Document ID: SEC-2017-1615-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2017-09-29T04:00Z

[Federal Register Volume 82, Number 188 (Friday, September 29, 2017)]
[Notices]
[Pages 45647-45650]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-20888]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81713; File No. SR-NYSEArca-2017-109]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Amending NYSE Arca 
Rule 14.2 To Make Technical and Conforming Updates in Connection With 
the Recent Merger of NYSE Arca Equities, Inc. With and Into the 
Exchange

September 25, 2017.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that, on September 12, 2017, NYSE Arca, Inc. (the ``Exchange'' or 
``NYSE Arca'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') the proposed rule change as described in 
Items I and II below, which Items have been prepared by the self-
regulatory organization. The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend NYSE Arca Rule 14.2 (Liability of 
Exchange) to make technical and conforming updates in connection with 
the recent merger of NYSE Arca Equities, Inc. (``NYSE Arca Equities'') 
with and into the Exchange.
    The proposed rule change is available on the Exchange's Web site at 
www.nyse.com, at the principal office of the Exchange, and at the 
Commission's Public Reference Room.

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

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

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

1. Purpose
    The Exchange proposes to amend NYSE Arca Rule 14.2 to make 
technical and conforming updates in connection with the recent merger 
of its wholly-owned subsidiary NYSE Arca Equities, Inc. (``NYSE Arca 
Equities'') with and into the Exchange (the ``Merger'').
    On June 2, 2017, the Exchange filed rule changes with the 
Securities and Exchange Commission (``Commission'') in connection with 
the proposed Merger (the ``Original Filing'').\4\ On August 15, 2017, 
the Exchange filed a partial amendment to the Original Filing (the 
``Amendment''), which, among other things, amended the Original Filing 
to reflect changes to the proposed rule text that resulted from changes 
to the NYSE Arca and NYSE Arca Equities rules that became operative 
after June 2, 2017.\5\ On

[[Page 45648]]

August 17, 2017, the Commission approved the proposed rule changes, as 
amended, and the Merger occurred on that same date.\6\
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    \4\ See Securities Exchange Act Release No. 80929 (June 14, 
2017), 82 FR 28157 (June 20, 2017) (SR-NYSEArca-2017-40) 
(``Notice'').
    \5\ See Partial Amendment 2 to SR-NYSEArca-2017-40 (August 15, 
2017). The Amendment also was submitted to the Commission as a 
comment letter on the Original Filing. See letter from Martha 
Redding, Associate General Counsel, NYSE Group, to Brent J. Fields, 
Secretary, Commission (August 15, 2017), available at https://www.sec.gov/comments/sr-nysearca-2017-40/nysearca201740-2221802-160732.pdf.
    \6\ See Securities Exchange Act Release No. 81419 (August 17, 
2017), 82 FR 40044 (August 23, 2017) (SR-NYSEArca-2017-40) (Approval 
Order).
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    Prior to the Merger, NYSE Arca had two rulebooks: The NYSE Arca 
rules for its options market and the NYSE Arca Equities rules for its 
equities market. At the Merger, the NYSE Arca Equities rules were 
integrated into the NYSE Arca rules, so that there is now one NYSE Arca 
rulebook.\7\ In that process, NYSE Arca Rule 14 (Liability of Directors 
and Exchange) was amended to incorporate NYSE Arca Equities Rule 13 
(Liability of Directors and Corporation).\8\
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    \7\ See id. at 40044.
    \8\ See id. at 40048.
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    On July 24, 2017, the Commission approved a proposed rule change to 
amend NYSE Arca Equities Rule 13.2 (Liability of Corporation).\9\ 
Because such rule change was approved after the Original Filing but 
prior to the Merger, it should have been included in the Amendment. 
However, due to an oversight, the Amendment did not incorporate the 
changes to NYSE Arca Equities Rule 13.2 into NYSE Arca Rule 14.2.\10\ 
Accordingly, the Exchange proposes to make technical and conforming 
changes to NYSE Arca Rule 14.2 in order to conform it to the text of 
previous NYSE Arca Equities Rule 13.2 approved by the Commission on 
July 24, 2017.\11\
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    \9\ See Securities Exchange Act Release No. 81197 (July 24, 
2017), 82 FR 35244 (July 28, 2017) (SR-NYSEArca-2017-46) (Approval 
Order).
    \10\ The Amendment updated NYSE Arca Equities Rule 13.2 in 
Exhibit 5I to Original Filing to reflect the changes made in SR-
NYSEArca-2017-46. See Item 19 of the Amendment, supra note 5, at 13-
15. Exhibit 5I set forth the NYSE Arca Equities Rules, which were 
deleted in their entirety at the time of the Merger.
    \11\ The Exchange notes that during the period between the 
Merger and the date of the present filing, it did not receive a 
claim that exceeded the liability limits and thus the Exchange was 
not prevented from fully compensating an ETP Holder for losses 
suffered in connection with the use of the Exchange's facilities, 
including losses caused by the negligent act or omission of an 
Exchange employee.
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    More specifically, the Exchange proposes to:
     Amend Rule 14.2(a) to provide that the limitation of 
liability set forth in that paragraph would apply to ``successors, 
representatives, or customers'' of Equities Trading Permit holders 
(``ETP Holders''), Options Trading Permit holders (``OTP Holders'') and 
Options Trading Permit firms (``OTP Firms'') of the Exchange, 
consistent with previous NYSE Arca Equities Rule 13.2(a);
     Amend Rule 14.2(b), which describes certain prerequisites 
for qualifying for compensation, to replace the words ``acknowledged 
receipt of'' with the word ``received,'' consistent with previous NYSE 
Arca Equities Rule 13.2(b);
     Amend Rule 14.2(b) and (c) to eliminate the daily caps on 
liability, consistent with previous NYSE Arca Equities Rule 13.2(b) and 
(c); and
     Amend Rule 14.2(c) and add a new Rule 14.2(d) to change 
the procedural requirements for submitting notification to the Exchange 
of any claims for compensation, consistent with previous NYSE Arca 
Equities Rule 13.2(c) and (d). As a technical change, the obsolete 
reference to the ``Corporation'' in NYSE Arca Equities Rule 13.2(d), 
which referred to NYSE Arca Equities, would be updated to refer to the 
``Exchange'' in new Rule 14.2(d).\12\
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    \12\ See Notice, supra note 4, at 28161 (noting that in rule 
text based on NYSE Arca Equities rules, references to the 
Corporation would be replaced with references to the Exchange).
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(b) Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Exchange Act,\13\ in general, and with Section 
6(b)(1) \14\ in particular, in that it enables the Exchange to be so 
organized as to have the capacity to be able to carry out the purposes 
of the Exchange Act and to comply, and to enforce compliance by its 
exchange members and persons associated with its exchange members, with 
the provisions of the Exchange Act, the rules and regulations 
thereunder, and the rules of the Exchange.
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    \13\ 15 U.S.C. 78f(b).
    \14\ 15 U.S.C. 78f(b)(1).
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    The Exchange believes that the proposed change to Rule 14.2 would 
enable the Exchange to continue to be so organized as to have the 
capacity to carry out the purposes of the Exchange Act and comply and 
enforce compliance with the provisions of the Exchange Act by its 
members and persons associated with its members, because, by 
incorporating the amendments to NYSE Arca Equities Rule 13.2 that the 
Commission approved on July 24, 2017, the proposed change would ensure 
that the changes made to Rule 14.2 to reflect the Merger were accurate 
and complete.
    For similar reasons, the Exchange also believes that the proposed 
rule change is consistent with Section 6(b)(5) of the Act,\15\ 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, to remove impediments to and perfect the 
mechanism of a free and open market and a national market system and, 
in general, to protect investors and the public interest.
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    \15\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed rule change would remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system in general, to protect investors and the 
public interest, because, by incorporating the amendments to NYSE Arca 
Equities Rule 13.2 that the Commission approved on July 24, 2017, the 
proposed change would ensure that the changes made to Rule 14.2 to 
reflect the Merger were accurate and complete, thereby reducing 
potential investor or market participant confusion. The proposed change 
would clarify the scope of the limitation of liability, including the 
elimination of daily liability caps and applicable procedural 
requirements, for all ETP Holders, OTP Holders, and ETP Firms [sic], 
and ensure that all Exchange permit holders would be subject to the 
same rule.\16\
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    \16\ The Commission notes that NYSE Arca Rule 14.2 applies to 
ETP Holders, OTP Holders, and OTP Firms.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Exchange Act,\17\ in general, and with Section 
6(b)(1) \18\ in particular, in that it enables the Exchange to be so 
organized as to have the capacity to be able to carry out the purposes 
of the Exchange Act and to comply, and to enforce compliance by its 
exchange members and persons associated with its exchange members, with 
the provisions of the Exchange Act, the rules and regulations 
thereunder, and the rules of the Exchange.
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    \17\ 15 U.S.C. 78f(b).
    \18\ 15 U.S.C. 78f(b)(1).
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    The Exchange believes that the proposed change to Rule 14.2 would 
enable the Exchange to continue to be so organized as to have the 
capacity to carry out the purposes of the Exchange Act and comply and 
enforce compliance with the provisions of the Exchange Act by its 
members and persons associated with its members, because, by 
incorporating the amendments to NYSE Arca Equities Rule 13.2 that the 
Commission approved on July 24, 2017, the proposed change would ensure 
that the changes made to Rule 14.2 to reflect the Merger were accurate 
and complete.
    For similar reasons, the Exchange also believes that the proposed 
rule change is consistent with Section 6(b)(5) of the

[[Page 45649]]

Act,\19\ 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, to remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system and, in general, to protect investors and the public interest.
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    \19\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed rule change would remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system in general, to protect investors and the 
public interest, because, by incorporating the amendments to NYSE Arca 
Equities Rule 13.2 that the Commission approved on July 24, 2017, the 
proposed change would ensure that the changes made to Rule 14.2 to 
reflect the Merger were accurate and complete, thereby reducing 
potential investor or market participant confusion. The proposed change 
would clarify the scope of the limitation of liability, including the 
elimination of daily liability caps and applicable procedural 
requirements, for all ETP Holders, OTP Holders, and ETP Firms [sic], 
and ensure that all Exchange permit holders would be subject to the 
same rule.\20\
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    \20\ See supra note 16.
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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 rule change is 
not intended to address competitive issues but rather is concerned 
solely with updating Rule 14.2 to reflect the previously approved 
amendments to NYSE Arca Equities Rule 13.2, ensuring that all Exchange 
permit holders would be subject to the same rules.

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 \21\ and Rule 19b-4(f)(6) thereunder.\22\ 
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) thereunder.
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    \21\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \22\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
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 has satisfied this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) \23\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\24\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay so that the proposal 
may become operative immediately upon filing. The Exchange notes that 
such waiver would allow the Exchange to implement without further delay 
the previously-approved amendments to NYSE Arca Equities Rule 13.2 and 
would ensure continuity in the Exchange's treatment of ETP Holders, as 
ETP Holders subject to NYSE Arca Rule 14.2 would be subject to the same 
limitations of liability as they were under NYSE Arca Equities Rule 
13.2 prior to the Merger, including the elimination of daily liability 
caps. In addition, the Exchange notes that the proposed rule change 
would clarify the scope of its limitation of liability rule, including 
the elimination of daily liability caps and applicable procedural 
requirements, for all ETP Holders, OTP Holders, and OTP Firms, and 
ensure that all Exchange permit holders would be subject to the same 
rule.
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    \23\ 17 CFR 240.19b-4(f)(6).
    \24\ 17 CFR 240.19b-4(f)(6)(iii).
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    The Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest. 
Waiver of the operative delay will help ensure consistent treatment of 
ETP Holders, OTP Holders, and OTP Firms under NYSE Arca Rule 14.2 and 
help avoid the potential for confusion as to the applicable limitations 
of liability with respect to that rule. Therefore, the Commission 
hereby waives the 30-day operative delay and designates the proposal 
operative upon filing with the Commission.\25\
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    \25\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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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) of the Act \26\ to determine whether the proposed 
rule change should be approved or disapproved.
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    \26\ 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-NYSEArca-2017-109 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-2017-109. 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

[[Page 45650]]

provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549 on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-NYSEArca-2017-109 and should 
be submitted on or before October 20, 2017.
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    \27\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\27\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-20888 Filed 9-28-17; 8:45 am]
 BILLING CODE 8011-01-P