[Federal Register Volume 82, Number 72 (Monday, April 17, 2017)]
[Notices]
[Pages 18191-18196]
[FR Doc No: 2017-07638]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80432; File No. SR-ISE-2017-03]

Self-Regulatory Organizations; Nasdaq ISE, LLC; Order Approving
Proposed Rule Change, as Modified by Amendment No. 1, To Amend Various
Rules in Connection With a System Migration to Nasdaq INET Technology

April 11, 2017.

I. Introduction

    On February 8, 2017, the International Securities Exchange, LLC
(now known as Nasdaq ISE, LLC (``ISE'' or ``Exchange'')) \1\ filed with
the Securities and Exchange Commission (``Commission''), pursuant to
Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act''),\2\
and Rule 19b-4 thereunder,\3\ a proposed rule change to amend various
Exchange rules in connection with a system migration to Nasdaq, Inc.
(``Nasdaq'') supported technology. The proposed rule change was
published for comment in the Federal Register on February 27, 2017.\4\
On March 30, 2017, the Exchange filed Amendment No. 1 to the proposed
rule change.\5\ The Commission received no comment letters on the
proposed rule change. This order approves the proposed rule change, as
modified by Amendment No. 1.
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    \1\ ISE was renamed Nasdaq ISE, LLC in a rule change that became
operative on April 3, 2017. See Securities Exchange Act Release No.
80325 (March 29, 2017), 82 FR 16445 (April 4, 2017) (SR-ISE-2017-
25).
    \2\ 15 U.S.C. 78s(b)(1).
    \3\ 17 CFR 240.19b-4.
    \4\ See Securities Exchange Act Release No. 80075 (February 21,
2017), 82 FR 11975 (``Notice'').
    \5\ In Amendment No. 1, the Exchange clarified the proposed
handling of complex orders during Limit Up-Limit Down states,
proposed that All-Or-None Orders may only be entered with a time-in-
force designation of Immediate-Or-Cancel, proposed to memorialize
the handling of Cancel and Replace Orders, and removed a proposed
rule change regarding delaying the implementation of Directed
Orders. The Exchange also clarified the reason Price Level
Protection would be applied to complex orders and made other
clarifying changes. Because Amendment No. 1 does not materially
alter the substance of the proposed rule change or raise unique or
novel regulatory issues, it is not subject to notice and comment.
The amendment is available at: https://www.sec.gov/comments/sr-ise-2017-03/ise201703-1677882-149321.pdf.
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II. Discussion and Commission Findings

    After careful review, the Commission finds that the proposed rule
change, as modified by Amendment No. 1, is consistent with the
requirements of the Act and the rules and regulations thereunder
applicable to a national securities exchange.\6\ In particular, the
Commission finds that the proposed rule change is consistent with
Section 6(b)(5) of the Act,\7\ which requires, among other things, that
the rules of a national securities exchange be 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. As noted above, the Commission
received no comment letters regarding the proposed rule change.
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    \6\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
    \7\ 15 U.S.C. 78f(b)(5).
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    The Exchange proposes to amend various Exchange rules to reflect
the ISE system migration to a Nasdaq INET technology.\8\ In connection
this system migration, as discussed below, the Exchange intends to
adopt certain trading functionality currently utilized on Nasdaq
Exchanges.\9\
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    \8\ INET is utilized across Nasdaq's markets, including The
NASDAQ Options Market LLC (``NOM''), NASDAQ PHLX LLC (``Phlx''), and
NASDAQ BX, Inc. (collectively, the ``Nasdaq Exchanges''). See
Notice, supra note 4, at 11975. The Commission also recently
approved Nasdaq GEMX, LLC's (formerly ISE Gemini, LLC) migration to
INET. See Securities Exchange Act Release Nos. 80011 (February 10,
2017), 82 FR 10927 (February 16, 2017) (SR-ISEGemini-2016-17); 80014
(February 10, 2017), 82 FR 10952 (February 16, 2017) (SR-ISEGemini-
2016-18).
    \9\ See Notice, supra note 4, at 11975. The Exchange anticipates
that it will begin implementation of the proposed rule changes in
the second quarter of 2017. See Notice, supra note 4, at 11975.
According to the Exchange, the system migration will be on a symbol
by symbol basis. The Exchange will issue an alert to members in the
form of an Options Trader Alert to provide notification of the
symbols that will migrate and the relevant dates. See id. Further,
the Commission has approved a separately filed companion proposed
rule change to amend the Exchange's opening process in connection
with the system migration to INET technology. See Securities
Exchange Act Release No. 80225 (March 13, 2017), 82 FR 14243 (March
17, 2017) (SR-ISE-2017-02).

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A. Trading Halts

1. Cancellation of Quotes
    The Exchange proposes to amend ISE Rule 702 (Trading Halts) to
conform the treatment of orders and quotes on the Exchange to Phlx Rule
1047(f). Specifically, the Exchange proposes to amend Rule 702(a)(2) by
providing that during a halt the Exchange will maintain existing orders
on the book but not existing quotes. Pursuant to the revision, during
the halt, the Exchange will accept orders and quotes and, for such
orders and quotes, process cancels and modifications. Currently, the
Exchange maintains existing orders and quotes during a trading halt.
With respect to cancels and modifications during a trading halt, the
Exchange represents that the current process on ISE will not change
under the proposed rule change.\10\
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    \10\ See Notice, supra note 4, at 11976.
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    The Exchange represents that its proposal to maintain existing
orders on the book but not existing quotes during a halt would provide
market participants with clarity as to the manner in which interests
will be handled by the System.\11\ The Exchange believes that, during a
trading halt, the market may move and create risk to market
participants with respect to resting interests.\12\
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    \11\ See Notice, supra note 4, at 11983.
    \12\ See id.
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    The Commission believes that that cancelling existing quotes during
a trading halt would provide market participants the opportunity to
update potentially stale quotes. Further, the Commission notes that the
Exchange will process cancels and modifications to orders as well as
quotes received during a halt. Finally, the Commission further notes
that the proposed treatment of quotes during a halt is consistent with
existing Phlx rule.\13\
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    \13\ See Phlx Rule 1047(f).
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2. Limit Up-Limit Down
    The Exchange proposes to replace existing ISE Rule 703A (Trading
During Limit Up-Limit Down States in Underlying Securities) with
proposed ISE Rule 702(d).\14\ Specifically, proposed ISE Rule 702(d)
will provide that during a Limit State and Straddle State in the
underlying NMS stock \15\ the Exchange will not open an affected
option.\16\ However, provided the Exchange has opened an affected
option for trading, the Exchange will: (i) Reject Market Orders \17\
(including complex Market Orders) and notify members of the reason for
such rejection; \18\ (ii) cancel complex orders that are Market Orders
residing in the System, if the complex Market Order becomes marketable
while the affected underlying is in a Limit or Straddle State; \19\
(iii) continue to process Market Orders exposed at the NBBO pursuant to
Supplementary Material. 02 to ISE Rule 1901 and complex Market Orders
exposed for price improvement pursuant to ISE Rule 722(b)(3)(iii),
pending in the System, and cancel such Market Order or complex Market
Order if at the end of the exposure period the affected underlying is
in a Limit or Straddle State; \20\ and (iv) elect Stop Orders if the
condition is met, and, because such orders become Market Orders, cancel
them back and notify members of the reason for such rejection.\21\
Moreover, when the security underlying an option class is in a Limit
State or Straddle State, the Exchange will suspend the maximum
quotation spread requirements for market maker quotes in ISE Rule
803(b)(4) and the continuous quotation requirements in ISE Rule
804(e).\22\ Additionally, the Exchange will not consider the time
periods associated with Limit States and Straddle States when
evaluating whether a market maker has complied with its continuous
quotation requirements in ISE Rule 804(e).\23\
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    \14\ The Exchange represents that proposed ISE Rule 702(d) is
similar to Phlx Rule 1047(d). See Notice, supra note 4, at 11976.
    \15\ Proposed ISE Rule 702(d) states that capitalized terms used
in Rule 702(d) will have the same meaning as provided for in the
Plan to Address Extraordinary Market Volatility Pursuant to Rule 608
of Regulation NMS, as it may be amended from time to time (the
``LULD Plan'').
    \16\ See proposed ISE Rule 702(d)(1). The Exchange states that
its rules do not currently address the opening rotation in the event
that the underlying NMS stock is open but has entered into a Limit
or Straddle State. See Notice, supra note 4, at 11976.
    \17\ For the definition of the term ``Market Orders'', see ISE
Rule 715(a).
    \18\ See proposed ISE Rule 702(d)(2).
    \19\ See id. See also Amendment No. 1, supra note 5.
    \20\ See proposed ISE Rule 702(d)(2). If the affected underlying
is no longer in a Limit or Straddle State after the exposure period,
the Market Order will be processed with normal handling. See id. The
Exchange currently cancels Market Orders pending in the System upon
initiation of a Limit or Straddle State. See Notice, supra note 4,
at 11976.
    \21\ See proposed ISE Rule 702(d)(3). ISE currently does not
elect Stop Orders that are pending in the System during a Limit or
Straddle State. Under the proposal, the Exchange will elect Stop
Orders that are pending in the System during a Limit or Straddle
State, if conditions for such election are met; however, because
such orders become Market Orders, they will be cancelled back to the
member with a reason for such rejection. See Notice, supra note 4,
at 11977.
    \22\ See proposed ISE Rule 702(d)(4).
    \23\ See id. Proposed ISE Rule 703(d)(4) is substantively
identical to ISE Rule 703A(c). See Notice, supra note 4, at 11976.
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    The Commission believes that the proposed Rule 702(d) would provide
certainty to market participants regarding the manner in which Limit
up-Limit Down states would impact the opening process as well as Market
Orders (including complex Market Orders) and Stop Orders. The
Commission believes that the rejection of Market Orders (including
complex Market Orders and elected Stop Orders) is reasonably designed
to potentially prevent executions of un-priced orders during times of
significant volatility.\24\ The Commission also notes that processing
rather than cancelling existing Market Orders is reasonable because
these Market Orders are only pending in the System if they are exposed
at the NBBO pursuant to Supplementary Material .02 to ISE Rule 1901 or
because they are complex Market Orders exposed for price improvement
pursuant to ISE Rule 722(b)(3)(iii).\25\ Further, the Exchange believes
that electing Stop Orders that are pending in the System during a Limit
or Straddle State, if conditions for such election are met, would
provide market participants with the intended result.\26\ Lastly, the
Commission notes that proposed ISE Rule 702(d)(4) is substantively
identical to existing ISE Rule 703A(c), which is being deleted.
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    \24\ See Notice, supra note 4, at 11982.
    \25\ See Notice, supra note 4, at 11982.
    \26\ See Notice, supra note 4, at 11982.
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3. Auction Handling During a Trading Halt
    The Exchange proposes to amend certain rules to account for the
impact of a trading halt on the Exchange's auction mechanisms. First,
the Exchange proposes to amend ISE Rule 723 (Price Improvement
Mechanism for Crossing Transactions) regarding the manner in which a
trading halt will impact an order entered into the Price Improvement
Mechanism (``PIM''). Today, if a trading halt is initiated after an
order is entered into the PIM, the Exchange terminates such auction and
eligible interest is executed.\27\ The Exchange proposes to amend the
current process by terminating the auction and not executing eligible
interest when a

trading halt occurs.\28\ Similarly, the Exchange also proposes to amend
to ISE Rule 716 (Block Trades) to state that, if a trading halt is
initiated after an order is entered into the Block Order Mechanism,
Facilitation Mechanism, or Solicited Order Mechanism, the Exchange will
automatically terminate such auction without execution.\29\
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    \27\ See Notice, supra note 4, at 11977. In the case of a
complex order entered into the PIM, if a trading halt is initiated,
the auction would be terminated and eligible interest cancelled
without execution. See id. The Exchange is not amending this
behavior. See id.
    \28\ See proposed ISE Rule 723(d)(5). The Exchange is not
amending the behavior of the PIM with respect to complex orders. See
Amendment No. 1, supra note 5.
    \29\ See proposed subsections (c)(3), (d)(3)(iv), and (e)(2)(iv)
of ISE Rule 716. The Exchange represents that this proposed
amendment represents the current process on ISE and is generally
consistent with Phlx Rule 1047(c). See Notice, supra note 4, at
11977.
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    The Exchange believes that its proposal to terminate the PIM
auction, Block Order Mechanism, Facilitation Mechanism, and Solicited
Order Mechanism and not execute eligible interest when a trading halt
occurs will provide certainty to participants regarding how their
interest will be handled.\30\ The Exchange believes that during a
trading halt, the market may move and create risk to market
participants with respect to resting interest.\31\ The Commission
believes that the proposed rule provides transparency and clarity
regarding the handling of these orders during a trading halt.
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    \30\ See Notice, supra note 4, at 11983.
    \31\ See id.
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B. Market Order Spread Protection

    The Exchange proposes to amend ISE Rule 711 (Acceptance of Quotes
and Orders) by adopting a new mandatory risk protection entitled Market
Order Spread Protection which will apply to Market Orders.\32\ Pursuant
to proposed ISE Rule 711(c), if the NBBO is wider than a preset
threshold at the time a Market Order is received by the Exchange, the
Exchange will reject the order. The Exchange will notify members of the
threshold with a notice, and, thereafter, will notify members of any
subsequent changes to the threshold.\33\ The Exchange represents that
the Market Order Spread Protection will be the same for all options
traded on the Exchange and is applicable to all members that submit
Market Orders.\34\
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    \32\ The Exchange states that this mandatory feature is
currently offered on NOM to protect Market Orders from being
executed in very wide markets. See Notice, supra note 4, at 11977.
See also NOM Rules at Chapter VI, Section 6(c).
    \33\ See Notice, supra note 4, at 11977. The Exchange proposes
to initially set the threshold to $5, similar to the threshold set
on NOM. See id. The Exchange states that NOM set the differential at
$5 to match the maximum bid/ask differential permitted for quotes on
that exchange. See id. ISE also uses a similar $5 differential. See
id.
    \34\ See Notice, supra note 4, at 11978.
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    The Exchange believes, and the Commission concurs, that the
proposed Market Order Spread Protection would help mitigate risks
associated with trading errors and help reduce the number of executions
at dislocated prices.\35\ The Commission also notes that the protection
is similar to a mandatory feature currently offered on NOM.\36\
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    \35\ See Notice, supra note 4, at 11983.
    \36\ See NOM Rules at Chapter VI, Section 6(c).
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C. Acceptable Trade Range

    Today, ISE offers a Price Level Protection that places a limit on
the number of price levels at which an incoming order or quote to sell
(buy) would be executed automatically when there are no bids (offers)
from other exchanges at any price for the options series.\37\ The
Exchange proposes to replace the current Price Level Protection with
Phlx's Acceptable Trade Range for orders that are not complex
orders.\38\ The Exchange states that the proposed Acceptable Trade
Range is a mechanism designed to prevent the System from experiencing
dramatic price swings by preventing the market from moving beyond set
thresholds.\39\ The System will calculate an Acceptable Trade Range to
limit the range of prices at which an order or quote will be allowed to
execute.\40\ Upon receipt of a new order or quote, the Acceptable Trade
Range is calculated by taking the reference price, plus or minus a
value to be determined by the Exchange, where the reference price is
the National Best Bid (``NBB'') for sell orders/quotes and the National
Best Offer (``NBO'') for buy orders/quotes. Accordingly, the Acceptable
Trade Range is: The reference price - (x) for sell orders/quotes; and
the reference price + (x) for buy orders.\41\ If an order or quote
reaches the outer limit of the Acceptable Trade Range (the ``Threshold
Price'') without being fully executed, then any unexecuted balance will
be cancelled.\42\ The Acceptable Trade Range will not be available for
All-or-None Orders.\43\
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    \37\ See Notice, supra note 4, at 11980; ISE Rule 714(b)(1).
    \38\ See Phlx Rule 1080(p). Unlike Phlx, ISE does not offer a
general continuous re-pricing mechanism. See id. Accordingly, the
Exchange states that the proposed Acceptable Trade Range will not
include the posting period functionality available today on Phlx.
See Notice, supra note 4, at 11978, n.16. The Exchange will not post
interest that exceeds the outer limit of the Acceptable Trade Range;
rather the interest will be cancelled. See Notice, supra note 4, at
11978. Orders that do not exceed the outer limit of the Acceptable
Trade Range will post to the order book and will reside on the order
book at such price until they are either executed in full or
cancelled by the member. See Notice, supra note 4, at 11979.
    \39\ See Notice, supra note 4, at 11983.
    \40\ See proposed ISE Rule 714(b)(1)(i).
    \41\ The Exchange states that the Acceptable Trade Range
settings are tied to the option premium. See Notice, supra note 4,
at 11979, n.17. A table consisting of several steps based on the
premium of an option will be displayed on the NASDAQTrader.com Web
site and used to determine how far the market for a given option
will be allowed to move. See Notice, supra note 4, at 11979. Updates
to the table would be announced via an Exchange alert, generally the
prior day. See id.
    \42\ See proposed ISE Rule 714(b)(1)(ii).
    \43\ See proposed ISE Rule 714(b)(1)(ii). Today, ISE's Price
Level Protection rule is also not available for All-or-None Orders.
See Notice, supra note 4, at 11978, n.18.
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    The Exchange represents that it will set the Acceptable Trade Range
at levels to ensure that it is triggered infrequently.\44\ While the
Acceptable Trade Range settings will be tied to the option premium,
other factors will be considered when determining the exact
settings.\45\ For example, the Exchange states that acceptable ranges
may change if market-wide volatility is high or if overall market
liquidity is low based on historical trends.\46\ To ensure a well-
functioning market, the Exchange believes that different market
conditions may require adjustments to the threshold amounts from time
to time.\47\ Further, while the Acceptable Trade Range settings will
generally be the same across all options traded on the Exchange, ISE
proposes to set them separately based on characteristics of the
underlying security.\48\ For example, the Exchange has generally
observed that options subject to the Penny Pilot program quote with
tighter spreads than options not subject to the Penny Pilot.
Accordingly, the Exchange will set Acceptable Trade Ranges for three
categories of options: (1) Penny Pilot Options trading in one cent
increments for options trading at less than $3.00 and increments of
five cents for options trading at $3.00 or more; (2) Penny Pilot
Options trading in one-cent increments for all prices; and (3) Non-
Penny Pilot Options.\49\
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    \44\ See Notice, supra note 4, at 11978.
    \45\ See id.
    \46\ See id.
    \47\ See id.
    \48\ See Notice, supra note 4, at id.
    \49\ See proposed ISE Rule 714(b)(1)(iii).
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    The Exchange represents that the Acceptable Trade Range should
prevent the System from experiencing dramatic price swings by
preventing the market from moving beyond set thresholds.\50\ The
Commission believes that the Acceptable Trade Range is reasonably
designed to prevent executions of orders and quotes at prices that are
significantly worse than the NBBO at time of an order's submission and
may

reduce the potential negative impacts of unanticipated volatility in
individual options.
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    \50\ See Notice, supra note 4, at 11983.
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    For complex orders, the Exchange proposes to continue to apply the
existing Price Level Protection rule and relocate the rule from current
ISE Rule 714(b)(1) to proposed ISE Rule 714(b)(4).\51\ The Exchange
represents that the existing Price Level Protection Rule is a better
protection for complex orders than the proposed Acceptable Trade Range
protection because, unlike single leg orders, complex orders are not
subject to trade-through protections and the Acceptable Trade Range
protection utilizes the NBBO.\52\ The Commission also notes that the
functionality of Price Level Protection will remain the same with
respect to complex orders. Further, the Commission notes that the
proposed Acceptable Trade Range is similar to an existing mechanism on
Phlx.\53\
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    \51\ See proposed ISE Rule 714(b)(4). To adapt the rule so that
it only applies to complex orders, the Exchange proposes to amend
the Price Level Protection rule to: (i) Remove references that
specifically relate to single leg order functionality; (ii) remove
references to PMM handling that does not apply to complex orders;
and (iii) add references to component legs to make clear that the
rule applies to the component legs of complex orders. See Notice,
supra note 4, at 11980. The Exchange represents that the number of
price levels at which an incoming order or quote could execute when
there are no corresponding bids or offers from other exchanges at
any price is currently set to five per leg. See Amendment No. 1,
supra note 5.
    \52\ See Notice, supra note 4, at id.
    \53\ See Notice, supra note 4, at 11983; Phlx Rule 1080(p).
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D. PMM Order Handling and Opening Obligations

    The Exchange proposes to eliminate the Primary Market Maker
(``PMM'') order handling and opening obligations in ISE Rule
803(c).\54\ As described above, with the migration of ISE to the Nasdaq
INET architecture, the Exchange is adopting the Acceptable Trade Range
and opening rotation functionality currently offered on NOM and Phlx,
which do not contain similar requirements for the PMMs as in ISE Rule
803(c).
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    \54\ ISE Rule 803(c) provides that, in addition to the
obligations contained in Rule 803 for market makers generally, for
options classes to which a market maker is the appointed PMM, PMM
shall have the responsibility to: (1) As soon as practical, address
Priority Customer Orders that are not automatically executed
pursuant to Rule 714(b)(1) in a manner consistent with its
obligations under Rule 803(b) by either (i) executing all or a
portion of the order at a price that at least matches the NBBO and
that improves upon the Exchange's best bid (in the case of a sell
order) or the Exchange's best offer (in the case of a buy order); or
(ii) releasing all or a portion of the order for execution against
bids and offers on the Exchange; and (2) initiate trading in each
series pursuant to Rule 701 (Trading Rotations).
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    The Exchange represents that PMMs' current obligations are no
longer necessary due to the introduction of the Acceptable Trade Range
and proposed changes to the Exchange's opening process.\55\ The
Exchange states that its proposal to conform the Exchange's opening
process to Phlx Rule 1017 will result in an opening initiated by the
receipt of an appropriate number of valid width quotes by the PMM or
Competitive Market Maker, instead of an opening process initiated by a
PMM.\56\ Similarly, the Exchange believes the proposed Acceptable Trade
Range functionality will continue to provide order protection to
members without imposing any PMM obligations.\57\ The Exchange further
represents that NOM and Phlx do not impose similar PMM order handling
and opening obligations.\58\ Accordingly, the Commission believes that
these changes are consistent with the Act.
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    \55\ See Notice, supra note 4, at 11983. See also supra note 9.
    \56\ See Notice, supra note 4, at 11983. See also supra note 9.
    \57\ See Notice, supra note 4, at 11980. The Exchange states
that Phlx does not currently have similar roles for a Specialist on
its market. See id.
    \58\ See Notice, supra note 4, at 11980.
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E. Back-Up PMM

    The Exchange proposes to amend Supplementary Material .03 to ISE
Rule 803 to eliminate Back-Up PMMs. Today, any ISE member that is
approved to act in the capacity of a PMM or an ``Alternative Primary
Market Maker'' may voluntarily act as a Back-Up PMM in an options
series in which it is quoting as a Competitive Market Maker
(``CMM'').\59\ With the technology migration, the Exchange believes
that a Back-Up PMM is no longer necessary because under INET the
Exchange will not utilize the order handling obligations present on the
Exchange today.\60\ The Exchange further represents that the proposed
new opening process obviates the importance of such a role because it
would no longer rely on a market maker to initiate the opening
process.\61\ Accordingly, the Commission believes that these changes
are consistent with the Act.
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    \59\ See ISE Rule 803, Supplementary Material .03.
    \60\ See Notice, supra note 4, at 11983.
    \61\ See Notice, supra note 4, at 11983. See also supra note 9.
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F. Market Maker Speed Bump

    The Exchange proposes to amend ISE Rule 804 (Market Maker
Quotations) to establish default parameters for certain risk
functionality. The Exchange currently offers a risk protection
mechanism for market maker quotes that removes a member's quotes in an
options class if a specified number of curtailment events occur during
a set time period (``Market Maker Speed Bump'').\62\ In addition, the
Exchange offers a market-wide risk protection that removes a market
maker's quotes across all classes if a number of curtailment events
occur (``Market-Wide Speed Bump'').\63\ ISE Rule 804(g) currently
requires that market makers set curtailment parameters for both the
Market Maker Speed Bump and the Market-Wide Speed Bump. Today, if a
market maker does not set these parameters, for each Market Maker Speed
Bump and the Market-Wide Speed Bump, the System rejects their
quotes.\64\ With the technology migration, the Exchange proposes to
provide default curtailment parameters, which will be determined by the
Exchange and announced to members.\65\ The Commission believes that
this change is consistent with the Act and notes that, although the
Exchange will establish default curtailment settings, market makers
will have discretion to set different curtailment settings appropriate
for their trading and risk tolerance.
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    \62\ See ISE Rule 804(g)(1) and Supplementary Material .04 to
ISE Rule 722.
    \63\ See ISE Rule 804(g)(2). Market makers may request the
Exchange to set the market wide parameter to apply to just ISE or
across ISE and ISE Gemini. See id.
    \64\ See Notice, supra note 4, at 11980-81.
    \65\ See Notice, supra note 4, at 11981.
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G. Anti-Internalization

    The Exchange proposes to amend the Supplementary Material at .03 to
ISE Rule 804 (Market Maker Quotations) to adopt an anti-internalization
rule. Today, ISE's functionality prevents Immediate-or-Cancel (``IOC'')
orders entered by a market maker from trading with the market maker's
own quote.\66\ The Exchange proposes to replace this self-trade
protection with anti-internalization functionality currently offered on
Phlx.\67\ The Exchange proposes to provide that quotes and orders
entered by market makers using the same member identifier will not be
executed against quotes and orders entered on the opposite side of the
market by the same market maker using the same member identifier. In
such a case, the System will cancel the resting quote or order back to
the entering party prior to execution. The proposed anti-
internalization functionality will not apply in any auction or with
respect to complex order transactions. The Exchange states that this
proposed functionality does not modify the duty

of best execution owed to public customer orders.\68\
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    \66\ See id.
    \67\ See Phlx Rule 1080(p)(2).
    \68\ See Notice, supra note 4, at 11981.
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    The Exchange represents that the proposal is designed to assist
market makers in reducing trading costs from unwanted executions
potentially resulting from the interaction of executable interest from
the same firm performing the same market making function.\69\ The
Commission believes that the proposed rule is reasonably designed to
prevent the unwanted execution of quotes and orders entered by market
makers using the same member identifier.
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    \69\ See Notice, supra note 4, at 11981, n.34.
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H. Minimum Execution Quantity Orders

    The Exchange proposes to amend ISE Rule 715 (Types of Orders) to
remove minimum quantity orders in subpart (q).\70\ The Exchange states
that the utilization of minimum quantity orders by its members has been
very limited, and therefore proposes to remove this order type.\71\
Furthermore, the Exchange proposes to remove two references to minimum
quantity orders in Supplementary Material .02 to ISE Rule 713 and in
Supplementary Material .04 to ISE Rule 717.
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    \70\ A Minimum Quantity Order is an order type that is available
for partial execution only for a specified number of contracts or
greater. A member may specify whether any subsequent executions of
the order must also be for the specified number of contracts or
greater, or if the balance may be executed as a regular order. If
all executions are to be for a specified number of contracts or
greater and the balance of the order after one or more partial
execution(s) is less than the minimum, such balance is treated as
all-or-none. See ISE Rule 715(q).
    \71\ See Notice, supra note 4, at 11981.
---------------------------------------------------------------------------

    The Exchange states that the removing the minimum quantity order
type would simplify functionality available on the Exchange and reduce
the complexity of its order types.\72\ The Exchange further represents
that the utilization of minimum quantity orders by its members has been
very limited and is currently being utilized to transact less than 1%
of the Exchange's volume.\73\ Accordingly, the Commission believes it
is appropriate for the Exchange to remove references to the minimum
quantity order type.
---------------------------------------------------------------------------

    \72\ See Notice, supra note 4, at 11984.
    \73\ See Notice, supra note 4, at 11981, n.35.
---------------------------------------------------------------------------

I. Cancel and Replace Orders

    The Exchange proposes to amend Supplementary Material .02 to ISE
Rule 715 (Types of Orders) to memorialize how the Exchange System will
handle cancel and replace orders in connection with the Exchange's
technology migration to INET.\74\ Currently, Exchange members can send
a Cancel and Replace Order in one message, which allows the replacement
order to retain the time priority of the cancelled order, subject to
certain exceptions.\75\ However, currently the Exchange does not apply
price or other reasonability checks to the replacement order for all
Cancel and Replace Orders.\76\ For example, the Exchange notes that
currently, a Cancel and Replace Order which reduced the size of an
original order from 600 to 300 contracts would not be subject to price
or other reasonability checks.\77\
---------------------------------------------------------------------------

    \74\ See Amendment No. 1, supra note 5.
    \75\ See id. The Exchange notes that, instead of sending a
Cancel and Replace Order, a Member can separately send a
cancellation message and a new order, for which the Exchange would
apply price or other reasonability checks, but the new order would
not retain the priority of the original order. See id. This behavior
will not change. See id.
    \76\ See Amendment No. 1, supra note 5.
    \77\ See id.
---------------------------------------------------------------------------

    The Exchange now proposes to define the Cancel and Replace Order to
ensure that price and other reasonability checks are applied to Cancel
and Replace Orders.\78\ The Exchange proposes to define a Cancel and
Replace Order as a single message for the immediate cancellation of a
previously received order and the replacement of that order with a new
order. If the previously placed order is already partially filled or in
its entirety, the replacement order is automatically canceled or
reduced by the number of contracts that were executed. Additionally,
the replacement order will retain the priority of the cancelled order,
if the order posts to the order book, provided the price is not
amended, size is not increased, or in the case of Reserve Orders, size
is not changed. However, if the replacement portion of a Cancel and
Replace Order does not satisfy the System's price or other
reasonability checks the existing order will be cancelled and not
replaced.\79\
---------------------------------------------------------------------------

    \78\ See proposed ISE Rule 715, Supplementary Material .02.
    \79\ Price and reasonability checks that would be applied
include ISE Rule 710 (Minimum Trading Increments), ISE Rule 711(c)
(proposed Market Order Spread Protection), ISE Rule 714(b)(2) (Limit
Order Price Protection), and ISE Rule 722(b)(1) (Minimum Increments
for Complex Orders), and Supplementary Material .07 (b), (c) and (d)
to Rule 722 (Price Limits for Complex Orders and Quotes). See
Amendment No. 1, supra note 5, n.39. The Exchange also notes that,
as for other orders, the Exchange may cancel an order because it
does not satisfy a format or other requirement specified in the
Exchange's rules and specifications. See id.
---------------------------------------------------------------------------

    The Exchange represents that conducting price or other
reasonability checks for all Cancel and Replace Orders will validate
orders against current market conditions prior to proceeding with the
request to modify the order.\80\ The Exchange further believes that
memorializing Cancel and Replace Order handling will add transparency
to the Exchange's rules and reduce the potential for investor
confusion.\81\
---------------------------------------------------------------------------

    \80\ See id.
    \81\ See id.
---------------------------------------------------------------------------

    The Commission notes that other exchanges with a similar order type
permit an order to retain priority if only the size of the order is
decremented.\82\ Accordingly, the Commission believes it is appropriate
for the Exchange to define Cancel and Replace Order in the manner
proposed.
---------------------------------------------------------------------------

    \82\ See id; see Phlx Rule 1080(b)(i)(A).
---------------------------------------------------------------------------

J. All-Or-None Orders

    The Exchange proposes to amend ISE Rule 715(c) to provide that All-
Or-None Orders \83\ may only be entered into the Exchange's System with
a time-in-force designation of Immediate-Or-Cancel.\84\ Currently, the
Exchange allows users to submit All-Or-None Orders with any time-in-
force designation. As proposed, an All-Or-None Order would be required
to be submitted as an Immediate-Or-Cancel Order and thus will either
execute in its entirety or be cancelled. Because All-Or-None Orders
will either be executed or cancelled, the Exchange also proposes to
remove language stating that All-Or-None Orders can be maintained in
the System in Supplementary Material .02 to ISE Rule 713 and to delete
Supplementary Material .04 to Rule 717, which concerns the exposure of
non-marketable All-Or-None Orders.\85\
---------------------------------------------------------------------------

    \83\ An All-Or-None Order is a limit or market order that is to
be executed in its entirety or not at all. See ISE Rule 715(c).
    \84\ An Immediate-Or-Cancel Order is a limit order that is to be
executed in whole or in part upon receipt, and any portion not so
executed is to be treated as cancelled. See ISE Rule 715(b)(3).
    \85\ See Amendment No. 1, supra note 5.
---------------------------------------------------------------------------

    The Exchange states that this change would remove uncertainty with
respect to the manner in which All-Or-None Orders would be handled in
the order book, because the All-Or-None Order would be canceled if it
cannot be immediately executed in its entirety.\86\ Accordingly, the
Commission believes it is appropriate for the Exchange to require that
All-Or-None Orders be entered with a time-in-force designation of
Immediate-Or-Cancel.
---------------------------------------------------------------------------

    \86\ See id.
---------------------------------------------------------------------------

    For these reasons, the Commission believes that the proposed rule
change, as modified by Amendment No. 1, is consistent with the Act.

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\87\ that the proposed rule change (SR-ISE-2017-03), as modified by
Amendment No. 1, be, and hereby is, approved.
---------------------------------------------------------------------------

    \87\ 15 U.S.C. 78s(b)(2).
    \88\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\88\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-07638 Filed 4-14-17; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 81, Number 54 (Monday, March 21, 2016)]
[Notices]
[Pages 15136-15138]
[FR Doc No: 2016-06228]

=======================================================================
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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-77370; File No. SR-NYSEMKT-2016-35]

Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and
Immediate Effectiveness of Proposed Change Modifying the NYSE Amex
Options Fee Schedule

March 15, 2016.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on March 3, 2016, NYSE MKT LLC (the ``Exchange'' or ``NYSE MKT'') filed
with the Securities and Exchange Commission (``SEC'' or ``Commission'')
the proposed rule change as described in Items I, II, and III below,
which Items have been prepared by the Exchange. 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\ 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 modify the NYSE Amex Options Fee Schedule
(``Fee Schedule''). The Exchange proposes to implement the fee change
effective March 3, 2016. The proposed 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 purpose of this filing is to add the definitions of ``Appointed
MM'' and ``Appointed OFP'' to the Exchange's Fee Schedule, effective
March 3, 2016, which would increase opportunities for firms to qualify
for the Amex Customer Engagement (``ACE'') program (the ``ACE Program''
or ``Program'').
    Specifically, the Exchange proposes to allow NYSE Amex Options
Market Makers to designate an Order Flow Provider (``OFP'') as its
``Appointed OFP'' and for an OFP to designate an NYSE Amex Options
Market Maker as its ``Appointed MM,'' for purposes of sections I.D. and
I.E. of the Fee Schedule.\3\ ATP Holders would effectuate the
designation by each sending an email to the Exchange.\4\ The Exchange
would view corresponding emails as acceptance of such an appointment
and would only recognize one such designation for each party once every
12-months, which designation would remain in effect unless or until the
Exchange receives an email from either party indicating that the
appointment has been terminated.\5\ The proposed new concepts would be
applicable to, and included in, sections 1.D. and 1.E. of the Fee
Schedule, as described below, and are designed to increase
opportunities for firms to qualify for the ACE Program.\6\
---------------------------------------------------------------------------

    \3\ See proposed Fee Schedule, Key Terms and Definitions.
    \4\ See proposed section 1.E. to Fee Schedule, Designating an
Appointed OFP/Appointed MM. ATP Holders should direct their emails
designating Appointed OFP/Appointed MMs to<EMAIL_ADDRESS>
See id.
    \5\ See id. The Commission notes that the proposed rule text
specifies that the Exchange will recognize one such designation for
each party, and that a party may make a designation not more than
once every 12-months, which designation shall remain in effect
unless or until the Exchange receives an email from either party
indicating that the appointment has been terminated.
    \6\ See proposed Fee Schedule, sections 1.D. and 1.E.
---------------------------------------------------------------------------

    Last year, the Exchange instituted a Prepayment Program that allows
NYSE Amex Options Market Makers the option to commit to either a 1-year
or 3-year term (the ``1 Year Prepayment Program'' or ``3 Year
Prepayment Program,'' respectively).\7\ In connection with these
Prepayment Programs, the Exchange added the ACE Program (described
below), which enables an NYSE Amex Options Market Maker (``Market
Maker'') that elects to participate in either of the Prepayment
Programs to qualify its Affiliated OFP to be eligible to receive the
enhanced credit(s) under the ACE Program. Currently, an OFP is only
eligible for the enhanced credits of section 1.E. by virtue of its
affiliation (i.e., minimum of 70% common ownership) with a Market Maker
in one of the Prepayment Programs.
---------------------------------------------------------------------------

    \7\ See Securities Exchange Act Release No. 74086 (January 16,
2015), 80 FR 3701 (January 16, 2015) [sic] (SR-NYSEMKT-2015-04). See
also Fee Schedule, section I.D., Prepayment Program.
---------------------------------------------------------------------------

    Section I.E. of the Fee Schedule describes the ACE Program,\8\
which features five tiers expressed as a percentage of total industry
Customer equity and ETF option average daily volume (``ADV'').\9\ OFPs
receive per contract credits solely for Electronic Customer volume that
the OFP, as agent, submits to the Exchange.\10\ The ACE Program offers
two methods for OFPs to receive credits:
---------------------------------------------------------------------------

    \8\ See Fee Schedule, section I.E, ACE Program.
    \9\ In calculating ADV, the Exchange utilizes monthly reports
published by the OCC for equity options and ETF options that show
cleared volume by account type. See OCC Monthly Statistics Reports,
available here, http://www.theocc.com/webapps/monthly-volume-reports
(including for equity options and ETF options volume, subtotaled by
exchange, along with OCC total industry volume). The Exchange
calculates the total OCC volume for equity and ETF options that
clear in the Customer account type and divide this total by the
number of trading days for that month (i.e., any day the Exchange is
open for business). For example, in a month having 21 trading days
where there were 252,000,000 equity option and ETF option contracts
that cleared in the Customer account type, the calculated ADV would
be 12,000,000 (252,000,000/21 = 12,000,000).
    \10\ Electronic Customer volume is volume executed
electronically through the Exchange System, on behalf of an
individual or organization that is not a Broker-Dealer and who does
not meet the definition of a Professional Customer.
---------------------------------------------------------------------------

    1. By calculating, on a monthly basis, the average daily Customer
contract volume an OFP executes Electronically on the Exchange as a
percentage of total average daily industry Customer equity and ETF
options volume; \11\ or
---------------------------------------------------------------------------

    \11\ See supra n. 9.
---------------------------------------------------------------------------

    2. By calculating, on a monthly basis, the average daily contract
volume an OFP executes Electronically in all participant types (i.e.,
Customer, Firm, Broker-Dealer, NYSE Amex Options Market Maker, Non-NYSE
Amex Options Market Maker, and Professional Customer) on the Exchange,
as a percentage of total average daily industry Customer equity and ETF
option volume,\12\ with the further requirement that a specified
percentage of the minimum volume required to qualify for the Tier must
be Customer volume.
---------------------------------------------------------------------------

    \12\ Id.
---------------------------------------------------------------------------

    Upon reaching a higher tier, an Affiliated OFP receives for all
eligible Customer volume the per contract enhanced credit associated
with the highest tier achieved, retroactive to the first contract
traded each month, regardless of which of the two calculation methods
the OFP qualifies under.\13\
---------------------------------------------------------------------------

    \13\ In the event that an OFP is eligible for credits under both
calculation methods, the OFP would benefit from whichever criterion
results in the highest per contract credit for all the OFP's
eligible ADV. In calculating an OFP's Electronic volume, certain
volumes are excluded (e.g., QCC trades). See Fee Schedule, section
I.E.

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

    The Exchange proposes to modify sections 1.D. (Prepayment Programs)
and 1.E (ACE Program) to include the newly introduced concepts of an
Appointed OFP and Appointed MM.\14\ The proposal would be available to
all Market Makers and OFPs. Specifically, the proposed changes would
enable any Market Maker--not just those participating in a Prepayment
Program--to qualify its Appointed OFP for credits under the ACE
Program. In this regard, the proposed change would enable a Market
Maker without an Affiliated OFP--or with an Affiliated OFP that doesn't
meet the volume requirements for credits under the Program--to enter a
relationship with an Appointed OFP. Similarly, as proposed, an OFP, by
virtue of designating an Appointed MM, would be able to aggregate its
own Customer volume with the activity of its Appointed MM, which would
enhance the OFP's potential to qualify for additional credits in
ACE.\15\ Thus, the proposed changes would enable firms that are not
currently eligible for the ACE Program to avail themselves of the
Program as well as to assist firms that are currently eligible for the
Program to potentially achieve a higher ACE tier, thus qualifying to
higher credits. The Exchange believes these proposed changes would
incent firms to direct their order flow to the Exchange to the benefit
of all market participants. Further, the Exchange believes that the
proposed changes would encourage market making firms to participate in
one of the Exchange's Prepayment Programs, which would increase capital
commitment and liquidity on the Exchange to the benefit of all market
participants.
---------------------------------------------------------------------------

    \14\ The Exchange also proposes to make the non-substantive
change of adding a period following reference to section I.C. See
proposed Fee Schedule, section I.D. The Exchange also proposes to
remove an errant period from item 2 in section 1.D. of the Fee
Schedule. See id.
    \15\ An OFP that has both an Appointed MM and an Affiliated NYSE
Amex Market Maker may only aggregate volumes with one of these two,
not both. Specifically, the Exchange proposes to specify in section
I.E. that ``[i]n calculating an OFP's Electronic volume, the
Exchange will include the activity of either (i) Affiliates of the
OFP, such as when an OFP has an Affiliated NYSE Amex Options Market
Making firm, or (ii) an Appointed MM of such OFP.''
---------------------------------------------------------------------------

    As proposed, the Exchange would only process one designation of an
Appointed OFP and Appointed MM per year, which designation would remain
in effect unless or until the parties informed the Exchange its
termination.\16\ The Exchange believes that this requirement would
impose a measure of exclusivity and would enable both parties to rely
upon each other's, and potentially increase, transaction volumes
executed on the Exchange, which is beneficial to all Exchange
participants.
---------------------------------------------------------------------------

    \16\ See supra n. 5.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent
with section 6(b) of the Act,\17\ in general, and furthers the
objectives of sections 6(b)(4) and (5) of the Act,\18\ in particular,
because it provides for the equitable allocation of reasonable dues,
fees, and other charges among its members, issuers and other persons
using its facilities and does not unfairly discriminate between
customers, issuers, brokers or dealers.
---------------------------------------------------------------------------

    \17\ 15 U.S.C. 78f(b).
    \18\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

    The proposal is reasonable, equitable and not unfairly
discriminatory for the following reasons. First, the proposal would be
available to all Market Makers and OFPs and the decision to be
designated as an ``Appointed OFP'' or ``Appointed MM'' is completely
voluntary and ATP Holders may elect to accept this appointment or not.
In addition, the proposed changes would enable firms that are not
currently eligible for the ACE Program to avail themselves of the
Program as well as to assist firms that are currently eligible for the
Program to potentially achieve a higher ACE tier, thus qualifying to
higher credits. The Exchange believes these proposed changes would
incent firms to direct their order flow to the Exchange. Specifically,
the proposed changes would enable any Market Maker--not just those
participating in a Prepayment Program--to qualify its Appointed OFP for
credits under the ACE Program. Moreover, the proposed change would
allow any OFP, by virtue of designating an Appointed MM, to aggregate
its own Customer volume with the activity of its Appointed MM, which
would enhance the OFP's potential to qualify for additional credits
under the ACE Program. The Exchange believes these proposed changes
would incent Appointed OFPs and OFPs with an Appointed MM to direct
their order flow to the Exchange, which increase in orders routed to
the Exchange would benefit all market participants by expanding
liquidity, providing more trading opportunities and tighter spreads,
including those market participants that opt not to become an Appointed
OFP and therefore may be ineligible to earn the credits under the ACE
Program.
    Similarly, the proposal, which would permit the opportunity for
both parties to rely upon each other's, and potentially increase,
transaction volumes, are reasonable, equitable and not unfairly
discriminatory because they may encourage market making firms to
participate in one of the Exchange's Prepayment Programs, which
potential increase in order flow, capital commitment and resulting
liquidity on the Exchange would benefit all market participants by
expanding liquidity, providing more trading opportunities and tighter
spreads.
    The proposal is also reasonable, equitable and not unfairly
discriminatory because the Exchange would only process one designation
of an Appointed OFP and Appointed MM per year, which requirement would
impose a measure of exclusivity while allowing both parties to rely
upon each other's, and potentially increase, transaction volumes
executed on the Exchange to the benefit of all Exchange participants.
    Finally, the Exchange believes the proposal is reasonable,
equitable and not unfairly discriminatory as it may encourage an
increase in orders routed to the Exchange, which would expand liquidity
and provide more trading opportunities and tighter spreads to the
benefit of all market participants, even to those market participants
that are either currently affiliated by virtue of their common
ownership or that opt not to affiliate under this proposal (the latter
group including market participants that are ineligible to earn the
credits under the ACE Program).

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

    In accordance with section 6(b)(8) of the Act,\19\ 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 they would increase opportunities for
firms to qualify for the ACE Program, which may increase intermarket
and intramarket competition by incenting participants to direct their
orders to the Exchange thereby increasing the volume of contracts
traded on the Exchange and enhancing the quality of quoting. Enhanced
market quality and increased transaction volume that results from the
anticipated increase in order flow directed to the Exchange would
benefit

all market participants and improve competition on the Exchange.
---------------------------------------------------------------------------

    \19\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------

    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, its fees and credits to remain competitive with other
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 foregoing rule change is effective upon filing pursuant to
section 19(b)(3)(A) \20\ of the Act and subparagraph (f)(2) of Rule
19b-4 \21\ thereunder, because it establishes a due, fee, or other
charge imposed by the Exchange.
---------------------------------------------------------------------------

    \20\ 15 U.S.C. 78s(b)(3)(A).
    \21\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

    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) \22\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \22\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

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<EMAIL_ADDRESS>Please include
File Number SR-NYSEMKT-2016-35 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-2016-35. 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-2016-35, and should
be submitted on or before April 11, 2016.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\23\
---------------------------------------------------------------------------

    \23\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-06228 Filed 3-18-16; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 81, Number 71 (Wednesday, April 13, 2016)]
[Notices]
[Page 21950]
[FR Doc No: 2016-08421]

=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

Aerospace Fuel, Engine Oil, and Hydraulic Hose Assemblies

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Notice of availability and request for public comment.

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

SUMMARY: This notice announces the Federal Aviation Administration's
(FAA) intent to cancel the following Technical Standard Orders (TSOs):
-C42, Propeller Feathering Hose Assemblies; -C53c, Fuel and Engine Oil
System Hose Assemblies; and -C75, Hydraulic Hose Assemblies. The intent
is to combine the updated requirements of the aforementioned TSOs into
TSO-C140, Aerospace Fuel, Engine Oil, and Hydraulic Hose Assemblies.
The impact of cancelling these TSOs will not affect current design or
production approvals for an existing TSO-C42, -C53c, or -C75
authorization (TSOA). However, modifications to TSO-C42, -C53c, and -
C75 TSOAs will no longer be accepted after the effective cancellation
date. Generally, we will not accept applications for the previous
revisions after the cancellation date of these TSOs. We may do so,
however, up to six months after publication of this cancellation notice
if we know that work was being done against the prior minimum
performance standard before the cancellations became effective.
Articles approved under those cancelled TSOAs may continue to be
produced under the provisions of their original approvals.

DATES: Comments must be received on or before May 13, 2016.

FOR FURTHER INFORMATION CONTACT: Jim Kabbara, AIR-133, Federal Aviation
Administration, 950 L'Enfant Plaza, 5th floor, Washington, DC 20024.
Telephone<PHONE_NUMBER> or email at<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

Comments Invited

    You are invited to comment on the proposed cancellation of the TSOs
by submitting written data, views, or arguments to the above address.
Comments received may be examined, both before and after the closing
date at the above address, weekdays except federal holidays, between
8:30 a.m. and 4:30 p.m. The Director, Aircraft Certification Service,
will consider all comments received on or before the closing date.

Background

    A recent review of TSO-C140 revealed it contained all the updated
requirements of TSOs -C42, -C53c, and -C75, each of which are in need
of an update. As such, we believe that the proposed cancellation does
not impose any new requirements and will have no burden on the aviation
community.

    Issued in Washington, DC.
Susan J.M. Cabler,
Acting Manager, Design, Manufacturing, & Airworthiness Division,
Aircraft Certification Service.
[FR Doc. 2016-08421 Filed 4-12-16; 8:45 am]
 BILLING CODE 4910-13-P