Document ID: SEC-2013-1103-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE MKT LLC
Posted Date: 2013-06-20T04:00Z

[Federal Register Volume 78, Number 119 (Thursday, June 20, 2013)]
[Notices]
[Pages 37259-37261]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-14684]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-69764; File No. SR-NYSEMKT-2013-49]

Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change Proposing To Permit 
Traders Conducting Certain Futures and Options Trading on ICE Futures 
U.S. in Space Rented From the Exchange at 20 Broad Street To Access the 
IFUS Trading Floor Prior to 7 a.m. and on Days That the Exchange Is 
Closed Via the Exchange's 11 Wall Street Facilities and To Permit 
Additional IFUS Traders To Conduct Business on the IFUS Trading Floor

June 13, 2013.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that on June 3, 2013, 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 permit traders conducting certain futures 
and options trading on ICE Futures U.S. (``IFUS'') \4\ in space rented 
from the Exchange at 20 Broad Street (the ``IFUS Trading Floor'') to 
access the IFUS Trading Floor prior to 7 a.m. and on days that the 
Exchange is closed via the Exchange's 11 Wall Street facilities and to 
permit additional IFUS traders to conduct business on the IFUS Trading 
Floor (together, the ``Proposal'').
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    \4\ IFUS is a Designated Contract Market pursuant to the 
Commodity Exchange Act, as amended, and is regulated by the U.S. 
Commodity Futures Trading Commission (``CFTC''). IFUS was formerly 
known as the New York Board of Trade (``NYBOT'').
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    The text of the proposed rule change is available on the Exchange's 
Web site at www.nyse.com, at the principal office of the Exchange, and 
at the Commission's Public Reference Room.

[[Page 37260]]

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
    On February 13, 2013, the Exchange filed a proposed rule change to 
relocate trading of certain futures and options contracts conducted on 
IFUS from rented space at the New York Mercantile Exchange (``NYMEX'') 
to trading space at 20 Broad Street, New York, New York, commonly known 
as the ``Blue Room'', and amend NYSE MKT Rule 6A, which defines the 
terms ``Trading Floor'' and ``NYSE Amex Options Trading Floor'' (the 
``Original Filing'').\5\ The Original Filing stated that the IFUS 
traders relocating to 20 Broad Street (the ``IFUS Traders'') and their 
clerical employees would be prohibited from entering the Main Room, 
where most of the New York Stock Exchange LLC (``NYSE'') and NYSE MKT 
Equities Floor brokers and all NYSE and NYSE MKT Equities Designated 
Market Makers (``DMMs'') are located, as well as the NYSE Amex Options 
trading floor. Moreover, the Original Filing stated that the IFUS 
Traders can only utilize the 18 Broad Street entrance to access the 
Blue Room.
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    \5\ See Securities Exchange Act Release Nos. 68996 (February 27, 
2013), 78 FR 14378 (March 5, 2013) (SR-NYSE-2013-13).
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    However, because the 18 Broad Street entrance does not open until 7 
a.m., the Exchange proposes to clarify that the IFUS Traders may, on an 
as needed basis and only prior to 7 a.m., access the Blue Room via the 
Exchange's 11 Wall Street facilities, which would entail walking 
through the Main Room to access the Blue Room. Given that the IFUS 
Traders' Exchange-issued identification badges do not provide access to 
11 Wall Street, any IFUS Trader wishing to access their workspace prior 
to 7 a.m. would need to request access and be approved by the Exchange. 
As noted, access would be limited to hours before the 18 Broad Street 
entrance opens at 7 a.m. Because the Exchange is not open for the 
transaction of business until 9:30 a.m.,\6\ the Exchange does not 
believe that allowing one or more IFUS Traders to briefly cross the 
Main Room on the way to the Blue Room prior to 7 a.m., which is 
significantly prior to the Exchange's open, would pose any realistic 
risk that the IFUS Traders would be exposed to confidential customer 
order information or other confidential trading information.
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    \6\ NYSE MKT Rule 52 limits dealings on the Exchange to the 
hours during which the Exchange is open for the transaction of 
business, which NYSE MKT Rule 51 defines to include a daily trading 
session between the hours of 9:30 a.m. and 4:30 p.m.
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    To date, only one IFUS Trader has requested and been provided 
access before 7 a.m. following review and approval by NYSE Regulation 
and IFUS Market Regulation. As a condition of permitting access, IFUS 
Market Regulation advised the trader that access to the IFUS Trading 
Floor through the 11 Wall Street entrance is only permitted in the 
morning prior to 7 a.m. and that this is the only time the trader was 
permitted to cross through or be on the Main Floor. The trader was also 
reminded that access to and from the IFUS Trading Floor after 7:00 a.m. 
must be via the 18 Broad Street entrance. As proposed, any additional 
requests for access to the IFUS Trading Floor prior to 7 a.m. will be 
subject to the same restrictions.
    In addition, the Exchange proposes to clarify that the IFUS Traders 
may access the Blue Room via the Exchange's 11 Wall Street facilities 
on days that the Exchange is closed.\7\ The Exchange believes that 
there is no realistic risk that the IFUS Traders would be exposed to 
confidential customer order information or other confidential trading 
information on legal holidays when the Exchange is closed.
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    \7\ Certain of the IFUS Traders conduct business on foreign 
markets on Exchange holidays.
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    The Exchange also seeks to allow additional IFUS Traders and 
relevant support staff to conduct business on the IFUS Trading Floor in 
its new location. IFUS has received several requests from traders who 
previously traded coffee and sugar products on IFUS when it was located 
at NYMEX to resume trading on IFUS. The Exchange believes that it is 
appropriate to permit additional IFUS Traders and their support staff 
to relocate to the Blue Room pursuant to all of the conditions 
specified in Original Filing.
    The additional IFUS Traders would be located with the other IFUS 
Traders in the Blue Room (which, as the Original Filing notes, contains 
privacy barriers consisting of eight foot walls providing visual and 
sound insulation to reduce the likelihood that trading screens can be 
viewed or conversations overheard between firms and traders) and would 
be subject to the same restrictions on accessing the Blue Room 
described above and in the Original Filing. The names of the additional 
IFUS Traders would also be provided to the Financial Industry 
Regulatory Authority (``FINRA'') which conducts surveillance of the 
NYSE MKT and NYSE markets to enable FINRA to more readily identify any 
potentially violative trading involving the IFUS Traders.\8\
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    \8\ Providing the names of the IFUS Traders to FINRA will be for 
the purpose of regulatory information sharing. Neither the Exchange 
nor FINRA will be responsible for regulating or surveilling the IFUS 
Traders' activity and the IFUS Traders will not be subject to the 
Exchange's jurisdiction. Rather, the IFUS Traders will continue to 
be regulated by IFUS as they are today.
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    Any additional IFUS Traders would not trade any of the products 
traded on NYSE MKT, and there is extremely limited overlap in related 
products traded by the IFUS Traders and on the NYSE MKT. Moreover, even 
with additional traders conducting business in coffee and sugar 
products on the IFUS Trading Floor, the IFUS Traders overall will 
continue to execute a very small volume of predominantly cotton 
options. In light of these facts, the Exchange believes it is highly 
unlikely that any order handled by one of them could impact the price 
of any individual security traded on the Exchange. In this regard, the 
Exchange continues to believe that the pricing correlation between 
order flow in IFUS products and securities traded on NYSE MKT is 
tenuous at best and that it is extremely unlikely that information 
overheard by an equities Floor broker or an IFUS Trader could be used 
to benefit the broker's or trader's proprietary, personal or other 
customer trading.
    Accordingly, the Exchange does not believe that permitting 
additional IFUS Traders to conduct business on the IFUS Trading Floor 
in the Blue raises any regulatory concerns.
2. Statutory Basis
    The Exchange believes that the Proposal is consistent with the 
provisions of Section 6 of the Act,\9\ in general, and Section 6(b)(5) 
of the Act,\10\ in particular, in that it is designed to prevent 
fraudulent and manipulative

[[Page 37261]]

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. The Exchange believes that the Proposal is designed to 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system. The Exchange believes that the 
Proposal will permit the Exchange to allow additional IFUS Traders to 
utilize space on the trading floor within the existing regulatory 
framework at the Exchange, to efficiently and effectively conduct 
business in their respective area consistent with maintaining necessary 
distinctions between the two organizations. Moreover, the Proposal will 
impose restrictions designed to prevent inappropriate information 
sharing by and between members and member firm employees on the Trading 
Floor of the Exchange and additional IFUS Traders on the IFUS Trading 
Floor.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the Proposal will impose any 
burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act. The proposal is designed to 
promote competition by providing the Exchange the additional 
flexibility to maximize the use of its trading floor space.

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 \11\ and Rule 19b-4(f)(6) thereunder.\12\ 
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.
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    \11\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \12\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) \13\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\14\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest.
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    \13\ 17 CFR 240.19b-4(f)(6).
    \14\ 17 CFR 240.19b-4(f)(6)(iii).
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    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) \15\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \15\ 15 U.S.C. 78s(b)(2)(B).
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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-2013-49 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSEMKT-2013-49. 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 20549-1090, on official business between the hours of 
10:00 a.m. and 3:00 p.m. Copies of the filing will also be available 
for inspection and copying at the NYSE's principal office and on its 
Internet Web site at www.nyse.com. 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-2013-49 and should be submitted on or before 
July 11, 2013.
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    \16\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2013-14684 Filed 6-19-13; 8:45 am]
BILLING CODE 8011-01-P