[Federal Register Volume 78, Number 108 (Wednesday, June 5, 2013)]
[Notices]
[Pages 33866-33867]
[FR Doc No: 2013-13287]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-69673; File No. SR-NYSEMKT-2013-42]

Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and
Immediate Effectiveness of Proposed Rule Change Amending NYSE MKT Rule
980NY, To Remove Provisions Governing How the Complex Matching Engine
Handles Electronic Complex Orders That Contain a Stock Leg

May 30, 2013.
    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 May 17, 2013, 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 the
Substance of the Proposed Rule Change

    The Exchange proposes to amend NYSE MKT Rule 980NY, to remove
provisions governing how the Complex Matching Engine (``CME'') handles
Electronic Complex Orders that contain a stock leg. The text of the
proposed rule change is available on the Exchange's Web site at
www.nyse.com, at the principal office of the Exchange, and at the
Commission's Public Reference Room.

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

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

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

1. Purpose
    The Exchange is proposing to amend NYSE MKT Rule 980NY to delete
provisions governing CME functionality for Electronic Complex Orders
\4\ containing a stock leg submitted to the Exchange by ATP Holders.
Exchange Rule 980NY provides that Electronic Complex Orders that are
entered into the NYSE MKT system are routed to the CME for possible
execution. Provisions governing the functioning of the CME were
originally incorporated in Rule 980NY in 2009.\5\ The Rule, amended in
2010,\6\ states that the execution of the stock component of a Complex
Order must be executed consistent with the rules of the stock execution
venue, and sets out the priority ranking used by Exchange systems to
execute Stock/Option Orders,\7\ Stock/Complex Orders,\8\ and the option
components of such orders.
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    \4\ An ``Electronic Complex Order'' is any Complex Order, as
defined in Exchange Rule 900.3NY(e), or Stock/Option Order or Stock/
Complex Order, as defined in Rule 900.3NY(h) (see, infra, footnotes
6 and 7). Rule 900.3NY(e) defines a Complex Order as any order
involving the simultaneous purchase and/or sale of two or more
different option series in the same underlying security, for the
same account, in a ratio that is equal to or greater than one-to-
three (.333) and less than or equal to three-to-one (3.00) and for
the purpose of executing a particular investment strategy. Exchange
Rule 900.3NY governs Complex Orders, Stock/Option Orders and Stock/
Complex Orders on the Exchange and Rule 990NY lists definitions
applicable to intermarket linkage.
    \5\ See Securities Exchange Act Release No. 60554 (Aug. 21,
2009), 74 FR 43737 (Aug. 27, 2009) (SR-NYSEAmex-2009-42) (order
granting approval).
    \6\ See Securities Exchange Act Release No. 63558 (Dec. 16,
2010), 75 FR 80553 (Dec. 22, 2010) (SR-NYSEAmex-2010-100) (order
granting approval).
    \7\ A Stock/Option Order is defined in Rule 900.3NY(h)(l) as an
order to buy or sell a stated number of units of an underlying stock
or a security convertible into the underlying stock coupled with the
purchase or sale of options contract(s) on the opposite side of the
market representing either (A) the same number of units of the
underlying stock or convertible security, or (B) the number of units
of the underlying stock necessary to create a delta neutral
position, but in no case in a ratio greater than eight options
contracts per unit of trading of the underlying stock or convertible
security established for that series by the Clearing Corporation.
    \8\ A Stock/Complex Order is defined in Rule 900.3NY(h)(2) as
the purchase or sale of a Complex Order coupled with an order to buy
or sell a stated number of units of an underlying stock or a
security convertible into the underlying stock (``convertible
security'') representing either (A) the same number of units of the
underlying stock or convertible security as are represented by the
options leg of the Complex Order with the least number of options
contracts, or (B) the number of units of the underlying stock
necessary to create a delta neutral position, but in no case in a
ratio greater than eight-to-one (8.00), where the ratio represents
the total number of units of the underlying stock or convertible
security in the option leg to the total number of units of the
underlying stock or convertible security in the stock leg.
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    The Exchange is proposing to amend Rule 980NY to delete provisions
governing how the CME processes Electronic Complex Orders that contain
a stock leg. Two types of Electronic Complex Orders, Stock/Option
Orders and Stock/Complex Orders, contain a stock leg. Rule 980NY(c)(i)
provides that ``the CME will accept an incoming Electronic Complex
Order and will automatically execute it against Electronic Complex
Orders in the Consolidated Book, or, if not marketable against another
Electronic Complex Order, against individual quotes or orders residing
in the Consolidated Book,'' subject to specified conditions. The CME,
however, rejects Electronic Complex Orders that contain a stock leg.
The development and implementation of the technology supporting the
CME's capability to accept Electronic Complex Orders that contain a
stock leg has taken longer than anticipated to complete and is not yet
available. The Exchange is therefore proposing to delete from the Rule
those provisions that permit the CME to accept Electronic Complex
Orders that contain a stock leg.
    The Exchange expects that this CME functionality will not be ready
until the Fall of 2013. The Exchange therefore believes it is
appropriate to delete from Rule 980NY provisions governing the
described functionality until such time as it is ready to be
implemented. In addition, the Exchange is proposing the deletion of
Commentary .03 to Rule 980NY to conform the Rule's Commentary to the
proposed amendments to the Rule. When the CME functionality to support
the acceptance of a Stock/Option Order or Stock/Complex Order is ready
to be implemented, the Exchange will file a rule proposal to add back
the provisions relating to the functionality, amended as necessary to
reflect how such functionality would operate.
    The use of Stock/Option and Stock/Complex Orders in open outcry
trading on the Exchange Floor remains available to ATP Holders and is
not impacted by the proposed amendment to Rule 980NY, which only
relates to CME's current inability to accept Electronic Complex Orders
that contain a stock leg.

2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) \9\ of the
Act, in general, and furthers the objectives of Section 6(b)(5),\10\ in
particular, in that it is designed to promote just and equitable
principles of trade, 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. Specifically, the
Exchange believes that the removal of unavailable functionality will
add transparency and clarity to the Exchange's rules. Additionally, the
removal would reduce potential confusion that may result from the
Exchange's rulebook referring to order execution functionality that is
unavailable. Finally, the proposed amendment would not otherwise affect
the operation of any other provision of the Rule on Exchange systems,
including the availability of Stock/Option and Stock/Complex Orders in
open outcry trading referenced above.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change imposes
any burden on competition. The proposed change is not designed to
address any competitive issue but rather would delete unavailable
functionality in the Exchange's rulebook, thereby reducing confusion
and making the Exchange's rules easier to understand and navigate.

C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action

    The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \11\ and Rule 19b-4(f)(6) thereunder.\12\
Because the proposed rule change does not: (i) significantly affect the
protection of investors or the public interest; (ii) impose any
significant burden on competition; and (iii) become operative prior to
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, if consistent with the protection of
investors and the public interest, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.
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    \11\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \12\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) \13\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b4(f)(6)(iii),\14\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest.
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    \13\ Id.
    \14\ 17 CFR 240.19b-4(f)(6)(iii).
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    The Exchange has asked the Commission to waive the 30-day operative
delay so that the proposal may become operative immediately upon
filing. The Exchange believes that the waiver of the operative delay is
consistent with the protection of investors and the public interest
because the change will provide clarity as to what functionality is
offered by the Exchange, and because the CME functionality proposed to
be removed from the rule set is not actually available, its removal
will not have a negative effect on investors. Furthermore, the Exchange
notes that the waiver of the 30-day operative period will enable the
Exchange's rules to immediately reflect the functionality available on
the Exchange. The Commission believes that waiver of the operative
delay is consistent with the protection of investors and the public
interest. Therefore, the Commission waives the operative delay and
designates the proposal operative upon filing.\15\
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    \15\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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    At any time within 60 days of the filing of such proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act.

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-2013-42 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSEMKT-2013-42. 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 at 100 F Street NE.,
Washington, DC 20549-1090 on official business days between the hours
of 10:00 a.m. and 3:00 p.m. Copies of such filing also will be
available for inspection and copying at the principal offices 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-2013-42, and should be submitted on or before June 26, 2013.

    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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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-13287 Filed 6-4-13; 8:45 am]
BILLING CODE 8011-01-P