Document ID: SEC-2016-0161-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange, LLC
Posted Date: 2016-01-29T05:00Z

[Federal Register Volume 81, Number 19 (Friday, January 29, 2016)]
[Notices]
[Pages 5027-5031]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-01691]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76971; File No. SR-NYSE-2015-46]

Self-Regulatory Organizations; New York Stock Exchange LLC; Order 
Instituting Proceedings To Determine Whether To Disapprove a Proposed 
Rule Change To Establish Rules To Comply With the Quoting and Trading 
Requirements of the Plan To Implement a Tick Size Pilot Plan Submitted 
to the Commission Pursuant to Rule 608 of Regulation NMS Under the Act

January 25, 2016.

I. Introduction

    On October 9, 2015, New York Stock Exchange LLC (``NYSE'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to establish rules to comply with the quoting and 
trading requirements of the Plan to Implement a Tick Size Pilot Program 
(``Plan'') submitted to the Commission pursuant to Rule 608 of 
Regulation NMS under the Act (``Tick Size Pilot''). The proposed rule 
change was published for comment in the Federal Register on October 28, 
2015.\3\ The Commission has received two comment letters on the 
proposal.\4\ On December 3, 2015, the Commission designated a longer 
period for Commission action on the proposed rule change, until January 
26, 2016.\5\ On January 15, 2016, the Exchange, on behalf of NYSE Arca, 
Inc., NYSE MKT LLC, and the Chicago Stock Exchange, Inc. (``CHX''), 
submitted a letter in response to the comment letters.\6\ This order 
institutes proceedings under Section 19(b)(2)(B) of the Act \7\ to 
determine whether to disapprove the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 76229 (October 22, 
2015), 80 FR 66065 (``Notice'').
    \4\ See letters from Mary Lou Von Kaenel, Managing Director, 
Financial Information Forum, dated November 5, 2015 (``FIF 
Letter''); and Theodore R. Lazo, Managing Director and Associate 
General Counsel, Securities Industry and Financial Markets 
Association, dated December 18, 2015 (``SIFMA Letter'').
    \5\ See Securities Exchange Act Release No. 76551, 80 FR 76602 
(December 9, 2015).
    \6\ See letter from Brendon J. Weiss, Co-Head, Government 
Affairs, Intercontinental Exchange, Inc. and John K. Kerin, CEO, 
Chicago Stock Exchange, Inc., dated January 15, 2016 (``Response 
Letter''). In the Response Letter, the Exchange also commented on 
proposed rule changes submitted by the Financial Industry Regulatory 
Authority, Inc. (``FINRA'') and BATS Exchange, Inc. (``BATS'') to 
implement the quoting and trading requirements of the Tick Size 
Pilot. See Securities Exchange Act Release Nos. 76483 (November 19, 
2015), 80 FR 73853 (November 25, 2015) (SR-FINRA-2015-047) and 76552 
(December 3, 2015), 80 FR 76591 (December 9, 2015) (SR-BATS-2015-
108) (together the ``FINRA/BATS Proposals'').
    \7\ 15 U.S.C. 78s(b)(2)(B).
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II. Description of the Proposed Rule Change

    NYSE proposes to adopt NYSE Rule 67(a), (c), (d), and (e) \8\ to 
implement the quoting and trading requirements of the Tick Size Pilot. 
Proposed Rule 67(a)(1) contains definitions \9\ of ``Plan,'' \10\ 
``Pilot Test Groups,'' \11\ ``Trading Center,'' \12\ and ``Retail 
Investor Order.'' \13\
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    \8\ The Exchange has reserved proposed Rule 67(b) for future use 
to require compliance by its member organizations with the 
collection of data pursuant to the Plan.
    \9\ Proposed NYSE Rule 67(a)(1)(E) provides that all capitalized 
terms not otherwise defined in proposed NYSE Rule 67 shall have the 
meanings set forth in the Tick Size Pilot, Regulation NMS under the 
Exchange Act, or Exchange Rules.
    \10\ NYSE proposes to define the ``Plan'' as the Tick Size Pilot 
plan submitted to the Commission pursuant to Rule 608 of Regulation 
NMS. See proposed NYSE Rule 67(a)(1)(A).
    \11\ NYSE proposes to define ``Pilot Test Groups'' as the three 
test groups established under the Plan, consisting of 400 Pilot 
Securities each, which satisfy the respective criteria established 
under the Plan for each such test group. See proposed NYSE Rule 
67(a)(1)(B).
    \12\ NYSE proposes to define ``Trading Center'' as having the 
same meaning as Rule 600(b)(78) of Regulation NMS and for purposes 
of a Trading Center operated by a broker-dealer, means an 
independent trading unit, as defined under Rule 200(f) of Regulation 
SHO, within such broker-dealer. See proposed NYSE Rule 67(a)(1)(C).
    \13\ NYSE proposes to define ``Retail Investor Order'' as an 
agency order or riskless principal order that meets the criteria of 
FINRA Rule 5320.03 that originates from a natural person and is 
submitted to the Exchange by a retail member organization (or a 
divisions thereof that has been approved by the Exchange under the 
Exchange's retail liquidity program (Rule 107C) to submit Retail 
Investor Orders), provided that no change is made to the terms of 
the order with respect to the price or side of market and the order 
does not originate from a trading algorithm or any other 
computerized technology. A Retail Investor Order is an immediate or 
cancel orders that operate in accordance with the Exchange's retail 
liquidity program as set forth in NYSE Rule 107C. See proposed NYSE 
Rule 67(a)(1)(D).
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    Proposed NYSE Rule 67(a)(2) provides that the Exchange is a 
Participant \14\ in the Plan and is subject to the applicable 
requirements of the Plan.\15\ Proposed NYSE Rule 67(a)(3) provides that 
member organizations shall establish, maintain, and enforce written 
policies and procedures that are reasonably designed to comply with the 
applicable requirements of the Plan.\16\

[[Page 5028]]

Proposed NYSE Rule 67(a)(4) provides that Exchange systems will not 
display, quote, or trade in violation of the applicable quoting and 
trading requirements for a Pilot Security specified in the Plan the 
NYSE Rule 67, unless such quotation or transaction is specifically 
exempted under the Plan.\17\
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    \14\ Unless otherwise noted, capitalized terms not defined in 
this order shall have the meanings set forth in the Plan.
    \15\ See Proposed NYSE Rule 67(a)(2).
    \16\ See Proposed NYSE Rule 67(a)(3).
    \17\ See Proposed NYSE Rule 67(a)(4).
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    Proposed NYSE Rule 67(a)(5) defines the procedure for dealing with 
Pilot Securities that drop below $1.00 during the Pilot Period. If the 
price of a Pilot Security drops below $1.00 during regular trading but 
does not have a Closing Price below $1.00, the Pilot Security will 
continue to trade according to the quoting and trading requirements of 
its originally assigned Test Group in the Plan. If a Pilot Security has 
a Closing Price below $1.00, the Pilot Security would be moved from its 
respective Test Group into the Control Group, and would be quoted and 
traded at any price increment that is currently permitted by Exchange 
rules for the remainder of the Pilot Period.\18\ Proposed NYSE Rule 
67(a)(5) further provides that notwithstanding anything to the 
contrary, at all times during the Pilot Period, Pilot Securities 
(whether in the Control Group or any Pilot Test Group) will continue to 
be subject to the requirements contained in Paragraph (b).\19\
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    \18\ See Proposed NYSE Rule 67(a)(5).
    \19\ The Commission notes that the Exchange has reserved 
Paragraph (b) for the data collection contemplated under the Plan.
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    Proposed NYSE Rule 67(c) describes the quoting and trading 
requirements of Pilot Securities in Test Group One. Specifically, NYSE 
proposes that no member may display, rank, or accept from any person 
any displayable or non-displayable bids or offers, orders, or 
indications of interest in increments other than $0.05 for Pilot 
Securities in Test Group One.\20\ Orders priced to trade at the 
midpoint of the national best bid and national best offer (``NBBO'') or 
best protected bid and best protected offer (``PBBO'') and orders 
entered into the Exchange's Retail Liquidity Program as Retail Price 
Improvement Orders may be ranked and accepted in increments of less 
than $0.05.\21\ Pilot Securities in Test Group One may continue to 
trade at any price increment currently permitted.\22\
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    \20\ See Proposed NYSE Rule 67(c).
    \21\ See Proposed NYSE Rule 67(c).
    \22\ See Proposed NYSE Rule 67(c).
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    Proposed NYSE Rule 67(d) describes the quoting and trading 
requirements of Pilot Securities in Test Group Two. Specifically, NYSE 
proposes that no member may display, rank, or accept from any person 
any displayable or non-displayable bids or offers, orders, or 
indications of interest in increments other than $0.05 for Pilot 
Securities in Test Group Two.\23\ Further, NYSE proposes that absent 
any enumerated exceptions, no member organization may execute orders in 
any Test Group Two Pilot Security in a price increment other than 
$0.05.\24\ Proposed NYSE Rule 67(d)(3) provides for three exceptions 
where Test Group Two Pilot Securities could trade in increments of less 
than $0.05. First, trading could occur at the midpoint between the NBBO 
or the PBBO.\25\ Second, Retail Investor Orders may be provided with 
price improvement that is at least $0.005 better than the PBBO.\26\ 
Finally, Negotiated Trades may trade in increment less than $0.05.\27\
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    \23\ Similar to the exception in Test Group One, orders priced 
to trade at the midpoint of the NBBO or PBBO and orders entered into 
the Exchange's Retail Liquidity Program as Retail Price Improvement 
Orders may be ranked and accepted in increments of less than $0.05. 
See Proposed NYSE Rule 67(d).
    \24\ Proposed NYSE Rule 67(d)(2) applies to all trades, 
including Brokered Cross Trades.
    \25\ See Proposed NYSE Rule 67(d)(3)(A).
    \26\ See Proposed NYSE Rule 67(d)(3)(B).
    \27\ See Proposed NYSE Rule 67(d)(3)(C).
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    Proposed NYSE Rule 67(e) describes the quoting and trading 
requirements of Pilot Securities in Test Group Three. NYSE proposes for 
Pilot Securities in Test Group Three no member organization may 
display, rank, or accept from any person any displayable or non-
displayable bids or offers, orders, or indications of interest in 
increments other than $0.05.\28\ Proposed NYSE Rule 67(e)(2) states 
that absent an enumerated exception, no member organization may execute 
orders in any Test Group Three Pilot Security in a price increment 
other than $0.05.\29\ Proposed NYSE Rule 67(e)(3) provides for the same 
three exceptions as in Test Group Two.\30\
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    \28\ Similar to the exceptions in Test Group One and Test Group 
Two, orders priced to trade at the midpoint of the NBBO or PBBO and 
orders entered into the Exchange's Retail Liquidity Program as 
Retail Price Improvement Orders may be ranked and accepted in 
increments of less than $0.05. See Proposed NYSE Rule 67(e)(1).
    \29\ Proposed NYSE Rule 67(e)(2) applies to all trades, 
including Brokered Cross Trades.
    \30\ See Proposed NYSE Rule 67(e)(3).
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    Proposed NYSE Rule 67(e)(4) states the Test Group Three Pilot 
Securities will be subject to a Trade-at Prohibition. Proposed NYSE 
Rule 67(e)(4)(A) defines ``Trade-At Prohibition'' as the prohibition 
against executions by a Trading Center of a sell order for a Pilot 
Security at the Price of a Protected Bid or the execution of a buy 
order at the price of a Protected Offer during regular trading 
hours.\31\ Proposed NYSE Rule 67(e)(4)(B) states that absent any 
enumerated exception, no member organization may execute a sell order 
for a Pilot Security in Test Group Three at the price of a Protected 
Bid or a buy order at the price of a Protected Offer.
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    \31\ See Proposed NYSE Rule 67(e)(4)(A).
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    Proposed NYSE Rule 67(e)(4)(C) provides that a member organization 
may execute a sell order for a Pilot Security in Test Group Three at 
the price of a Protected Bid or a buy order for a Pilot Security in 
Test Group Three at the price of a Protected Offer under the following 
14 circumstances. First, an order may be executed by a Trading Center 
within a member organization that has a displayed quotation for the 
account of that Trading Center on a principal basis, via either a 
processor or an SRO Quotation Feed, at a price equal to the traded-at 
Protected Quotation, that was displayed before the order was received, 
but only up to the full displayed size of the Trading Center's 
previously displayed quote.\32\ In the Notice, NYSE stated that ``[b]y 
requiring the displayed quotation to be for the account of `that 
Trading Center,' the Trading Center cannot rely on any quotations it 
may put up on an agency basis, including a riskless principal basis.'' 
\33\ NYSE further noted that ``[a] Trading Center that is a broker-
dealer also cannot rely on any quotation that is not a displayed 
quotation for its own account, such as a quotation of another broker-
dealer, or customer of such broker-dealer.'' \34\
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    \32\ See Proposed NYSE Rule 67(e)(4)(C)(i).
    \33\ See Notice at note 26.
    \34\ See Notice at note 26.
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    The second exception permits the execution of an order that 
consists of odd lot orders and odd lot portions of partial round lot 
orders that are displayed on the SRO Quotation Feed at the price equal 
to the traded-at Protected Quotation, up to the size of the displayed 
quotation.\35\ The third exception allows the execution of an order 
that is of Block Size \36\ at the time of origin and is not: An 
aggregation of non-block orders; broken into orders smaller than Block 
Size prior to submitting the order to a Trading Center for execution; 
or executed on multiple Trading Centers.\37\
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    \35\ Proposed Supplementary Material .10 to NYSE Rule 
67(e)(4)(c)(ii) states that a member would be prohibited from 
breaking round lot order or a round lot portion of a partial round 
lot into an odd lot order to avoid the restrictions of the proposed 
Rule.
    \36\ ``Block Size'' is defined in the Plan as an order (1) of at 
least 5,000 shares or (2) for a quantity of stock having a market 
value of at least $100,000.
    \37\ See Proposed NYSE Rule 67(e)(4)(C)(iii).
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    The fourth exception permits the execution of a Retail Investor 
Order

[[Page 5029]]

executed with at least $0.005 price improvement.\38\ The firth 
exception permits the execution of an order when the Trading Center 
displaying the Protected Quotation that was traded-at experiences a 
failure, material delay, or malfunction of its systems or 
equipment.\39\ The sixth exception permits the execution of an order as 
part of a transaction that was not a regular way contract.\40\ The 
seventh exception permits the execution of an order as part of a 
single-priced opening, reopening, or closing transaction on the 
Exchange.\41\ The eighth exception permits the execution of an order 
when a Protected Bid is priced higher than a Protected Offer in the 
Pilot Security.\42\
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    \38\ See Proposed NYSE Rule 67(e)(4)(C)(iv).
    \39\ See Proposed NYSE Rule 67(e)(4)(C)(v).
    \40\ See Proposed NYSE Rule 67(e)(4)(C)(vi).
    \41\ See Proposed NYSE Rule 67(e)(4)(C)(vii).
    \42\ See Proposed NYSE Rule 67(e)(4)(C)(viii).
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    The ninth exception permits the execution of an order that is 
identified as a Trade-at Intermarket Sweep Order.\43\ The tenth 
exception permits the execution of an order by a Trading Center that 
simultaneously routed Trade-at Intermarket Sweep Orders to execute 
against the full displayed size of the Protected Quotation that was 
traded at.\44\ The eleventh exception permits the execution of an order 
that is part of a Negotiated Trade.\45\ The twelfth exception permits 
the execution of an order when the Trading Center displaying the 
Protected Quotation that was traded at had displayed within one second 
prior to execution of the transaction that constituted the Trade-at, a 
Best Protected Bid or Best Protected Offer, as applicable, for the 
Pilot Security with a price that was inferior to the price of the 
Trade-at transaction.\46\
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    \43\ See Proposed NYSE Rule 67(e)(4)(C)(ix).
    \44\ See Proposed NYSE Rule 67(e)(4)(C)(x).
    \45\ See Proposed NYSE Rule 67(e)(4)(C)(xi).
    \46\ See Proposed NYSE Rule 67(e)(4)(C)(xii).
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    The thirteenth exception permits the execution of an order by a 
Trading Center, which at the time of order receipt, had guaranteed an 
execution at no worse than a specified price (a ``stopped order'') 
where: (1) The stopped order was for the account of a customer; (2) the 
customer agreed to the specified price on an order-by-order basis; and 
(3) the price of the Trade-at transaction was, for a stopped buy order, 
equal to the National Best Bid in the Pilot Security at the time of 
execution or, for a stopped sell order, equal to the National Best 
Offer in the Pilot Security at the time of execution.\47\ Finally, the 
last exception permits the execution of an order that is for a 
fractional share of a Pilot Security, provided that such fractional 
share order was not the result of breaking an order for one or more 
whole shares of a Pilot Security into orders for fractional shares or 
was not otherwise effected to evade the requirements of the Tick Size 
Pilot.\48\ Proposed NYSE Rule 67(D) states that no member organization 
shall break an order into smaller orders to evade the requirements of 
the Trade-at Prohibition or any provisions of the Plan.
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    \47\ See Proposed NYSE Rule 67(e)(4)(C)(xiii).
    \48\ See Proposed NYSE Rule 67(e)(4)(C)(xiv).
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III. Summary of Comments and the Exchange's Response

    The Commission has received two comment letters on the proposed 
rule change and a response from the Exchange. One commenter expressed 
concern with the differences between the NYSE proposal and the rules to 
comply with the quoting and trading requirements of the Plan proposed 
in the FINRA/BATS Proposals,\49\ particularly with respect to the 
Trade-at Prohibition.\50\ The commenter noted that the NYSE proposal 
would limit a Trading Center from price matching a Protected Quotation 
to when the Trading Center is displaying in a principal capacity, while 
the FINRA/BATS Proposals are not so restrictive. The commenter stated 
its belief that the FINRA/BATS Proposals are more consistent with the 
terms of the Plan, and that the Commission should approve it instead. 
The commenter further stressed the importance of consistency in the 
rules implementing the Plan, and expressed the view that if the 
different proposals are approved, compliance by market participants 
``would be virtually impossible.'' \51\ This commenter also noted that 
there are differences in certain key defined terms, such as ``Retail 
Investor Order,'' between the NYSE proposal and the FINRA/BATS 
Proposals.\52\
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    \49\ See supra note 6.
    \50\ See SIFMA Letter.
    \51\ See SIFMA Letter.
    \52\ Id.
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    The other commenter also expressed concern with the proposal's 
limitation of the exception to the Trade-at Prohibition discussed above 
to principal quotations, and with the certain defined terms, such as 
``Retail Investor Order'' and ``Block Size''.\53\ In addition, it 
suggested the inclusion of certain other exceptions that align with 
those available, through Commission exemption and guidance, in 
connection with Rule 611 of Regulation NMS, and raised questions as to 
whether the proposal was limited to the exchange-related activities of 
NYSE members, or would apply to their off-exchange activities as 
well.\54\
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    \53\ See FIF Letter.
    \54\ The commenter stated its belief that the additional 
qualifiers will inhibit a Trading Center from facilitating a block 
cross trade. See FIF Letter. The commenter also raised other issues 
not directly addressed by the Exchange's proposal, such as the 
timeline for implementation, additional exceptions for Trade-at 
Prohibition, and unanswered questions.
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    In its Response Letter, the Exchange expressed the view that its 
proposal is consistent with the goals of the Plan, including testing 
whether market participants are incentivized to display more liquidity 
in a wider tick environment. On the other hand, in the Exchange's 
opinion, the FINRA/BATS Proposals would create an incentive for trading 
in Test Group Three to migrate to dark venues, which would be 
inconsistent with the goals of the Plan. Specifically, the Exchange 
expressed the view that the FINRA/BATS Proposals would allow an 
alternative trading system (``ATS'') to execute matched trades of any 
of its participants at the price of a Traded-at Protected Quotation if 
the ATS is displaying, on an agency basis, a quotation of another 
participant at the Protected Quotation. Thus, the Exchange reasoned 
that the FINRA/BATS Proposals would allow trades by ATS participants at 
the price of a Protected Quotation without requiring them to display a 
Protected Quotation, but instead ``free-ride'' on the Protected 
Quotation of another participant in the ATS that is displayed, on an 
agency basis by the ATS. This would, in the opinion of the Exchange, 
``eviscerate'' the requirement for dark pools to trade with Protected 
Quotations, and be contrary to the Commission's intent for the Trade-At 
Prohibition to test whether market participants are incentivized to 
display more liquidity in a wider tick environment.
    The Exchange confirmed one commenter's understanding with respect 
to the Retail Investor Order exception and that the exception would 
allow for over-the-counter trading. Additionally, the Exchange stated 
that it opposed changing the Block Size exception as the Exchange does 
not believe that a trading center should be permitted to facilitate a 
block cross that aggregates multiple smaller orders, even if one 
component of the block meets the definition of Block Size Order.

IV. Proceedings To Determine Whether To Disapprove SR-NYSE-2015-46 and 
Grounds for Disapproval Under Consideration

    The Commission is instituting proceedings pursuant to Section

[[Page 5030]]

19(b)(2)(B) of the Act \55\ to determine whether the Exchange's 
proposed rule change should be disapproved. Institution of proceedings 
is appropriate at this time in view of the legal and policy issues 
raised by the proposed rule change as discussed below. Institution of 
proceedings does not indicate that the Commission has reached any 
conclusions with respect to any of the issues involved. Rather, as 
described in greater detail below, the Commission seeks and encourages 
interested persons to provide additional comment on the proposed rule 
change to inform the Commission's analysis whether to disapprove the 
proposed rule change.
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    \55\ 15 U.S.C. 78s(b)(2).
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    Pursuant to Section 19(b)(2)(B) of the Act,\56\ the Commission is 
providing notice of the grounds for disapproval under consideration. 
The Commission is instituting proceedings to allow for additional 
analysis of, and input from commenters with respect to, the proposed 
rule change's consistency with Section 6(b)(5) of the Act and Section 
6(b)(8) of the Act. Section 6(b)(5) of the Act \57\ requires that an 
exchange's rules be designed, among other things, to promote just and 
equitable principles of trade, to remove impediments to and perfect the 
mechanism of a free and open market and a national market system, and 
to protect investors and the public interest, and that they not be 
designed to permit unfair discrimination between customers, issuers, 
brokers or dealers. Section 6(b)(8) of the Act \58\ requires that rules 
of the exchange not impose any burden on competition that is not 
necessary or appropriate in furtherance of the Act.
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    \56\ 15 U.S.C. 78s(b)(2)(B). Section 19(b)(2)(B) of the Act also 
provides that proceedings to determine whether to approve or 
disapprove a proposed rule change must be concluded within 180 days 
of the date of publication of notice of the filing of the proposed 
rule change. Id. The time for conclusion of the proceedings may be 
extended for up to 60 days if the Commission finds good cause for 
such extension and publishes its reasons for so finding. Id.
    \57\ See 15 U.S.C. 78f(b)(5).
    \58\ See 15 U.S.C. 78f(b)(8).
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    The Exchange's proposal would establish rules for NYSE member 
organizations to comply with the quoting and trading requirements of 
the Tick Size Pilot. NYSE proposes to adopt a version of the Trade-at 
Prohibition that would be more restrictive than required by the Plan, 
the applicable provisions of which would permit a Trading Center to 
execute an order for a Pilot Security in Test Group Three if that 
Trading Center ``is displaying a quotation, via either a processor or 
an SRO quotation feed, at a price equal to the traded-at protected 
quotation but only up to the trading center's full displayed size.'' 
\59\ The Exchange's proposal would limit the ability of a Trading 
Center to rely on this exception to the Trade-at Prohibition to 
situations where it is displaying a quotation as principal, and not 
where it is displaying a quotation as agent (including riskless 
principal). The Exchange justifies this additional restriction out of 
concern that Trading Centers that are ATSs might be used to execute a 
``matched trade'' by an ATS participant that itself is not displaying a 
Protected Quotation, but instead is relying upon another ATS 
participant to do so, thereby creating a ``loophole'' in the Trade-at 
Prohibition. However, by precluding any Trading Center from relying on 
any quotation displayed as agent, the Exchange's proposal effectively 
would preclude all ATSs, which necessarily execute orders as agent, 
from executing transactions at the NBBO even if they are displaying a 
Protected Quotation. The Exchange has not clearly explained why it 
believes a new ATS business model--one that allows priority for 
participants executing ``matched trades'' over displayed quotations--is 
viable and likely to arise in the context of the Tick Size Pilot. 
Further, even if the Exchange were able to offer such an explanation, 
it has not clearly explained why there is not a more targeted way to 
address this potential loophole in the Trade-at Prohibition than one 
which precludes all ATSs, including those operating as traditional 
electronic communication networks, or ``ECNs,'' from executing 
transactions at the NBBO. The Commission therefore believes that 
questions are raised as to whether the proposed rule change is 
consistent with the requirements of Section 6(b)(5) and Section 6(b)(8) 
of the Act.
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    \59\ See Tick Size Plan Section VI.D.1.
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V. Commission's Solicitation of Comments

    The Commission requests written views, data, and arguments with 
respect to the concerns identified above as well as other relevant 
concerns. Such comments should be submitted by February 19, 2016. 
Rebuttal comments should be submitted by March 4, 2016. Although there 
do not appear to be any issues relevant to approval or disapproval 
which would be facilitated by an oral presentation of views, data, and 
arguments, the Commission will consider, pursuant to Rule 19b-4, any 
request for an opportunity to make an oral presentation.\60\
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    \60\ 15 U.S.C. 78s(b)(2). Section 19(b)(2) of the Act grants the 
Commission flexibility to determine what type of proceeding--either 
oral or notice and opportunity for written comments--is appropriate 
for consideration of a particular proposal by a self-regulatory 
organization. See Securities Act Amendments of 1975, Senate Comm. on 
Banking, Housing & Urban Affairs, S. Rep. No. 75, 94th Cong., 1st 
Sess. 30 (1975).
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    Interested persons are invited to submit written data, views, and 
arguments concerning the proposed rule change, 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-NYSE-2015-46 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-NYSE-2015-46. 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. 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 publicly available. All submissions should refer to File Number 
SR-NYSE-2015-46 and should be submitted on or before February 19, 2016. 
Rebuttal comments should be submitted by March 4, 2016.

[[Page 5031]]

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\61\
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    \61\ 17 CFR 200.30-3(a)(57).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-01691 Filed 1-28-16; 8:45 am]
 BILLING CODE 8011-01-P