Document ID: SEC-2013-1386-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2013-08-05T04:00Z

[Federal Register Volume 78, Number 150 (Monday, August 5, 2013)]
[Notices]
[Pages 47455-47456]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-18760]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-70075; File No. SR-NYSEArca-2013-75]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Amending NYSE Arca 
Equities Rule 7.31(a)(2) To Specify That the Exchange Would Use The 
Last Official Closing Price To Calculate the Market Order Trading 
Collar If There Is No Consolidated Last Sale Price That Trading Day

July 30, 2013.
    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 July 18, 2013, NYSE Arca, Inc. (the ``Exchange'' or 
``NYSE Arca'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I, 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.
---------------------------------------------------------------------------

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

I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    The Exchange proposes to amend NYSE Arca Equities Rule 7.31(a)(2) 
to specify that the Exchange would use the last official closing price 
to calculate the market order trading collar if there is no 
consolidated last sale price that trading day. 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange is proposing to amend NYSE Arca Equities Rule 
7.31(a)(2) to specify that the Exchange would use the last official 
closing price to calculate the market order trading collar (``Trading 
Collar'') if there is no consolidated last sale price on that trading 
day. Pursuant to Rule 7.31(a)(1), during Core Trading Hours,\4\ a 
market order to buy (sell) will not execute or route to another market 
center at a price above (below) the Trading Collar. Trading Collars are 
based on a price that is a specified percentage away from the 
consolidated last sale price, which can be a price either reported on 
the Consolidated Tape or the UTP Trade Data Feed, depending on which 
market the security is listed. The upper boundary of the Trading Collar 
is calculated by increasing the consolidated last sale price by a 
specific percentage, and the lower boundary is calculated by decreasing 
the consolidated last sale price by the same specified percentage.
---------------------------------------------------------------------------

    \4\ See NYSE ARca Equities Rule 1.1(j) (defining ``Core Trading 
Hours'' as the hours of 6:30 a.m. to 1:00 p.m. (Pacific Time)).
---------------------------------------------------------------------------

    In thinly-traded securities, there may not be a consolidated last 
sale price available for a security that trading day. Currently, if 
this occurs, the Exchange does not calculate a Trading Collar until 
there is a consolidated last during Core Trading Hours, which means 
that the first execution of a market order at the Exchange may not be 
subject to a Trading Collar.
    The Exchange proposes to amend Rule 7.31(a)(2) to specify that if 
there is no consolidated last sale price on the same trading day, the 
Exchange would use the last official closing price for the security. 
The Exchange proposes to make this change to assure that there will be 
a Trading Collar available for all executions of market orders at the 
Exchange, even if an execution has not yet been reported for a security 
that day.
    As proposed, the Exchange could use a consolidated last sale price 
that is reported to the Consolidated Tape or the UTP Trade Data Feed 
before Core Trading Hours begin that day. For example, assume XYZ 
security, a thinly-traded security, had an official closing price on 
Day 1 of $10.00. On Day 2, a trade is reported to the Consolidated Tape 
in XYZ security at 5:30 a.m. Eastern for $10.01, but there are no 
additional trades in XYZ during Core Trading Hours. Accordingly, as 
proposed, on Day 2, the Exchange would use the $10.01 consolidated last 
sale price as the reference price for calculating the Trading Collar 
for XYZ, and not the $10.00 official last close. If there are no 
further trades on Day 2 and no trades on Day 3, on Day 3, the Exchange 
would use the Day 1 official closing price to calculate the Trading 
Collar, and not the Day 2 pre-Core Trading Hours execution of $10.01. 
The Exchange believes that it is appropriate to use an execution that 
may occur on the same day in the pre-Core Trading Hours as the 
reference price because it may be reflective of the current price of 
the security. However, if there are no further transactions in the 
security that day or on the next day(s), the Exchange believes that the 
last official closing price is more indicative of the true value of the 
security and should be used as the reference price.
    The Exchange would not use a consolidated last sale price that is 
reported after the official closing price for the prior day. For 
example, if XYZ had an official closing price on Day 1 of $10.00 and an 
execution reported to the Consolidated Tape at 5:30 p.m. Eastern of 
$10.01, and no trades on Day 2, the Exchange would use the $10.00 
closing price as the reference price for calculating the Trading Collar 
for XYZ.
    The Exchange also proposes to amend Rule 7.31(a)(1) to clarify that 
Trading Collars are available for the Market Order Auction. Because the 
Market Order Auction occurs during Core Trading Hours,\5\ the Exchange 
believes that it is implied in the rule that the Trading Collars are 
also applicable during the Market Order Auction. However, in the 
interest of full

[[Page 47456]]

transparency, the Exchange proposes to specify that Trading Collars are 
applicable for the Market Order Auction.
---------------------------------------------------------------------------

    \5\ Pursuant to NYSE Arca Equities Rule 7.34(a)(1), the Market 
Order Auction occurs during the Exchange's Opening Session. However, 
because the Market Order Auction occurs no earlier than 9:30:00 a.m. 
Eastern, although it is part of the Opening Session, it takes place 
during what are defined as Core Trading Hours pursuant to Rule 
1.1(j).
---------------------------------------------------------------------------

2. Statutory Basis
    The statutory basis for the proposed rule change is Section 6(b)(5) 
of the Securities Exchange Act of 1934 (the ``Act''),\6\ which requires 
the rules of an exchange 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, in general, to protect 
investors and the public interest. The Exchange believes that the 
proposed rule meets these requirements in that it ensures that the 
Exchange will be able to calculate and apply a Trading Collar for all 
incoming market orders, including when there has not yet been an 
execution during Core Trading Hours in a security. The Exchange 
believes that using the last official closing price for calculating the 
market order Trading Collar removes impediments to and perfects the 
mechanism of a free and open market and protects investors and the 
public interest because the last official closing price represents the 
most accurate indication of the price at which a security may be 
trading. The Exchange notes that the official closing price of a 
security is used for other purposes, such as calculating the Trigger 
Price pursuant to Rule 7.16, in compliance with Rule 201 of Regulation 
SHO.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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 Act. The Exchange believes that 
the proposed amendment will not impose any burdens on competition 
because the proposal would simply provide for a manner to calculate 
market order Trading Collars for situations when there is no 
consolidated last sale price in a security.

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

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \7\ and Rule 19b-4(f)(6) thereunder.\8\ 
Because the proposed rule change does not: (i) Significantly affect the 
protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative prior to 
30 days from the date on which it was filed, or such shorter time as 
the Commission may designate, if consistent with the protection of 
investors and the public interest, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \8\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) \9\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b4(f)(6)(iii),\10\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay so that the proposal 
may become operative immediately upon filing.
---------------------------------------------------------------------------

    \9\ 17 CFR 240.19b-4(f)(6).
    \10\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of such proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings under 
Section 19(b)(2)(B) \11\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-NYSEArca-2013-75 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSEArca-2013-75. 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 offices of NYSE. 
All comments received will be posted without change; the Commission 
does not edit personal identifying information from submissions. You 
should submit only information that you wish to make available 
publicly. All submissions should refer to File Number SR-NYSEArca-2013-
75, and should be submitted on or before August 26, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
---------------------------------------------------------------------------

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

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-18760 Filed 8-2-13; 8:45 am]
BILLING CODE 8011-01-P