Document ID: SEC-2017-0567-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE MKT LLC
Posted Date: 2017-04-10T04:00Z

[Federal Register Volume 82, Number 67 (Monday, April 10, 2017)]
[Notices]
[Pages 17302-17306]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-07049]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80375; File No. SR-NYSEMKT-2017-16]

Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing of 
Proposed Rule Change Amending Rule 36--Equities To Permit Exchange 
Floor Brokers To Use Non-Exchange Provided Telephones on the Floor

April 4, 2017.
    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 22, 2017, 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 to amend Rule 36--Equities to permit Exchange 
Floor brokers to use non-Exchange provided telephones on the Floor and 
make related changes modeled on the rules governing telephone use on 
the Exchange's options trading floor and on the options trading floor 
of its affiliate NYSE Arca, Inc. The proposed rule change is available 
on the Exchange's Web site at www.nyse.com, at the principal office of 
the Exchange, and at the Commission's Public Reference Room.

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

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

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

1. Purpose
    The Exchange proposes to amend Rule 36--Equities (Communication 
Between Exchange and Members' Offices) (``Rule 36'') to permit Exchange 
Floor brokers to use non-Exchange provided telephones on the Floor (the 
``Floor'') \4\ and make related changes modeled on the rules governing 
telephone use on the Exchange's options trading floor and on the 
options trading floor of its affiliate NYSE Arca, Inc. (``NYSE Arca'').
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    \4\ Rule 6--Equities defines the Floor as the trading Floor of 
the Exchange and the premises immediately adjacent thereto, such as 
the various entrances and lobbies of the 11 Wall Street, 18 New 
Street, 8 Broad Street, 12 Broad Street and 18 Broad Street 
Buildings, and also means the telephone facilities available in 
these locations.
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Background
Overview of Rule 36 Requirements
    Rule 36 governs the establishment of telephone or electronic 
communications between the Floor and any other location, which requires 
Exchange approval. Supplementary Material .20, .21 and .23 to Rule 36 
outline the conditions under which Floor brokers are permitted to use 
Exchange authorized and provided portable telephones with the approval 
of the Exchange. The Exchange adopted these provisions of Rule 36 in 
2008 when it was acquired by NYSE Euronext.\5\
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    \5\ See Securities Exchange Act Release No. 58705 (October 1, 
2008), 73 FR 58995 (October 8, 2008) (SR-Amex-2008-63). The 
Exchange's Rule 36 was modeled on the New York Stock Exchange LLC's 
(the ``NYSE'') version of Rule 36. See id., 73 FR at 58996 & n.24.
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    Pursuant to Rule 36.20(a), with Exchange approval, Floor brokers 
may maintain a telephone line or use Exchange authorized and provided 
portable phones, which permit a non-member off the Floor to communicate 
with a member or member organization on the Floor. Subject to the 
exception contained in Rule 36.23, discussed below, Rule 36.20(a) 
expressly prohibits the use of a portable telephone on the Floor other 
than one authorized and issued by the Exchange.\6\
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    \6\ The last sentence of Rule 36.20(a) provides that the 
Exchange will approve the maintenance of telephone lines only at the 
booth location of a member or member organization.
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    The use of Exchange authorized and issued portable phones is 
governed by Rule 36.21, which provides that when using an Exchange 
authorized and provided portable phone, a Floor broker:

    (i) May engage in direct voice communications from the point of 
sale on the Floor to an off-Floor location;
    (ii) may provide status and oral execution reports as to orders 
previously received, as well as ``market look'' observations as 
historically have been routinely transmitted from a broker's booth 
location;
    (iii) must comply with Exchange Rule 123(e)--Equities;
    (iv) must comply with all other rules, policies, and procedures 
of both the Exchange and the federal securities law, including the 
record retention requirements, as set forth in Exchange Rule 440--
Equities and SEC Rules 17a-3 and 17a-4; \7\ and
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    \7\ See 17 CFR 240.17a-3; 17 CFR 240.17a-4.
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    (v) may not use call-forwarding or conference calling. Exchange 
authorized and provided portable phones used by Floor brokers shall 
not have these capabilities.

    Rule 36.21(b) further provides that Floor brokers and their member 
organizations must implement procedures designed to deter anyone 
calling their portable phones from using caller ID block or other means 
to conceal the phone number from which a call is being made. Members 
and member organizations are required to make and retain records 
demonstrating compliance with such procedures.
    Rule 36.21(c) provides that Floor brokers may not use an Exchange 
authorized and issued portable phone used to trade equities while on 
the NYSE Amex Options Trading Floor.
    Rule 36.23 provides that, notwithstanding any other provision of 
Rule 36, members and employees of member organizations may use personal 
portable communications devices outside the Trading Floor \8\ 
consistent

[[Page 17303]]

with Exchange Rules and the federal securities laws and the rules 
thereunder, and are prohibited from using personal portable or wireless 
communications devices while on the NYSE Amex Options Trading Floor.\9\ 
The Rule further provides that those members and employees of member 
organizations that are also registered to trade options on NYSE Amex 
are permitted to use personal portable or wireless communication 
devices while on the NYSE Amex Options Trading Floor in accordance with 
applicable Exchange options rules and regulations, including Rules 220 
and 902NY.
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    \8\ Rule 6A--Equities defines the Trading Floor as the 
restricted-access physical areas designated by the Exchange for the 
trading of securities, commonly known as the Main Room and the 
Buttonwood Room but does not include the areas in the Buttonwood 
Room designated by the Exchange for the trading of its listed 
options securities, which, for the purposes of the Exchange's 
Equities Rules is referred to as the ``NYSE Amex Options Trading 
Floor,'' or the physical area within fully enclosed telephone booths 
located in 18 Broad Street at the Southeast wall of the Trading 
Floor.
    \9\ Rule 6A(b)--Equities defines ``NYSE Amex Options Trading 
Floor'' as the areas in the ``Buttonwood Room'' designated by the 
Exchange where NYSE Amex-listed options are traded. See note 8, 
supra.
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Rules Governing Telephones on the NYSE Amex Options and NYSE Arca 
Options Trading Floors
    The Exchange operates NYSE Amex Options, a physical options trading 
floor in New York, and the Exchange's affiliate NYSE Arca operates a 
physical options trading floor in San Francisco. NYSE MKT Rule 902NY 
(Admission and Conduct on the Options Trading Floor), governing phone 
use on the NYSE Amex Options Trading Floor, was adopted in 2009 and 
modeled on NYSE Arca Rule 6.2(h) (Admission to and Conduct on the 
Options Trading Floor).\10\ Both exchanges allow Floor-based permit 
holders and their employees to use personal phones on the options 
trading floors subject to the same types of restrictions proposed for 
the Exchange. Neither NYSE MKT nor NYSE Arca provides exchange-issued 
and approved telephones for use on the options trading floors.
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    \10\ See Securities Exchange Act Release No. 59939 (May 19, 
2009), 74 FR 25779 (May 29, 2009) (SR-NYSEAmex-2009-17).
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    Specifically, NYSE MKT Rule 902NY(i)(1) and NYSE Arca Rule 
6.2(h)(1) require permit holders to register, prior to use, any new 
telephones to be used on the options trading floor by sending a 
registered email to the Operations Department, which includes the 
number of the telephone being registered.\11\ Similarly, both rules 
require trading permit holder representatives to attest at the time of 
registration that they are aware of and understand the rules governing 
the use of telephones on the options trading floor. NYSE MKT Rule 
902NY(i)(1) and NYSE Arca Rule 6.2(h)(1) provide that no trading permit 
holder or employee thereof may employ any alternative communication 
device (other than telephones as described herein) on the trading floor 
without prior approval of the respective exchange.\12\
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    \11\ On the NYSE Amex Options market, a permit holder is known 
as an ``Amex Trading Permit Holder'' or ``ATP Holder,'' which is 
defined in Rule 900.2NY(5) as a natural person, sole proprietorship, 
partnership, corporation, limited liability company or other 
organization, in good standing, that has been issued an ATP. See 
also Rule 900.2NY(4) (defining ``ATP'' as a permit issued by NYSE 
MKT for effecting securities transactions on the Exchange's Trading 
Facilities, defined in Rule 900.2NY(81) as, among places, the 
Exchange's facilities for the trading of options 11 Wall Street, New 
York, NY). An ATP Holder must be registered as a broker or dealer. 
Similarly, on the NYSE Arca options market, permit holders are OTP 
Holders or OTP Firms, which are defined in NYSE Arca Rules 1.1(q) 
and (r), respectively.
    \12\ The Exchange does not propose to include the requirements 
of Rule 902NY(i)(2) (Functionality) and NYSE Arca Rule 6.2(h)(2) 
(Functionality) or Rule 902NY(i)(3) (Requirements and Conditions) 
and NYSE Arca Rule 6.2(h)(3) (Requirements and Conditions) in its 
Rule 36.
    Rule 902NY(i)(2) and NYSE Arca Rule 6.2(h)(2) prohibit 
maintenance of an open line of continuous communication whereby a 
person not located in the trading crowd may continuously monitor the 
activities in the trading crowd, and covers intercoms, walkie-
talkies and any similar devices. Similarly, Rule 902NY(i)(3)(A) and 
NYSE Arca Rule 6.2(h)(3)(A) provide that only quotations that have 
been publicly disseminated may be provided over telephones in 
trading areas. In today's largely automated trading environment on 
the Exchange, where pricing decisions have moved away from market 
participants on the Trading Floor and there is greater availability 
to all market participants of real-time trade and quote information, 
importing these requirements into Rule 36 would serve no purpose. 
The traditional trading ``crowd'' at the DMM post has virtually 
disappeared, and along with it much of the informational imbalance 
that existed prior to the implementation of Regulation NMS. The 
Exchange also believes that these requirements would be incompatible 
with current Rule 36, which explicitly permits Floor brokers to 
engage in direct voice communication from the point of sale on the 
Floor to an off-Floor location and, more importantly, provide status 
and oral execution reports as to orders previously received, as well 
as ``market look'' observations as historically have been routinely 
transmitted from a broker's booth location.
    Further, Rule 902NY(i)(3)(B) and NYSE Arca Rule 6.2(h)(3)(B) 
require telephone orders to be entered directly to the trading zone 
(NYSE MKT) or trading post (NYSE Arca) only during outgoing 
telephone calls that are initiated from the trading crowd (NYSE MKT) 
or option posts (NYSE Arca), and that all such orders be immediately 
recorded in the Electronic Order Capture System (EOC). For the same 
reasons noted above, the Exchange believes that importing these 
requirements into Rule 36 would serve no purpose. Moreover, 
comparable Exchange system entry requirements to those in Rule 
902NY(i)(3)(B) and NYSE Arca Rule 6.2(h)(3)(B) are set forth in Rule 
123(e)--Equities.
    Rule 902NY(i)(3)(C) and NYSE Arca Rule 6.2(h)(3)(C) provide that 
the relevant exchange may require the taping of any telephone line 
into the trading zone (NYSE MKT) or trading post (NYSE Arca) or may 
require permit holders to provide for the tape recording of a 
dedicated line in the trading zone or trading post at any time. Rule 
902NY(i)(3)(C) and NYSE Arca Rule 6.2(h)(3)(C), however, relates to 
the taping of land lines, not cellular or wireless phones. 
Accordingly, the Exchange does not propose to include this 
requirement in Rule 36.
    Finally, the Exchange does not propose to include the 
requirements found in Rule 902NY(i)(4)(B) and (C) and NYSE Arca Rule 
6.2(h)(4)(B) and (C) in its Rule 36. Rule 902NY(i)(4)(B) and NYSE 
Arca Rule 6.2(h)(4)(B) provide that Floor brokers and permit holders 
may receive orders over their phones subject to the provisions of 
Rule 902NY(i)(3)(B) and NYSE Arca Rule 6.2(h)(3)(B), respectively, 
and that telephonic orders entered from off the Trading Floor must 
be placed with a person located in an ATP Holder booth. Similarly, 
Rule 902NY(i)(4)(C) and NYSE Arca Rule 6.2(h)(4)(C) provide that 
Floor brokers receiving orders from a permit holder representative 
on the Trading Floor may immediately represent that order in the 
trading crowd provided that such orders are immediately recorded in 
EOC. As noted, current Rule 36 already contemplates that Floor 
brokers can accept orders via telephone consistent with NYSE MKT 
rules, including the requirement in NYSE MKT Rule 123(e)--Equities 
to first record order details in an electronic system on the Floor 
before representing or executing the order.
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    Further, NYSE MKT Rule 902NY(i)(4)(A) and NYSE Arca Rule 
6.2(h)(4)(A) provide that permit holders and employees of permit 
holders may use their own cellular and wireless phones to place calls 
to any person at any location (whether on or off the trading floor). 
Neither exchange prohibits or restricts the use of conference call or 
call forwarding features by permit holders and their employees when 
using personal cellular and wireless phones on the trading floor.
    NYSE MKT Rule 902NY(i)(5) and NYSE Arca Rule 6.2(h)(5) also provide 
that permit holders must maintain records of the use of telephones and 
all other approved alternative communication devices, including logs of 
calls placed, for a period of not less than three years, the first two 
years in an accessible place. Both exchanges reserve the right to 
inspect such records pursuant to NYSE MKT Rule 31 and NYSE Arca Rule 
10.2, respectively.
    NYSE MKT Rule 902NY(i)(6) and NYSE Arca Rule 6.2(h)(6) provide that 
each exchange may deny, limit or revoke the registration of any 
telephone used on the trading floor whenever it determines that use of 
such device is inconsistent with the public interest, the protection of 
investors, or just and equitable principles of trade, or such device 
has been or is being used to facilitate any violation of the Act, as 
amended, or rules thereunder, or the rules of the respective exchange.
    Finally, NYSE MKT Rule 902NY(i)(7) and NYSE Arca Rule 6.2(h)(7) 
provide that the respective exchanges assume no liability to permit 
holders due to conflicts between phones in use on the options trading 
floor or due to electronic interference problems resulting from the use 
of telephones on the trading floor.

[[Page 17304]]

Proposed Rule Change
    The Exchange proposes to amend Rule 36 to permit Floor brokers to 
use any cellular or wireless telephone properly registered with the 
Exchange on the Floor, thereby eliminating the requirement that Floor 
brokers only use Exchange-approved and provided portable phones. The 
proposed changes are based on Exchange rules and NYSE Arca rules 
governing the use of cellular phones on the options trading floors of 
those exchanges and include proposed safeguards surrounding the use of 
non-Exchange issued devices modeled on the rules of the Exchange and 
its affiliate.
    To effect these changes, the Exchange proposes the following 
amendments to Rule 36.20(a):
     First, the requirement for prior Exchange approval to 
utilize cellular or wireless telephones on the Floor would remain 
unchanged and would be strengthened by the Exchange's proposal to add 
the phrase ``and subject to the registration requirements set forth in 
Supplementary Material .21'' in the first sentence of subparagraph (a).
     Second, the Exchange proposes to delete the phrase ``an 
Exchange authorized and provided portable'' before the word 
``telephone'' in the first sentence of subparagraph (a) and replace it 
with the term ``a cellular or wireless.'' \13\ The Exchange also 
proposes a non-substantive grammatical change to replace the word 
``which'' with ``that'' before the word ``permits.''
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    \13\ NYSE MKT Rule 902NY and NYSE Arca Rule 6.2(h) utilize the 
phrase ``cellular and cordless.'' The Exchange proposes to instead 
use the more modern synonym, ``wireless.''
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     Third, the Exchange would change the reference to 
``portable'' phones to ``cellular or wireless'' in the second sentence 
of subparagraph (a). The Exchange also proposes non-substantive changes 
at the end of the second sentence to replace a capital ``S'' with a 
lower case ``s'' in the word ``See'' and to delete the word ``for'' 
following the word ``See'' before ``e.g.''
     Finally, in the last sentence of subparagraph (a), the 
Exchange would replace the word ``portable'' with ``cellular or 
wireless.'' The Exchange would also replace the phrase ``authorized and 
issued by'' with ``registered with'' before ``the Exchange'' and add 
the clause ``as provided in .21 of this Rule'' after ``the Exchange'' 
and before ``is prohibited.''
    To continue to enable the Exchange to regulate and control 
equipment and communications on the Floor, the Exchange proposes the 
following amendments to Rules 36.21 and 36.23, which are modeled on the 
options rules of the Exchange and its affiliate, which set forth the 
conditions under which Floor brokers would be permitted to use their 
own cellular or wireless telephones on the Floor.
     First, the Exchange proposes to replace ``an Exchange 
authorized and provided portable'' in the heading to Rule 36.21 with 
``a cellular or wireless'' before ``phone.''
     Second, the Exchange proposes a new subparagraph (a) to 
Rule 36.21 requiring Floor brokers to register, prior to use, any 
cellular or wireless telephone proposed to be used on the Floor by 
submitting a request in writing to the Exchange.\14\ Proposed Rule 
36.21(a) would further require that Floor brokers attest at the time of 
registration that they are aware of and understand the rules governing 
the use of telephones on the Floor.\15\ Finally, separate from the 
registration and use of telephones, under the proposed Rule no Floor 
broker may employ any alternative communication device on the Floor 
(other than telephones as described in the proposed rule) without prior 
Exchange approval. The Exchange would thus retain the authority to 
review and approve any alternative communication device prior to use. 
The requirements in proposed Rule 36.21(a) are based on the 
requirements specified in NYSE MKT Rule 902NY(i)(1) and NYSE Arca Rule 
6.2(h)(1), described above. The language of proposed Rule 36.21(a) is 
different than the other Exchange and NYSE Arca rules on which it is 
based because of the inclusion of conforming references to ``Floor 
brokers,'' ``cellular or wireless telephone,'' one reference to 
``devices'' rather than ``telephones,'' and the use of ``Floor'' rather 
than ``Trading Floor.'' The proposed Rule also requires Floor brokers 
and not Floor broker ``representatives'' to attest.\16\
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    \14\ The Exchange does not propose to specify in the Rule that 
an email or other writing be sent to a specific Exchange department. 
Rather, the Exchange will specify where the email should be sent in 
regulatory guidance that the Exchange would issue following approval 
of this rule filing. The guidance would also specify that the 
registration email identify the telephone number of the phone being 
registered.
    \15\ A proposed attestation is attached as Exhibit 5A. The 
Exchange would also issue appropriate regulatory guidance regarding 
the use of portable phones on the Floor prior to the effective date 
of this rule filing.
    \16\ See Rule 902NY(i)(1) and NYSE Arca Rule 6.2(h)(1) (imposing 
the attestation requirement on ``ATP Holder representatives'' and 
``OTP Holder and OTP Firm representatives'').
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     Third, current subparagraph (a) of Rule 36.21 would become 
new subparagraph (b) and the Exchange would delete ``an Exchange 
authorized and provided portable'' before ``phone,'' replace it with 
``a cellular or wireless,'' and add the phrase ``on the Floor'' after 
``phone.'' The Exchange would also retain current subparts (i)-(iv) and 
delete current subpart (v), which prohibits the use of call-forwarding 
or conference calling. These requirements were added to the NYSE's 
version of Rule 36 in 2006 and copied by the Exchange in 2008.\17\ As 
noted above, the rules of the Exchange and NYSE Arca, both of which 
permit non-exchange issued telephones to be used on the options trading 
floors, do not contain similar prohibitions on call-forwarding or 
conference calling.
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    \17\ See Securities Exchange Act Release No. 53213 (Feb. 2, 
2006), 71 FR 7103 (Feb. 10, 2006) (SR-NYSE-2005-80) & note 5, supra. 
The Exchange also proposes a non-substantive change in proposed Rule 
36.21(b)(ii) to correct punctuation by replacing the single quotes 
around ``market look'' with double quotes.
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    The Exchange believes that the current prohibitions on use of call-
forwarding or conference calling are no longer necessary and that it 
would be consistent with the Act to eliminate these prohibitions. 
First, the prohibition on forwarding calls prevented Floor brokers from 
forwarding calls placed to an Exchange-issued device to a non-Exchange 
issued device. Once Floor brokers are able to use non-Exchange issued 
telephones, the rationale for the prohibition would no longer apply. 
Moreover, the Exchange believes that, if this feature were used to 
forward calls from one registered cell phone to another registered cell 
phone on the Floor, both phones would independently be subject to the 
obligations of proposed Rule 36 and therefore subject to Exchange 
jurisdiction. To the extent such calls are forwarded to a telephone 
that is not located on the Floor, Rule 36 would not apply to a 
telephone that was not physically present on the Floor. With respect to 
the call conferencing feature, current Rule 36.21 does not restrict 
with whom a Floor broker may communicate when using a portable phone at 
the point of sale. Moreover, if this feature were used, any records of 
such calls would be captured pursuant to paragraph (d) of Rule 36.21 
below and would be available to the Exchange upon request.
     Fourth, current subparagraph (b) would become proposed 
subparagraph (c).\18\ The Exchange would also replace

[[Page 17305]]

the word ``portable'' in proposed subparagraph (c) with ``cellular or 
wireless.''
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    \18\ Rule 36.21(b) provides that Floor brokers and their member 
organizations must implement procedures designed to deter anyone 
calling their portable phone from using caller ID block or other 
means to conceal the phone number from which a call is being made. 
Members and member organizations are required to make and retain 
records demonstrating compliance with such procedures.
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     Fifth, the Exchange proposes a new subparagraph (d) of 
Rule 36.21 providing that Floor brokers must maintain records of the 
use of telephones and all other approved communication devices, 
including logs of calls placed, for a period of not less than three 
years, the first two years in an accessible place, and that the 
Exchange reserves the right to periodically inspect such records. 
Proposed new subparagraph (d) is based on NYSE MKT Rule 902NY(i)(5) and 
NYSE Arca Rule 6.2(h)(5). Proposed Rule 36.21(d) is different than the 
NYSE MKT and NYSE Arca rules on which it is based because of the 
inclusion of conforming references to ``Floor brokers.'' The last 
sentence of the proposed Rule also provides that the Exchange reserves 
the right to periodically inspect records pursuant to Rule 8210, which 
governs provision of information and testimony and inspection and 
copying of books, and is analogous to Rule 31 and NYSE Arca Rule 10.2.
     Sixth, current subparagraph (c) would become proposed 
subparagraph (e). The Exchange would also replace the phrase ``an 
Exchange authorized and provided portable'' in proposed subparagraph 
(e) with ``a cellular or wireless.'' The Exchange would also add the 
phrase ``registered with the Exchange and'' before ``used to trade 
equities while on the NYSE Amex Options Trading Floor.''
     Seventh, the Exchange proposes a new subparagraph (f) that 
provides the Exchange with the ability to deny, limit or revoke 
registration of any device used on the Floor whenever it determines, in 
accordance with the procedures set forth in Rule 9558,\19\ that use of 
such a device is inconsistent with the public interest, the protection 
of investors, or just and equitable principles of trade, or such device 
has been or is being used to facilitate any violation of the Act, as 
amended, the rules thereunder, or the Exchange's rules. Proposed Rule 
36.21(f) is based on Rule 902NY(i)(6). Proposed Rule 36.21(f) is 
different than the NYSE MKT and NYSE Arca rules on which it is based 
because of the inclusion of conforming references to ``device'' rather 
than ``telephone'' and ``Floor'' rather than ``Trading Floor.'' The 
proposed Rule also omits the reference to Rule 475 in Rule 902NY(i)(6) 
and the reference to NYSE Arca Rule 10.14 in NYSE Arca Rule 6.2(h)(6). 
Rule 475 only applies to proceedings for which a written notice has 
been issued by the Exchange under the Rule prior to April 15, 2016; 
otherwise, Rule 9558, which is referenced in the proposed Rule, 
applies. Rule 9558 is also the closest Exchange analogue to NYSE Arca 
Rule 10.14.
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    \19\ Rule 9558 relates to summary proceedings for actions 
authorized by Section 6(d)(3) of the Act.
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     Eighth, the Exchange would adopt a new subparagraph (g) 
providing that the Exchange assumes no liability due to conflicts 
between phones in use on the Floor or due to electronic interference 
problems resulting from the use of telephones on the Floor. Proposed 
Rule 36.21(g) is based on Rule 902NY(i)(7) and NYSE Arca Rule 6.2(h)(7) 
and, except for conforming references to ``Floor brokers'' and 
``Floor'' rather than ``Trading Floor,'' is identical to the NYSE MKT 
and NYSE Arca Rules.\20\
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    \20\ The Exchange notes that proposed Rule 36.21(f) is similar 
to the rules of other exchanges that seek to limit or cap liability 
for losses arising from the use of an exchange's facilities, 
systems, or equipment. See, e.g., Nasdaq Rule 4626 (Limitation of 
Liability); NYSE Arca Rules 2.8 (No Liability for Using Exchange 
Facilities) and 14.2 (Liability of Exchange); NYSE Arca Equities 
Rule 2.7 (No Liability for Using Trading Facilities) and 13.2 
(Liability of Corporation). See generally NYSE MKT Rule 17--Equities 
(Use of Exchange Facilities and Vendor Services) and 18--Equities 
(Compensation in Relation to Exchange Failure).
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     Finally, the Exchange would replace three references to 
``personal portable'' with ``cellular'' in current Rule 36.23. The 
Exchange would also add the clause ``subject to .21(e) of this Rule'' 
at the end of the last sentence in Rule 36.23.
    The proposed changes to Rule 36, with the exception of current Rule 
36.23, would not apply to Designated Market Makers, who would continue 
to be subject to Rules 36.30 and 36.31.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\21\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\22\ 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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    \21\ 15 U.S.C. 78f(b).
    \22\ 15 U.S.C. 78f(b)(5).
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    In particular, the Exchange believes that permitting Floor brokers 
to use any cellular or wireless telephone properly registered with the 
Exchange on the Floor and eliminating the requirement that Floor 
brokers only use Exchange-approved and provided portable phones are 
designed to prevent fraudulent and manipulative acts and practices and 
would be consistent with the public interest and the protection of 
investors because of the numerous safeguards surrounding the use of 
non-Exchange issued devices also proposed for inclusion in Rule 36. The 
proposed safeguards would include:
     Requiring Floor brokers to register personal communication 
devices prior to use;
     attesting at the time of registration that they are aware 
of and understand the rules governing the use of telephones on the 
Floor;
     prohibiting employment of alternative communication 
devices on the Floor without prior Exchange approval;
     requiring Floor brokers to maintain records of the use of 
telephones and all other approved alternative communication devices, 
including logs of calls placed, for a period of not less than three 
years, the first two years in an accessible place, for inspection by 
the Exchange at any time; and
     empowering the Exchange to deny, limit or revoke 
registration of any device used on the Floor whenever it determines 
that use of such a device is inconsistent with the public interest, the 
protection of investors, or just and equitable principles of trade, or 
such device.
    The Exchange believes that these proposed safeguards, modeled on 
the rules of the Exchange and its affiliate, establish an appropriate 
regulatory framework for supervising and monitoring use of 
communication devices on the Exchange's trading Floor consistent with 
the objectives of Section 6(b)(5) of the Act.
    The Exchange further believes that deleting the current requirement 
in Rule 36 prohibiting the use of call-forwarding or conference calling 
would be consistent with the public interest and the protection of 
investors because, as noted above, such requirements are not currently 
in place on the NYSE MKT and NYSE Arca options trading floors. As noted 
above, the rationale for the prohibition was aimed at preventing Floor 
brokers from forwarding calls to non-Exchange issued phones and would 
be moot if Floor brokers are only using non-Exchange issued devices. If 
a call is forwarded from a registered cellular or wireless phone to 
another registered telephone (wired or not) on the Floor, the phone 
that received the calls would separately be subject to the obligations

[[Page 17306]]

of proposed Rule 36 and therefore subject to Exchange jurisdiction. If 
a call is forwarded to a telephone located off of the Floor, Rule 36 
would not be implicated because the person on the phone would not be 
physically located on the Floor. In addition, the Exchange believes 
that if Floor brokers use cellular or wireless telephones that include 
call conferencing features, any such use would be captured on the 
records of use of such telephones that Floor brokers would be required 
to maintain pursuant to proposed paragraph (d) of Rule 36.21.
    The Exchange believes that including a provision in proposed Rule 
36.21 providing that the Exchange assumes no liability to Floor brokers 
due to conflicts between phones in use on the Floor or due to 
electronic interference problems resulting from the use of telephones 
on the Floor removes impediments to and perfects the mechanism of a 
free and open market by adding transparency to the Exchange's rules 
regarding use of personal telephone equipment on Exchange premises.
    The Exchange also believes that the proposed amendments to Rule 36 
support the mechanism of free and open markets by continuing to provide 
a means for increased communication by Floor brokers to and from the 
Floor.
    Finally, the Exchange believes that replacing the outdated word 
``portable'' with ``cellular or wireless'' in Rule 36.20 and .21 and 
replacing ``personal portable'' with ``cellular'' in Rule 36.23 removes 
impediments to and perfects the mechanism of a free and open market by 
removing confusion that may result from having obsolete and outdated 
references in the Exchange's rulebook. Similarly, the Exchange further 
believes that the proposal removes impediments to and perfects the 
mechanism of a free and open 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 and outdated references 
would be consistent 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 and outdated 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 Act. The Exchange does not 
believe that the proposed rule change will impose any burden on 
competition because the proposed change relates to how Floor brokers 
are permitted to communicate on the Floor and proposes no change for 
other market participants. In addition, the Exchange does not believe 
that the proposed changes will impose any competitive burden because 
Floor brokers will operate in the same manner but with telephone 
equipment that is not Exchange-issued.

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-2017-16 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-2017-16. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549 on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-NYSEMKT-2017-16, and should 
be submitted on or before May 1, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\23\
Eduardo A. Aleman,
Assistant Secretary.
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    \23\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2017-07049 Filed 4-7-17; 8:45 am]
 BILLING CODE 8011-01-P