[Federal Register Volume 83, Number 112 (Monday, June 11, 2018)]
[Notices]
[Pages 27061-27068]
[FR Doc No: 2018-12432]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83384; File No. SR-NYSEAMER-2018-05]

Self-Regulatory Organizations; NYSE American LLC; Notice of
Filing of Amendment No. 1 and Order Granting Accelerated Approval of a
Proposed Rule Change, as Modified by Amendment No. 1, To Establish an
Electronic Price Improvement Auction for Complex Orders

June 5, 2018.

I. Introduction

    On February 15, 2018, NYSE American LLC (the ``Exchange'' or ``NYSE
American'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change to adopt new Exchange Rule 971.2NY to establish
the Complex Customer Best Execution Auction (``Complex CUBE Auction''
or ``Auction''), a price improvement auction for Electronic Complex
Orders (referred to herein as ``Complex Orders''), and to make related
changes to other rules.\3\ The proposed rule change was published for
comment in the Federal Register on March 7, 2018.\4\ On April 18, 2018,
pursuant to

Section 19(b)(2) of the Act,\5\ the Commission extended the time for
Commission action on the proposal until June 5, 2018.\6\ The Commission
received no comments regarding the proposal. On May 15, 2018, the
Exchange filed Amendment No. 1 to the proposed rule change.\7\ The
Commission is publishing this notice to solicit comments on Amendment
No. 1 from interested persons, and is approving the proposed rule
change, as modified by Amendment No. 1, on an accelerated basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ An Electronic Complex Order is any Complex Order, as defined
in Exchange Rule 900.3NY(e), that is entered into the Exchange's
electronic order delivery, execution and reporting System. See
Exchange Rules 980NY and 900.2NY(48). A Complex Order is ``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.'' See
Exchange Rule 900.3NY(e).
    \4\ See Securities Exchange Act Release No. 82802 (March 2,
2018), 83 FR 9769 (``Notice'').
    \5\ 15 U.S.C. 78s(b)(2).
    \6\ See Securities Exchange Act Release No. 83061, 83 FR 17869
(April 24, 2018).
    \7\ Amendment No. 1 revises the proposal to: (1) Add Exchange
Rules 971.1NY, Commentary .01, and 971.2NY, Commentary .03 to
specify that a Single-Leg CUBE Auction for a single series may occur
concurrently with a Complex CUBE Auction for a Complex Order that
includes that series, and to describe the processing of such
concurrent auctions; (2) add definitions of ``single stop price''
and ``auto-match limit price,'' add examples to the defined terms in
proposed Exchange Rule 971.2NY, Commentary .02, and clarify that in
both the Single-Leg and Complex CUBE Auctions, a Contra Order will
trade solely with the CUBE Order; (3) indicate that after a Complex
CUBE Order has been filled, RFR Responses, including Complex GTX
Orders, may trade with Complex Orders on the same side of the market
as the Complex CUBE Order; (4) further explain the rationale for not
allowing customer interest on a Contra Order; (5) further explain
the reasons for early Auction terminations when the same-side CUBE
BBO crosses RFR Responses or a single stop price; (6) provide an
example showing the allocation of a Complex CUBE Order guaranteed
with an auto-match limit price; (7) modify the description of the
proposed changes to Exchange Rules 980NY(e)(6)(A) and (B); and (8)
provide further support for the Exchange's argument that the
proposal is consistent with Section 11(a) of the Act and the rules
thereunder. To promote transparency of its proposed amendment, when
NYSE American filed Amendment No. 1 with the Commission, it also
submitted Amendment No. 1 as a comment letter to the file, which the
Commission posted on its website and placed in the public comment
file for SR-NYSEAMER-2018-05 (available at https://www.sec.gov/comments/sr-nyseamer-2018-05/nyseamer201805-3649246-162408.pdf). The
Exchange also posted a copy of its Amendment No. 1 on its website
(available at https://www.nyse.com/publicdocs/nyse/markets/nyse-american/rule-filings/filings/2018/NYSEAmer-2018-05,%20Pt.%20Am.%201.pdf).
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I. Description of the Proposal, as Modified by Amendment No. 1

A. Background

    NYSE American currently provides a CUBE Auction for single-leg
option orders (the ``Single-Leg CUBE'').\8\ As described more fully in
the Notice, the Exchange proposes to adopt new Exchange Rule 971.2NY,
``Complex Electronic Cross Transactions,'' to establish a Complex CUBE
Auction for Complex Orders that will operate in a manner that is
substantially similar to the Single-Leg CUBE, with differences to
account for the different processing of and priority rules for Complex
Orders.\9\ NYSE American states that the Complex CUBE Auction will
operate in a manner consistent with the electronic price improvement
auctions for complex orders that are available on other options
exchanges.\10\
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    \8\ See Exchange Rule 971.1NY.
    \9\ See Notice, 83 FR at 9769. NYSE American notes that the
Complex CUBE Auction follows the fundamental principles of the
Single-Leg CUBE mechanism but with the priority and allocation rules
used in auctions for Complex Orders. See id. at 9779 (citing
Exchange Rule 980NY(e)).
    \10\ See id. (citing Chicago Board Options Exchange, Inc.
(``CBOE'') Rule 6.74A; Nasdaq PHLX, LLC (``Phlx'') Rule 1087; BOX
Options Exchange LLC (``BOX'') Rule 7245; Nasdaq ISE, LLC (``ISE'')
Rule 723; and Miami International Securities Exchange, LLC
(``MIAX'') Rule 515A, Interpretation and Policy .12).
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B. Initiation of a Complex CUBE Auction

    To initiate a Complex CUBE Auction, an ATP Holder (the ``Initiating
Participant'') electronically submits into the Complex CUBE Auction a
Complex Order that the Initiating Participant represents as agent on
behalf of a public customer, broker dealer, or other entity.\11\ The
Initiating Participant guarantees the execution of the Complex CUBE
Order by submitting a contra-side order (the ``Complex Contra Order'')
representing principal interest or non-Customer interest the Initiating
Participant has solicited to trade solely with the CUBE Order at either
a single stop price or an auto-match limit price, as discussed
below.\12\
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    \11\ See proposed Exchange Rule 971.2NY(a). An ``ATP Holder'' is
a natural person, sole proprietorship, partnership, corporation,
limited liability company or other organization, in good standing,
that has been issued an American Trading Permit (``ATP'') issued by
the Exchange for effecting approved securities transactions on the
Exchange's Trading Facilities. An ATP Holder must be a registered
broker or dealer pursuant to Section 15 of the Act and has status as
a ``member'' of the Exchange, as defined in Section 3 of the Act.
See Exchange Rules 900.2NY(4) and (5).
    \12\ See proposed Exchange Rule 971.2NY(a)(1). Requiring the
Complex Contra Order to include only principal interest or non-
Customer interest will preserve the intended allocation methodology
for the Auction. See Amendment No. 1. NYSE American notes that a
Complex Contra Order is guaranteed to trade with at least 40% of the
Complex CUBE Order if RFR Responses do not improve the guaranteed
price(s). See proposed Exchange Rules 971.2NY(c)(4)(B)(i)(b) and
(ii)(b). NYSE American also notes that, because Customer interest on
the Exchange is afforded first priority at a price, allowing
Customer interest on the Complex Contra Order would disrupt the
intended allocation methodology for the Auction because the Complex
Contra Order would be entitled to 100% of the Complex CUBE Order
rather than 40% of the order. NYSE American further notes that
allowing customer interest on the Complex Contra Order could reduce
competition in the Auction and undermine its price improvement aim
if other market participants choose not to participate in the
Auction because they believe it is unlikely that they would receive
an allocation in the Auction. See id. NYSE American states that it
will file a proposed rule change if it intends to establish a
customer-to-customer cross mechanism in the future. See id. The
proposal likewise revises the Single-Leg CUBE rules to indicate that
the Contra Order in a Single-Leg CUBE Auction must represent
principal or non-Customer Interest. See Exchange Rule 971.1NY(a) and
Amendment No. 1.
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    The Complex CUBE Order must be priced better than the interest
resting on the Consolidated Book.\13\ In particular, a Complex CUBE
Order must have a net debit/credit price that is equal to or better
than the ``CUBE BBO'' on the same side of the market as the Complex
CUBE Order (the ``same-side CUBE BBO'').\14\ The CUBE BBO is the more
aggressive of (i) the Complex BBO improved by $0.01,\15\ or (ii) the
Derived BBO improved by $0.01 multiplied by the smallest leg of the
complex order strategy.\16\ A Complex CUBE Order that does not meet
this requirement will be rejected, along with the Complex Contra
Order.\17\ The CUBE BBO may be updated during the Auction.\18\ If the
CUBE BBO updates during the Auction (the ``updated CUBE BBO''), the
range of permissible executions for the Complex CUBE Order will adjust
in accordance with the updated CUBE BBO, unless the

interest that updated the CUBE BBO would cause the Auction to conclude
early pursuant to proposed Exchange Rule 971.2NY(c)(3).\19\
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    \13\ See Notice, 83 FR at 9771, and proposed Exchange Rule
971.2NY(b)(2). The Consolidated Book (``Book'') is ``the Exchange's
electronic book of limit orders for the accounts of Customers and
broker-dealers, and Quotes with Size. All orders and Quotes with
Size that are entered into the Book will be ranked and maintained in
accordance with the rules of priority as provided in Rule 964NY.''
See Exchange Rule 900.2NY(14).
    \14\ See proposed Exchange Rule 971.2NY(b)(2).
    \15\ See proposed Exchange Rule 971.2NY(a)(2). The proposal
revises the current definition of ``Complex BBO'' to define the
Complex BBO as the complex orders with the lowest-priced (i.e., the
most aggressive) net debit/credit price on each side of the
Consolidated Book for the same complex order strategy. See proposed
Exchange Rule 971.2NY(b).
    \16\ The BBO is the best bid or offer in the System. See
Exchange Rule 900.2NY(7)(a). The ``Derived BBO'' is calculated using
the BBO from the Consolidated Book for each of the options series
comprising a given complex order strategy. See proposed Exchange
Rule 900.2NY(7)(c). The definition of Derived BBO, which does not
change the manner in which the Exchange determines what was formerly
referred to as the ``Complex BBO,'' is designed to make clear that
the Derived BBO is derived from the BBO of the leg markets. See
Notice, 83 FR at 9771. The proposal makes conforming amendments to
Exchange Rule 980NY to replace references to the ``Complex BBO''
with the ``Derived BBO.'' See id.
    \17\ See proposed Exchange Rule 971.2NY(b)(2). NYSE American
notes that a Complex CUBE Order that is not priced equal to or
better than the same-side CUBE BBO is not the best-priced interest
available and should not trade ahead of better-priced interest on
the same side of the market. See Notice, 83 FR at 9773. A Complex
CUBE Order and the Complex Contra Order also will be rejected if
they are submitted before the opening of trading, during the final
second of the trading session in the component series, or during a
trading halt. See proposed Exchange Rules 971.2NY(b)(3), (4), and
(5).
    \18\ See proposed Exchange Rule 971.2NY(a)(2).
    \19\ See proposed Exchange Rule 971.2NY(a)(4)(A). The ``range of
permissible executions'' for a Complex CUBE Order is all prices
equal to or between the initiating price and the same-side CUBE BBO.
See proposed Exchange Rule 971.2NY(a)(4). The ``initiating price''
for a Complex CUBE Order is the less aggressive of the net debit/
credit price of the order or the price that locks the contra-side
CUBE BBO. See proposed Exchange Rule 971.2NY(a)(3).
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C. Auction Process

    An Initiating Participant must guarantee the execution of a Complex
CUBE Order by submitting a Complex Contra Order with either a single
stop price or an auto-match limit price, which must be executable
against the initiating price of the Auction.\20\ If the single stop
price crosses the same-side CUBE BBO (i.e., would be outside the range
of permissible executions), the Complex CUBE Order is not eligible to
initiate an Auction and will be rejected along with the Complex Contra
Order.\21\ A Complex Contra Order with an auto-match limit price may
trade with the Complex CUBE Order at prices that are better than or
equal to the initiating price until trading at the auto-match limit
price.\22\ If the auto-match limit price crosses the same-side CUBE
BBO, the Complex Contra Order will be priced back to lock the same-side
CUBE BBO.\23\
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    \20\ See proposed Exchange Rules 971.2NY(b)(1)(A) and (B). A
single stop price is the price at which the Initiating Participant
guarantees the Complex CUBE Order. An auto-match limit price is the
most aggressive price at which the Initiating Participant is willing
to trade with the Complex CUBE Order.
    \21\ See proposed Exchange Rule 971.2NY(b)(1)(A) and Notice, 83
FR at 9772.
    \22\ See proposed Exchange Rule 971.2NY(b)(1)(B).
    \23\ See id.
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    The time at which the Auction is initiated will be considered the
time of execution for the Complex CUBE Order.\24\ Only one Complex CUBE
Auction may be conducted at a time in any given complex order strategy
and, once commenced, the Complex CUBE Order (as well as the Complex
Contra Order) may not be cancelled or modified. \25\
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    \24\ See proposed Exchange Rule 971.2NY(c).
    \25\ See id.
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    Upon receipt of a Complex CUBE Order, NYSE American will send a
Request for Responses (``RFR'') identifying the complex order strategy,
the side and size of the Complex CUBE Order, and the initiating price
to all ATP Holders who subscribe to receive RFR messages.\26\ ATP
Holders may submit responses to the RFR during the Response Time
Interval, which will last for a random period of time within parameters
that NYSE American determines and announces by Trader Update.\27\ Any
ATP Holder may respond to the RFR, provided the response is properly
marked specifying price, size, and side of the market (``RFR
Response'').\28\ The Auction will accept the following RFR Responses:
(i) A Complex GTX Order, defined as an Electronic Complex Order with a
time-in-force contingency for the Response Time Interval, which must
specify the price, size, and side of the market; \29\ and (ii)
unrelated Complex Orders, including Complex Order Auction (``COA'')-
eligible orders, on the opposite side of the market as the Complex CUBE
Order that are received during the Response Time Interval, provided the
unrelated orders can participate within the range of permissible
executions specified pursuant to proposed Exchange Rule
971.2NY(a)(4).\30\ NYSE American believes that considering unrelated
Complex Orders to be RFR Reponses would increase the number of orders
against which the Complex CUBE Order could execute and thus should
maximize price improvement opportunities for the Complex CUBE
Order.\31\
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    \26\ See proposed Exchange Rule 971.2NY(c)(1)(A).
    \27\ See proposed Exchange Rule 971.2NY(c)(1)(B). The minimum/
maximum parameters for the Response Time Interval will be no less
than 100 milliseconds and no more than one second. See id. The
proposed Response Time Interval provisions are the same as the
Response Time Interval provisions for the Single-Leg CUBE Auction.
See Exchange Rule 971.1NY(c)(2)(B).
    \28\ See proposed Exchange Rule 971.2NY(c)(1)(C).
    \29\ A Complex GTX Order will not be displayed on the
Consolidated Book or disseminated to any participants, and a Complex
GTX Order that is not fully executed will be cancelled at the
conclusion of the Auction. Complex GTX Orders with a size greater
than the size of the Complex CUBE Order will be capped at the size
of the Complex CUBE Order. Complex GTX Orders may be cancelled or
modified, and a Complex GTX Order on the same side of the market as
the CUBE Order will be rejected. See proposed Exchange Rule
971.2NY(c)(1)(C)(i). NYSE American notes that because Complex GTX
Orders can only trade against a Complex CUBE Order or an unrelated
order on the same side as the Complex CUBE Order, same-side Complex
GTX Orders are unnecessary to the Complex CUBE Auction. See Notice,
83 FR at 9774.
    \30\ See proposed Exchange Rule 971.2NY(c)(1)(C)(ii).
    \31\ See Notice, 83 FR at 9775. NYSE American notes that quotes
and orders in the leg markets for a complex strategy underlying a
Complex CUBE Order will not be eligible to participate in the
Auction, although updates to the leg markets may cause an Auction to
conclude early to preserve the priority of interest at that price.
NYSE American states that limiting participation in the Complex CUBE
Auction to Complex Orders, but allowing certain updates to the leg
markets to cause an Auction to conclude early, is consistent with
the manner in which the Exchange treats interest in the COA process,
as described in Exchange Rule 980NY(e)(7)(B). See id.
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D. Early Termination of a Complex CUBE Auction

    An Auction will conclude at the end of the Response Time Interval
unless there is a trading halt in any component series of the Complex
CUBE Order or an early conclusion event, as provided in proposed
Exchange Rule 971.2NY(c)(3).\32\ NYSE American states that ending the
Auction early, as provided in proposed Exchange Rule 971.2NY(c)(3),
will preserve the priority of incoming interest and allow a Complex
CUBE Auction to operate seamlessly with the Consolidated Book.\33\
Proposed Exchange Rule 971.2NY(c)(3) provides that an Auction will
conclude early if, during the Response Time Interval:
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    \32\ See proposed Exchange Rule 971.2NY(c)(2).
    \33\ See Notice, 83 FR at 9776.
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    (A) The Exchange receives a new Complex CUBE Order in the same
complex order strategy that meets the conditions of proposed Exchange
Rule 971.2NY(b);
    (B) the Exchange receives interest that adjusts the same-side CUBE
BBO to be better than the initiating price;
    (C) the Exchange receives interest that adjusts the same-side CUBE
BBO to cross any RFR Response(s);
    (D) the Exchange receives interest that adjusts the same-side CUBE
BBO to cross the single stop price specified by the Initiating
Participant;
    (E) the Exchange receives interest that crosses the same-side CUBE
BBO; or
    (F) the Exchange receives interest in the leg market that causes
the contra-side CUBE BBO to be better than the stop price or auto-match
limit price.

E. Allocations at the Conclusion of a Complex CUBE Auction

    Proposed Exchange Rule 971.2NY(c)(4) describes the allocation of
trading interest at the conclusion of an Auction. NYSE American notes
that if RFR Responses can fill the Complex CUBE Order at a price or
prices better than the stopped price or auto-match limit price, the
Complex CUBE Order will be matched against the better-priced RFR
Responses to provide the Complex CUBE Order the maximum amount of price
improvement possible.\34\ If there are no RFR Responses, a Complex
Contra Order with a single stop price will execute against the Complex
CUBE Order at the stop price, and a Complex Contra Order with an auto-
match limit price will execute against the Complex CUBE Order at the
initiating price.\35\ If there

are RFR Responses, any Customer orders that arrive during an Auction as
RFR Responses will have first priority to execute at each price level,
and they will be allocated on a size pro rata basis pursuant to
Exchange Rule 964NY(b)(3).\36\ After Customer interest at a price level
has been satisfied, any remaining size of a Complex CUBE Order will be
allocated first to RFR Responses within the permissible range of
executions that are priced better than the stop price or the auto-match
limit price, as applicable.\37\ The allocation of any remaining size of
the Complex CUBE Order varies, depending on whether the Complex Contra
Order has a single stop price \38\ or an auto-match limit price.\39\
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    \34\ See id.
    \35\ See proposed Exchange Rules 971.2NY(c)(4)(B)(i)(c) and
(ii)(c).
    \36\ See proposed Exchange Rule 971.2NY(c)(4)(A). Any RFR
Response that exceeds the size of the Complex CUBE Order will be
capped at the Complex CUBE Order size for purposes of size pro rata
allocation of the Complex CUBE Order. See proposed Exchange Rule
971.2NY(c)(4). In addition, a single RFR Response will not be
allocated a volume that is greater than its size. See proposed
Exchange Rule 971.2NY(c)(4)(C).
    \37\ See proposed Exchange Rules 971.2NY(c)(4)(B)(i)(a) and
(ii)(a). The Complex CUBE Order will be allocated among RFR
Responses pursuant to the size pro rata algorithm in Exchange Rule
964NY(b)(3) at each price point. See id.
    \38\ For a Complex Contra Order with a single stop price, the
remaining size of the Complex CUBE Order will execute at the stop
price, and the Complex Contra Order will receive an allocation of
the greater of 40% of the original Complex CUBE Order size or one
contract, or the greater of 50% of the original Complex CUBE Order
size or one contract if there is only one RFR Response. Any
remaining size of the Complex CUBE Order at the stop price will be
allocated among the remaining RFR Responses on a size pro rata basis
pursuant to Exchange Rule 964NY(b)(3). If all RFR Responses are
filled, any remaining size of the Complex CUBE Order will be
allocated to the Complex Contra Order. See proposed Exchange Rule
971.2NY(c)(4)(B)(i)(b).
    \39\ For a Complex Contra Order with an auto-match limit price,
the remaining size of the Complex CUBE Order will execute at the
Complex Contra Order's auto-match limit price and, if volume
remains, at prices worse than the auto-match limit price. At each
price point equal to or worse than the auto-match limit price, the
Complex Contra Order will receive an allocation equal to the
aggregate size of all other RFR Responses starting with the best
price at which an execution against an RFR Response occurs within
the range of permissible executions until a price point is reached
where the balance of the CUBE Order can be fully executed (the
``clean-up price''). At the clean-up price, if there is sufficient
size of the Complex CUBE Order still available after executing at
better prices or against Customer interest, the Complex Contra Order
will be allocated additional volume required to achieve an
allocation of the greater of 40% of the original Complex CUBE Order
size or one contract or the greater of 50% of the original Complex
CUBE Order size or one contract if there is only one RFR Response.
If the Complex Contra Order meets its allocation guarantee at a
price better than the clean-up price, it will cease matching RFR
Responses that may be priced worse than the price at which the
Complex Contra Order received its allocation guarantee. If there are
other RFR Responses at the clean-up price, the remaining size of the
Complex CUBE Order will be allocated to such interest pursuant to
the size pro rata algorithm set forth in Rule 964NY(b)(3). Any
remaining portion of the Complex CUBE Order will be allocated to the
Complex Contra Order at the initiating price. See proposed Exchange
Rule 971.2NY(c)(4)(B)(ii)(b).
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F. Concurrent Single-Leg and Complex CUBE Auctions

    Although there will be only one Complex CUBE Auction at a time for
a particular Complex Order strategy, a Single-Leg CUBE Auction for a
series may occur concurrently with a Complex CUBE Auction for a
strategy that includes that series, as provided in proposed Exchange
Rules 971.1NY, Commentary .01, and 971.2NY, Commentary .03.\40\ Thus,
the Exchange will accept orders designated for the CUBE on a single
option series when a Complex CUBE Auction in a Complex Order strategy
that includes that series is in progress.\41\ The Exchange will also
accept Complex Orders designated for the Complex CUBE Auction when a
Single-Leg CUBE Auction in any of the component series is in
progress.\42\ The Exchange believes that providing for these concurrent
auctions could reduce the potential for an Auction to be terminated
early by other incoming orders designated for CUBE in the same single
options series and that this could, in turn, reduce order
cancelations.\43\
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    \40\ The proposed rules indicate that to the extent that Single-
Leg and Complex CUBE Auctions involving the same option series occur
concurrently, each CUBE Auction will be processed sequentially based
on the time each CUBE Auction commenced. At the time each CUBE
Auction concludes, including when it concludes early, it will be
processed pursuant to Exchange Rule 971.1NY(c)(5) or proposed
Exchange Rule 971.2NY(c)(4), as applicable. See proposed Exchange
Rules 971.1NY, Commentary .01, and 971.2NY, Commentary .03.
    \41\ See Notice, 83 FR at 9780.
    \42\ See id.
    \43\ See Amendment No. 1.
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G. Conduct Inconsistent With Just and Equitable Principles of Trade

    NYSE American also proposes to adopt rules identifying conduct that
would be considered inconsistent with just and equitable principles of
trade with respect to a Complex CUBE Auction to discourage ATP Holders
from attempting to misuse or manipulate the Auction process.\44\ NYSE
American notes that proposed Exchange Rule 971.2NY, Commentary .01 is
based on Exchange Rule 971.1NY, Commentary, 02 relating to the Single-
Leg CUBE, and is consistent with the rules of other options exchanges
that offer electronic price improvement auction mechanisms.\45\
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    \44\ See proposed Exchange Rule 971.2NY, Commentary .01, and
Notice, 83 FR at 9777. Proposed Exchange Rule 971.2NY, Commentary
.01 provides that the following conduct would be inconsistent with
just and equitable principles of trade: (a) An ATP Holder entering
RFR Responses to an Auction for which the ATP Holder is the
Initiating Participant; (b) engaging in a pattern and practice of
trading or quoting activity for the purpose of causing an Auction to
conclude before the end of the Response Time Interval; (c) an
Initiating Participant that breaks up an agency order into separate
Complex CUBE Orders for the purpose of gaining a higher allocation
percentage than the Initiating Participant would have otherwise
received in accordance with the allocation procedures contained in
proposed Exchange Rule 971.2NY(c)(5); and (d) engaging in a pattern
and practice of sending multiple RFR Responses at the same price
that in the aggregate exceed the size of the Complex CUBE Order.
    \45\ See id. at 9777 n.47 (citing PHLX Rule 1087(c)-(e); ISE
Rule 723, Supplementary Material .01; and BOX Rule 7150, IM-7150-
2(a) and (b)). NYSE American also proposes to correct a
typographical error in Exchange Rule 971.1NY, Commentary .02, by
adding the word ``of'' to the rule text, which was inadvertently
omitted.
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H. Order Exposure Requirements

    Current Exchange Rule 935NY prohibits Users \46\ from executing as
principal any orders they represent as agent unless (i) agency orders
are first exposed on the Exchange for at least one second; (ii) the
User has been bidding or offering on the Exchange for at least one
second prior to receiving an agency order that is executable against
such bid or offer; (iii) the User utilizes the Single-Leg CUBE Auction
pursuant to Exchange Rule 971.1.NY; or (iv) the User utilizes the COA
auction process pursuant to Exchange Rule 980NY(e). NYSE American
proposes to amend Exchange Rule 935NY to provide that a User may
execute as principal an order that the User represents as agent,
provided that the User utilizes the Complex CUBE Auction process. Such
a Complex CUBE Order would not be subject to the one-second order
exposure requirement of Exchange Rule 935NY.\47\ NYSE American believes
that the proposed Response Time Interval, with a random length of no
less than 100 milliseconds and no greater than one second (as
determined and announced by the Exchange), is of sufficient length to
permit ATP Holders time to respond to a Complex CUBE Auction, thereby
enhancing opportunities for competition among participants and
increasing the likelihood of price improvement for the Complex CUBE
Order.\48\
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    \46\ A User is any ATP Holder that is authorized to obtain
access to the System. See Exchange Rule 900.2NY(87).
    \47\ See Notice, 83 FR at 9778.
    \48\ See id.
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I. Changes to the Single-Leg CUBE Auction and COA Rules

    The proposal revises the title of Exchange Rule 971.1NY to
``Single-Leg

Electronic Cross Transactions,'' to distinguish Exchange Rule 971.1NY
from proposed Exchange Rule 971.2NY, ``Complex Electronic Cross
Transactions.'' The proposal revises also revises Exchange Rule 971.1NY
to indicate, as discussed above, that an Initiating Participant that
solicits interest to trade with a Single-Leg CUBE Order may solicit
only non-Customer interest to be the Contra Order.\49\ In addition, the
proposal amends Exchange Rule 971.1NY to clarify that the Contra Order
will trade solely with the CUBE Order and to indicate that a CUBE Order
and Contra Order submitted during a trading halt will be rejected.\50\
The proposal revises the auto-match provisions in Exchange Rule
971.1NY(c)(1)(C) to indicate that the auto-match limit price for a CUBE
Order that is outside of the range of permissible executions may be
repriced so that it is within the range of permissible executions.\51\
The proposal modifies Exchange Rule 971.1NY(c)(2)(i)(d) to indicate
that a GTX Order may be modified, as well as cancelled. Finally, as
discussed above, the proposal adds new Commentary .01 to Exchange Rule
971.1NY, which addresses concurrent CUBE Auctions for a single option
series and for a Complex Order that includes that series.
---------------------------------------------------------------------------

    \49\ See Exchange Rule 971.1NY(a). Alternatively, the Contra
Order may represent principal interest.
    \50\ See Exchange Rule 971.1NY(a) and proposed Exchange Rule
971.1NY(b)(10).
    \51\ In particular, NYSE American proposes to specify in
Exchange Rule 971.1NY(c)(1)(C) that it would adjust the auto-match
limit price to within the range of permissible executions by adding
a new sentence stating that: ``An auto-match limit price specified
for a CUBE Order to buy (sell) that is below (above) the lower
(upper) bound of the range of permissible executions will be
repriced to the lower (upper) bound.'' See Notice, 83 FR at 9773.
---------------------------------------------------------------------------

    The proposal also amends Exchange Rule 980NY(e)(6)(A) and (B) to
indicate that incoming Complex CUBE Orders are among the incoming
Complex Orders that could cause a COA Auction to end early.\52\ The
Exchange notes that this is consistent with the principle that the
Exchange will conduct only one auction in a given Complex Order
strategy at a time, as provided in proposed Exchange Rule 971.2NY(c)
and Exchange Rule 980NY(e)(3).\53\
---------------------------------------------------------------------------

    \52\ Exchange Rule 980NY(e)(6)(A)(i), as amended by the current
proposal, will provide that an incoming Complex Order, including an
incoming Complex CUBE Order, or a COA-eligible order on the opposite
side of the market as the initiating COA-eligible order, that locks
or crosses the initial Derived BBO will cause the COA to end early.
Exchange Rule 980NY(e)(6)(B)(i), as amended by the current proposal,
will provide that an incoming Complex Order, including a Complex
CUBE Order, or COA-eligible order that is priced equal to or lower
(higher) than the initiating COA-eligible order to buy (sell), and
also locks or crosses the contra-side initial Derived BBO, will
cause the COA to end early. As noted above, the proposal also
revises Exchange Rule 980NY(e)(6) to replace references to the
``Complex BBO'' with references to the ``Derived BBO.''
    \53\ See Amendment No. 1.
---------------------------------------------------------------------------

J. Additional Changes

    The proposal revises the definition of ``Professional Customer'' in
Exchange Rule 900.2NY(18A) to add the Complex CUBE Auction provisions
in proposed Exchange Rule 971.2NY to the existing list of Exchange
rules for which a Professional Customer will be treated in the same
manner as a Broker/Dealer (or non-Customer) in securities. NYSE
American notes that this is consistent with the treatment of
Professional Customer Orders in the Single-Leg CUBE Auction.\54\ NYSE
American also proposes to add Commentary .02 to proposed Exchange Rule
971.2NY to further explain the defined terms used in proposed Rule
971.2NY.\55\ NYSE American believes that these definitions will help to
clarify how the Auction will operate.\56\
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    \54\ See Notice, 83 FR at 9780, and Exchange Rule 900.2NY(18A).
    \55\ Proposed Exchange Rule 971.2NY, Commentary .02 provides
definitions and examples of ``better-priced'' and ``more
aggressive'' interest, and ``worse-priced'' and ``less aggressive''
interest; interest that ``improves the BBO;'' interest that
``locks'' contra-side interest; interest that ``crosses'' contra-
side interest; and ``executable'' interest. The Exchange notes that
the definitions use the term ``interest'' because they apply to any
interest that could interact with a Complex Order, including quotes
and orders in the leg markets that comprise the complex order
strategy. See Notice, 83 FR at 9771.
    \56\ See id.
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K. Implementation

    NYSE American will announce the implementation date of the proposed
rule change in a Trader Update to be published no later than 60 days
following Commission approval of the proposal.\57\ The implementation
date would be no later than 60 days following publication of the Trader
Update announcing Commission approval.\58\ The Exchange believes that
this implementation schedule will provide ATP Holders with adequate
notice of the Complex CUBE Auction and allow time for ATP Holders that
intend to participate in Complex CUBE Auctions to prepare their systems
for participation in the Auctions.\59\
---------------------------------------------------------------------------

    \57\ See id. at 9779.
    \58\ See id.
    \59\ See id.
---------------------------------------------------------------------------

III. 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.\60\ In particular, the
Commission finds that the proposed rule change, as modified by
Amendment No. 1, is consistent with Section 6(b)(5) of the Act,\61\
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
regulating, clearing, settling, processing information with respect to,
and 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; and not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------

    \60\ In approving this proposed rule change, the Commission
notes that it has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
    \61\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Commission notes that NYSE American's Complex CUBE Auction
mechanism is similar to rules on other options exchanges that permit
the entry of complex orders into an electronic price improvement
auction mechanism.\62\ In addition, NYSE American states that the
Complex CUBE Auction will operate in a manner that is substantially
similar to the Single-Leg CUBE Auction, with differences to account for
the different processing of and priority rules for Complex Orders.\63\
The Commission believes that allowing ATP Holders to enter orders into
the Complex CUBE Auction mechanism may provide additional opportunities
for Complex Orders to receive price improvement.
---------------------------------------------------------------------------

    \62\ See, e.g., Phlx Rule 1080(n); MIAX Rule 515A,
Interpretation and Policy .12(a); CBOE Rule 6.74A; BOX Rule 7245;
and ISE Rule 723, Supplementary Material .09.
    \63\ See Notice, 83 FR at 9769.
---------------------------------------------------------------------------

    The Commission notes that Initiating Participant must enter a
Complex CUBE Order with a net debit/credit price that is equal to or
better than the same-side CUBE BBO (i.e., the more aggressive of the
Complex BBO improved by $0.01 or the Derived BBO improved by $0.01
multiplied by the smallest leg of the complex order strategy), and that
the Initiating Participant must submit a Complex Contra Order for the
full size of the Complex CUBE Order.\64\ Once the Complex CUBE Auction
begins, the Complex CUBE Order and the Complex

Contra Order may not be cancelled or modified.\65\ Therefore, a Complex
CUBE Order submitted to the Complex CUBE Auction will be guaranteed
price improvement over the Complex BBO or the Derived BBO at the time
the Complex CUBE Order was entered into the System, and will be given
an opportunity for further price improvement by being exposed to ATP
Holders during the Complex CUBE Auction.
---------------------------------------------------------------------------

    \64\ See proposed Exchange Rules 971.2NY(b)(2) and (a)(1).
    \65\ See proposed Exchange Rule 971.2NY(c).
---------------------------------------------------------------------------

IV. Section 11(a) of the Act

    Section 11(a)(1) of the Act \66\ prohibits a member of a national
securities exchange from effecting transactions on that exchange for
its own account, the account of an associated person, or an account
over which it or its associated person exercises discretion
(collectively, ``covered accounts''), unless an exception applies.
Section 11(a)(1) and the rules thereunder contain a number of
exceptions for principal transactions by members and their associated
persons, including the exceptions set forth in Rule 11a2-2(T) under the
Act.\67\ The Exchange has represented that it has analyzed its rule
proposed hereunder, and believes that they are consistent with the
requirements of Section 11(a) of the Act and rules thereunder.\68\ For
the reason set forth below, the Commission believes that the proposed
Complex CUBE Auction rules are consistent with the requirements of
Section 11(a) of the Act and the rules thereunder.
---------------------------------------------------------------------------

    \66\ 15 U.S.C. 78k(a)(1).
    \67\ 17 CFR 240.11a2-2(T).
    \68\ See Notice, 83 FR at 9778-79, and Amendment No. 1.
---------------------------------------------------------------------------

A. Rule 11a2-2(T) Under the Act (``Effect Versus Execute'' Rule)

    Rule 11a2-2(T) under the Act,\69\ known as the ``effect versus
execute'' rule, provides exchange members with an exception from the
Section 11(a)(1) prohibition. Rule 11a2-2(T) permits an exchange
member, subject to certain conditions, to effect transactions for
covered accounts by arranging for an unaffiliated member to execute the
transactions on the exchange. To comply with the conditions of Rule
11a2-2(T), a member: (1) May not be affiliated with the executing
member; (2) must transmit the order from off the exchange floor; (3)
may not participate in the execution of the transaction once it has
been transmitted to the member performing the execution; \70\ and (4)
with respect to an account over which the member has investment
discretion, neither the member nor its associated person may retain any
compensation in connection with effecting the transaction except as
provided in the Rule. The Exchange believes that orders sent by off-
floor ATP Holders, for covered accounts, to the proposed Complex CUBE
Auction would qualify for this ``effect versus execute'' exception.\71\
---------------------------------------------------------------------------

    \69\ Id.
    \70\ The member may, however, participate in clearing and
settling the transaction. See Securities Exchange Act Release No.
14563 (March 14, 1978), 43 FR 11542 (March 17, 1978) (regarding the
Designated Order Turnaround System of the New York Stock Exchange
(``1978 Release'')).
    \71\ See Notice, 83 FR at 9778.
---------------------------------------------------------------------------

    Rule 11a2-2(T) requires that the order be executed by an exchange
member who is unaffiliated with the member initiating the order. The
Commission has stated that the requirement is satisfied when automated
exchange facilities, such as the Exchange's Complex CUBE Auction, are
used, as long as the design of these systems ensures that members do
not possess any special or unique trading advantages in handling their
orders after transmitting them to the Exchange.\72\ The Exchange
represents that the design of the Complex CUBE Auction ensures that ATP
Holders do not have any special or unique trading advantages in the
handling of their orders after transmission.\73\ Based on the
Exchange's representations, the Commission believes that the Complex
CUBE Auction's rules satisfy this requirement.
---------------------------------------------------------------------------

    \72\ In considering the operation of automated execution systems
operated by an exchange, the Commission has noted that, while there
is no independent executing exchange member, the execution of an
order is automatic once it has been transmitted into each system.
Because the design of these systems ensures that members do not
possess any special or unique trading advantages in handling their
orders after transmitting them to the exchange, the Commission has
stated that executions obtained through these systems satisfy the
independent execution requirement of Rule 11a2-2(T). See Securities
Exchange Act Release No. 15533 (January 29, 1979), 44 FR 6084
(January 31, 1979) (regarding the American Stock Exchange's Post
Execution Reporting System and Switching System, the Intermarket
Trading System, the Multiple Dealer Trading Facility of the
Cincinnati Stock Exchange, the PCX Communications and Execution
System, and the Philadelphia Stock Exchange Automated Communications
and Execution System (``1979 Release'')).
    \73\ See Notice, 83 FR at 9779.
---------------------------------------------------------------------------

    Second, Rule 11a2-2(T) requires orders for covered accounts be
transmitted from off the exchange floor. The Exchange represents that
orders for covered accounts sent to the Complex CUBE Auction from off-
floor ATP Holders will be transmitted from remote terminals directly to
the Complex CUBE Auction by electronic means.\74\ In the context of
other automated trading systems, the Commission has found that the off-
floor transmission requirement is met if a covered account order is
transmitted from a remote location directly to an exchange's floor by
electronic means.\75\ With respect to such orders transmitted
electronically from remote terminals directly to the Complex CUBE
Auction, the Commission believes that the Complex CUBE Auction's rules
satisfy the off- floor transmission requirement.\76\ The Commission
believes that, based on the foregoing, the proposal satisfies the off-
floor transmission requirement for the purposes of ``effect versus
execute'' rule.
---------------------------------------------------------------------------

    \74\ See id. at 9778.
    \75\ See, e.g., Securities Exchange Act Release Nos. 59154
(December 23, 2008), 73 FR 80468 (December 31, 2008) (SR-BSE-2008-
48) (approving, among other things, the equity rules of the Boston
Stock Exchange (``BSE'')); 57478 (March 12, 2008), 73 FR 14521
(March 18, 2008) (SR-NASDAQ-2007-004 and SR-NASDAQ-2007-080)
(approving rules governing the trading of options on The NASDAQ
Options Market); 49068 (January 13, 2004), 69 FR 2775 (January 20,
2004) (SR-BSE-2002-15) (approving the Boston Options Exchange as an
options trading facility of BSE); the 1979 Release; and the 1978
Release.
    \76\ The Exchange further represents that there may be instances
of orders for a covered account that may be sent by an off-floor ATP
Holder to an unaffiliated Floor Broker for entry into the Complex
CUBE Auction mechanism. The Exchange represents that at the current
time, Exchange-sponsored Floor Broker systems are not enabled to
accept orders into the Complex CUBE Auction mechanism from Floor
Brokers. The Exchange further represents that, if a Floor Broker
were to gain access to the Complex CUBE Auction mechanism via a
third-party system, that Floor Broker may not rely on any exceptions
found in Section 11(a) of the Act or rules thereunder to enter
orders for their own covered accounts into the Auction mechanism
from on the floor, or transmit such orders from on the floor to off
of the floor for entry into the Complex CUBE Auction mechanism. See
Amendment No. 1.
---------------------------------------------------------------------------

    Third, Rule 11a2-2(T) requires that the member not participate in
the execution of its order once it has been transmitted to the member
performing the execution. The Exchange represents that, upon submission
to the Complex CUBE Auction, an order will be executed automatically
pursuant to the proposed rules set forth for the Auction.\77\ The
Exchange states that, in particular, execution of an order sent to the
Auction depends not on the ATP Holder entering the order, but rather on
what other orders are present and the priority of those orders. Thus,
at no time following the submission of an order is an ATP Holder able
to acquire control or influence over the result or timing of order
execution.\78\ Accordingly, the Commission believes that an ATP Holder
does not participate in the execution of an order submitted into the

Complex CUBE Auction. Based on the Exchange's representations, the
Commission believes that the proposal satisfies the non-participation
requirement of Rule 11a2-2(T).
---------------------------------------------------------------------------

    \77\ See Notice, 83 FR at 9778-79.
    \78\ See Notice, 83 FR at 9779. The Exchange notes that the
Initiating Participant may not cancel or modify a Complex CUBE Order
once a Complex CUBE Auction has started. See id. at 9779 n.60 and
proposed Exchange Rule 971.2NY(c).
---------------------------------------------------------------------------

    Fourth, in the case of a transaction effected for an account with
respect to which the initiating member or an associated person thereof
exercises investment discretion, neither the initiating member nor any
associated person thereof may retain any compensation in connection
with effecting the transaction, unless the person authorized to
transact business for the account has expressly provided otherwise by
written contract referring to Section 11(a) of the Act and Rule 11a2-
2(T).\79\ The Commission notes that ATP Holders trading for covered
accounts over which they exercise investment discretion must comply
with this condition in order to rely on the rule's exemption.
---------------------------------------------------------------------------

    \79\ 17 CFR 240.11a2-2(T)(a)(2)(iv). In addition, Rule 11a2-
2(T)(d) requires a member or associated person authorized by written
contract to retain compensation, in connection with effecting
transactions for covered accounts over which such member or
associated person thereof exercises investment discretion, to
furnish at least annually to the person authorized to transact
business for the account a statement setting forth the total amount
of compensation retained by the member in connection with effecting
transactions for the account during the period covered by the
statement. See 17 CFR 240.11a2-2(T)(d). See also 1978 Release
(stating ``[t]he contractual and disclosure requirements are
designed to assure that accounts electing to permit transaction-
related compensation do so only after deciding that such
arrangements are suitable to their interests'').
---------------------------------------------------------------------------

V. Solicitation of Comments on Amendment No. 1 to the Proposed Rule
Change

    Interested persons are invited to submit written data, views, and
arguments concerning whether Amendment No. 1 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 protected]. Please include
File Number SR-NYSEAMER-2018-05 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-NYSEAMER-2018-05. 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 website (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 website 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. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-NYSEAMER-2018-05, and should be
submitted on or before July 2, 2018.

VI. Accelerated Approval of Proposed Rule Change, as Modified by
Amendment No. 1

    The Commission finds good cause to approve the proposed rule
change, as modified by Amendment No. 1, prior to the thirtieth day
after the date of publication of notice of the filing of Amendment No.
1 in the Federal Register. As discussed above, Amendment No. 1 revises
the proposal to: (1) Add Exchange Rules 971.1NY, Commentary .01, and
971.2NY, Commentary .03 to specify that a Single-Leg CUBE Auction for a
single series may occur concurrently with a Complex CUBE Auction for a
Complex Order that includes that series, and to describe the processing
of such concurrent auctions; (2) add definitions of ``single stop
price'' and ``auto-match limit price,'' add examples to the defined
terms in proposed Exchange Rule 971.2NY, Commentary .02, and clarify
that in both the Single-Leg and Complex CUBE Auctions, a Contra Order
will trade solely with the CUBE Order; (3) indicate that after the
Complex CUBE Order has been filled, RFR Responses, including Complex
GTX Orders, may trade with Complex Orders on the same side of the
market as the Complex CUBE Order; (4) further explain the rationale for
not allowing customer interest on a Contra Order; (5) further explain
the reasons for early Auction terminations when the same-side CUBE BBO
crosses RFR Responses or a single stop price; (6) provide an example
showing the allocation of a Complex CUBE Order guaranteed with an auto-
match limit price; (7) modify the description of the proposed changes
to Exchange Rules 980NY(e)(6)(A) and (B); and (8) provide further
support for the Exchange's argument that the proposal is consistent
with Section 11(a) of the Act and the rules thereunder.
    With respect to the processing of Single-Leg and Complex CUBE
Auctions, NYSE American believes that the new rule language describing
the sequential processing of these auctions is consistent with the
handling by Cboe EDGX Exchange, Inc. (``EDGX'') of orders executed in
concurrent complex order auctions (``COAs'') involving the same complex
order strategy.\80\ Thus, NYSE American believes that its proposed
rules describing the processing of Single-Leg and Complex CUBE Auctions
do not raise new or novel regulatory issues.\81\ NYSE American also
notes that none of the proposed changes that provide additional details
regarding the operation of the Single-Leg and Complex CUBE Auctions
alter the functionality of the proposed Complex CUBE mechanism (or
Single-Leg CUBE), as described in the original filing, but rather,
provide additional details regarding the operation of the Auctions.\82\
In addition, the Commission believes that Amendment No. 1 provides
additional clarity in the rule text and additional analysis of several
aspects of the proposal, thus facilitating the Commission's ability to
make the findings set forth above to approve the proposal. For these
reasons, the Commission finds good cause, pursuant to Section 19(b)(2)
of the Act,\83\ to approve the proposed rule change, as modified by
Amendment No. 1, on an accelerated basis.
---------------------------------------------------------------------------

    \80\ See Amendment No. 1. See also EDGX Rule 21.20,
Interpretation and Policy .02. Although the EDGX COA Auction is
distinct from the CUBE Auctions in that the EDGX COA Auction is not
an auction of paired orders, NYSE American believes that its
proposed rules describing the sequential processing of Single-Leg
and Complex CUBE Auctions are consistent with the sequential
processing of COAs described in EDGX's rules. See Amendment No. 1.
    \81\ See id.
    \82\ See id.
    \83\ 15 U.S.C. 78s(b)(2).

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

VII. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\84\ that the proposed rule change (SR-NYSEAMER-2018-05), as
modified by Amendment No. 1, is approved on an accelerated basis.
---------------------------------------------------------------------------

    \84\ Id.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\85\
---------------------------------------------------------------------------

    \85\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-12432 Filed 6-8-18; 8:45 am]
 BILLING CODE 8011-01-P


[Federal Register Volume 88, Number 184 (Monday, September 25, 2023)]
[Rules and Regulations]
[Pages 65588-65589]
[FR Doc No: 2023-20626]

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

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 71

[Docket No. FAA-2023-0534; Airspace Docket No. 21-AWP-52]
RIN 2120-AA66

Amendment of V-388 Near Paradise, CA

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Final rule.

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

SUMMARY: This action amends the Very High Frequency Omnidirectional
Range (VOR) Federal airway V-388 between the Paradise, CA (PDZ), VOR/
Tactical Air Navigation (VORTAC) and the Palm Springs, CA (PSP), VORTAC
navigational aids.

DATES: Effective date 0901 UTC, November 30, 2023. The Director of the
Federal Register approves this incorporation by reference action under
1 CFR part 51, subject to the annual revision of FAA Order JO 7400.11
and publication of conforming amendments.

ADDRESSES: A copy of the Notice of Proposed Rulemaking (NPRM), all
comments received, this final rule, and all background material may be
viewed online at www.regulations.gov using the FAA Docket number.
Electronic retrieval help and guidelines are available on the website.
It is available 24 hours each day, 365 days each year.
    FAA Order JO 7400.11H, Airspace Designations and Reporting Points,
and subsequent amendments can be viewed online at www.faa.gov/air_traffic/publications/. You may also contact the Rules and
Regulations Group, Office of Policy, Federal Aviation Administration,
800 Independence Avenue SW, Washington, DC 20591; telephone: (202) 267-
8783.

FOR FURTHER INFORMATION CONTACT: Steven Roff, Rules and Regulations
Group, Office of Policy, Federal Aviation Administration, 800
Independence Avenue SW, Washington, DC 20591; telephone: (202) 267-
8783.

SUPPLEMENTARY INFORMATION:

Authority for This Rulemaking

    The FAA's authority to issue rules regarding aviation safety is
found in Title 49 of the United States Code. Subtitle I, Section 106
describes the authority of the FAA Administrator. Subtitle VII,
Aviation Programs, describes in more detail the scope of the agency's
authority. This rulemaking is promulgated under the authority described
in Subtitle VII, Part A, Subpart I, Section 40103. Under that section,
the FAA is charged with prescribing regulations to assign the use of
the airspace necessary to ensure the safety of aircraft and the
efficient use of airspace. This regulation is within the scope of that
authority as it would modify the route structure as necessary to
preserve the safe and efficient flow of air traffic within the National
Airspace System.

History

    The FAA published a NPRM for Docket No. FAA 2023-0534 in the
Federal Register (88 FR 21546; April 11, 2023), proposing to amend VOR
Federal airway V-388. Interested parties were invited to participate in
this rulemaking effort by submitting written comments on the proposal.
No comments were received.

Incorporation by Reference

    VOR Federal airways are published in paragraph 6010 of FAA Order JO
7400.11, Airspace Designations and Reporting Points, which is
incorporated by reference in 14 CFR 71.1 on an annual basis. This
document amends the current version of that order, FAA Order JO
7400.11H, dated August 11, 2022, and effective September 15, 2023. FAA
Order JO 7400.11H is publicly available as listed in the ADDRESSES
section of this document. These amendments will be published in the
next update to FAA Order JO 7400.11.
    FAA Order JO 7400.11H lists Class A, B, C, D, and E airspace areas,
air traffic service routes, and reporting points.

The Rule

    This action amends 14 CFR part 71 by amending VOR Federal airway V-
388. The VOR Route amendment action is described below.
    V-388: As amended, V-388 extends between the Seal Beach, CA (SLI),
VORTAC and the Palm Springs, CA (PSP), VORTAC.

Regulatory Notices and Analyses

    The FAA has determined that this regulation only involves an
established body of technical regulations for which frequent and
routine amendments are necessary to keep them operationally current.
It, therefore: (1) is not a ``significant regulatory action'' under
Executive Order 12866; (2) is not a ``significant rule'' under DOT
Regulatory Policies and Procedures (44 FR 11034; February 26, 1979);
and (3) does not warrant preparation of a regulatory evaluation as the
anticipated impact is so minimal. Since this is a routine matter that
only affects air traffic procedures and air navigation, it is

certified that this rule, when promulgated, does not have a significant
economic impact on a substantial number of small entities under the
criteria of the Regulatory Flexibility Act.

Environmental Review

    The FAA has determined that the action amending VOR Federal airway
V-388 near Paradise, CA qualifies for categorical exclusion under the
National Environmental Policy Act (42 U.S.C. 4321 et seq.) and its
implementing regulations at 40 CFR part 1500, and in accordance with
FAA Order 1050.1F, Environmental Impacts: Policies and Procedures,
paragraph 5-6.5a, which categorically excludes from further
environmental impact review rulemaking actions that designate or modify
classes of airspace areas, airways, routes, and reporting points (see
14 CFR part 71, Designation of Class A, B, C, D, and E Airspace Areas;
Air Traffic Service Routes; and Reporting Points); and paragraph 5-
6.5.i., which categorically excludes from further environmental impact
review the establishment of new or revised air traffic control
procedures conducted at 3,000 feet or more above ground level (AGL);
procedures conducted below 3,000 feet AGL that do not cause traffic to
be routinely routed over noise sensitive areas; modifications to
currently approved procedures conducted below 3,000 feet AGL that do
not significantly increase noise over noise sensitive areas; and
increases in minimum altitudes and landing minima. As such, this action
is not expected to result in any potentially significant environmental
impacts. In accordance with FAA Order 1050.1F, paragraph 5-2 regarding
Extraordinary Circumstances, the FAA has reviewed this action for
factors and circumstances in which a normally categorically excluded
action may have a significant environmental impact requiring further
analysis. Accordingly, the FAA has determined that no extraordinary
circumstances exist that warrant preparation of an environmental
assessment or environmental impact study.

Lists of Subjects in 14 CFR Part 71

    Airspace, Incorporation by reference, Navigation (air).

The Amendment

    In consideration of the foregoing, the Federal Aviation
Administration amends 14 CFR part 71 as follows:

PART 71--DESIGNATION OF CLASS A, B, C, D, AND E AIRSPACE AREAS; AIR
TRAFFIC SERVICE ROUTES; AND REPORTING POINTS

0
1. The authority citation for 14 CFR part 71 continues to read as
follows:

    Authority:  49 U.S.C. 106(f), 106(g), 40103, 40113, 40120; E.O.
10854, 24 FR 9565, 3 CFR, 1959-1963 Comp., p. 389.

Sec.  71.1  [Amended]

0
2. The incorporation by reference in 14 CFR 71.1 of FAA Order JO
7400.11H, Airspace Designations and Reporting Points, dated August 11,
2023, and effective September 15, 2023, is amended as follows:

Paragraph 6010(a) Domestic VOR Federal Airways.

* * * * *

V-388 [Amended]

    From Seal Beach, CA; INT Seal Beach 073[deg] and Pomona, CA,
202[deg] radials; INT Pomona 202[deg] and Paradise, CA, 285[deg]
radials; Paradise; INT Paradise, CA, 087[deg] and Palm Springs, CA,
287[deg] radials; to Palm Springs, CA.
* * * * *

    Issued in Washington, DC, on September 19, 2023.
Karen L. Chiodini,
Acting Manager, Rules and Regulations Group.
[FR Doc. 2023-20626 Filed 9-22-23; 8:45 am]
BILLING CODE 4910-13-P