Document ID: SEC-2015-0795-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange, LLC
Posted Date: 2015-05-12T04:00Z

[Federal Register Volume 80, Number 91 (Tuesday, May 12, 2015)]
[Notices]
[Pages 27217-27219]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-11380]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74889; File No. SR-NYSE-2015-23]

Self-Regulatory Organizations; New York Stock Exchange, LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Deleting Rules 16 and 17T Related to the Terminated Intermarket Trading 
System, NMS Linkage Plans, and Amending Rules 45, 47, 52, 54, 93, 94, 
95, 104A.50 and 123 To Remove Outdated References to the ITS Plan

May 6, 2015.
    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 May 4, 2015, New York Stock Exchange LLC (``NYSE'' or the 
``Exchange'') 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 the 
Substance of the Proposed Rule Change

    The Exchange proposes to (1) delete Rules 16 and 17T related to the 
terminated Intermarket Trading System (``ITS'') and NMS Linkage Plans, 
respectively, and (2) amend Rules 45, 47, 52, 54, 93, 94, 95, 104A.50 
and 123 to remove outdated references to the ITS Plan. The text of the 
proposed rule change is available on the Exchange's Web site at 
www.nyse.com, at the principal office of the Exchange, and at the 
Commission's Public Reference Room.

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

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

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

1. Purpose
    The Exchange proposes to (1) delete Rules 16 and 17T related to the 
terminated ITS and NMS Linkage Plans, respectively, and (2) amend Rules 
45, 47, 52, 54, 93, 94, 95, 104A.50 and 123 to remove outdated 
references to the ITS Plan.
    First, the Exchange proposes to delete Rules 16 and 17T in their 
entirety. Rule 16 governs Exchange liability for use of ITS \4\ and the 
ITS Pre-Opening Application.\5\ ITS was eliminated on June 30, 2007. 
Similarly, Rule 17T was adopted in October 2006 as an interim measure 
in order to provide member access to other market center participants 
in the NMS Linkage Plan. The NMS Linkage Plan became effective on 
October 1, 2006 and ran concurrently with the ITS Plan until March 5, 
2007, at which time the Order Protection Rule of Reg. NMS became 
operative. The NMS Linkage Plan terminated on June 30, 2007.\6\ Rules 
16 and 17T are accordingly obsolete.
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    \4\ Between 1978 and 1997, ITS was the principal means of 
electronically transmitting orders between market centers to avoid 
trading through superior quotes in those markets. When the 
Commission adopted Regulation National Market System (``Reg. NMS''), 
the ITS Plan participants terminated the governing agreement, the 
ITS Plan, and replaced it with the NMS Linkage Plan. See Securities 
Exchange Act Release No. 54551 (September 29, 2006), 71 FR 194 
(October 6, 2006). The purpose of the NMS Linkage Plan was to enable 
the plan participants to act jointly in planning, developing, 
operating and regulating the NMS Linkage System that would 
electronically link the participant markets to one another.
    \5\ Prior to its amendment in 2007, Rule 15 defined an ``Pre-
Opening Application'' as ``the application of the System that 
permits a market-maker in one Participant market who wishes to open 
his market in an Eligible Listed Security to obtain from other 
market-makers registered in that security in other Participant 
markets any pre-opening interests such other market-makers might 
decide to disclose as set forth in the ITS Plan.''
    \6\ See Securities Exchange Act Release No. 57003 (December 20, 
2007), 72 FR 73949, 73950 (December 28, 2007) (SR-NYSE-2007-112) 
(``Rule 15 Amendment'').
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    Second, the Exchange proposes to remove the following outdated 
references to the ITS Plan in Rules 45, 47, 52, 54, 93, 94, 95, 104A.50 
and 123: \7\
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    \7\ In 2014, the Exchange amended Rules 15A and 123D to remove 
outdated references to the ITS Plan. See Securities Exchange Act 
Release No. 72916 (August 26, 2014), 79 FR 52094 (September 2, 2014) 
(SR-NYSE-2014-44).
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     Rule 45 governs the application of Exchange Rules 46 to 
294 to contracts made on the Exchange. Rule 45 would be amended to 
remove the second paragraph carving out transactions effected pursuant 
to ITS, which are subject to the Rules specified in Rule 15. Rule 15 
was amended in 2007, which had been rendered obsolete following 
adoption of the NMS Linkage Plan.\8\
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    \8\ See Rule 15 Amendment, 72 FR at 73950.
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     Rule 47, which provides that Floor Officials have the 
power to supervise and regulate active openings and unusual situations, 
would be amended to delete the second sentence of the Rule providing 
that Floor Officials can also supervise and regulate the operation of 
ITS during active openings and unusual situations.
     Rule 52, which provides that dealings on the Exchange are 
limited to business hours, would be amended to remove the clause 
prohibiting members from issuing a commitment to trade through ITS 
outside of business hours and the clause relating to DMM pre-opening 
notifications and pre-opening responses sent pursuant to ITS.
     Rule 54 provides that only members can make or accept bids 
and offers, consummate transactions or otherwise transact business on 
the Exchange trading Floor. Rule 54 would be amended to delete the 
second sentence of subpart (a) to remove the exception for commitments 
or obligations to trade through ITS.
     Rule 93 prohibits members from directly or indirectly 
holding any interest or participation in an unreported joint account. 
Rule 93 would be amended to remove Supplementary Material .10, which 
provides that members issuing ITS commitments or obligations to trade 
are deemed to be initiating a purchase or a sale of a security on the 
Exchange for purposes of Rule 93. Rule 93 would also be amended to 
remove the explanatory note that certain portions of the Rule were 
repositioned from Rule 423 effective April 27, 1983.
     Rule 94 prohibits DMMs from directly or indirectly 
acquiring or

[[Page 27218]]

holding any interest or participation in an joint account for buying or 
selling on the Exchange ``or any other Application of the System''. 
Rule 94 would be amended to delete the clause ``or any other 
Application of the System'', which is a reference to ITS.
     Rule 95 prohibits members on the Floor from executing or 
causing to be executed discretionary transaction on the Exchange and 
through ITS ``or any application of the System''. Rule 95 would be 
amended to remove the references to ITS.
     Rule 104A.50 requires DMMs to maintain record of purchases 
and sales initiated on the Floor, including purchases and sales 
resulting from commitments or obligations to trade issued through ITS. 
Rule 104A.50 would be amended to remove the references to ITS. The Rule 
also provides that price designations for transactions made in another 
market center through ITS are to be determined from the immediately 
preceding transaction price on the Exchange ``at the time the 
commitment or obligation to trade is issued.'' Rule 104A.50 would also 
be amended to remove these additional references to commitments or 
obligations to trade through ITS.
     Rule 123(a) provides that every member must maintain for 
at least three years a record of every order originated by the member 
on the Floor and given to another member for execution. The record 
keeping requirement includes ``every commitment or obligation to trade 
issued from the Floor through ITS or any other Application of the 
System''. Rule 123(d) requires that before any order is executed, 
including where an order is to be executed by issuance from the Floor 
of a commitment or obligation to trade through ITS, the account name or 
designation for the order must be recorded. Rule 123(a) and (d) would 
be amended to delete these references to commitments or obligations to 
trade through ITS.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\9\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\10\ in particular, in that it 
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 
and, in general, help to protect investors and the public interest. 
Specifically, the Exchange believes that deleting rule text relating to 
routing arrangements that have been superseded by Reg. NMS removes 
impediments to and perfects the mechanism of a free and open market by 
simplifying its rulebook and removing confusion that may result from 
having obsolete rules in the Exchange's rulebook. 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 also believes that eliminating obsolete rules would not be 
inconsistent with the public interest and the protection of investors 
because investors will not be harmed and in fact would benefit from 
increased transparency as to which rules are operable, thereby reducing 
potential confusion. Similarly, the Exchange believes that removing 
cross-references to obsolete rules would remove impediments to and 
perfect the mechanism of a free and open market because it would reduce 
potential confusion that may result from having such cross references 
in the Exchange's rulebook. Removing such obsolete cross references 
will also further the goal of transparency and add clarity to the 
Exchange's rules.
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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 proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. The proposed change is not 
designed to address any competitive issue but rather to delete obsolete 
rules and references to obsolete rules, thereby increasing 
transparency, reducing confusion, and making the Exchange's rules 
easier to understand and navigate.

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

    Because the foregoing 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 for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \11\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\12\
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    \11\ 15 U.S.C. 78s(b)(3)(a)(iii).
    \12\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file 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 satisfied this requirement.
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is: (i) 
Necessary or appropriate in the public interest; (ii) for the 
protection of investors; or (iii) otherwise in furtherance of the 
purposes of the Act. If the Commission takes such action, the 
Commission shall institute proceedings to determine whether the 
proposed rule should be approved or 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-NYSE-2015-23 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-NYSE-2015-23. 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

[[Page 27219]]

communications relating to the proposed rule change between the 
Commission and any person, other than those that may be withheld from 
the public in accordance with the provisions of 5 U.S.C. 552, will be 
available for Web site viewing and printing in the Commission's Public 
Reference Room, 100 F Street NE., Washington, DC 20549 on official 
business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of 
such filing also will be available for inspection and copying at the 
principal offices of 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-NYSE-2015-23, and should be submitted on or before June 
2, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-11380 Filed 5-11-15; 8:45 am]
 BILLING CODE 8011-01-P