Document ID: SEC-2015-1283-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE MKT LLC
Posted Date: 2015-08-03T04:00Z

[Federal Register Volume 80, Number 148 (Monday, August 3, 2015)]
[Notices]
[Pages 46081-46083]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-18880]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75534; File No. SR-NYSEMKT-2015-53]

Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change Extending the Operation 
of Its Supplemental Liquidity Providers Pilot Until October 31, 2015

July 28, 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 July 17, 2015, 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 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to extend the operation of its Supplemental 
Liquidity Providers Pilot (``SLP Pilot'' or ``Pilot'') (see Rule 107B--
Equities), currently scheduled to expire on July 31, 2015, until the 
earlier of the Securities and Exchange Commission's (``Commission'') 
approval to make such Pilot permanent or October 31, 2015. 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to extend the operation of its SLP Pilot,\4\ 
currently scheduled to expire on July 31, 2015, until the earlier of 
Commission approval to make such Pilot permanent or October 31, 2015.
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 61308 (January 7, 
2010), 75 FR 2573 (January 15, 2010) (SR-NYSEAmex-2009-98) 
(establishing the NYSE Amex Equities SLP Pilot). See also Securities 
Exchange Act Release Nos. 61841 (April 5, 2010), 75 FR 18560 (April 
12, 2010) (SR-NYSEAmex-2010-33) (extending the operation of the SLP 
Pilot to September 30, 2010); 62814 (September 1, 2010), 75 FR 54671 
(September 8, 2010) (SR-NYSEAmex-2010-88) (extending the operation 
of the SLP Pilot to January 31, 2011); 63615 (December 29, 2010), 76 
FR 611 (January 5, 2011) (SR-NYSEAmex-2010-123) (extending the 
operation of the SLP Pilot to August 1, 2011); 64772 (June 29, 
2011), 76 FR 39455 (July 6, 2011) (SR-NYSEAmex-2011-44) (extending 
the operation of the SLP Pilot to January 31, 2012); 66041 (December 
23, 2011), 76 FR 82328 (December 30, 2011) (SR-NYSEAmex-2011-103) 
(extending the operation of the SLP Pilot to July 31, 2012); 67496 
(July 25, 2012), 77 FR 45390 (July 31, 2012) (SR-NYSEMKT-2012-22) 
(extending the operation of the SLP Pilot to January 31, 2013); 
68557 (January 2, 2013), 78 FR 1284 (January 8, 2013) (SR-NYSEMKT-
2012-85) (extending the operation of the SLP Pilot to July 31, 
2013); 69820 (June 21, 2013), 78 FR 38748 (June 27, 2013) (SR-
NYSEMKT-2013-52) (extending the operation of the SLP Pilot to 
January 31, 2014); 71361 (January 21, 2014), 79 FR 4364 (January 27, 
2014) (SR-NYSEMKT-2014-03) (extending the operation of the SLP Pilot 
to July 31, 2014); and 72623 (July 16, 2014), 79 FR 41592 (July 22, 
2014) (SR-NYSEMKT-2014-58 (extending the operation of the SLP Pilot 
to December 31, 2014); and 73947 (December 24, 2014), 80 FR 83 
(January 2, 2015) (SR-NYSEMKT-2014-110 (extending the operation of 
the SLP Pilot to July 31, 2015).
---------------------------------------------------------------------------

Background \5\
---------------------------------------------------------------------------

    \5\ The information contained herein is a summary of the ``New 
Market Model'' Pilot and the SLP Pilot. See supra note 4 and infra 
note 6 for a fuller description of those pilots.
---------------------------------------------------------------------------

    In October 2008, the New York Stock Exchange LLC (``NYSE'') 
implemented significant changes to its market rules, execution 
technology and the rights and obligations of its market participants 
all of which were designed to improve execution quality on the NYSE. 
These changes were all elements of the NYSE's and the Exchange's 
enhanced market model referred to as the ``New Market Model'' (``NMM 
Pilot'').\6\ The NYSE SLP Pilot was launched in coordination with the 
NMM Pilot (see NYSE Rule 107B).
---------------------------------------------------------------------------

    \6\ See Securities Exchange Act Release No. 58845 (October 24, 
2008), 73 FR 64379 (October 29, 2008) (SR-NYSE-2008-46).
---------------------------------------------------------------------------

    As part of the NMM Pilot, NYSE eliminated the function of 
specialists on the Exchange creating a new category of market 
participant, the Designated Market Maker or ``DMM.'' \7\ Separately, 
the NYSE established the SLP Pilot, which established SLPs as a new 
class of market participants to supplement the liquidity provided by 
DMMs.\8\
---------------------------------------------------------------------------

    \7\ See NYSE Rule 103.
    \8\ See NYSE Rule 107B and NYSE MKT Rule 107B--Equities. NYSE 
amended the monthly volume requirements to an average daily volume 
(``ADV'') that is a specified percentage of NYSE consolidated ADV. 
See Securities Exchange Act Release No. 67759 (August 30, 2012), 77 
FR 54939 (September 6, 2012) (SR-NYSE-2012-38).
---------------------------------------------------------------------------

    The NYSE adopted NYSE Rule 107B governing SLPs as a six-month pilot 
program commencing in November 2008. This NYSE pilot has been extended 
several times, most recently to July 31, 2015.\9\ The NYSE has filed to

[[Page 46082]]

make its NMM and SLP Pilots permanent.\10\
---------------------------------------------------------------------------

    \9\ See Securities Exchange Act Release Nos. 58877 (October 29, 
2008), 73 FR 65904 (November 5, 2008) (SR-NYSE-2008-108) (adopting 
SLP Pilot program); 59869 (May 6, 2009), 74 FR 22796 (May 14, 2009) 
(SR-NYSE-2009-46) (extending SLP Pilot program until October 1, 
2009); 60756 (October 1, 2009), 74 FR 51628 (October 7, 2009) (SR-
NYSE-2009-100) (extending SLP Pilot program until November 30, 
2009); 61075 (November 30, 2009), 74 FR 64112 (December 7, 2009) 
(SR-NYSE-2009-119) (extending SLP Pilot program until March 30, 
2010); 61840 (April 5, 2010), 75 FR 18563 (April 12, 2010) (SR-NYSE-
2010-28) (extending the SLP Pilot until September 30, 2010); 62813 
(September 1, 2010), 75 FR 54686 (September 8, 2010) (SR-NYSE-2010-
62) (extending the SLP Pilot until January 31, 2011); 63616 
(December 29, 2010), 76 FR 612 (January 5, 2011) (SR-NYSE-2010-86) 
(extending the operation of the SLP Pilot to August 1, 2011); 64762 
(June 28, 2011), 76 FR 39145 (July 5, 2011) (SR-NYSE-2011-30) 
(extending the operation of the SLP Pilot to January 31, 2012); 
66045 (December 23, 2011), 76 FR 82342 (December 30, 2011) (SR-NYSE-
2011-66) (extending the operation of the SLP Pilot to July 31, 
2012); 67493 (July 25, 2012), 77 FR 45388 (July 31, 2012) (SR-NYSE-
2012-27) (extending the operation of the SLP Pilot to January 31, 
2013); 68560 (January 2, 2013), 78 FR 1280 (January 8, 2013) (SR-
NYSE-2012-76) (extending the operation of the SLP Pilot to July 31, 
2013); 69819 (June 21, 2013), 78 FR 38764 (June 27, 2013) (SR-NYSE-
2013-44) (extending the operation of the SLP Pilot to January 31, 
2014); 71362 (January 21, 2014), 79 FR 4371 (January 27, 2014) (SR-
NYSE-2014-03) (extending the operation of the SLP Pilot to July 31, 
2014); and 72628 (July 16, 2014), 79 FR 42588 (July 22, 2014) (SR-
NYSE-2014-34) (extending the operation of the SLP Pilot to December 
31, 2014); and 73945 (December 24, 2014), 80 FR 58 (January 2, 2015) 
(SR-NYSE-2014-72) (extending the operation of the SLP Pilot to July 
31, 2015).
    \10\ See Securities Exchange Act Release No. 75153 (June 11, 
2015), 80 FR 34717 (June 17, 2015) (SR-NYSE-2015-26).
---------------------------------------------------------------------------

Proposal To Extend the Operation of the NYSE MKT SLP Pilot
    The Exchange established the SLP Pilot to provide incentives for 
quoting, to enhance competition among the existing group of liquidity 
providers, including the DMMs, and add new competitive market 
participants. NYSE MKT Rule 107B--Equities is based on NYSE Rule 107B. 
NYSE MKT Rule 107B--Equities was filed with the Commission on December 
30, 2009, as a ``me too'' filing for immediate effectiveness as a pilot 
program.\11\ The Exchange's SLP Pilot is scheduled to end operation on 
July 31, 2015 or such earlier time as the Commission may determine to 
make the rules permanent.
---------------------------------------------------------------------------

    \11\ See Securities Exchange Act Release No. 61308 (January 7, 
2010), 75 FR 2573 (January 15, 2010) (SR-NYSEAmex-2009-98).
---------------------------------------------------------------------------

    The Exchange believes that the SLP Pilot, in coordination with the 
NMM Pilot, allows the Exchange to provide its market participants with 
a trading venue that utilizes an enhanced market structure to encourage 
the addition of liquidity, facilitate the trading of larger orders more 
efficiently and operates to reward aggressive liquidity providers. As 
such, the Exchange believes that the rules governing the SLP Pilot 
(NYSE MKT Rule 107B--Equities) should be made permanent.
    The Exchange proposes to extend the current operation of the SLP 
Pilot until October 31, 2015, in order to allow the Exchange to 
formally submit a filing to the Commission to convert the SLP Pilot 
rule to a permanent rule. The Exchange is currently preparing a rule 
filing seeking permission to make the Exchange's SLP Pilot permanent, 
but does not expect that filing to be completed and approved by the 
Commission before July 31, 2015.\12\
---------------------------------------------------------------------------

    \12\ The NMM Pilot was scheduled to expire on July 31, 2015 as 
well. The Exchange has filed to extend the NMM Pilot until October 
31, 2015. See SR-NYSEMKT-2015-52.
---------------------------------------------------------------------------

    The proposed change is not otherwise intended to address any other 
issues and the Exchange is not aware of any problems that member 
organizations would have in complying with the proposed change.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\13\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\14\ in particular, because 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 regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities, to remove impediments to, and 
perfect the mechanisms of, a free and open market and a national market 
system and, in general, to protect investors and the public interest 
and because it is not designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------

    \13\ 15 U.S.C. 78f(b).
    \14\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes the proposed rule change is designed to 
prevent fraudulent and manipulative acts and practices and to promote 
just and equitable principles of trade because it seeks to extend a 
pilot program that has already been approved by the Commission. The 
Exchange believes the proposed rule change is designed to facilitate 
transactions in securities and to remove impediments to, and perfect 
the mechanisms of, a free and open market and a national market system 
because the SLP Pilot provides its market participants with a trading 
venue that utilizes an enhanced market structure to encourage the 
addition of liquidity and operates to reward aggressive liquidity 
providers. Moreover, requesting an extension of the SLP Pilot will 
permit adequate time for: (i) The Exchange to prepare and submit a 
filing to make the rules governing the SLP Pilot permanent; (ii) public 
notice and comment; and (iii) completion of the 19b-4 approval process. 
Finally, the Exchange believes that it is subject to significant 
competitive forces, as described below in the Exchange's statement 
regarding the burden on competition. For these reasons, the Exchange 
believes that the proposal is consistent with the Act.

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

    In accordance with Section 6(b)(8) of the Act,\15\ the Exchange 
believes that the proposed rule change would not impose any burden on 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act. The Exchange believes that extending the operation 
of the SLP Pilot will enhance competition among liquidity providers and 
thereby improve execution quality on the Exchange. The Exchange will 
continue to monitor the efficacy of the program during the proposed 
extended pilot period.
---------------------------------------------------------------------------

    \15\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------

    Finally, the Exchange notes that it operates in a highly 
competitive market in which market participants can readily favor 
competing venues. In such an environment, the Exchange must continually 
review, and consider adjusting the services it offers and the 
requirements it imposes to remain competitive with other U.S. equity 
exchanges. For the reasons described above, the Exchange believes that 
the proposed rule change reflects this competitive environment.

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 \16\ and Rule 19b-4(f)(6) thereunder.\17\ 
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

[[Page 46083]]

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.
---------------------------------------------------------------------------

    \16\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \17\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) \18\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\19\ 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 
waiving the 30-day operative delay is consistent with the protection of 
investors and the public interest. The Exchange believes that waiver 
will ensure that member organizations and the public can continue to 
benefit from the pilot program without interruption after July 31, 
2015. The Commission hereby waives the 30-day operative delay and 
designates the proposal operative upon filing.\20\
---------------------------------------------------------------------------

    \18\ 17 CFR 240.19b-4(f)(6).
    \19\ 17 CFR 240.19b-4(f)(6)(iii).
    \20\ 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).
---------------------------------------------------------------------------

    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) \21\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \21\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

IV. Solicitation of Comment

    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-2015-53 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-NYSEMKT-2015-53. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549, on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-NYSEMKT-2015-53, and should 
be submitted on or before August 24, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\22\
---------------------------------------------------------------------------

    \22\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-18880 Filed 7-31-15; 8:45 am]
BILLING CODE 8011-01-P