Document ID: SEC-2016-1297-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2016-07-26T04:00Z

[Federal Register Volume 81, Number 143 (Tuesday, July 26, 2016)]
[Notices]
[Pages 48876-48878]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-17585]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78374; File No. SR-NYSEARCA-2016-98]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Amending NYSE Arca 
Equities Rules 1.1(s) and 7.35P(a)(10)(A) to Extend the Period for the 
Current Trading Halt Auction Collar Price Collar Thresholds

July 20, 2016.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given 
that, on July 8, 2016, NYSE Arca, Inc. (``Exchange'' or ``NYSE Arca'') 
filed with the Securities and Exchange Commission (``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 Equities Rules 1.1(s) and 
7.35P(a)(10)(A) to extend the period for the current Trading Halt 
Auction Collar price collar thresholds. The proposed rule change is 
available on the

[[Page 48877]]

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 Equities Rule 1.1(s) 
(``Rule 1.1(s)'') and 7.35P(a)(10)(A) (``Rule 7.35P'') to extend the 
period for the current Trading Halt price collar thresholds.
    As specified in Rules 1.1(s) and 7.35P(a)(10)(A), the price collar 
thresholds for Trading Halt Auctions are currently set at 10% for 
securities with an Auction Reference Price \4\ of $25.00 or less, 5% 
for securities with an Auction Reference Price greater than $25.00 but 
less than or equal to $50.00, and 3% for securities with an Auction 
Reference Price greater than $50.00.\5\ These price collar thresholds 
were adopted on an interim basis and sunset on July 28, 2016.
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    \4\ As set forth in Rule 7.35P(a)(8)(A), the Auction Reference 
Price for Trading Halt Auctions is the last consolidated round-lot 
price of that trading day and, if none, the prior trading day's 
Official Closing Price. As set forth in Rule 1.1(s), the auction 
reference price is the last consolidated sale price.
    \5\ Rule 7.35P governs trading for symbols transitioned to the 
Pillar trading platform. Although all symbols are trading on the 
Pillar trading platform, the [sic] the Exchange proposes to amend 
Rule 1.1(s) so that Exchange rules that address the same topic are 
harmonized.
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    When approving the current price collar thresholds for Trading Halt 
Auctions, the Commission noted that they were appropriate as an interim 
measure to protect investors and the public interest.\6\ The Exchange 
committed to use the period while the interim price collar thresholds 
are in place to conduct an analysis to determine whether to make the 
proposed price collar thresholds permanent or to propose other or 
additional changes to its re-opening process. Since that time, under 
the auspices of the Operating Committee of the Regulation NMS Plan to 
Address Extraordinary Market Volatility (``LULD Plan''), and with input 
from the Advisory Committee to the LULD Plan, the Exchange has begun 
working with other primary listing markets and participants to the LULD 
Plan to identify proposed changes to the resumption of trading 
following a trading pause that could be applied across all automated 
markets. This initiative has superseded the Exchange's prior analysis 
relating to the resumption of trading following a trading pause.
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    \6\ See Securities Exchange Act Release Nos. 76994 (Jan. 28, 
2016), 81 FR 5809 (Feb. 3, 2016) (SR-NYSEArca-2015-121) (Approval 
Order) and 77140 (Feb. 16, 2016), 81 FR 8812 (SR-NYSEArca-2016-27) 
(Notice of Filing).
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    Because the analysis associated with market-wide initiative is not 
expected to be completed by July 28, 2016, the Exchange proposes to 
extend the time for its interim price collar thresholds for Trading 
Halt Auctions from July 28, 2016 to January 31, 2017. The Exchange 
believes that extending the existing interim measures an additional six 
months will provide time for the participants to the LULD Plan to 
complete their analysis relating to the resumption of trading following 
a trading pause, while at the same time maintaining the current 
protections for Trading Halt Auctions. This extension of the time 
period will also provide additional time for the Exchange and other 
participants to the LULD Plan to amend their respective rules or the 
LULD Plan, as appropriate.
    The Exchange continues to believe that it is appropriate to have 
protections in place for Trading Halt Auctions to assure that a 
reopening trade will not deviate significantly from prior prices, even 
taking into consideration natural price movements for a security. The 
Exchange believes that it is appropriate to maintain price collar 
thresholds for Trading Halt Auctions based on the clearly erroneous 
execution guidelines because an auction trade is subject to these 
guidelines for purposes of determining whether such execution is 
clearly erroneous. In addition, the Exchange's interim price collar 
thresholds are similar to how BATS BZX Exchange, Inc. (``BATS'') prices 
its Halt Auctions for ETPs. Like BATS, the Exchange is the primary 
listing market only for ETPs and would, therefore only have Trading 
Halt Auctions for ETPs. BATS Rule 11.23(d)(2)(D) provides that BATS 
executes orders in ETPs in a Halt auction at a price level within a 
``Collar Price Range'' that maximizes the number of shares executed in 
the auction. Similar to the Exchange's rule, BATS uses Collar Price 
Ranges that are based on the numerical guidelines set forth in the 
market-wide clearly erroneous execution rules.\7\ The Exchange's 
Auction Collars differ from BATS's pricing mechanism because the 
Exchange would use the consolidated last sale price as the reference 
price, rather than the midpoint of a ``Valid NBBO.'' The Exchange 
believes that using the consolidated last sale price tracks the market-
wide clearly erroneous execution rules, which similarly use the 
consolidated last sale price for determining whether an execution is 
clearly erroneous.
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    \7\ As set forth in BATS Rule 11.23(a)(6), the Collar Price 
Range is 10% for securities with a Collar Midpoint of $25.00 or 
less, 5% for securities with a Collar Midpoint greater than $25.00 
but less than or equal to $50.00, and 3% for securities with a 
Collar Midpoint greater than $50.00. BATS Rule 11.23(a)(6) defines 
the Collar Midpoint as the Volume Based Tie Breaker, which is 
defined in BATS Rule 11.23(a)(23) as the midpoint of the NBBO if it 
is a Valid NBBO, with a Valid NBBO defined as where: (i) There is 
both a NBB and NBO for the security; (ii) the NBBO is not crossed; 
and (iii) the midpoint of the NBBO is less than the Maximum 
Percentage away from both the NBB and the NBO.
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2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Securities Exchange Act of 1934 (the ``Act''),\8\ in general, and 
furthers the objectives of Section 6(b)(5),\9\ 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 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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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that extending the interim period for the 
current Trading Halt Auction price collar thresholds would remove 
impediments to and perfect the mechanism of a fair and orderly market 
by providing for Auctions Collars at the Exchange pending the ongoing 
analysis by the participants to the LULD Plan to identify a market-wide 
solution to automated reopenings following a trading pause. For the 
extended interim basis, the price collar thresholds would continue to 
be aligned with the clearly erroneous execution guidelines and 
therefore continuing with these price collar thresholds would reduce 
the

[[Page 48878]]

potential for a Trading Halt Auction to be a clearly erroneous 
execution. In addition, the Exchange believes that pending the outcome 
of the analysis being performed by the Operating Committee to the LULD 
Plan, extending the Exchange's interim measure an additional six months 
would be consistent with the protection of investors and the public 
interest.

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 provide for a 
six-month extension to the price collar thresholds for Trading Halt 
Auctions on the Exchange, pending the analysis being conducted by the 
Operating Committee to the LULD Plan.

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, the proposed rule 
change 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 the 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 pursuant to Rule 19b-4(f)(6) under the 
Act \12\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \13\ permits the 
Commission to 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 
Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest. As 
the Exchange notes, waiver of the operative delay would allow for the 
current price collar thresholds, which are due to expire on July 28, 
2016, to continue uninterrupted pending the ongoing market-wide 
analysis regarding potential changes to automated reopenings following 
a trading pause. Accordingly, the Commission hereby waives the 
operative delay and designates the proposal operative upon filing.\14\
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    \12\ 17 CFR 240.19b-4(f)(6).
    \13\ 17 CFR 240.19b-4(f)(6)(iii).
    \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 to 
determine whether the proposed rule change 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-NYSEARCA-2016-98 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-2016-98. 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-NYSEARCA-2016-98 and should 
be submitted on or before August 16, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-17585 Filed 7-25-16; 8:45 am]
 BILLING CODE 8011-01-P