Document ID: SEC-2018-1450-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2018-09-18T04:00Z

[Federal Register Volume 83, Number 181 (Tuesday, September 18, 2018)]
[Notices]
[Pages 47221-47229]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-20193]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-84098; File No. SR-NYSEARCA-2018-65]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend Its 
Options Rules To Make Certain Non-Substantive Changes and To Harmonize 
Certain Rules With Those of Its Affiliate, NYSE American LLC

September 12, 2018.
    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 August 31, 2018, 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 and II 
below, which Items have been prepared by the self-regulatory

[[Page 47222]]

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 its options rules to make certain 
non-substantive changes and to harmonize certain rules with those of 
its affiliate, NYSE American LLC (``NYSE American''), to reduce 
unnecessary complexity and promote standardization. The proposed rule 
change is available on the Exchange's website 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 its options rules to make certain 
non-substantive changes and to harmonize certain rules with those of 
its affiliate, NYSE American. The proposed amendments are designed to 
reduce unnecessary complexity within the Exchange's rules and to 
promote standardization and clarity amongst similar rules of the 
Exchange and its affiliate, NYSE American. Specifically, the Exchange 
proposes to:
     Make a ministerial, non-substantive change to Exchange 
Rule 6.17-O, Commentary .01.
     harmonize Exchange Rule 6.37-O, Obligations of Market 
Makers, with NYSE American Rule 925NY, Obligations of Market Makers, 
and make related changes to Exchange Rules 6.37A-O, 6.37B-O, and 6.37B-
O; \4\
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    \4\ The Exchange also proposes to update various cross-
references to these rules throughout the rulebook to reflect the 
updated rule numbers.
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     delete the text of Exchange Rule 6.41-O, Market Maker 
Marketing Reports;
     harmonize Exchange Rule 6.43-O, Options Floor Broker 
Defined, with NYSE American Rule 930NY by replacing the term 
``Professional Customer'' with ``Qualified Customer''; \5\
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    \5\ See Securities Exchange Act Release No. 81670 (September 21, 
2017), 82 FR 45095 (September 27, 2017) (SR-NYSEAMER-2017-18) 
(Notice of Filing and Immediate Effectiveness of Proposed Rule 
Change To Update and Amend its Options Rules, as Described Herein, 
To Reduce Unnecessary Complexity and To Promote Standardization and 
Clarity).
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     amend Exchange Rule 6.47-O, Crossing Orders, to update the 
references to the current Order Protection Rule and harmonize it with 
NYSE American Rule 934NY; \6\
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    \6\ Id.
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     harmonize Exchange Rule 6.67-O(d)(2)(A) with NYSE American 
Rule 955NY(d)(2)(A) by replacing an outdated reference to a required 
timestamp synchronized to the ``NIST Clock'' with a reference to the 
current operative Consolidated Audit Trail (``CAT'') clock 
synchronization rule; \7\
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    \7\ Id.
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     harmonize Exchange Rule 6.69-O(b)(iii) with NYSE American 
Rule 957NY(b)(iii) by conforming the Exchange's rule governing the 
priority of complex orders in open outcry to its rule governing 
electronic complex orders; \8\ and
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    \8\ Id.
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     harmonize Exchange Rule 6.75-O, Priority and Order 
Allocation Procedures--Open Outcry, with NYSE American Rules 
963NY(d).\9\
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    \9\ Id.
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    Each of these proposed changes are explained in detail below.
Exchange Rule 6.17-O. Verification of Compared Trades and 
Reconciliation of Uncompared Trades
    The Exchange proposes to make ministerial, non-substantive changes 
to Exchange Rule 6.17-O, Commentary .01 to remove superfluous language. 
In particular, the Exchange proposes to amend the third paragraph of 
Commentary .01 of Exchange Rule 6.17-O to remove the duplicative phrase 
``or accessible via telephone or email''. The proposed deletion of this 
phrase does not alter the meaning or application of Rule 6.17-O.
Exchange Rule 6.37-O, Obligations of Market Makers, and Exchange Rules 
6.37A-O, 6.37B-O, and 6.37C-O
    The Exchange proposes to harmonize the Market Maker quoting 
obligations set forth under Exchange Rule 6.37-O, Obligations of Market 
Makers, with NYSE American Rule 925NY, Obligations of Market Makers, 
and make related changes to Exchange Rules 6.37A-O, 6.37B-O, and 6.37C-
O. Exchange Rule 6.37-O sets forth the continuous quoting obligations 
of Market Makers for options contracts to which they are appointed 
pursuant to Exchange Rule 6.35-O. The Exchange proposes to delete the 
text of Rule 6.37-O, except for paragraph (a), and replace it with the 
relevant text from NYSE American Rule 925NY.\10\ The proposed rule 
change would not result in an easing of the quoting obligations in 
place on the Exchange. Instead, the proposed rule change would 
harmonize the Market Maker obligations across the Exchange and its 
affiliate, NYSE American, while requiring the same level of 
obligations. Harmonized rules would provide investors, as well as those 
that engage in market making activities on both the Exchange and NYSE 
American, with standardized obligations and consistent rules across 
both markets. A description of the proposed amendments are described 
below.
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    \10\ The Exchange notes that paragraph (a) of Exchange Rule 
6.37-O is identical to paragraph (a) of NYSE American Rule 925NY.
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    The Exchange notes that current Exchange Rule 6.37-O sets forth 
Market Maker obligations when quoting on the Trading Floor and Exchange 
Rule 6.37A-O sets forth Market Maker obligations when quoting on the 
NYSE Arca OX electronic trading system. Like NYSE American 925NY, the 
obligations under amended Exchange Rule 6.37-O would apply equally to 
Maker Makers on the Trading Floor and those quoting on the Exchange's 
electronic trading system. The Exchange also notes that the current 
text of Exchange Rule 6.37A-O is substantially similar to the text of 
NYSE American Rule 925NY, which the Exchange propose to adopt herein. 
Nonetheless, the proposed text would be more detailed than current Rule 
6.37A-O by including detailed bid-ask differentials under paragraph 
(b)(4) as well as provisions governing leaves of absence under proposed 
Commentary .01. Therefore, the Exchange proposes to delete the text of 
Exchange Rule 6.37A-O and renumber Exchange Rules 6.37B-O as 6.37A-O 
and 6.37C-O as 6.37B-O. The Exchange also proposes to update various 
cross-references to these rules in Exchange Rules 6.33-O(a), 6.64-
O(b)(D) and (E), 6.82-O(c)(4), 10.12(h) and (k), and 10.16(e)(2) to 
reflect the updated rule numbers.
    Proposed Paragraph (b), Obligations in Appointed Classes. Paragraph 
(b) of Exchange Rule 6.37-O would continue

[[Page 47223]]

to impose the continuous quoting obligations that a Market Maker is 
expected to engage, to a reasonable degree under the existing 
circumstances, in dealings for his own account when there exists, or it 
is reasonably anticipated that there will exist, a lack of price 
continuity, a temporary disparity between the supply of and demand for 
a particular option contract, or a temporary distortion of the price 
relationships between option contracts of the same class. Market Makers 
would continue to be expected to perform the following activities in 
the course of maintaining a fair and orderly market.
    Proposed paragraphs (1) through (3) of Exchange Rule 6.37-O(b) 
would require Market Makers to: (1) Compete with other Market Makers to 
improve the market in all series of options classes to which the Market 
Maker is appointed; (2) make markets that will be honored for the 
number of contracts entered into the System in all series of options 
classes within the Market Maker's appointment; and (3) update market 
quotations in response to changed market conditions in all series of 
options classes within the Market Maker's appointment. Each of these 
provisions mirror NYSE American Rule 925NY(b)(1) through (3).
    Current paragraphs (b)(1)(A) through (E) of Rule 6.37-O require 
that Market Maker bids and/or offers create differences of no more 
than: (A) .25 between the bid and the offer for each option contract 
for which the bid is less than $2, (B) .40 where the bid is $2 or more 
but does not exceed $5, (C) .50 where the bid is more than $5 but does 
not exceed $10, (D) .80 where the bid is more than $10 but does not 
exceed $20, and (E) $1 when the last bid is $20.01 or more, provided 
that two Trading Officials may establish differences other than the 
above for one or more series or classes of options. These provisions 
would be set forth under new paragraph (b)(4)(A) through (E) of 
Exchange Rule 6.37-O with one proposed change from the current Exchange 
rule. Current paragraph (b)(1)(E) of Rule 6.37-O requires that Market 
Maker bids and/or offers create differences of no more than $1 when the 
last bid is $20.01 or more, provided that two Trading Officials may 
establish differences other than the above for one or more series or 
classes of options. Proposed paragraph (b)(4)(E) of Exchange Rule 6.37-
O would allow for one Trading Official, rather than two, to establish 
differences for one or more series or classes of options. The Exchange 
believes that requiring two Trading Officials to act in this scenario 
is unnecessary and allowing a single Trading Official to act would 
allow for a more efficient process, especially in cases where a 
decision must be made quickly in light of fast moving market events. 
The Exchange also notes that NYSE American Rule 925NY(b)(1)(E), the 
rule it seeks to harmonize Exchange Rule 6.37-O, allows for a single 
Trading Official to establish differences for one or more series or 
classes of options. Each of these provisions would mirror NYSE American 
Rule 925NY(b)(1)(A) through (E).
    Current paragraph (b)(1)(F) of Rule 6.37-O states that a Trading 
Official may, with respect to options trading with a bid price less 
than $2, establish bid-ask differentials that are no more than $0.50 
wide (``double-width'') when the primary market for the underlying 
security: (a) Reports a trade outside of its disseminated quote 
(including any Liquidity Quote); or (b) disseminates an inverted quote. 
The imposition of double-width relief must automatically terminate when 
the condition that necessitated the double-width relief (i.e., 
condition (a) or (b)) is no longer present. Market Makers that have not 
automated this process may not avail themselves of the relief provided 
herein (i.e. they may not manually adjust prices). The Exchange notes 
that NYSE American Rule 925NY does not contain a similar provision and, 
therefore, the Exchange does not propose to carry over current 
paragraph (b)(1)(F) of Rule 6.37-O to the harmonized rule. Furthermore, 
the Exchange notes that this provision is not necessary because a 
Trading Official would have the ability to widen differences for one or 
more series or classes of options in such scenario pursuant to 
paragraph (b)(4)(E) of Exchange Rule 6.37-O discussed above.
    Current paragraph (b)(1)(G) of Rule 6.37-O states that quotes given 
in open outcry may not be quoted with $5 widths and instead must comply 
with the legal width requirements specified in paragraph (b)(1)(A)-(F) 
of Rule 6.37-O. This requirement would be moved to paragraph (b)(5) of 
Rule 6.37-O and be rephrased to be harmonized with NYSE American Rule 
925NY(b)(5) and would require that electronically submitted quotes to 
the System during Core Trading Hours may not have a difference 
exceeding $5 between the bid and offer regardless of the price of the 
bid. Paragraph (b)(5) of Rule 6.37-O would also provide that two 
Trading Officials may establish quote width differences other than as 
provided in paragraph (b)(5) of Rule 6.37-O for one or more option 
series. This is consistent with NYSE American Rule 925NY(b)(5).
    The Exchange proposes to adopt the text of NYSE American Rule 
925NY(b)(6) under proposed paragraph (b)(6) of Exchange Rule 6.37-O and 
require that, in response to a call for a market from a Floor Broker, a 
Market Maker may bid no more than $1 lower and/or offer no more than $1 
higher than the last preceding transaction price for the particular 
option contract. However, this standard would not ordinarily apply if 
the price per share (or other unit of trading) of the underlying 
security or Exchange-Traded Fund Share has changed since the last 
preceding transaction for the particular option contract, in which 
event a Market Maker may then bid no lower than or offer no more than 
$1 plus the aggregate change in the price per share (or other unit of 
trading) of the underlying security or Exchange-Traded Fund Share since 
the time of the last preceding transaction for the particular option 
contract. This provision would apply from one day's close to the next 
day's opening and from one transaction to the next in intra-day 
transactions. With respect to inter-day transactions, this provision 
applies if the closing transaction occurred within one hour of the 
close and the opening transaction occurred within one hour after the 
opening. With respect to intra-day transactions, this provision applies 
to transactions occurring within one hour of one another. A Trading 
Official may waive the provisions of this paragraph in an index option 
when the primary underlying securities market for that index is not 
trading. Nothing in paragraph (b)(6) of Exchange Rule 6.37-O would 
alter the maximum bid/ask differentials established by paragraph 
(b)(4)-(5) of Rule 6.37-O discussed above.
    Proposed Paragraph (c), Unusual Conditions--Opening Auction. The 
Exchange proposes to adopt the text of NYSE American Rule 925NY(c) 
under proposed paragraph (c) of Exchange Rule 6.37-O which would govern 
quote width differentials where a Trading Official declares an Unusual 
Market Condition during the opening auction. Current paragraph (b)(4) 
of Exchange Rule 6.37-O discusses where a Trading Official may declare 
a fast market and declare wider quote width differentials and these 
provisions would be substantially similar to proposed paragraph (c) of 
Exchange Rule 6.37-O. As proposed, if the Trading Official finds that 
it in the interest of maintaining a fair and orderly market so 
requires, he or she may declare that unusual market conditions exist in 
a particular issue and allow Market Makers in that issue to make 
auction bids and offers with spread differentials

[[Page 47224]]

of up to two times, or in exceptional circumstances, up to three times, 
the legal limits permitted under proposed Exchange Rule 6.37-O. In 
making such determinations to allow wider markets, the Trading Official 
should consider the following factors: (A) whether there is pending 
news, a news announcement or other special events; (B) whether the 
underlying security or Exchange-Traded Fund Share is trading outside of 
the bid or offer in such security then being disseminated; (C) whether 
OTP Holders and OTP Firms receive no response to orders placed to buy 
or sell the underlying security; and (D) whether a vendor quote feed is 
clearly stale or unreliable.
    Paragraph (c)(1) of Exchange Rule 6.37-O would further require that 
a Trading Official who declared the unusual market conditions to file a 
report with Exchange Operations setting forth the relief granted, the 
time and duration of such relief and the reasons behind declaring an 
unusual market condition. This provision would mirror NYSE American 
Rule 925NY(c)(1).
    Proposed Paragraph (d), In Classes of Option Contracts Other Than 
Those to Which Appointed. Current Exchange Rule 6.37-O(c) governs a 
Market Maker's activities in options classes in which it has not been 
assigned pursuant to Exchange Rule 6.35-O. The Exchange proposes to 
renumber paragraph (c) of Exchange Rule 6.37-O as paragraph (d) and 
replace its text with that of NYSE American Rule 925NY(d). Proposed 
paragraph (d) of Exchange Rule 6.37-O would be substantially similar to 
current paragraph (c). As proposed, Market Makers would continue to be 
prohibited from engaging in transactions for an account in which they 
have an interest that are disproportionate in relation to, or in 
derogation of, the performance of their obligations as specified in 
Rule 6.37-O with respect to the classes in their appointment. Whenever 
Market Makers enter the trading crowd for a class of options in which 
they do not hold an appointment, they must fulfill the obligations 
established by Exchange Rule 6.37-O. In addition, when present anywhere 
on the Trading Floor, with regard to all securities traded on the 
Trading Floor, Market Makers are expected to undertake the obligations 
specified in paragraph (b) of Exchange Rule 6.37-O discussed above in 
response to a demand therefore from the Trading Official that the 
performance of such obligations by other Market Makers requires 
supplementation.
    Current paragraphs (c)(2) and (3) also prohibit Market Makers from 
individually or as a group, intentionally or unintentionally, 
dominating the market in option contracts of a particular class and 
effecting purchases or sales on the floor of the Exchange except in a 
reasonable and orderly manner. These provisions would be renumbered as 
paragraphs (d)(1) and (2) under Exchange Rule 6.37-O and would mirror 
NYSE American Rule 925NY(d). The only difference from the current text 
is that paragraph (d)(2) of Exchange Rule 6.37-O would not specifically 
reference the floor of the Exchange as the rule would apply equally to 
all Market Makers, regardless of whether they are located on the floor 
of the Exchange or engage in market making electronically from a 
location off the Exchange floor.
    Current paragraphs (c)(1) and (c)(4) of Exchange Rule 6.37-O would 
not be carried over as part of the new rule. The Exchange notes that 
these provision are outdated and are not included in the current NYSE 
American Rule 925NY to which the Exchange seeks to harmonize its Market 
Maker obligations. Paragraph (c)(1) of Exchange Rule 6.37-O currently 
prohibits Market Makers from congregating in a particular class of 
option contract. The purpose of this rule was to prevent Market Makers 
from dominating the market for an option when options were listed and 
traded verbally on a single exchange. Today, options are traded on 
numerous exchanges electronically significantly reducing the ability of 
a group of Market Makers on a single exchange from engaging in 
manipulative activity. Further, other Exchange rules address the 
manipulation concern that current paragraph (c)(1) of Rule 6.37-O was 
intended to address. For example, Exchange Rule 11.5 prohibits market 
manipulation on the Exchange generally. Exchange Rule 11.20(a)(1) also 
prohibits members, including Market Makers, from knowingly managing or 
financing a manipulative operation, which would include congregating in 
a particular class of securities to manipulate or dominate the market.
    Paragraph (c)(4) of Exchange Rule 6.37-O states that whenever a 
Floor Broker enters a trading crowd and calls for a market in a 
particular option series, each Market Maker present at the trading post 
will be obligated to vocalize a two-sided, legal-width market (pursuant 
to former Exchange Rule 6.37-O(b)(1)) for a minimum of 10 contracts. 
Market Makers would continue to be required to make legal-wide markets 
in compliance with proposed Exchange Rule 6.37-O(b). However, Market 
Makers would no longer be required to quote for a least 10 contracts. 
The 10 contract requirement is antiquated and not necessary in a market 
environment where options are traded electronically on multiple 
exchanges. Furthermore, the 10 contract requirement is not included in 
the rules of NYSE American Rule 925NY or other options exchanges.\11\ 
Current Exchange Rule 6.37B-O(b) and (c) (proposed to be renumbered as 
Exchange Rule 6.37A-O) would require that Market Maker quotations meet 
the legal quote width requirements of proposed Exchange Rule 6.37-O.
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    \11\ See e.g., Cboe Exchange, Inc. Rule 8.7 and Nasdaq Options 
Rules, Chapter VII, Sections 5 and 6 (no including a requirement 
that a market maker's quotation be for at least 10 contracts).
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    Paragraph (c)(4) of Exchange Rule 6.37-O states that its obligation 
to provide a legal-width market only applies to: (A) Market Makers who 
have executed a transaction in the issue, but not those who have been 
assigned contracts by the Trading Official pursuant to Commentary .05, 
on the day of the Floor Broker's call for a market or on the previous 
business day; (B) option issues that are ranked in the 120 most 
actively traded equity options based on the total number of contracts 
traded nationally as reported by the Options Clearing Corporation (for 
each current month, the Exchange's determination of whether an equity 
option ranks in the top 120 most active issues is based on volume 
statistics for the one month of trading activity that occurred two 
months prior to the current month); (C) non-broker-dealer orders; and 
(D) series not designated as LEAPS (pursuant to Exchange Rule 6.4). 
With respect to (A) and (B) above, the provision to provide a legal-
width market under proposed Exchange Rule 6.37-O(b) would apply to all 
options to which a Market Maker is appointed and would not be limited. 
With respect to (C) above regarding providing a quote to non-broker-
dealer orders, paragraph (e) of Exchange Rule 6.37B-O (proposed to be 
renumbered as Exchange Rule 6.37A-O) would continue to state that ``[a] 
Market Maker shall be compelled to buy/sell a specified quantity of 
option contracts at the disseminated bid/offer pursuant to his 
obligations under Rule 6.86-O.'' This rule would preclude a Market 
Maker from not honoring its quotation against non-broker-dealer orders. 
Therefore, current paragraph (c)(4)(C) is not necessary to be included 
in proposed Rule 6.37-O(c). Lastly, current paragraph (D) states that 
the paragraph (c)(4) would not apply to series designated as LEAPS. The 
Exchange notes that current paragraph (b) and (c) of Exchange Rule 
6.37B-O (proposed to

[[Page 47225]]

be renumbered as Exchange Rule 6.37A-O) set forth Market Maker quoting 
obligation and Commentary .01 of that rule states that those quoting 
obligation ``shall not apply to Market Makers with respect to adjusted 
option series, and series with a time to expiration of nine months or 
greater'', i.e., LEAPS. Therefore, as amended, the quoting obligations 
set forth in proposed Rule 6.37-O would continue to not apply to LEAPS.
    Deletion of Current Paragraph (d), In Person Requirements for 
Market Makers. The Exchange proposes to remove the text of current 
paragraph (d) of Exchange Rule 6.37-O because no similar provision is 
included in NYSE American Rule 925NY to which the Exchange seeks to 
harmonize its Market Maker obligations. Furthermore, this provision is 
unnecessary as it conflicts with more stringent requirements set forth 
in current Exchange Rule 6.35-O described below. Current Exchange Rule 
6.37-O(d) sets forth in-person requirements for Market Makers and 
requires that an adequate number of Market Makers be available 
throughout each trading session. Exchange Rule 6.37-O(d) requires the 
following minimum in-person trading requirements: At least 60% of a 
Market Maker's transactions must be executed by the Market Maker in-
person or through an approved facility of the Exchange. Orders executed 
for a Market Maker through a Floor Broker will not be credited toward 
the 60% requirement. A failure to comply with this 60% in-person 
trading requirement may result in a fine pursuant to Rule 10.12; 
however, if aggravating circumstances are present, formal disciplinary 
action may be taken pursuant to Rule 10.4. Exchange Rule 6.37-O(d) 
further states that in order to assure compliance with the spirit and 
intent of the 60% requirement, the Exchange may review each of the 
Market Maker's transactions used to meet the 60% requirement.
    The Exchange does not proposes to include the text of current 
paragraph (d) to Exchange Rule 6.37-O as this requirement conflicts 
with Exchange Rule 6.35-O(i), which sets forth a higher standard and 
applies to Market Maker activity both on the floor and conducted 
electronically. Specifically, paragraph (i) of Exchange Rule 6.35-O 
requires that at 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. Paragraph (j) of Exchange Rule 
6.35-O set forth how the Exchange would calculate whether the Market 
Maker satisfied the requirements of paragraph (i) and sets forth the 
penalties for non-compliance.
    Proposed (e), Prohibited Practices and Procedures. The Exchange 
proposes to retain the text of current paragraph (e) of Exchange Rule 
6.37-O. The Exchange notes that the text of current Exchange Rule 
6.37(e) is identical to NYSE American Rule 925NY(e). Any practice or 
procedure whereby Market Makers trading any particular option issue 
determine by agreement the spreads or option prices at which they will 
trade that issue would continue to be prohibited. In addition, any 
practice or procedure whereby Market Makers trading any particular 
option issue determine by agreement the allocation of orders that may 
be executed in that issue would also continue to be prohibited.
    Proposed Paragraph (f). Exchange Rule 6.37-O(f) discusses when 
members of a trading crowd may act collectively in response to a 
request for a market. The Exchange proposes to replace the current text 
of paragraph (f) to Exchange Rule 6.37-O with the text of NYSE American 
Rule 925NY(f). But for minor differences explained below, the revised 
text is substantially similar to the existing text of Exchange Rule 
6.37-O(f). The proposed amendment would harmonize the rule with that of 
NYSE American Rule 925NY(f). Current paragraph (f) of Rule 6.37-O 
states that notwithstanding the prohibitions set forth in Subsection 
(e), the LMM and members of the trading crowd are permitted to act 
collectively as set forth below: (1) The obligation of Market Makers to 
make competitive markets does not preclude the LMM and members of the 
trading crowd from making a collective response to a request for a 
market, provided the OTP Holder or OTP Firm representing the order 
requests such a response in order to fill a large order (for purposes 
of this rule, a large order is an order for a number of contracts that 
is greater than the eligible order size for automatic execution 
pursuant to Rule 6.87) and; (2) in conjunction with their obligations 
as a responsible broker or dealer pursuant to Exchange Rule 6.86-O and 
Rule 602 of Regulation NMS, the Firm Quote Rule,\12\ the LMM and Market 
Makers in the trading crowd may collectively agree to the best bid, 
best offer and aggregate quotation size required to be communicated to 
the Exchange pursuant to Rule 6.86(c).
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    \12\ 17 CFR 242.602. The Exchange notes that Rule 11Ac1-1 under 
the Act has been renumbered as Rule 602 of Regulation NMS.
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    Although the language proposed in Exchange Rule 6.37-O would differ 
from that currently set forth in Rule 6.37-O(f), the application and 
meaning of the rule would be the same. Like as set forth under current 
paragraph (f)(1) of Rule 6.37-O, Market Makers in a trading crowd would 
continue to be able to discuss a request for a market that is greater 
than the disseminated size for that option class, for the purpose of 
making a single bid (offer) based upon the aggregate of individual bids 
(offers) by members in the trading crowd, but only when the member 
representing the order asks for a single bid (offer). Also, like as 
required in current paragraph (f)(1) of Rule 6.37-O, proposed paragraph 
(f) to Rule 6.37-O would continue to require that such bids or offers 
are firm quotes and each member of the trading crowd participating in 
the bid (offer) shall be obligated to fulfill his portion of the single 
bid (offer) at the single price. Such bids and offers would, therefore, 
continue to be required to comply with Exchange Rule 6.86-O, Firm 
Quotes, and Rule 602 of Regulation NMS, even though those rules are not 
specifically mentioned by number. Market Maker quotations must comply 
with their firm quote obligations set forth in Exchange Rule 6.86-O and 
Rule 602 of Regulations NMS regardless of whether those rules are 
specifically mentioned in proposed Exchange Rule 6.37-O(f). 
Furthermore, paragraph (e) of Exchange Rule 6.37B-O (proposed to be 
renumbered as Exchange Rule 6.37A-O) would continue to state that ``[a] 
Market Maker shall be compelled to buy/sell a specified quantity of 
option contracts at the disseminated bid/offer pursuant to his 
obligations under Rule 6.86-O.'' The text of proposed paragraph (f) of 
Rule 6.37-O would also mirror the text of NYSE American Rule 925NY(f).
    Proposed paragraph (f) of Rule 6.37-O would state that the 
obligation of Market Makers to make competitive markets does not 
preclude Market Makers in a trading crowd from discussing a request for 
a market that is greater than the disseminated size for that option 
class, for the purpose of making a single bid (offer) based upon the 
aggregate of individual bids (offers) by members in the trading crowd, 
but only when the member representing the order asks for a single bid 
(offer). Whenever a single bid (offer) pursuant to this paragraph is 
made, such bid (offer) shall be a firm quote and each member of the 
trading crowd participating in the bid (offer) shall be obligated to 
fulfill his portion of the single bid (offer) at the single price.
    Commentary. First, the Exchange proposes to harmonize the leave of 
absence requirements under current Commentary .07 to Exchange Rule 
6.37-

[[Page 47226]]

O with that of Commentary .01 to NYSE American Rule 925NY. 
Specifically, the Exchange proposes to adopt the text of Commentary .01 
to NYSE American Rule 925NY as Commentary .01 to Exchange Rule 6.37-O. 
As amended, like current Commentary .07(a), (b), and (c) to Exchange 
Rule 6.37-O, Commentary .01(a), (b), and (c) would allow Market Makers 
to request leaves of absence when they plan to be away from the floor 
or temporarily withdraw from submitting quotations into the System for 
periods in excess of two weeks during a calendar quarter. Requests for 
leaves of absence must continue to be submitted in writing to the 
Exchange prior to the commencement of the intended leave. Lastly, while 
on leave, Market Makers will continue to not be permitted to make 
opening transactions in Exchange listed options, in their Market Maker 
accounts, through the use of a Floor Brokers, except as provided in 
Exchange Rule 6.32-O, Commentary .01. The Exchange does not proposes to 
retain the paragraph (d) of Commentary .07 to Exchange Rule 6.37-O 
under new Commentary .01 as that provision is outdated and is not part 
of NYSE American Rule 925NY to which the Exchange seeks to harmonize.
    Furthermore, the Exchange does not propose to retain the remaining 
provisions, Commentary .01 through .06 and .08 through .09 of the 
Commentary to Exchange Rule 6.37-O. These provisions are outdated for 
the reasons discussed below, and not included in the current NYSE 
American Rule 925NY to which the Exchange seeks to harmonize its Market 
Maker obligations.
    Current Commentary .01 states that the limitations of Rule 6.37-
O(b)(2) should not be carried over from one day to the next, and 
therefore are not applicable to the Exchange's opening. The Exchange 
notes that current paragraph (b)(2) to Rule 6.37-O simply states 
``Reserved'' and, therefore, includes no limitations that the rule 
would need to specify would not be carried over to the next trading day 
or apply to the Exchange's opening process. Not retaining this 
provision in the amended rule would remove potentially confusing text 
referencing an outdated provision in the Exchange's rules, thereby 
ensuring the Exchange's rules are clear and easily understood. Further, 
this provisions is not included in the current NYSE American Rule 925NY 
to which the Exchange seeks to harmonize its Market Maker obligations.
    Current Commentary .02 states that the bid-ask differentials as 
stated in paragraph (b)(1) of Rule 6.37-O shall apply to all option 
series open for trading in each option class. This provision is not 
necessary as the rule, by its terms, applies to all Market Makers 
appointed in an options class on the Exchange.\13\ This provision is 
also not included in the current NYSE American Rule 925NY.
---------------------------------------------------------------------------

    \13\ See proposed Exchange Rule 6.37-O(b) and (b)(4).
---------------------------------------------------------------------------

    Current Commentary .03 states that when a Market Maker displays a 
market on the screen that is the best market in that crowd, the Market 
Maker is obligated to ensure that its market is removed from the screen 
when the Market Maker leaves the crowd. Current Commentary .03 is 
applicable only to Market Maker activity in a floor-based market. In 
addition, Market Makers who post a quotation, whether in the crowd or 
not, are required to comply with their firm quote obligations under 
Exchange Rule 6.86-O and Rule 602(b) of Regulation NMS. If the Market 
Maker leaves the crowd, it is up to them to remove their quote or to 
honor any executions that occur while their quote remains posted. 
Further, this provision is not included in the current NYSE American 
Rule 925NY.
    Current Commentary .04 states that the obligations of a Market 
Maker with respect to those classes of option contracts to which he 
holds an appointment, pursuant to Rule 6.35-O, shall take precedence 
over his other Market Maker obligations. This provision is not included 
in the current NYSE American Rule 925NY. This provision is also not 
necessary as proposed Rule 6.37-O(b) would include all of a Market 
Makers obligations for options classes for which they are appointed, 
and a Market Maker would be required to satisfy those obligations 
regardless of whether that Market Maker is engaged in other market 
making activities. Furthermore, proposed paragraph (d) to Exchange Rule 
6.37-O states that ``[w]ith respect to classes of option contracts 
outside of their appointment, Market Makers should not engage in 
transactions for an account in which they have an interest that are 
disproportionate in relation to, or in derogation of, the performance 
of their obligations as specified in this Rule with respect to the 
classes in their appointment.''
    Current Commentary .05 states that whenever a Floor Broker enters a 
trading crowd and calls for a market in any class and series at that 
post, each Market Maker present at the post where the option is traded 
is obligated, at a minimum, to make a market for one contract except as 
provided for in Rule 6.37-O(b)(5) and Rule 6.37-O(c)(4), at the 
established price. In addition, the Exchange may determine that Market 
Makers in trading crowds shall increase the depth of their markets as 
set forth in Options Floor Procedure Advice B-12. In the event a Floor 
Broker is unable to satisfy his order from bids and offers given in the 
crowd, the Trading Official may assign one contract to every Market 
Maker present within the primary zone to assist the Floor Broker in 
satisfying his order. If a Market Maker at the post either bids lower 
or offers higher than the established market, such Market Maker shall 
be obligated to trade one contract at the price quoted by the Market 
Maker. This provision is not necessary and is not included in the 
current NYSE American Rule 925NY. As amended, proposed Rule 6.37-
O(b)(2) would require a Market Maker to make markets that will be 
honored for the number of contracts entered into the System in all 
series of options classes within the Market Maker's appointment.
    Current Commentary .06 states that the maintenance of a fair and 
orderly market has been determined to be impaired in instances where a 
Market Maker refuses to honor a market quotation that has just been 
given, in response to a request for a market. This provision is not 
necessary as the proposed rule requires Market Makers to enter two-
sided quotations in the options classes that they are appointed and to 
honor those quotations.\14\ This provision is also not included in the 
current NYSE American Rule 925NY.
---------------------------------------------------------------------------

    \14\ See proposed paragraphs (b) and (f) of Exchange Rule 6.37-
O.
---------------------------------------------------------------------------

    Current Commentary .08 states that a Market Maker may be compelled 
to buy/sell a specified quantity of option contracts at the 
disseminated bid/offer pursuant to his obligations under Rule 6.86-O. 
The Exchange does not proposes to retain this provision as a similar 
provision is not included in the current NYSE American Rule 925NY. In 
addition, the obligation set forth in Commentary .08 are redundant with 
Market Maker's obligation to not only comply with the Exchange's firm 
quote obligations set forth under Exchange Rule 6.86-O, but also their 
obligations to comply with Rule 602 of Regulation NMS. Moreover, a 
Market Maker's firm quote obligations are also discussed in proposed 
paragraph (b)(2) to Exchange Rule 6.37-O which requires Market Makers 
to make markets that will be honored for the number of contracts 
entered into the System.
    Current Commentary .09 states that the Exchange or its authorized 
agent may calculate bids and asks for various indices for the sole 
purpose of

[[Page 47227]]

determining permissible bid/ask differentials on options on these 
indices. These values will be calculated by determining the weighted 
average of the bids and asks for the components of the corresponding 
index. These bids and asks will be disseminated by the Exchange at 
least every fifteen (15) seconds during the trading day solely for the 
purpose of determining the permissible bid/ask differential that Market 
Makers may quote on an in-the-money option on the indices. For in-the-
money series in index options where the calculated bid/ask differential 
is wider than the applicable differential set out in subparagraph 
(b)(1) of Rule 6.37-O, the bid/ask differential in the index option 
series may be as wide as the calculated bid/ask differential in the 
underlying index. The Exchange will not make a market in the basket of 
stock comprising the indices and is not guaranteeing the accuracy or 
the availability of the bid/ask values. This provision is not necessary 
as the Exchange no longer performs the calculations described in the 
Commentary .09. Removing this provision would, therefore, more 
accurately describe the operation of the system in the Exchange's 
rules. A similar provision is also not included in the current NYSE 
American Rule 925NY.
Exchange Rule 6.41-O, Market Maker Marketing Reports
    The Exchange proposes to delete the text of Exchange Rule 6.41-O, 
entitled Market Maker Marketing Reports. Exchange Rule 6.41-O states 
that the Exchange will provide its Market Makers with statistical 
reports designed to measure trading volume and participation in trading 
activity in each option issue traded on the Exchange. The reports are 
to provide monthly trading information that identifies, by order flow 
provider, the issue and number of contracts traded, the Lead Market 
Maker post where the issue is traded, the contra and executing broker 
symbols, and whether the trade was executed through the Exchange's OX 
electronic trading system or manually in the trading crowd. Under its 
rules, the Exchange currently provides other reports, including reports 
related to compared trades.\15\ However, the Exchange no longer 
provides the report described in Exchange Rule 6.41-O to Market Makers, 
no Market Maker has requested such report, no other rule or regulation 
requires the Exchange to provide such report, and that the rules of its 
affiliate, NYSE American, do not include a similar provision. 
Therefore, the Exchange proposes to delete the text of Exchange Rule 
6.41-O to avoid potential confusion regarding the specific reports 
produced by the Exchange. The Exchange also proposes to delete a cross-
reference to Exchange Rule 6.41-O in Exchange Rule 11.16, Books and 
Records.
---------------------------------------------------------------------------

    \15\ See Exchange Rules 6.18-O, 6.19-O, and 6.21-O.
---------------------------------------------------------------------------

Exchange Rule 6.43-O, Options Floor Broker Defined
    The Exchange proposes to amend 6.43-O(b)(1) and (2) to replace the 
definition of ``Professional Customer'' with the single-use term 
``Qualified Customer'' in connection with the limited public business 
that qualified Floor Brokers and their Floor Clerks may conduct. Rule 
6.43-O(b) defines both the permissible conduct of a limited public 
business and defines the term ``Professional Customer'', for purposes 
of Rule 6.43-O(b).\16\ Exchange Rule 6.1A-O(4A) also defines the term 
``Professional Customer'', but does so differently.\17\ To avoid 
unnecessary complexity or confusion concerning the duplicate 
definitions of ``Professional Customer'', the Exchange proposes to 
amend 6.43-O(b) to replace the definition of ``Professional Customer'' 
with the single-use term ``Qualified Customer'' in connection with the 
limited public business, and to limit the use of ``Qualified Customer'' 
to Rule 6.43-O(b). This proposed change would also harmonize NYSE Arca 
Rule 6.43-O(b)(1) and (2) with NYSE American Rules 930NY(b)(1) and 
(2).\18\
---------------------------------------------------------------------------

    \16\ Exchange Rule 6.43(b)(2) defines ``Professional Customer'' 
as ``a bank; trust company; insurance company; investment trust; a 
state or political subdivision thereof; charitable or nonprofit 
educational institution regulated under the laws of the United 
States, or any state, or pension or profit sharing plan subject to 
ERISA or of any agency of the United States as of a state or 
political subdivision thereof; or any person (other than a natural 
person) who has, or who has under management, net tangible assets of 
at least sixteen million dollars.''
    \17\ The definition of ``Professional Customer'' in Rule 6.1A-
O(4A), which is broader than the definition in Rule 6.43-O(b)(2), 
defines a ``Professional Customer'' as an individual or organization 
that is not a Broker/Dealer in securities and places more than 390 
orders in listed options per day on average during a calendar month 
for its own beneficial account(s). Rule 6.1A-O(4A) also defines the 
treatment of a Professional Customer under various Exchange rules 
except Rule 6.43-O(b), and defines how to calculate the number of 
Professional Customers orders in connection with different order 
types.
    \18\ See Securities Exchange Act Release No. 81670 (September 
21, 2017), 82 FR 45095 (September 27, 2017) (SR-NYSEAMER-2017-18) 
(Notice of Filing and Immediate Effectiveness of Proposed Rule 
Change To Update and Amend its Options Rules, as Described Herein, 
To Reduce Unnecessary Complexity and To Promote Standardization and 
Clarity).
---------------------------------------------------------------------------

Exchange Rule 6.47-O, ``Crossing'' Orders--OX
    The Exchange proposes to amend Rule 6.47-O, its crossing rule, by 
replacing outdated references to the requirement that execution prices 
``be equal to or better than the NBBO'' with updated cross-references 
to the Rule 6.94-O, the current plenary Order Protection Rule. In 
addition, in connection with non-facilitation (regular way) crosses, 
facilitation procedures, crossing of solicited orders, and customer-to-
customer crosses, the Exchange proposes to delete from Rules 6.47-
O(a)(3), (b)(5), (c)(3), and (e)(3) the sentences that provide that 
``[t]he orders will be cancelled or posted in the Book if an execution 
would take place at a price that is inferior to the NBBO''. Exchange 
Rule 6.94-O governs such situations, and the orders will not be 
cancelled or posted but would trade through in accord with the 
exemptions in Exchange Rule 6.94-O. This proposed change would also 
harmonize NYSE Arca Rule 6.47-O with NYSE American Rules 934NY.\19\
---------------------------------------------------------------------------

    \19\ Id.
---------------------------------------------------------------------------

Exchange Rule 6.67-O, Order Format and Entry Requirements
    The Exchange proposes to amend Rule 6.67-O(d)(2)(A) to replace an 
outdated reference to require timestamps be synchronized to the ``NIST 
Clock'' with a reference to Rule 11.6820, the current Consolidated 
Audit Trail (``CAT'') clock synchronization rule. Specifically, in 
connection with Rule 6.67-O(d)(2)(A), which governs contingency 
reporting procedures when an exception to the Electronic Order Capture 
System (``EOC'') applies, the Exchange proposes to delete an outdated 
reference to ``(a timestamp synchronized with the National Institute of 
Standards and Technology Atomic Clock in Boulder Colorado `NIST Clock' 
will be available at all OTP Holder and OTP Firm booths and trading 
posts'' and replace it with a requirement that all order events must 
conform to the requirements of Rule 11.6820. For further clarity, the 
Exchange also proposes to delete ``immediately'' from the text of the 
rule because Rule 11.6820 sets the operative standard. This proposed 
change would also harmonize NYSE Arca Rule 6.67-O(d)(2)(A) with NYSE 
American Rules 955NY(d)(2)(A).\20\
---------------------------------------------------------------------------

    \20\ Id.
---------------------------------------------------------------------------

Exchange Rule 6.69-O, Reporting Duties
    The Exchange proposes to amend Exchange Rule 6.69-O(b)(iii) to 
harmonize it with NYSE American Rule

[[Page 47228]]

957NY(b)(iii). Exchange Rule 6.69-O(b) governs reporting of 
transactions on the options floor and subparagraph (iii) is specific to 
Complex Orders. In particular, subparagraph (b)(iii) of Rule 6.69-O 
currently states that for Complex Order transactions, ``between two 
Floor Brokers or two Market Makers, the party responsible for reporting 
the transaction shall be the OTP Holder that first initiated the 
transaction.'' The Exchange proposes to delete this language and 
replace it with ``where the transaction is made up of both buy and sell 
orders and priced on a net debit/credit basis, the seller shall be 
determined to be the OTP Holder participating on the `debit' side of 
the trade.'' Doing so would harmonize the reporting requirements for 
Complex Orders under Rule 6.69-O(b)(iii) with those for complex orders 
under NYSE American Rule 957NY(b)(iii),\21\ thereby providing 
consistent reporting obligations across the Exchange and its affiliate.
---------------------------------------------------------------------------

    \21\ Id.
---------------------------------------------------------------------------

Exchange Rule 6.75-O, Priority and Order Allocation Procedures--Open 
Outcry
    The Exchange proposes to conform Rule 6.75-O governing the priority 
of Complex Orders \22\ in open outcry to its Rule 6.91-O governing 
Electronic Complex Orders.\23\ Rule 6.91-O(a)(1) governs the priority 
of Electronic Complex Orders \24\ in the Consolidated Book and states 
that ``Electronic Complex Orders in the Consolidated Book shall be 
ranked according to price/time priority based on the total or net debit 
or credit and the time of entry of the order'' (emphasis added).\25\ 
Specifically, the Exchange proposes to conform Rule 6.75-O(g) to Rule 
6.91-O(a)(1) by amending Rule 6.75-O(g) to provide that a Complex Order 
and Stock/Complex Orders may be executed at a ``total or'' net debit or 
credit price. The proposed change would, therefore, not result in any 
change to the manner in which Complex Orders are handled under the 
Exchange's rules. This proposed change would also harmonize Exchange 
Rule 6.75-O(g) with NYSE American Rule 963NY(d).\26\
---------------------------------------------------------------------------

    \22\ See NYSE Arca Rule 6.62-O(e).
    \23\ See NYSE Arca Rule 6.91-O.
    \24\ An ``Electronic Complex Order'' means ``any Complex Order 
as defined in Rule 6.62-O(e) or any Stock/Option Order or Stock/
Complex Order as defined in Rule 6.62-O(h) that is entered into the 
NYSE Arca System (the `System').'' Id.
    \25\ See Exchange Rule 6.91-O(a)(1).
    \26\ Securities Exchange Act Release No. 81670 (September 21, 
2017), 82 FR 45095 (September 27, 2017) (SR-NYSEAMER-2017-18) 
(Notice of Filing and Immediate Effectiveness of Proposed Rule 
Change To Update and Amend its Options Rules, as Described Herein, 
To Reduce Unnecessary Complexity and To Promote Standardization and 
Clarity).
---------------------------------------------------------------------------

2. Statutory Basis
    The proposed rule changes are consistent with Section 6(b) \27\ of 
the Act, in general, and furthers the objectives of Section 
6(b)(5),\28\ in particular, in that they are 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.
---------------------------------------------------------------------------

    \27\ 15 U.S.C. 78f(b).
    \28\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    Specifically, the Exchange believes that conforming and harmonizing 
its rules to the rules of an affiliated exchange governing the same 
subject matter, updating its rules by harmonizing its Market Maker 
obligation with its affiliate, NYSE American, deleting outdated and 
updating rule cross-references, eliminating extraneous or redundant 
text, and therefore potentially confusing or ambiguous language, would 
remove impediments to and perfect a national market system by 
simplifying and reducing the complexity of its rules and regulatory 
requirements. The Exchange notes that it and its affiliate, NYSE 
American, operate in a similar manner and consistent rules across the 
Exchange and NYSE American would reduce the likelihood of potential 
investor confusion. Furthermore, the proposed rule change would provide 
for standardized rules and a consistent set of obligations for common 
members as well as those members that are engaged in market making 
activities on both the Exchange and NYSE American. The Exchange also 
believes that these proposed amendments would be consistent with the 
public interest and the protection of investors because investors would 
benefit from the proposal to harmonize, simplify, update and clarify 
the rules discussed herein. Further, the Exchange believes that the 
proposed rule change would benefit investors by improving the 
transparency and clarity of the Exchange's rules.
    In particular, the Exchange believes that by updating and 
conforming its rules governing Market Maker obligations to the rules of 
NYSE American, its affiliated exchange, removes impediments to and 
perfects the mechanism of a free and open market and a national market 
system by providing consistent, standardized rules governing Market 
Makers across both the Exchange and its affiliate. It should also aid 
those firms that engage in market making activity on both the Exchange 
and NYSE American with identical obligations, thereby aiding those 
firms in complying with the Exchange's rules by providing a harmonized 
set of regulatory obligations.
    Furthermore, by removing extraneous language from Exchange Rule 
6.17-O, Commentary .01, deleting outdated text under Exchange Rule 
6.41-O regarding a report no longer produced to Market Makers by the 
Exchange, replacing the definition of ``Professional Customer'' with 
the single-use term ``Qualified Customer'' under Exchange Rule 6.43-O 
in connection with the limited public business that qualified Floor 
Brokers and their Floor Clerks may conduct, by harmonizing Exchange 
Rule 6.47-O, its crossing rule, with NYSE American Rule 934NY by 
replacing outdated and potentially ambiguous references to the NBBO 
with cross-references to the current plenary Order Protection Rule, by 
updating and clarifying Exchange Rule 6.67-O governing its order format 
and system entry requirements by replacing an outdated reference with a 
reference to the current operative CAT time synchronization rule, and 
by conforming Exchange Rule 6.75-O governing the priority of complex 
orders in open outcry to its rule governing Electronic Complex Orders, 
would also promote just and equitable principles of trade, would remove 
impediments to and perfects the mechanism of a free and open market and 
a national market system, and, in general, would help to protect 
investors and the public interest by providing transparency as to which 
rules are operable, and by reducing potential confusion that may result 
from having outdated or redundant rules or cross-references in the 
Exchange's rulebook. Lastly, the Exchange notes that the proposed 
changes to Exchange Rules 6.37-O, 6.43-O(b), 6.47-O, 6.67-O(d)(2)(A), 
6.69-O(b)(iii), and 6.75-O(g) are based on the rules of its affiliate, 
NYSE American.\29\ The Exchange further believes that the proposed rule 
changes would remove impediments to and perfect the mechanism of a free 
and open market by ensuring that members, regulators and the public can 
more

[[Page 47229]]

easily navigate and understand the Exchange's rulebook, thereby 
avoiding potential confusion.
---------------------------------------------------------------------------

    \29\ See, e.g., NYSE American Rules 925NY, 930NY, 934NY, 955NY, 
957NY, and 936NY. See also, e.g., Securities Exchange Act Release 
No. 81670 (September 21, 2017), 82 FR 45095 (September 27, 2017) 
(SR-NYSEAMER-2017-18) (Notice of Filing and Immediate Effectiveness 
of Proposed Rule Change To Update and Amend its Options Rules, as 
Described Herein, To Reduce Unnecessary Complexity and To Promote 
Standardization and Clarity).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule changes will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. The proposed changes are not 
designed to address any competitive issue or attract additional order 
flow to the Exchange. Rather, these changes would update, remove, and 
clarify outdated cross-references and definitions, and redundant 
language, and also conform the Exchange's rules and definitions to the 
rules of an affiliated exchange, thereby reducing potential confusion 
and making the Exchange's rules easier to understand and navigate. The 
Exchange notes that it and its affiliate, NYSE American, operate in a 
similar manner and consistent rules across the Exchange and NYSE 
American would reduce the likelihood of potential investor confusion. 
Therefore, the proposed rule change is not intended to impose a burden 
on competition but rather provide for standardized rules and a 
consistent set of obligations for common members as well as those 
members that are engaged in market making activities on both the 
Exchange and NYSE American.

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 \30\ and Rule 19b-4(f)(6) thereunder.\31\ 
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.
---------------------------------------------------------------------------

    \30\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \31\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires the Exchange to give the Commission written notice of the 
Exchange's intent to file the proposed rule change, along with a 
brief description and text of the proposed rule change, at least 
five business days prior to the date of filing of the proposed rule 
change, or such shorter time as designated by the Commission. The 
Exchange has satisfied this requirement.
---------------------------------------------------------------------------

    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) \32\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \32\ 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 [email protected]. Please include 
File Number SR-NYSEARCA-2018-65 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-NYSEARCA-2018-65. 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 website (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 website 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. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-NYSEARCA-2018-65 and should be submitted 
on or before October 9, 2018.
---------------------------------------------------------------------------

    \33\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\33\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-20193 Filed 9-17-18; 8:45 am]
BILLING CODE 8011-01-P