Document ID: SEC-2016-1544-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE MKT, LLC
Posted Date: 2016-08-31T04:00Z

[Federal Register Volume 81, Number 169 (Wednesday, August 31, 2016)]
[Notices]
[Pages 60108-60109]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-20886]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78685; File No. SR-NYSEMKT-2016-77]

Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change Amending Rule 
900.2NY(18A)

August 25, 2016.
    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 12, 2016, 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.
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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 Rule 900.2NY(18A). 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 purpose of the filing is to amend Rule 900.2NY(18A), regarding 
the definition of a ``Professional Customer,'' to align the Exchange's 
definition with that of competing options exchanges, as discussed 
below.
    The Exchange adopted the definition of a Professional Customer in 
2010, after several other options exchanges added this definition.\4\ 
In doing so, the Exchange provided that a Professional Customer would 
``be treated in the same manner as a Broker/Dealer (or non-Customer) in 
securities for the purposes'' of various Exchange rules ``and the 
Exchange's schedule of fees.'' \5\ Recently, the Exchange amended its 
Professional Customer definition to align with rules of other 
markets.\6\ However, as part of the harmonization effort for a uniform 
definition of Professional Customer, the Exchange has determined that 
other options exchanges do not similarly include reference to their fee 
schedules in the definition of Professional Customer.\7\ Thus, to 
conform with the rules of other options exchanges, the Exchange 
proposes to modify Rule 900.2NY(18A) to delete the reference to the 
Exchange's fee schedule. This change would allow the Exchange, like its 
competitors, to attract Professional Customer order flow with fees that 
differentiate Professional Customers from Broker/Dealers.
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    \4\ See Securities Exchange Act Release No. 61818 (March 31, 
2010), 75 FR 17457 (April 6, 2010) (SR-NYSEAmex-2010-18). See also 
id., at note 14 (citing the approval orders of other options 
exchanges).
    \5\ See Rule 900.2NY(18A).
    \6\ See Securities Exchange Act Release No. 77836 (May 16, 
2016), 81 FR 31994 (May 20, 2016) (SR-NYSEMKT-2016-53).
    \7\ See, e.g., NYSE Arca Rule 6.1A.(4A) (no reference to fee 
schedule in definition of Professional Customer); Nasdaq OMX PHLX 
(``PHLX'') Rule 1000 (b)(14) (same); Nasdaq Options Market (``NOM'') 
Chapter 1, Sec. 1(a)(48) (same); Bats BZX Exchange, Inc.'s (``BZX'') 
Rule 16.1(a)(46) (same); BOX Options Exchange LLC (``BOX'') Rule 100 
(a)(50) (same); International Securities Exchange (``ISE'') Rule 
100(a)(37A) (same); MIAX Options Exchange (``MIAX'') Rule 100 
(same).
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    The Exchange also proposes to make a non-substantive change to 
clarify the list of rules to which the Professional Customer definition 
applies, which would add clarity and transparency to Exchange rules.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) \8\ of the 
Securities Exchange Act of 1934 (the ``Act''), in general, and furthers 
the objectives of Section 6(b)(5),\9\ in particular, 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 mechanisms of 
a free and open market and a national market system.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
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    The proposed change would foster cooperation and coordination with 
persons engaged in facilitating transactions in securities as it would 
align Exchange rules with that of its competitors, which benefits 
investors and the public interest. By removing reference to the 
Exchange's fee schedule from the definition of Professional Customer, 
the Exchange would, like its competitors, have the ability to attract 
Professional Customer order flow with fees that differentiate 
Professional Customers from Broker/Dealers. The proposed rule change 
would therefore remove impediments to and perfect the mechanism of a 
free and open market and a national market system by enabling the 
Exchange to structure its fees for Professional Customers competitively 
with the fees of other options exchanges.
    Further, the proposed changes are not unfairly discriminatory as 
the modified definition would apply to all similarly-situated ATP 
Holders that submit orders on behalf of Professional Customers.
    Finally, the non-substantive change to the Professional Customer 
definition would remove impediments to and perfect the mechanisms of a 
free and open market and a national market system, as it would add 
clarity and transparency to Exchange rules.

[[Page 60109]]

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 Exchange believes that 
the proposed changes are pro-competitive as the changes align Exchange 
rules with that of competing markets and would allow the Exchange to 
better compete for Professional Customer order flow. The Exchange does 
not believe that the proposed rule change would impose any burden on 
intramarket competition because, to the extent the Exchange chooses to 
adopt fees specific to Professional Customers, such fees would be equal 
to or less than those charged to broker/dealers and would not be more 
favorable than fees charged to public customers.

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 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) of the Act \10\ and Rule 19b-4(f)(6) thereunder.\11\
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 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, 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.
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    A proposed rule change filed under Rule 19b-4(f)(6) \12\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\13\ 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 Exchange 
would be able to propose fees changes related to Professional Customers 
on September 1, 2016.
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    \12\ 17 CFR 240.19b-4(f)(6).
    \13\ 17 CFR 240.19b-4(f)(6)(iii).
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    The Commission believes waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest 
because the proposal does not raise any new or novel issues. The 
Exchange's proposal removes the current provision that requires the 
Exchange to treat Professional Customers and Broker-Dealers in the 
``same manner'' with respect to fees, which will allow the Exchange to 
separately propose, if it so chooses, to set its fees competitively in 
order to attract Professional Customer order flow, provided that such 
competitive fees are consistent with the requirements of the Act and 
the rules and regulations thereunder. The Commission notes that the 
Exchange has representated that, to the extent it chooses to adopt fees 
specific to Professional Customers, such fees would be equal to or less 
than those charged to broker-dealers and would not be more favorable 
than fees charged to public customers. Because this proposal does not 
raise any new or novel issues with respect to the treatment of 
Professional Customers, the Commission hereby waives the operative 
delay and designates the proposed rule change operative upon 
filing.\14\
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    \14\ For purposes only of waiving the 30-day operative delay, 
the Commission has also 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 the 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-2016-77 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-2016-77. 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-2016-77 and should 
be submitted on or before September 21, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-20886 Filed 8-30-16; 8:45 am]
BILLING CODE 8011-01-P