[Federal Register Volume 80, Number 140 (Wednesday, July 22, 2015)]
[Notices]
[Pages 43515-43528]
[FR Doc No: 2015-17895]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75467; File No. SR-NYSEARCA-2015-58]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
of Proposed Rule Change for New Equity Trading Rules Relating to
Trading Halts, Short Sales, Limit Up-Limit Down, and Odd Lots and Mixed
Lots To Reflect the Implementation of Pillar, the Exchange's New
Trading Technology Platform

July 16, 2015.
    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 July 1, 2015, NYSE Arca, Inc. (the ``Exchange'' or
``NYSE Arca'') filed with the

Securities and Exchange Commission (the ``Commission'') the proposed
rule change as described in Items I, II, and III below, which Items
have been prepared by the self-regulatory organization. The Commission
is publishing this notice to solicit comments on the proposed rule
change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange proposes new equity trading rules relating to Trading
Halts, Short Sales, Limit Up-Limit Down, and Odd Lots and Mixed Lots to
reflect the implementation of Pillar, the Exchange's new trading
technology platform. 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 the
Statutory Basis for, the Proposed Rule Change

1. Purpose
    On April 30, 2015, the Exchange filed its first rule filing
relating to the implementation of Pillar, which is an integrated
trading technology platform designed to use a single specification for
connecting to the equities and options markets operated by NYSE Arca
and its affiliates, New York Stock Exchange LLC (``NYSE'') and NYSE MKT
LLC (``NYSE MKT'').\4\ The Pillar I Filing proposed to adopt new rules
relating to Trading Sessions, Order Ranking and Display, and Order
Execution. On June 26, 2015, the Exchange filed the second rule filing
relating to the implementation of Pillar to adopt new rules relating to
Orders and Modifiers and the Retail Liquidity Program.\5\
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    \4\ See Securities Exchange Act Release No. 74951 (May 13,
2015), 80 FR 28721 (May 19, 2015) (SR-NYSEArca-2015-38) (Notice)
(``Pillar I Filing''). In the Pillar I Filing, the Exchange
described its proposed implementation of Pillar, including that it
would be submitting more than one rule filing to correspond to the
anticipated phased migration to Pillar.
    \5\ See SR-NYSEArca-2015-56 (``Pillar II Filing'').
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    This filing is the third set of proposed rule changes to support
Pillar implementation and is intended to be read together with the
Pillar I Filing and Pillar II Filing. As described in the Pillar I
Filing, new rules to govern trading on Pillar would have the same
numbering as current rules, but with the modifier ``P'' appended to the
rule number. For example, Rule 7.18, governing UTP Regulatory Halts,
would remain unchanged and continue to apply to any trading in symbols
on the current trading platform. Proposed Rule 7.18P would govern
Trading Halts for trading in symbols migrated to the Pillar platform.
In addition, the proposed new rules to support Pillar in this filing
would use the terms and definitions that were proposed in the Pillar I
Filing and Pillar II Filing.\6\
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    \6\ Capitalized terms not proposed to be defined in this filing
are the defined terms set forth in the Pillar I Filing, Pillar II
Filing, or in Exchange rules.
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    In this filing, the Exchange proposes new Pillar rules relating to:
     Definition of ``Official Closing Price'' (NYSE Arca
Equities Rule 1.1 (``Rule 1.1''));
     Clearly Erroneous Executions (NYSE Arca Equities Rule
7.10P (``Rule 7.10P''));
     Limit Up--Limit Down Plan and Trading Pauses in Individual
Securities Due to Extraordinary Market Volatility (NYSE Arca Equities
Rule 7.11P (``Rule 7.11P''));\7\
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    \7\ Rule 7.11 and proposed Rule 7.11P implement the Plan to
Address Extraordinary Market Volatility pursuant to Rule 608 of
Regulation NMS (``LULD Plan''). See Securities Exchange Act Release
No. 67091 (May 31, 2012), 77 FR 33498 (June 6, 2012) (File No. 4-
631) (Order approving the LULD Plan).
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     Short Sales (NYSE Arca Equities Rule 7.16P (``Rule
7.16P''));
     Trading Halts (NYSE Arca Equities Rule 7.18P (``Rule
7.18P'')); and
     Odd and Mixed Lots (NYSE Arca Equities Rule 7.38P (``Rule
7.38P'')).
    The Exchange also proposes to amend existing definitions in Rule
1.1.
Rule 1.1 Definitions
    Rule 1.1 sets forth definitions, and in the Pillar I Filing, the
Exchange proposes to amend existing definitions and to add new
definitions that would be applicable in Pillar only.\8\ The definitions
intended for Pillar include the designation ``P.'' \9\ In this filing,
the Exchange proposes to:
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    \8\ See Pillar I Filing, supra note 4.
    \9\ As discussed in the Pillar I Filing, supra note 4, the
Exchange proposes to append the letter ``P'' for definitions that
would be applicable for symbols trading on the Pillar trading
platform only.
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     Amend Rule 1.1 to delete the definitions for ``UTP Plan''
and ``OTC/UTC Participant,'' and amend definitions of ``UTP Listing
Market'' and ``UTP Regulatory Halt,'' which would be applicable both
for the current trading platform and for Pillar;
     Add a new definition for the term ``UTP Security,'' which
would be applicable both for the current trading platform and for
Pillar; and Add a new definition for the term ``Official Closing
Price,'' which would be for Pillar only.
    Current Rule 1.1(ii) defines the term ``UTP Plan'' to mean the
Nasdaq Unlisted Trading Privileges Plan, as from time to time amended
according to its provisions. Because the term ``UTP Plan'' is no longer
used in Exchange rules, the Exchange proposes to delete this
definition.\10\ The Exchange further proposes adding a new definition,
which would be set forth in Rule 1.1(ii), as amended, to define the
term ``UTP Security.'' As proposed, the term UTP Security would mean a
security that is listed on a national securities exchange other than
the Exchange and that trades on the NYSE Arca Marketplace pursuant to
unlisted trading privileges (``UTP'').
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    \10\ The Exchange proposes to make a conforming change to delete
the definition of ``OTC/UTP Participant'' in Rule 1.1(hh) and
replace it with ``Reserved.'' The term ``OTC/UTP Participant'' is
not used in any current Exchange rules.
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    Current Rule 1.1(jj) defines the term ``UTP Listing Market'' for a
Nasdaq Security as having the same meaning assigned to it in the Nasdaq
Unlisted Trading Privileges Plan, as amended, or for any other security
shall mean the primary listing market for the security other than the
Exchange. The Exchange proposes to streamline this definition and make
non-substantive amendments to eliminate the references to Nasdaq
Securities, which is no longer a defined term on the Exchange,\11\ and
to the Nasdaq Unlisted Trading Privileges Plan, and instead refer more
generally to securities that trade on a UTP basis by using the new
defined term ``UTP Security.'' As proposed, the term ``UTP Listing
Market'' would mean the primary listing market for a UTP Security.
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    \11\ See Securities Exchange Act Release No. 75289 (June 24,
2015) (SR-NYSE-2015-54) (Notice of filing to amend Rule 1.1).
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    Current Rule 1.1(kk) defines the term ``UTP Regulatory Halt'' to
mean a trade suspension or halt called by the UTP Listing Market for
the purpose of dissemination of material news. The Exchange proposes
non-substantive amendments to this definition to refer to any
circumstance when the Exchange would be required to halt trading in a
UTP Security. As proposed, a ``UTP

Regulatory Halt'' would mean a trade suspension, halt, or pause called
by the UTP Listing Market in a UTP Security that requires all market
centers to halt trading in that security. The Exchange believes the
proposed definition would better define circumstances when the Exchange
would be required to halt trading in a UTP Security and would remove
the limitation that a UTP Regulatory Halt only refer to halts for the
purposes of dissemination of material news.
    The Exchange proposes to adopt a new definition in Pillar to define
the term ``Official Closing Price,'' which would be set forth in
proposed Rule 1.1(ggP). As proposed, the term ``Official Closing
Price'' would mean the reference price to determine the closing price
in a security for purposes of Rule 7 Equities Trading. In Pillar rules,
the term ``Official Closing Price'' would be used in proposed Rule
7.16P (for Exchange-listed securities only) and for Market Order
Trading Collars pursuant to proposed Rule 7.31P(a)(1)(B) (for both
Exchange-listed and UTP Securities).\12\
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    \12\ See Pillar II Filing, supra note 5.
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    Proposed Rule 1.1(ggP)(1) would describe how the Official Closing
Price would be determined for securities listed on the Exchange. As
proposed, the Official Closing Price would be the price established in
a Closing Auction of one round lot or more on a trading day. Because
there may be circumstances when there is insufficient trading interest
to have a closing auction trade of one round lot or more, the Exchange
proposes to specify what price the Exchange would use as its Official
Closing Price when there is no auction or a closing trade of less than
a round lot. As proposed, if there is no Closing Auction or if a
Closing Auction trade is less than a round lot on a trading day, the
Official Closing Price would be the most recent consolidated last sale
eligible trade during Core Trading Hours on that trading day. The rule
would further provide that if there were no consolidated last sale
eligible trades during Core Trading Hours on that trading day, the
Official Price would be the prior trading day's Official Closing Price.
    The Exchange believes that in the absence of a Closing Auction of a
round lot or more, the last consolidated last sale eligible trade
during Core Trading Hours best approximates the market's determination
of the price of such securities. The Exchange proposes to use only
those trades that occur during Core Trading Hours because the lower
liquidity during the Early and Late Trading Sessions may mean that
trades occurring during those sessions may not be as representative of
the price of the security. The Exchange also proposes to use only last
sale eligible trades to ensure that the referenced trade is a round lot
or more, and therefore indicative of the security's price and not an
anomalous trade.
    For example, assume on Monday, there is no closing auction in
symbol ABC, an Exchange-listed security and the most recent
consolidated last sale eligible trade was at 3:00 p.m. Eastern Time
that day for $10.00. Because there was no Closing Auction, the Official
Closing Price on Monday would be $10.00. Assume on Tuesday, there is no
Closing Auction or consolidated last sale eligible trades in ABC during
Core Trading Hours. Accordingly, the Exchange would use the prior day's
Official Closing Price, which was $10.00, so Tuesday's Official Closing
Price would also be $10.00. Assume on Wednesday there is again no
Closing Auction or consolidated last sale eligible trades during Core
Trading Hours. The Wednesday Official Closing Price would be based on
Tuesday's Official Closing Price, which was $10.00. This evaluation
would continue on each trading day.
    Proposed Rule 1.1(ggP)(2) would describe how the Exchange would
determine the Official Closing Price for securities listed on an
exchange other than the Exchange. The Official Closing Price would be
relevant for purposes of the value that the Exchange would use to begin
calculating Market Order Trading Collars pursuant to proposed Rule
7.31P(a)(1)(B). As proposed, the Official Closing Price would be the
official closing price disseminated by the primary listing market for
that security via a public data feed on a trading day.\13\ If the
primary listing market does not disseminate an official closing price
on a trading day, the Official Closing Price would be the most recent
consolidated last sale eligible trade during Core Trading Hours on that
trading day. If there were no consolidated last sale eligible trades
during Core Trading Hours on that trading day, the Official Closing
Price would be the prior day's Official Closing Price.
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    \13\ Both the Consolidated Tape System and the UTP Plan Trade
Data Feed provide for sale conditions that are input by the primary
listing market to indicate whether a trade is a Market Center
Official Close (``M''), a Market Center Closing Trade (``6''), or a
Corrected Closing Price (``9''). See Consolidated Tape System CTS
Participant Communications Interface Specifications, Version 2.7a,
at 88, available at: https://www.ctaplan.com/ and The UTP Plan Trade
Data Feed Direct Subscriber Interface Specification, Version 14.2,
at 6-16, available at http://www.nasdaqtrader.com/content/technicalsupport/specifications/utp/utdfspecification.pdf.
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    The Exchange also proposes that an Official Closing Price may be
adjusted to reflect corporate actions or a correction to a closing
price, as disseminated by the primary listing market for the security.
The proposed rule would provide specificity in Pillar rules regarding
what the Exchange would consider an Official Closing Price for
securities that do not have a Closing Auction or for which the primary
listing market does not disseminate an official closing price.
Proposed New Rule 7.18P--Halts
    The Exchange proposes new Rule 7.18P to describe halts on the
Pillar trading platform, and more specifically, how orders would be
processed during halts, suspensions, or pauses in any security as well
as halts related to Derivative Securities Products.\14\ The proposed
rule would consolidate into a single rule text from current Rules 7.18,
7.11(b)(6), and 7.34(a)(4) and (5).\15\
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    \14\ In the Pillar I Filing, the Exchange proposes to define the
term ``Derivative Securities Product'' in Rule 1.1(bbb) as a
security that meets the definition of ``derivative securities
product'' in Rule 19b-4(e) under the Securities Exchange Act of 1934
and a ``UTP Derivative Securities Product'' as a Derivative
Securities Product that trades on the Exchange pursuant to unlisted
trading privileges. See Pillar I Filing, supra note 4.
    \15\ As noted in the Pillar I Filing, id., the Exchange has not
proposed to include the text set forth in current Rule 7.34(a)(4)
and (5) in proposed Rule 7.34P.
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    Current Rule 7.18 sets forth requirements relating to UTP
Regulatory Halts. Current Rule 7.11(b)(6) sets forth how the Exchange
processes new and existing orders during a trading pause issued by
another primary listing market. Current Rule 7.34(a)(4) sets forth
requirements for trading halts in Derivative Securities Products traded
pursuant to UTP on the NYSE Arca Marketplace and current Rule
7.34(a)(5) sets forth requirements for trading halts in Derivative
Securities Products listed on the Exchange.
     Current Rule 7.34(a)(4)(A) provides that if a security
described in NYSE Arca Equities Rules 5.1(b)(13), 5.1(b)(18),
5.2(j)(3), 8.100, 8.200, 8.201, 8.202, 8.203, 8.204, 8.300, 8.400,
8.500, 8.600 and 8.700 (for purposes of this Rule 7.34, a ``Derivative
Securities Product'') begins trading on the NYSE Arca Marketplace in
the Opening Session and subsequently a temporary interruption occurs in
the calculation or wide dissemination of the Intraday Indicative Value
(``IIV'') or the value of the underlying index, as applicable, to such
Derivative Securities Product, by a major market data vendor, NYSE Arca

may continue to trade the Derivative Securities Product for the
remainder of the Opening Session.
     Current Rule 7.34(a)(4)(B) provides that during the Core
Trading Session, if a temporary interruption occurs in the calculation
or wide dissemination of the applicable IIV or value of the underlying
index by a major market data vendor and the listing market halts
trading in the Derivative Securities Product, NYSE Arca, upon
notification by the listing market of such halt due to such temporary
interruption, also shall immediately halt trading in the Derivative
Securities Product on the NYSE Arca Marketplace.
     Current Rule 7.34(a)(4)(C) relates to the Late Trading
Session and the next business day's Opening Session, and provides that
if the IIV or the value of the underlying index continues not to be
calculated or widely available after the close of the Core Trading
Session, NYSE Arca may trade the Derivative Securities Product in the
Late Trading Session only if the listing market traded such securities
until the close of its regular trading session without a halt. The rule
further provides that if the IIV or the value of the underlying index
continues not to be calculated or widely available as of the
commencement of the Opening Session on the next business day, NYSE Arca
shall not commence trading of the Derivative Securities Product in the
Opening Session that day. If an interruption in the calculation or wide
dissemination of the IIV or the value of the underlying index
continues, NYSE Arca may resume trading in the Derivative Securities
Product only if calculation and wide dissemination of the IIV or the
value of the underlying index resumes or trading in the Derivative
Securities Product resumes in the listing market.
     Current Rule 7.34(a)(5) sets forth that with respect to
Derivative Securities Products listed on the NYSE Arca Marketplace for
which a Net Asset Value (``NAV'') (and in the case of Managed Fund
Shares under NYSE Arca Equities Rule 8.600 and Managed Trust Securities
under NYSE Arca Equities Rule 8.700, a Disclosed Portfolio) is
disseminated, if the Exchange becomes aware that the NAV (or in the
case of Managed Fund Shares, the Disclosed Portfolio) is not being
disseminated to all market participants at the same time, it will halt
trading in the affected Derivative Securities Product on the NYSE Arca
Marketplace until such time as the NAV (or in the case of Managed Fund
Shares, the Disclosed Portfolio, as applicable) is available to all
market participants.
    Rule 7.18P(a): Proposed Rule 7.18P(a) would be based on current
Rule 7.18, but with non-substantive differences to streamline the rule
to reflect the proposed definition of a UTP Regulatory Halt, described
above, and to address when the Exchange may reopen a security that is
subject to a trading pause under the LULD Plan or a halt pursuant to
Rule 7.12 (Trading Halts Due to Extraordinary Market Volatility).\16\
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    \16\ See proposed Rule 7.11P(a)(2) (providing that the Exchange
would be subject to the applicable requirements of the LULD Plan,
including section (VII)(B) of the LULD Plan relating to the
reopening of trading following a trading pause) and Rule
7.12(c)(ii).
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    As proposed, the first sentence of new Rule 7.18P(a) would provide
that if the UTP Listing Market declares a UTP Regulatory Halt, the
Corporation \17\ would halt or suspend trading in that security until
it receives notification from the UTP Listing Market that the halt or
suspension is no longer in effect or as provided for in Rules 7.11P and
7.12. This proposed text is based on the first sentence of Rule 7.18
with non-substantive differences to refer to when a UTP Listing Market
``declares'' a UTP Regulatory Halt, rather than ``determines that an
UTP Regulatory Halt is appropriate,'' and consistent with the proposed
new definition of UTP Regulatory Halt, to add references to Rules 7.11P
and 7.12.
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    \17\ The term ``Corporation'' is defined in Rule 1.1(k) as NYSE
Arca Equities, Inc., as described in the NYSE Arca Equities, Inc.'s
Certificate of Incorporation and Bylaws.
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    The Exchange proposes a substantive difference in Pillar to add in
Rule 7.18P(a) that, during Core Trading Hours, the Exchange would halt
trading during a UTP Regulatory Halt until it receives the first Price
Band in a UTP Security. As proposed, notwithstanding that the Exchange
may have received notification from the primary listing market to
reopen a security or have authority under the LULD Plan or Rule 7.12 to
reopen trading in a UTP Security, the Exchange proposes that, during
Core Trading Hours, the Exchange would wait until after it receives the
first Price Band in that security before it begins trading. By waiting
until it receives the first Price Band, the Exchange would not begin
trading in a UTP Security before the protections of the LULD Plan are
available.
    The second sentence of proposed Rule 7.18P(a) would be based on the
second sentence of current Rule 7.18, without any substantive
differences. Because proposed Rule 7.18P would cover halts other than
regulatory halts for the purpose of dissemination of material news, the
Exchange proposes a non-substantive difference to specify that the
second sentence of proposed Rule 7.18P would be applicable only for
halts based on dissemination of material news. Accordingly, the second
sentence of proposed Rule 7.18P(a) would provide that if a UTP
Regulatory Halt were issued for the purpose of dissemination of
material news, the Corporation would assume that adequate publication
or dissemination has occurred upon the expiration of one hour after
initial publication in a national news dissemination service of the
information that gave rise to an UTP Regulatory Halt and may, at its
discretion, reopen trading at that time, notwithstanding notification
from the UTP Listing Market that the halt or suspension is no longer in
effect.
    Rule 7.18P(b): Proposed Rule 7.18P(b) would describe order
processing during a UTP Regulatory Halt. The Exchange proposes a
substantive difference in Pillar that the Exchange would not conduct
any Trading Halt Auctions in UTP Securities. Accordingly, Rule 7.18P(b)
would provide that the NYSE Arca Marketplace would not conduct a
Trading Halt Auction in a UTP Security.
    Proposed Rule 7.18P(b) would further provide how the Exchange would
process new and existing orders in a UTP Security during a UTP
Regulatory Halt, and is based on rule text from current Rule 7.11(b)(6)
regarding how the Exchange processes new and existing orders in UTP
Securities during a trading pause triggered under the LULD Plan:
     Proposed Rule 7.18P(b)(1) would provide that the Exchange
would cancel any unexecuted portion of Market Orders, which is based on
rule text in current Rule 7.11(b)(6)(ii). The Exchange proposes a
substantive difference in Pillar from current Rule 7.11(b)(6)(ii)
because Pegged Orders would not be cancelled during a UTP Regulatory
Halt. Rather, such orders would remain on the NYSE Arca Book and once
the Exchange resumes trading the UTP Security, Pegged Orders would be
assigned working prices based on the new PBBO and be eligible to trade.
     Proposed Rule 7.18P(b)(2) would provide that the Exchange
would maintain all other resting orders in the NYSE Arca Book, which
other than Pegged Orders, is how the Exchange currently functions and
is based on rule text in current Rule 7.11(b)(6)(i).
     Proposed Rule 7.18P(b)(3) would provide that the Exchange
would accept and process all cancellations, which is based on current
Rule 7.11(b)(6)(iii).

     Proposed Rule 7.18P(b)(4) would be new functionality for
Pillar, and would provide that the Exchange would process a request to
cancel and replace as a cancellation without replacing the order.
Accordingly, if a User seeks to replace an order, the Exchange would
reject that request because it would be a new order, consistent with
proposed Rule 7.18P(6), described below, but the Exchange would also
cancel the resting order because that would meet the intent of the User
to replace an order by cancelling the resting order.
     Proposed Rule Rule 7.18P(b)(5) would provide that the
Exchange would accept and route new Market Orders, Auction-Only Orders,
Primary MOO/LOO Orders, Primary Only Day Orders, and Primary Only MOC/
LOC Order to the primary listing market.
    The proposed handling of Market Orders and Primary Only Orders in
Pillar is based on current Rule 7.11(b)(6)(iv) and (v), which provides
that the Exchange accepts and routes new Market Orders, PO Orders, and
PO+ Orders to the primary market. The Exchange proposes non-substantive
differences to use the term ``primary listing market'' instead of
``primary market'' and to refer to the specific Primary Only Orders, as
defined in the Pillar II Filing, that would be eligible to be
routed.\18\ Because the Exchange does not process IOC orders in
auctions, the Exchange would not route Primary Only IOC Orders.
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    \18\ See Pillar II Filing, supra note 5 at proposed Rule
7.31P(f).
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    The proposed treatment of Auction-Only Orders during a UTP
Regulatory Halt in new Rule 7.18P(b)(5) would be new in Pillar. The
proposed processing of Auction-Only Orders during a UTP Regulatory Halt
would be consistent with the proposed treatment of such orders in
Pillar. As set forth in the Pillar I Filing, the Exchange proposes that
before the Core Trading Session begins (and for Market Orders, until
the first primary listing market print of any size or 10 a.m. Eastern
Time, whichever is earlier), it would route Market Orders and Auction-
Only Orders for securities that are not eligible for an auction on the
Exchange to the primary listing market, even if such orders do not
include a Primary Only designation.\19\ In addition, in the Pillar II
Filing, the Exchange proposes to accept Auction-Only Orders in non-
auction eligible securities.\20\
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    \19\ See Pillar I Filing, supra note 4 at proposed Rule
7.34P(c)(1)(D). See also Pillar II Filing, supra note 5 at proposed
Rule 7.31P(c).
    \20\ See Pillar II Filing, supra note 5 at proposed Rule
7.31P(c).
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     Proposed Rule 7.18P(b)(6) would provide that the Exchange
would reject all other incoming orders until the security begins
trading on the NYSE Arca Marketplace pursuant to proposed Rule
7.18P(a). This proposed rule text is based on current Rule
7.11(b)(6)(vi), which provides that the Exchange rejects all other
orders until the stock has reopened, with a proposed substantive
difference to reflect that the time when a stock would be reopened
would be based on proposed Rule 7.18P(a), described above.
    Rule 7.18P(c): Proposed Rule 7.18P(c) would set forth how the
Exchange would process new and existing orders for securities listed on
the Exchange during a halt, suspension or pause. In Pillar, because
Exchange-listed securities would be eligible to participate in a
Trading Halt Auction, the Exchange proposes to process orders in
Exchange-listed securities differently than how it would process orders
in UTP Securities.\21\
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    \21\ The Exchange does not have a rule addressing how it
processes new and existing orders during a halt, suspension, or
pause in an Exchange-listed security.
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     Proposed Rule 7.18P(c)(1) would provide that the Exchange
would cancel any unexecuted portion of Market Orders, which is how the
Exchange currently functions. The Exchange proposes a substantive
difference in Pillar from current functionality because Pegged Orders
would not be cancelled.
     Proposed Rule 7.18P(c)(2) would provide that the Exchange
would maintain all other resting orders in the NYSE Arca Book, which
other than Pegged Orders, is how the Exchange currently functions. The
Exchange proposes to further provide in Pillar that, during a halt,
suspension, or pause in Exchange-listed securities, the Exchange would
assign Limit Orders on the NYSE Arca Book a working price and display
price that is equal to the limit price of the such orders. For example,
if an Arca Only Order or ALO Order in an Exchange-listed security has a
working price different from its limit price, during a trading halt,
suspension, or pause, such order would be re-priced to its limit price.
The Exchange proposes to re-price such orders to their limit price so
that they may participate in the Trading Halt Auction at their limit
price.
    Consistent with the proposed processing of Pegged Orders, in
Pillar, Primary Pegged Orders would remain on the NYSE Arca Book and be
eligible to participate in the Trading Halt Auction at their limit
price. Market Pegged Orders would remain undisplayed on the NYSE Arca
Book, would not be eligible to participate in the Trading Halt Auction,
but would be available to be assigned a new working price and be
eligible to trade once there is a PBBO against which to peg following
the Trading Halt Auction.
     Proposed Rule 7.18P(c)(3) would provide that the Exchange
would accept and process all cancellations, which is based on current
functionality.
     Proposed Rule 7.18P(c)(4) would provide that the Exchange
would reject incoming Limit Orders designated IOC, Cross Orders,
Tracking Orders, Market Pegged Orders, and Retail Orders. In addition,
because the Exchange would not accept new Tracking Orders, Market
Pegged Orders, or Retail Orders in Exchange-listed securities during a
halt, suspension, or pause, the Exchange would process a request to
cancel and replace a Tracking Order, Market Pegged Order, or Retail
Order as a cancellation without replacing the order.\22\
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    \22\ Because Limit Orders designated IOC and Cross Orders would
not rest on the NYSE Arca Book, a cancel and replace message
submitted for such an order would not be related to a resting order,
and thus would be rejected. For all other order types, during a
halt, suspension or pause in an Exchange-listed security, the
Exchange would accept and process a request to cancel and replace an
order, which would be consistent with proposed Rule 7.18P(c)(3),
pursuant to which the Exchange would accept and process all
cancellations, and proposed Rule 7.18P(c)(5), pursuant to which the
Exchange would accept all other incoming orders until the security
has reopened.
---------------------------------------------------------------------------

     Proposed Rule 7.18P(c)(5) would provide that the Exchange
would accept all other incoming orders until the security has reopened,
which represents current functionality.
    Rule 7.18P(d): Proposed Rule 7.18P(d) would set forth halts in
Derivative Securities Products and is based on current Rule 7.34(a)(4)
and (5) without any substantive differences. Proposed Rule 7.18P(d)(1)
would be based on current Rule 7.34(a)(4) and would set forth
requirements for trading halts in UTP Derivative Securities Products
and proposed Rule 7.18P(d)(2) would be based on current Rule 7.34(a)(5)
and would set forth requirements for trading halts halts in Derivative
Securities Products listed on the Exchange. Proposed Rule 7.18P(d)
would have the following non-substantive differences from current Rule
7.34(a)(4) and (a)(5):
     To use the terms ``Derivative Securities Product'' and
``UTP Derivative Securities Product,'' which are new defined terms the
Exchange has proposed to be set forth in Rule 1.1(bbb).\23\
Accordingly, unlike current Rule 7.34(a)(4), the Exchange would not

define these terms in proposed Rule 7.18P.
---------------------------------------------------------------------------

    \23\ See Pillar I Filing, supra note 4.
---------------------------------------------------------------------------

     To use the terms ``Early Trading Session'' instead of
``Opening Session'' and ``primary listing market'' instead of ``listing
market.''
Proposed New Rule 7.16P--Short Sales
    Rule 7.16 sets forth requirements relating to short sales. The
Exchange proposes to adopt new Rule 7.16P to address short sales in
Pillar. As proposed, new Rule 7.16P would be based on the same rule
numbering as current Rule 7.16, but with proposed substantive
differences to the rule text that correlates to current Rule 7.16(f).
Specifically, in Pillar, because of proposed substantive differences to
how certain orders and modifiers would operate, the Exchange proposes
different handling of certain orders in Pillar to comply with the
requirements of Rule 201 of Regulation SHO (``Rule 201'').\24\
---------------------------------------------------------------------------

    \24\ 17 CFR 242.201.
---------------------------------------------------------------------------

    Rule 7.16P(a)-(e): Current Rule 7.16(a)-(e) sets forth various
requirements relating to Regulation SHO, 17 CFR 242.200 et seq.
Proposed Rule 7.16P(a)-(e) would be based on current Rule 7.16(a)-(e)
with minor non-substantive differences to replace the term ``shall''
with ``will'' in paragraphs (a), (d), and (e) of proposed Rule 7.16P
and replace the term ``shall'' with ``may'' in paragraph (b) of
proposed Rule 7.16P.
    Rule 7.16P(f)(1)-(4): Current Rule 7.16(f) sets forth Exchange
requirements in compliance with the Short Sale Price Test under Rule
201.\25\ Proposed Rule 7.16P(f) would be based on current Rule 7.16(f),
with a non-substantive difference to renumber paragraph (f) with sub-
paragraphs (1), (2), (3), etc., instead of (i), (ii), (iii), etc.
---------------------------------------------------------------------------

    \25\ Capitalized terms are based on the defined terms in Rule
7.16.
---------------------------------------------------------------------------

    Proposed Rules 7.16P(f)(1)-(4) would be based on the rule text in
current Rules 7.16(f)(i) (Definitions), 7.17(f)(ii) (Short Sale Price
Test), 7.16(f)(iii) (Determination of Trigger Price), and Rule
7.16(f)(iv) (Duration of Short Sale Price Test), with minor non-
substantive differences to replace the term ``shall'' with ``will,''
add the short-hand definition of ``NBB,'' replace references to
``national best bid'' with references to ``NBB,'' and update cross-
references based on the proposed different sub-numbering for paragraph
(f) of proposed Rule 7.16P.
    The Exchange proposes substantive differences in Rules 7.16P(f)(2)
and (f)(3) from current Rules 7.16(f)(ii) and (f)(iii) regarding which
price the Exchange would use in Pillar to determine a Trigger Price.
Current Rule 7.16(f)(ii) provides that except as provided in
subparagraphs (vi) and (vii) of Rule 7.16(f), Corporation systems shall
not execute or display a short sale order with respect to a covered
security at a price that is less than or equal to the current national
best bid if the price of that security decreases by 10% or more, as
determined by the listing market for the security, from the security's
closing price on the listing market as of the end of regular trading
hours on the prior day (``Trigger Price''). Rule 7.16(f)(iii)(B)
further provides that if a covered security did not trade on the
Corporation on the prior trading day (due to a trading halt, trading
suspension, or otherwise), the Corporation's determination of the
Trigger Price will be based on the last sale price on the Corporation
for that security on the most recent day on which the security traded.
    As discussed above, the Exchange proposes to adopt a new definition
in Pillar for the term ``Official Closing Price.'' The Exchange
proposes to use this term in proposed Rule 7.16P(f)(2) for purposes of
determining the Trigger Price in Exchange-listed securities, which
would be a substantive difference from current Rule 7.16(f)(ii), which
uses the security's closing price on the listing market. By using the
proposed definition of ``Official Closing Price,'' if there is no
closing auction of a round lot or more, the Exchange would use the most
recent consolidated last sale price to determine the Trigger Price,
rather than the last price of the security on the Exchange. While this
would be a substantive difference for Pillar, the proposal is
consistent with NYSE Rule 440B(c)(3), which provides that under
specified circumstances, the NYSE may use the consolidated last sale
price for a security on the most recent day on which the security
traded for purposes of determining a Trigger Price. Similar to the
NYSE, the Exchange believes that in the absence of a closing auction of
a round lot or more, using the consolidated last sale price available
as of the end of Core Trading Hours on the prior day (or most recent
day when there is a consolidated last sale price) best approximates the
market's determination of the appropriate price of such securities.\26\
---------------------------------------------------------------------------

    \26\ See Securities Exchange Act Release No. 68724 (Jan. 24,
2013), 78 FR 6389, 6390 (Jan. 30, 2013) (SR-NYSE-2013-03) (Notice of
Filing to amend NYSE Rule 440B to use the consolidated last sale
price for purposes of determining the Trigger Price in specified
circumstances).
---------------------------------------------------------------------------

    Using the term ``Official Closing Price'' in proposed Rule
7.16(f)(2), which would incorporate scenarios when there is no closing
auction on the Exchange, would obviate the need to include text from
current Rule 7.16(f)(iii)(B) in proposed Rule 7.16P. Specifically, the
proposed definition of ``Official Closing Price,'' which defines how
the Exchange would determine an Official Closing Price in the absence
of a Closing Auction or consolidated last sale eligible trade on the
prior trading day, would cover the scenario described in current Rule
7.16(f)(iii)(B), i.e., if a security does not trade on the Corporation
on the prior trading day.
    The Exchange's proposed modification in Pillar to how it would
determine the Trigger Price is consistent with Rule 201.\27\ Rule 201
provides that the listing market is responsible for determining the
closing price of a covered security, but does not require that the
Exchange use the closing price from an auction on the Exchange or a
last sale on the primary listing market for determining that price.\28\
The proposed use of the new defined term of ``Official Closing Price''
would provide for a closer approximation of the most recent trading
price of a security for purposes of determining the Trigger Price
because it would include consolidated last sale prices, and not just
last sale prices on the Exchange.
---------------------------------------------------------------------------

    \27\ 17 CFR 242.201.
    \28\ 17 CFR 242.201(b)(1)(i). See also Division of Trading and
Markets: Responses to Frequently Asked Questions Concerning Rule 201
of Regulation SHO, at Question 3.1 (providing guidance that when
there is a trading halt or suspension and therefore no closing
price, the primary listing market could use the last sale as the
prior day's closing price). See also NYSE Rule 440B(c)(3).
---------------------------------------------------------------------------

    Rule 7.16P(f)(5): Current Rule 7.16(f)(v) sets forth how short sale
orders are processed during a Short Sale Period. Proposed Rule
7.16P(f)(5)(A)-(J) would set forth how the Exchange would process short
sale orders during a Short Sale Period in Pillar and includes proposed
substantive differences from the current rule.
     Proposed Rule 7.16P(f)(5)(A) would set forth how the
Exchange would re-price orders in Pillar and is based on current Rule
7.16(f)(v)(C), which provides that marketable short sale orders will be
re-priced by the Corporation one minimum price increment above the
current national best bid (the ``Permitted Price'') and defines the
Permitted Price for securities priced $1.00 or more or under a $1.00.
    The first sentence of proposed Rule 7.16P(f)(5)(A) would be based
on the first sentence of Rule 7.16(f)(v)(C) with non-substantive
differences to define the orders that would be re-priced as ``short
sale orders with a working price

and/or display price equal to the NBB,'' rather than refer to such
orders as ``marketable short sale orders.'' The proposed rule would
further provide that such orders would have the working and/or display
price adjusted one minimum price increment above the current NBB
(``Permitted Price'') and use the term ``NBB'' instead of ``national
best bid.''
    The Exchange proposes to use Pillar terminology to refer to the
price at which an order is eligible to trade (working price) or be
displayed (display price) \29\ so that the proposed rule would cover
orders and modifiers that may have a working price that is different
from the display price (e.g., an Arca Only Order).\30\ Accordingly,
pursuant to proposed Rule 7.16P(f)(5)(A), the Exchange would re-price
short sale orders so that they would neither trade at the NBB (i.e.,
reference to the working price being re-priced) or be displayed at the
NBB (i.e., reference to the display price being re-priced), unless the
order is a permissible short sale order. This proposed rule text would
therefore cover all orders and modifiers at the Exchange in Pillar,
unless otherwise provided for in paragraphs (f)(5)(B)-(J) of proposed
Rule 7.16P.
---------------------------------------------------------------------------

    \29\ See Pillar I Filing, supra note 4 at proposed Rule
7.36P(a)(1) and (3).
    \30\ See Pillar II Filing, supra, note 5. By referring to both
the display price and the working price of an order being adjusted
to a Permitted Price in proposed Rule 7.16P(f)(5)(A), the Exchange
does not believe it needs to separately provide for how Arca Only
Orders would be re-priced in Pillar, and therefore rule text
currently in Rule 7.16(f)(v)(D)(ii), which provides that PNP Blind
Orders will be re-priced at a Permitted Price and are displayed once
they are re-priced, and therefore will re-price down when the
national best bid moves down but will not move up in price if the
national best bid moves up and will instead remain at the price
displayed, would not be included in proposed Rule 7.16P(f)(5).
Because an Arca Only Order has a display price, if such display
price is a Permitted Price pursuant to proposed Rule 7.16P(f)(6),
the Arca Only Order would not need to be adjusted to a price higher
than that display price, which is provided for in the current rule.
If the working price of an Arca Only Order is undisplayed, it would
be adjusted pursuant to proposed Rule 7.16P(f)(5)(C) as an order
that is ranked Priority 3--Non-Display Order.
---------------------------------------------------------------------------

    The second and third sentences of proposed Rule 7.16P(f)(5)(A)
would be based on the second and third sentences of current Rule
7.16(f)(v)(C) with minor non-substantive differences to use the term
``NBB'' instead of ``national best bid'' and use the term ``adjust''
instead of ``reprice.''
     Proposed Rule 7.16P(f)(5)(B) would set forth the reject
option for sell short orders that would be required to be re-priced
during a Short Sale Price Test. The proposed rule is based on current
Rule 7.16(f)(v)(A), which provides that an ETP Holder may mark
individual short sale orders to be rejected back if entered while a
symbol is subject to the short sale price test.
    In Pillar, the Exchange is proposing a substantive difference to
provide that the reject instruction would apply not only to orders on
arrival, but also to resting orders. As proposed, if the ETP Holder
chooses the reject option, a resting order that would be required to be
adjusted to a Permitted Price while a symbol is subject to the Short
Sale Price Test would instead cancel. Allowing ETP Holders to elect
that their resting interest be cancelled if it would be required to re-
price is consistent with the intent of the current rule, which is to
reject an order rather than re-price. In addition, the Exchange
proposes a minor non-substantive difference to use the term ``adjust''
rather than ``re-price.''
     Proposed Rule 7.16P(f)(5)(C) would provide how the
Exchange would process sell short Priority 1, Priority 2 odd lot
orders, and Priority 3 orders during a Short Sale Price Test. This
proposed rule text is based on current Rule 7.16(f)(v)(D)(i) relating
to short sale orders that are not displayed on entry, which provides
that Market Orders and Passive Liquidity orders will be re-priced at a
Permitted Price and will continuously re-price at a Permitted Price as
the national best bid moves both up and down.
    The Exchange proposes to use Pillar terminology to refer to
Priority categories to ensure that all sell short orders that would be
subject to re-pricing both up and down during a Short Sale Period would
be subject to the rule. As proposed, Market Orders, orders and reserve
interest ranked Priority 3--Non-Display Orders, and odd lot orders
ranked Priority 2--Display Orders would have a working price adjusted
to a Permitted Price and would continuously adjust to a Permitted Price
as the NBB moves both up and down. The rule would further provide that
reserve interest that replenishes the displayed quantity of a Reserve
Order would be replenished at a Permitted Price. The Exchange proposes
non-substantive differences to use the term ``adjust'' instead of
``reprice,'' and ``NBB'' instead of ``national best bid.''
    In Pillar, the Exchange is proposing a substantive difference to
treat odd lot orders ranked Priority 2--Display Orders in the same
manner as Market Orders and other non-displayed orders. As discussed in
the Pillar I Filing, the Exchange proposes that odd lot orders that are
ranked Priority 2--Display Orders would be considered ``displayed'' for
purposes of ranking because such orders are available via the
Exchange's proprietary data feeds.\31\ However, because Rule 201 refers
to displayed in the context of an order displayed via the public data
feeds, for purposes of proposed Rule 7.16P, the Exchange proposes to
process all sell short odd lot orders the same as sell short orders
that are ranked Priority 3--Non-Display Orders in that such orders
would be re-priced as the NBB moves both up and down. The Exchange
would extend this treatment to all odd lot sell short orders,
regardless of whether they were previously included in a displayed
quote that was at a price above the then current NBB and the NBB moves
into the price of the odd lot order and therefore eligible to remain
displayed at the price of the NBB under proposed Rule 7.16P(f)(6).
---------------------------------------------------------------------------

    \31\ See Pillar I Filing, supra note 4.
---------------------------------------------------------------------------

    The last sentence of proposed Rule 7.16P(f)(5)(C) would provide
that reserve interest that replenishes the displayed quantity of a
Reserve Order would be replenished at a Permitted Price. This
represents current functionality regarding reserve interest pursuant to
current Rule 7.16(f)(v)(C) in that all marketable orders other than
those specified in the rule are re-priced to one MPV above the current
NBB, which includes reserve interest that replenishes the display
quantity of a Reserve Order. The Exchange proposes to specify this
requirement separately in proposed Rule 7.16P(f)(5)(C) in order to
promote clarity regarding at what price reserve interest would
replenish any depleted display quantity of a Reserve Order. Because the
reserve interest would already be re-priced to a Permitted Price, the
Exchange would replenish display quantity at the Permitted Price, even
if the previously displayed quantity were eligible to be displayed at
the NBB pursuant to proposed Rule 7.16P(f)(6).
     Proposed Rule 7.16P(f)(5)(D) would set forth how the
Exchange would process sell short Pegged Orders and MPL Orders during a
Short Sale Price Test. The proposed rule is based on current Rule
7.16(f)(v)(B), which provides that MPL Orders will continue to be
priced at the mid-point of the national best bid and national best
offer, including situations where the midpoint is not one minimum price
increment above the national best bid. The Exchange proposes to add
Pegged Orders to this paragraph to describe new functionality in Pillar
that the Exchange would not reject or cancel Pegged Orders during a
Short Sale Period.\32\
---------------------------------------------------------------------------

    \32\ See Pillar II Filing, supra note 5.
---------------------------------------------------------------------------

    As proposed, during a Short Sale Period, both Pegged Orders and MPL

Orders would use the NBBO instead of the PBBO as the reference price
for determining the working price of such orders. Proposed Rule
7.16P(f)(5)(C) would further provide that the working price of MPL
Orders would be the mid-point of the NBBO, including situations where
the midpoint is less than one minimum price increment above the NBB.
This rule text is based on current Rule 7.16(f)(v)(B) with minor non-
substantive differences to use Pillar terms by referring to the
``working price'' rather than refer to the order being ``priced'' and
describing the price of an MPL Order in a less than one MPV market as a
midpoint being ``less than one minimum price increment'' rather than
``not one minimum price increment.''
    For Primary Pegged Orders, being pegged to the NBBO during a Short
Sale Price Test would eliminate the possibility for a sell short
Primary Pegged Order to be displayed at the NBB unless it was
previously displayed at a price above the then NBB, consistent with
proposed Rule 7.16P(f)(6), discussed below. As described in the Pillar
II Filing, pursuant to proposed Rule 7.31P(h)(2)(A), if the PBBO
becomes locked or crossed, a resting Primary Pegged Order would wait
for the PBBO that is not locked or crossed before the working price
would be adjusted, but would remain eligible to trade at its then
displayed price.\33\ In addition, the Exchange would reject an arriving
Primary Pegged Order if the PBBO is locked or crossed. During a Short
Sale Period, by using the NBBO instead of the PBBO, the Exchange would
reject newly arriving sell short Primary Pegged Orders if the NBBO is
locked or crossed, and therefore such orders would not be displayed at
the NBB. For resting Primary Pegged Orders, if the NBBO becomes locked
or crossed, a resting sell short Primary Pegged Order pegged to the
then NBO would remain at its previously displayed price, which would be
permitted pursuant to proposed Rule 7.16P(f)(6), and would not be re-
priced until there is an NBBO that is not locked or crossed.\34\
---------------------------------------------------------------------------

    \33\ See Pillar II Filing, supra note. 5.
    \34\ For example, assume that during a Short Sale Period, a sell
short Primary Pegged Order is pegged to the NBO of 10.00 and there
is an NBB of 9.99. If the NBB moves up and locks the NBO, pursuant
to proposed Rule 7.16P(f)(6), the sell short Primary Pegged Order
would have been displayed at a price that was above then then
current NBB and would be eligible to remain displayed at 10.00. If,
alternately, the sell short Primary Pegged Order was pegged to an
NBO of 10.00 when there is an NBB of 9.99, and then the NBO moves
down to lock the 9.99 NBB, the Primary Pegged Order would not have
its working price adjusted from 10.00 to 9.99, and therefore would
remain displayed and eligible to trade at a Permitted Price of
10.00.
---------------------------------------------------------------------------

    For Market Pegged Orders, because such orders are ranked Priority
3--Non-Display Orders, a sell short Market Pegged Order that is pegged
to the NBBO during a Short Sale Price Test would be adjusted to a
Permitted Price pursuant to proposed Rule 7.16P(f)(5)(C). For example,
assume a sell short Market Pegged Order is pegged to the PBB, with no
offset. If a Short Sale Price Test is triggered in that security, the
Market Pegged Order would begin pegging to the NBB and its working
price would be adjusted to a Permitted Price. Accordingly, the Market
Pegged Order, which would be undisplayed, would never be permitted to
trade at the NBB.
     Proposed Rule 7.16P(f)(5)(E) would set forth how the
Exchange would process sell short Tracking Orders during a Short Sale
Price Test, which would be new in Pillar.\35\ As proposed, during a
Short Sale Price Test, the working price of a sell short Tracking
Order, which is based on the PBO, would not be adjusted. However, such
order would not be eligible to trade at or below the NBB. Accordingly,
if the PBO were equal to or lower than the NBB, a sell short Tracking
Order would not be eligible to trade until such time that the PBO is
equal to a Permitted Price or higher.
---------------------------------------------------------------------------

    \35\ As undisplayed orders, Tracking Orders are currently priced
to a Permitted Price, consistent with Rule 7.16(f)(v)(D).
---------------------------------------------------------------------------

     Proposed Rule 7.16P(f)(5)(F) would set forth how the
Exchange would process sell short IOC Orders during a Short Sale Price
Test. The proposed rule is based on current Rule 7.16(f)(v)(E), which
provides that IOC orders requiring that all or part of the order be
executed immediately will be executed to the extent possible at a
Permitted Price and higher and then cancelled, and will not be re-
priced. The Exchange proposes non-substantive differences in proposed
Rule 7.16P(f)(5)(F) to use the term ``traded'' instead of ``executed''
and use proposed Pillar terminology to state that the working price
would not be adjusted instead of saying ``will not be re-priced.''
     Proposed Rule 7.16P(f)(5)(G) would set forth how the
Exchange would process sell short Day ISOs during a Short Sale Price
Test. The proposed rule is based on current Rule 7.16(f)(v)(F), which
provides that PNP ISO Orders are rejected if the price is at or below
the current national best bid. The Exchange proposes non-substantive
differences in proposed Rule 7.16(P)(5)(G) to refer to this order as a
``Day ISO'' instead of a ``PNP ISO Order,'' reference the ``limit
price'' and not just the ``price,'' and use the term ``NBB'' instead of
``national best bid.''
     Proposed Rule 7.16P(f)(5)(H) would set forth how the
Exchange would process Cross Orders for which the sell side is a short
sale order and are received during a Short Sale Price Test. Currently,
Cross Orders, which are an IOC Order, are subject to Rule 7.16(f)(v)(E)
and if the proposed cross price is not at a Permitted Price or higher,
the Cross Order is not re-priced but would instead cancel. Proposed
Rule 7.16P(f)(5)(H) would provide that Cross Orders with a cross price
at or below the NBB would be rejected. Accordingly, Cross Orders in
Pillar would be processed the same as provided for in Rule
7.16(f)(v)(E).\36\
---------------------------------------------------------------------------

    \36\ Proposed Rule 7.16P(f)(5)(H) would also describe how the
Exchange would process Limit IOC Routable Cross Orders, which is a
new form of Cross Order proposed in Pillar that would be eligible to
trade at prices other than its cross price. See Pillar II Filing,
supra note 5 at proposed Rule 7.31P(g)(2). If a Limit IOC Routable
Cross Order has a sell short order and the cross price is not at a
Permitted Price or higher, the entire order would be rejected and it
would not trade at prices other than the cross price.
---------------------------------------------------------------------------

     Proposed Rule 7.16P(f)(5)(I) would provide how the
Exchange would process sell short orders for which a Short Sale Price
Test is triggered after the order is routed. The proposed rule text
represents new functionality for Pillar. As proposed, if a Short Sale
Price Test is triggered after an order has routed, any returned
quantity of the order and the order it joins on the NYSE Arca Book
would be adjusted to a Permitted Price. The Exchange proposes to re-
price the resting quantity, even if it were eligible to remain
displayed at the NBB price pursuant to proposed Rule 7.16P(f)(6), to
conform to the general requirement in Pillar that the returned quantity
of a partially routed order would join the resting quantity.\37\ If the
returned quantity would be required to be re-priced to a Permitted
Price, then the resting quantity that it joins would similarly be re-
priced to a Permitted Price and the order would rest on the NYSE Arca
Book at a single price rather than two prices.
---------------------------------------------------------------------------

    \37\ See Pillar I Filing, supra note 4 at proposed Rule
7.36P(f)(1)(B).
---------------------------------------------------------------------------

    Proposed Rule 7.16P(f)(5)(I) would further provide that if the
order that was routed was a Reserve Order, the returned quantity of the
order would first join the reserve interest at a Permitted Price and be
assigned a new working time before being evaluated for replenishing the
display quantity of the Reserve Order. This proposed functionality
would ensure that the

returned quantity of the Reserve Order would be priced at a Permitted
Price and would not join any previously displayed quantity that might
be eligible to remain displayed at a price equal to or below the NBB
pursuant to proposed Rule 7.16P(f)(6). The Exchange proposes to include
this level of detail regarding how sell short Reserve Orders would be
processed in order to provide transparency in the Exchange's rules
regarding how orders operate during a Short Sale Period.
     Proposed Rule 7.16P(f)(5)(J) would provide how orders with
a Proactive if Locked/Crossed Modifier would operate during a Short
Sale Period and is based on current Rule 7.16(f)(v)(G), which provides
that proactive if locked modifiers will be ignored for short sale
orders. The Exchange proposes a non-substantive difference to rename
the modifier as a ``Proactive if Locked/Crossed Modifier,'' consistent
with the proposed name of the modifier in Pillar.\38\
---------------------------------------------------------------------------

    \38\ See Pillar I Filing, supra note 5 at proposed Rule
7.31P(i)(1).
---------------------------------------------------------------------------

    Proposed Rule 7.16P(f)(6) would provide for the execution of
permissible orders during the Short Sale Period. The proposed rule text
is based on current Rule 7.16(f)(vi), which provides that during the
Short Sale Period, Corporation systems will execute and display a short
sale order without regard to price if, at the time of initial display
of the short sale order, the order was at a price above the then
current national best bid. Except as specifically noted in subparagraph
(v), short sale orders that are entered into the Corporation prior to
the Short Sale Period but are not displayed will be re-priced to a
Permitted Price. The Exchange proposes minor non-substantive
differences to replace the reference to ``national best bid'' with a
reference to ``NBB,'' update the cross reference from subparagraph
(f)(v) to subparagraph (f)(5), and replace the term ``re-priced'' with
the term ``adjusted.''
    Proposed Rule 7.16P(f)(7) would provide for short exempt orders.
The proposed rule text is based on current Rule 7.16(f)(vii) with no
differences.
Proposed New Rule 7.11P--LULD
    Rule 7.11 sets forth rule provisions relating to the LULD Plan and
trading pauses in individual securities due to extraordinary market
activity. The Exchange proposes new Rule 7.11P for Pillar to address
the same topic. As proposed, new Rule 7.11P would be based on the same
rule numbering as current Rule 7.11, but with proposed substantive
differences to the paragraph that correlates to current Rule
7.11(a)(6). Specifically, in Pillar, the Exchange would expand the
number of order types that would be eligible for optional re-pricing
instructions.
    Rule 7.11P(a)(1)-(4): Current Rule 7.11 is a pilot rule in effect
during a pilot period to coincide with the pilot period for the LULD
Plan. Proposed Rule 7.11P(a)(1)-(4) for Pillar would be based on
current Rule 7.11(a)(1)-(4) with minor non-substantive differences to
replace the term ``shall'' with ``will'' and ``execute'' with
``trade.''
    Rule 7.11P(a)(5): Current Rule 7.11(a)(5) provides that Exchange
systems shall cancel buy (sell) interest that is priced or could be
executed above (below) the Upper (Lower) Price Band, except as
specified in Rule 7.11(a)(6). Accordingly, cancelling orders that are
priced or could be executed through the bands is the default
functionality on the Exchange. Rule 7.11(a)(5) further provides that
incoming marketable interest, including market orders, IOC orders, and
limit orders, shall be executed, or if applicable, routed to an away
market, to the fullest extent possible, subject to Rules 7.31(a)(1)-(3)
(Trading Collars for market orders) and 7.31(b)(2) (price check for
limit orders), at prices at or within the Price Bands. Any unexecuted
portion of such incoming marketable interest that cannot be executed at
prices at or within the Price Bands shall be cancelled and the ETP
Holder shall be notified of the reason for the cancellation.
    The Exchange proposes to maintain the current default to cancel
orders that would be priced or traded through the Price Bands. Proposed
Rule 7.11P(a)(5) would therefore provide that Exchange systems would
cancel buy (sell) interest that is priced or could be traded above
(below) the Upper (Lower) Price Band, except as specified in proposed
Rule 7.11P(a)(6). This proposed rule text is based on current Rule
7.11(a)(5) with non-substantive difference to change the term ``shall''
to ``will'' and ``executed'' to ``traded.''
    Proposed Rule 7.11P(a)(5)(A) would further provide that incoming
marketable interest, including Market Orders, Limit Orders, and Limit
Orders designated IOC would be traded, or if applicable, routed to an
Away Market, to the fullest extent possible, subject to Rules
7.31P(a)(1)(B) (Trading Collars for Market Orders) and 7.31P(a)(2)(B)
(price check for Limit Orders), at prices at or within the Price Bands.
Any unexecuted quantity of such incoming marketable interest that
cannot be traded at prices at or within the Price Bands would be
cancelled and the ETP Holder would be notified of the reason for the
cancellation. This proposed rule text is based on current Rule
7.11(a)(5)(A) with non-substantive differences to capitalize ``Away
Market,'' ``Market Order,'' ``Limit Order,'' and ``Limit Orders
designated IOC,'' use the term ``will'' instead of ``shall,'' use the
term ``traded'' instead of ``executed,'' and update cross references to
proposed Rule 7.31P.
    The Exchange also proposes to add proposed Rule 7.11P(a)(5)(B),
which would provide that Cross Orders with a cross price above the
Upper Price Band or below the Lower Price Band would be rejected. This
would be new rule text in Pillar. Cross Orders, which are IOC, are
currently subject to current Rule 7.11(a)(5), which provides that IOC
Orders execute to the fullest extent possible at prices at or within
the Price Bands, and any unexecuted portion that cannot be executed at
prices at or within the Price Bands shall be cancelled. Accordingly, if
the cross price of a Cross Order cannot be executed at prices at or
within the Price Bands, the Cross Order will be cancelled. Proposed
Rule 7.11P(a)(5)(B) is based on this rule text, but would also address
how the Exchange would process in Pillar the proposed new Limit IOC
Routable Cross Orders, which are eligible to trade at prices other than
their cross price.\39\ In Pillar, both the Limit IOC Cross Order and
the Limit IOC Routable Cross Order would cancel if the cross price were
outside the Price Bands, and therefore the proposed Limit IOC Routable
Cross Order would not trade with any interest on the NYSE Arca Book or
route to Away Market interest that is within the Price Bands.
---------------------------------------------------------------------------

    \39\ See Pillar II Filing, supra note 5 at proposed Rule
7.31P(g)(2).
---------------------------------------------------------------------------

    Rule 7.11(a)(6): Current Rule 7.11(a)(6) sets forth the
discretionary instruction to re-price eligible Limit Orders and
provides that for specified limit orders, ETP Holders may enter an
instruction for the Exchange to re-price a buy (sell) order that is
priced above (below) the Upper (Lower) Price Band to the Upper (Lower)
Price Band rather than cancel the order, provided, however, that if a
Discretionary Order includes a discretionary price that is priced above
(below) the Upper (Lower) Price Band, the Exchange shall cancel such
order.
     Current Rule 7.11(a)(6)(A) further provides that
instructions to re-price eligible orders shall be applicable to both
incoming and resting orders and if the Price Bands move and the
original limit price of a re-priced order if at or within the Price
Bands, Exchange

systems shall re-price such limit order to its original limit price.
     Current Rule 7.11(a)(6)(B) provides that each time an
eligible order is re-priced, it shall receive a new time priority.
     Current Rule 7.11(a)(6)(C) sets forth the order types
eligible for re-pricing instructions, which are Adding Liquidity Only
Orders, Discretionary Orders, Inside Limit Orders, Limit Orders, PNP
ISO, PNP Orders, Proactive if Locked Reserve Orders, Reserve Orders,
Primary Until 9:45 Orders, Primary After 3:55 Orders, and Primary Sweep
Orders.
     Finally, current Rule 7.11(a)(6)(D) provides that for an
order type eligible for re-pricing instructions under Rule
7.11(a)(6)(C) that is also a short sell order, during a Short Sale
Price Test, as set forth in Rule 7.16(f), a short sale order priced
below the Lower Price Band shall be re-priced to the higher of the
Lower Price Band or the Permitted Price, as defined in Rule
7.16(f)(ii), and that Sell short orders that are not eligible for re-
pricing instructions will be treated as any other order pursuant to
Rule 7.11(a)(5).
    In Pillar, the Exchange proposes substantive differences to expand
the number of order types eligible for re-pricing instructions. In
addition, rather than specifying which order types would be eligible
for re-pricing instructions, the Exchange would enumerate which order
types would not be eligible for re-pricing instructions. Accordingly,
as proposed, Rule 7.11P(a)(6) would provide that ETP Holders may enter
an instruction for the working price of a Limit Order to buy (sell)
with a limit price above (below) the Upper (Lower) Price Band to be
adjusted to a price that is equal to the Upper (Lower) Price Band
rather than cancel the order. The proposed rule text is based on
current Rule 7.11(a)(6) with both substantive differences to reference
that Limit Orders are eligible for re-pricing instructions and non-
substantive differences to use Pillar terminology.\40\ The Exchange
proposes to reference the working price of an order to be clear that
for order types that may have a working price that is more aggressive
than the display price, it would be the working price that would be
adjusted. For example, an Arca Only Order or ALO Order to buy that
would have a working price equal to the PBO, if the PBO were above the
Upper Price Band, the working price would be adjusted to be equal to
the Upper Price Band.
---------------------------------------------------------------------------

    \40\ The Exchange will not reference Discretionary Orders in
proposed Rule 7.11P(a)(6) because the Exchange will not be offering
Discretionary Orders in Pillar. See Pillar II Filing, supra note 5.
---------------------------------------------------------------------------

    Proposed Rule 7.11P(a)(6)(A) would be new rule text that enumerates
which orders would not be eligible for re-pricing instructions in
Pillar.\41\ As proposed, re-pricing instructions would not be available
for Market Orders, Auction-Only Orders, Q Orders, Primary Only Orders,
or any Limit Order that includes an IOC modifier, including Cross
Orders. The rule would also provide that instructions to re-price
included with a Primary Until 9:45 Order or Primary After 3:55 Order
would only be enforced when such orders are entered on or resting on
the NYSE Arca Book.\42\ The Exchange believes that proposed Rule
7.11P(a)(6)(A) would provide additional clarity in Exchange rules
regarding which orders would be eligible for re-pricing instructions,
and if eligible, when they would be re-priced.
---------------------------------------------------------------------------

    \41\ Because in Pillar the Exchange would enumerate which orders
are not eligible for re-pricing instructions rather than list orders
that would be eligible for re-pricing instructions, the Exchange
would not include rule text based on current Rule 7.11(a)(6)(C) in
the Pillar rule.
    \42\ This proposed rule text in Rule 7.11P(a)(6)(A) regarding
Primary Until 9:45 Orders and Primary After 3:55 Orders is
consistent with current Rule 7.11(a)(7) and proposed Rule
7.11P(a)(7), which provide that the Exchange routes these orders to
the primary listing market regardless of price.
---------------------------------------------------------------------------

    Proposed Rule 7.11P(a)(6)(B) would provide that instructions to re-
price eligible Limit Orders would be applicable to both incoming and
resting orders and that if the Price Bands move and the original limit
price of a re-priced order is at or within the Price Bands, such a
Limit Order would be adjusted to its limit price. This proposed rule
text is based on current Rule 7.11(a)(6)(A) with non-substantive
differences to refer to ``Limit Orders'' instead of ``orders'' and to
use the term ``adjust'' rather than ``reprice.''
    Proposed Rule 7.11P(a)(6)(C) would set forth proposed new
functionality in Pillar regarding how MPL Orders would be processed.
Currently, MPL Orders are not eligible for re-pricing instructions, and
therefore would cancel if they would trade outside the Price Bands. In
Pillar, MPL Orders would be eligible for re-pricing instructions. If
such instruction were included on an MPL Order, such order would not
cancel if the midpoint of the PBBO were outside the Price Bands, but
nor would it re-price. Accordingly, as proposed, Rule 7.11P(a)(6)(C)
would provide that an MPL Order that has an instruction to re-price
would not cancel, but would not be re-priced or eligible to trade if
the midpoint of the PBBO is below the Lower Price Band or above the
Upper Price Band. The Exchange believes that the proposed functionality
would provide more options for ETP Holders entering MPL Orders so that
such orders would not be cancelled if they would trade through a Price
Band, but also to honor the intent of the order to trade only at the
midpoint of the PBBO.
    Proposed Rule 7.11P(a)(6)(D) would be based on current Rule
7.11(a)(6)(D) relating to Sell Short Orders with non-substantive
differences to update cross references to proposed Rule 7.16P instead
of Rule 7.16. In addition, to reflect the proposed substantive
difference of which orders would be eligible for re-pricing
instructions in Pillar, the Exchange proposes a non-substantive
difference to the first sentence of the proposed rule so that it begins
with ``[i]f an eligible order includes repricing instructions and is
also a sell short order,'' instead of the current first sentence of
Rule 7.11(a)(6)(D), which states, ``[f]or an order type eligible for
repricing instructions under (6)(C) above that is also a short sell
order.''
    Finally, the Exchange would not be including in Rule 7.11P(a)(6)
rule text currently set forth in Rule 7.11(a)(6)(A) regarding time
priority. As discussed in greater detail in the Pillar I Filing,
pursuant to proposed Rule 7.36P(f)(2), an order would be assigned a new
working time any time the working price of the order changes and orders
re-priced pursuant to proposed Rule 7.11P(a)(6) would be subject to
this requirement.\43\ Therefore, the Exchange would not restate this
same requirement in proposed Rule 7.11P.
---------------------------------------------------------------------------

    \43\ See Pillar I Filing, supra note 4.
---------------------------------------------------------------------------

    Rule 7.11P(a)(7)-(8): Current Rule 7.11(a)(7) provides that
Exchange systems shall not route buy (sell) interest to an away market
displaying a sell (buy) quote that is above (below) the Upper (Lower)
Price Band, provided that the Exchange shall route Primary Only Orders
(Rule 7.31(x)), Primary Until 9:45 Orders (Rule 7.31(oo)), Primary
After 3:55 Orders (Rule 7.31(pp)), and Primary Sweep Orders (Rule
7.31(kk)) to the primary listing market regardless of price. Proposed
Rule 7.11P(a)(7) would be based on current Rule 7.11(a)(7) with non-
substantive differences to use the term ``will'' instead of ``shall,''
use the term ``orders'' instead of ``interest,'' capitalize the term
``Away Market,'' use the term ``primary listing market'' instead of
``primary market'', remove rule cite cross references, and delete
reference to Primary Sweep Orders.\44\
---------------------------------------------------------------------------

    \44\ The Exchange eliminated Primary Sweep Orders in 2015. See
Securities Exchange Act Release No. 74796 (April 23, 2015), 80 FR
12537 (March 9, 2015) (SR-NYSEArca-2015-08) (Approval order).

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

    Current Rule 7.11(a)(8) provides that the Exchange may declare a
Trading Pause for an NMS Stock listed on the Exchange when (i) the
National Best Bid (Offer) is below (above) the Lower (Upper) Price Band
and the NMS Stock is not in a Limit State; and (ii) trading in that NMS
Stock deviates from normal trading characteristics. Proposed Rule
7.11P(a)(8) would be based on current Rule 7.11(a)(8) without any
differences.
    Rule 7.11P(b): Current Rule 7.11(b) sets forth how Trading Pauses
operate on the Exchange. Because the LULD Plan has been fully
implemented across all Tier 1 and Tier 2 NMS Stocks, the Exchange no
longer pauses trading in securities as provided for in current Rules
7.11(b)(1) and (3)-(5). However, the Exchange proposes to maintain this
rule text while the LULD Plan is a pilot. Accordingly, proposed Rule
7.11P(b)(1)-(5) would be based on current Rule 7.11(b)(1)-(5) with non-
substantive differences to replace the term ``will'' with ``shall,''
replace time references from Pacific Time to Eastern Time, and replace
a cross-reference from Rule 7.35 to Rule 7.35P.
    Current Rule 7.11(b)(6) provides for how the Exchange processes new
and existing orders during a trading pause issued by another primary
listing market. As described above, proposed Rule 7.18P(b) would set
forth in Pillar how the Exchange would process new and existing orders
during a UTP Regulatory Halt, which would include a trading pause
issued by another primary listing market. Accordingly, the Exchange
would not include rule text from current Rule 7.11(b)(6) in the
proposed Rule 7.11P(b).
Proposed New Rule 7.38P--Odd Lots and Mixed Lots
    Rule 7.38 sets forth requirements relating to odd lots and mixed
lots, which are terms defined in Rule 7.6. The Exchange proposes new
Rule 7.38P to address odd lots and mixed lots in Pillar, including
circumstances when odd lot orders would be treated differently than
round lot orders.
    Proposed Rule 7.38P(a) would provide that Rules 7.31P and 7.44P
would specify whether an order may be entered as an odd lot or mixed
lot. Unlike current Rule 7.38, the Exchange proposes that in Pillar,
whether an order would be eligible to be entered as an odd lot or mixed
lot would be covered in proposed Rules 7.31P and 7.44P.\45\
Accordingly, rule text set forth in current Rules 7.38(a)(1) and (2)
would not be included in proposed Rule 7.38P(a).\46\
---------------------------------------------------------------------------

    \45\ See Pillar II Filing, supra note 5 at proposed Rules
7.31P(d)(1)(A) (Reserve Orders must be entered in round lots, and
therefore cannot be entered as odd lots or mixed lots);
7.31P(c)(3)(E) (MPL-IOC Orders must be entered with a minimum of one
round lot, and therefore may not be entered in odd lots);
7.31P(d)(4) (Tracking Orders must be in entered in round lots, and
therefore cannot be entered as odd lots or mixed lots); 7.31P(e)(2)
(Arca Only ALO Orders must have a minimum of one displayed round lot
on entry, and therefore cannot be entered as an odd lot);
7.31P(h)(2)(A) (Primary Pegged Orders must be entered with a minimum
of one round a [sic] lot); and 7.31P(j)(1) (Q Orders must be entered
with a minimum of one round lot displayed, and therefore cannot be
entered as an odd lot). Proposed Rule 7.44P(1)(3) would provide that
Retail Orders may be entered as an odd lot, round lot, or mixed lot.
    \46\ Current Rule 7.38(a)(1) provides that all orders submitted
by Users to the NYSE Arca Marketplace must be Market Orders or Limit
Orders and the following orders may not be entered in odd lots:
Reserve Orders, MPL-IOC Orders, Tracking Orders, or Q Orders.
Current Rule 7.38(a)(2) provides that Mixed lot orders submitted by
Users to the NYSE Arca Marketplace may be any order type supported
by the NYSE Arca Marketplace, unless inconsistent with the order
type descriptions found in Rule 7.31.
---------------------------------------------------------------------------

    Proposed Rule 7.38P(b) would provide that round lot, mixed lot, and
odd lots would be treated in the same manner in the NYSE Arca
Marketplace. This rule text is based on current Rule 7.38(b), without
any differences.
    The Exchange proposes that the general rule in Rule 7.38P(b) would
be subject to specific requirements in certain cases, as set forth in
proposed Rules 7.38P(b)(1) and (b)(2).
     Proposed Rule 7.38P(b)(1) would provide that the working
price of an odd lot order would be adjusted both on arrival and when
resting on the NYSE Arca Book based on the limit price of the order. If
the limit price of such odd lot order to buy (sell) is at or below
(above) the PBO (PBB), it would have a working price equal to the limit
price. If the limit price of such odd lot order to buy (sell) is above
(below) the PBO (PBB), it would have a working price equal to the PBO
(PBB). The proposed rule text uses Pillar terminology to describe how
the Exchange would price odd-lot orders that are not displayed as part
of the BBO so that they would not trade through the PBBO.\47\
---------------------------------------------------------------------------

    \47\ See, e.g., Pillar II Filing, supra note 5 at proposed Rule
7.31P(d)(2)(A) (describing the working price assigned to Limit Non-
Displayed Orders).
---------------------------------------------------------------------------

     Proposed Rule 7.38P(b)(2) would set forth the working time
that would be assigned to the returned quantity of an order that create
[sic] a new BBO when it joins resting quantity of the order. As
proposed, the rule would provide that for an order that is partially
routed to an Away Market on arrival, if any returned quantity of the
order joins resting odd-lot quantity of the original order and the
returned and resting quantity, either alone or together with other odd-
lot orders, would be displayed as a new BBO, both the returned and
resting quantity would be assigned a new working time.
    As set forth in the Pillar I Filing, proposed Rule 7.36P(f)(1)(B)
would provide that for an order that is partially routed to an Away
Market on arrival, the portion that is not routed would be assigned a
working time.\48\ If any unexecuted portion of the order returns and
joins any remaining resting portion of the original order, the returned
portion of the order would be assigned the same working time as the
resting portion of the order.
---------------------------------------------------------------------------

    \48\ Id. The display price of an odd lot order may differ from
the working price of the order.
---------------------------------------------------------------------------

    Proposed Rule 7.38P(b)(2) would provide for an exception to this
general requirement and is intended to prevent the Exchange from
displaying a new BBO that would lock or cross an Away Market PBBO.
Without this exception, if the returned quantity joined the resting
quantity's working time and is then displayed as a new BBO, it would be
considered to have an earlier working time than an updated PBBO, even
though the new BBO may be displayed after the PBBO was updated. By
assigning a new working time to the new displayed BBO, the Exchange
would evaluate it for routing as if it were a newly arriving order.
    For example, assume the PBBO is 9.98 x 10.00 and the 10.00 PBO is
on an Away Market for 100 shares. The Exchange receives a Limit Order
to buy ``A'' for 120 shares priced at 10.00 and would route 100 shares
of A to the Away Market, and 20 shares would be entered on the NYSE
Arca Book and assigned a working time. Because 20 shares is an odd lot
quantity, the Exchange could enter it onto the NYSE Arca Book without
locking the PBO. Assume that the returned quantity of A is 80 shares,
and between the time the order was routed and it returns unexecuted, a
second Away Market displays an offer of 10.00, which is the new PBO.
The returned quantity of A together with the resting quantity of A
would equal 100 shares, and therefore would constitute the best ranked
non-marketable displayed Limit Order on the Exchange and would become
the BB. As proposed, the entire quantity of A would be assigned a new
working time, which would be the time the returned quantity returns to
the Exchange. The Exchange would then evaluate whether the order should
be routed, and in this case, because it would create a new BB that
would lock

an existing PBO, the Exchange would route the 100 shares to the new
PBO. The Exchange would only have to assign a new working time if the
returning quantity would join resting odd-lot interest that would
result in a new BBO. If the resting quantity of the order were a round
lot or more, and therefore already displayed as the best ranked non-
marketable interest, the returned quantity could join that resting
interest at the working time of the resting interest pursuant to
proposed Rule 7.36P(f)(1)(B).
Proposed New Rule 7.10P--Clearly Erroneous Executions
    The Exchange proposes to adopt new Rule 7.10P for Pillar in order
to reflect terminology changes proposed in the Pillar I Filing and to
replace obsolete terms. As proposed, new Rule 7.10P would have the same
rule text and paragraph numbering as Rule 7.10 and would not have any
substantive differences from Rule 7.10. The Exchange proposes the
following non-substantive differences for proposed Rule 7.10P.
     To replace the term ``shall'' with ``will'' throughout the
rule and replace the term ``shall mean'' in proposed Rule 7.10P(i) with
``means.''
     To use the terms ``Early Trading Session'' instead of
``Opening Session'' and ``Late Trading Session'' instead of ``Late
Session'' in proposed Rules 7.10P(c)(1) and 7.10P(c)(3), which would
reflect the new terms proposed in the Pillar I Filing in proposed Rule
7.34P and are based on current Rule 7.10(c)(1) and 7.10(c)(3).
     To replace the term ``ie.'' with the term ``e.g.,'' in
proposed Rule 7.10P(c)(2).
     To capitalize the term ``Cross Order'' and delete an
obsolete reference to the Portfolio Crossing Service \49\ in proposed
Rule 7.10P(e)(1), which is based on current Rule 7.10(e)(1).
---------------------------------------------------------------------------

    \49\ The Exchange eliminated the Portfolio Crossing Service in
2014. See Securities Exchange Act Release No. 72942 (Aug. 28, 2014),
79 FR 52784 (Sept. 4, 2014) (SR-NYSEArca-2014-75) (Approval order
for filing that eliminated specified order types, modifiers, and
related references).
---------------------------------------------------------------------------

     To replace the term ``NYSE Arca Equities'' with
``Exchange'' as the modifier for Chief Regulatory Officer in proposed
Rule 7.10P(e)(3), which is based on current Rule 7.10(e)(3). The Chief
Regulatory Officer is an officer of NYSE Arca, which is the Exchange,
and not its wholly-owned subsidiary NYSE Arca Equities. Therefore,
changing the term to ``Exchange'' more accurately reflects the entity
for which the Chief Regulatory Officer is an officer.
     To replace the term ``3:00 ET'' with the term ``3:00 p.m.
Eastern Time'' in proposed Rule 7.10P(e)(3), which is based on current
Rule 7.10(e)(3) and is consistent with the proposed manner to describe
time in the Pillar I Filing.
     To replace the term ``Member'' with ``ETP Holder'' in
proposed Rule 7.10P(i), which is based on current Rule 7.10(i).
    The Exchange also proposes non-substantive differences to update
cross references in the Rule from Rule 7.10 to Rule 7.10P.
* * * * *
    As discussed in the Pillar I Filing, because of the technology
changes associated with the migration to the Pillar trading platform,
the Exchange will announce by Trader Update when rules with a ``P''
modifier will become operative and for which symbols. The Exchange
believes that keeping existing rules pending the full migration of
Pillar is necessary because they would continue to govern trading on
the current trading platform pending the full migration.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the
Securities Exchange Act of 1934 (the ``Act''),\50\ in general, and
furthers the objectives of Section 6(b)(5),\51\ in particular, because
it is designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, to foster
cooperation and coordination with persons engaged in facilitating
transactions in securities, to remove impediments to, and perfect the
mechanism of, a free and open market and a national market system and,
in general, to protect investors and the public interest. The Exchange
believes that the rules proposed in this filing, together with the
rules proposed in the Pillar I Filing and the Pillar II Filing, would
remove impediments to and perfect the mechanism of a free and open
market because they would promote transparency by using consistent
terminology for rules governing equities trading, thereby ensuring that
members, regulators, and the public can more easily navigate the
Exchange's rulebook and better understand how equity trading would be
conducted on the Pillar trading platform. Adding new rules with the
modifier ``P'' to denote those rules that would be operative for the
Pillar trading platform would remove impediments to and perfect the
mechanism of a free and open market by providing transparency of which
rules govern trading once a symbol has been migrated to the Pillar
platform. In addition, the proposed use of new Pillar terminology would
promote consistency in the Exchange's rulebook regarding how the
Exchange would process new and existing orders during a trading halt,
how sell short orders would be processed during a Short Sale Period,
how orders would be processed consistent with the requirements of the
LULD Plan, and when odd-lot orders would be treated differently than
round-lot orders.
---------------------------------------------------------------------------

    \50\ 15 U.S.C. 78f(b).
    \51\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes that the proposed amendments to existing
definitions in Rule 1.1 would remove impediments to and perfect the
mechanism of a fair and orderly market because they would not make any
substantive changes to Exchange rules, but rather are designed to
reduce confusion by eliminating obsolete references and terms and
therefore streamline the Exchange's rules. The Exchange further
believes that the proposed new definition for the term ``Official
Closing Price'' would remove impediments to and perfect the mechanism
of a fair and orderly market because the proposed definition would
promote transparency regarding the reference price the Exchange would
use in Pillar for purposes of calculating Trading Collars, pursuant to
proposed Rule 7.31P(a)(1)(B), and for purposes of determining a Trigger
Price pursuant to proposed Rule 7.16P(f)(2).
    For determining the Official Closing Price, the Exchange believes
that in the absence of a Closing Auction of a round lot or more, the
most recent consolidated last sale eligible trade during Core Trading
Hours best approximates the market's determination of the appropriate
price of such securities. In addition, using only those trades that
occur during Core Trading Hours that are last sale eligible would
remove impediments to and perfect the mechanism of a fair and orderly
market because the lower liquidity during the Early and Late Trading
Sessions may mean that trades occurring during those sessions may not
be as representative of the price of the security and odd-lot trades
may indicate an anomalous trade.
    The Exchange believes that proposed Rule 7.18P would remove
impediments to and perfect the mechanism of a fair and orderly market
because it would set forth in a single rule the requirements for
trading halts on the Exchange in both UTP Securities and Exchange-
listed securities, which are currently set forth in Rules 7.11(b)(6),
7.18, and 7.34(a)(4) and (a)(5). The Exchange

believes that the proposed substantive differences for Rule 7.18P as
compared to the current rules would remove impediments to and perfect
the mechanism of a fair and orderly market for the following reasons:
     Waiting until receipt of a Price Band in a UTP Security
before resuming trading following a UTP Regulatory Halt would assure
that the Exchange would not begin trading in a UTP Security before the
protections of the LULD Plan would be available. In addition, not
holding a Trading Halt Auction on the Exchange in a UTP Security,
together with rejecting new orders and routing Primary Only Orders
received during a UTP Regulatory Halt to the primary listing market,
would protect investors and the public by promoting price discovery and
liquidity on the primary listing market for its re-opening auction.
     Processing new and existing orders for UTP Securities
differently from new and existing orders in Exchange-listed securities
during a halt, suspension, or trading pause would complement the
proposal not to conduct a Trading Halt Auction in a UTP Security, as
discussed above. For Exchange-listed securities, because the Exchange
would be conducting a Trading Halt Auction, the Exchange would accept
new orders that would be eligible to participate in such auction. In
addition, to facilitate such auction, the Exchange would not cancel
resting Pegged Orders and would adjust the working price of resting
Limit Orders (including Pegged Orders) to their limit price so that
such orders could participate in a Trading Halt Auction at their limit
prices. The Exchange believes such proposed processing of new and
existing orders would promote liquidity and price discovery for Trading
Halt Auctions in Exchange-listed securities.
    With respect to Short Sales, the Exchange believes that proposed
Rule 7.16P would remove impediments to and perfect the mechanism of a
fair and orderly market because it would use Pillar terminology to
describe how the Exchange would process sell short orders during a
Short Sale Period, consistent with Rule 201 of Regulation SHO. More
specifically, the Exchange believes that using the new term ``Official
Closing Price'' for determining the Trigger Price of a security in Rule
7.16P(f)(2) is consistent with Rule 201(b)(1)(i) of Regulation SHO,
which requires that the listing market determine the closing price of a
covered security, but does not require that the Exchange use the
closing auction on the Exchange to determine that closing price. The
Exchange believes that using the Official Closing Price would provide
for a closer approximation of determining the Trigger Price because in
the absence of a closing auction of a round lot or more, it would
include consolidated last sale prices, and not just last sale prices on
the Exchange, which is consistent with how other markets operate.\52\
---------------------------------------------------------------------------

    \52\ See supra notes 26 and 28.
---------------------------------------------------------------------------

    The Exchange believes that how it would process sell short orders
during a Short Sale Period, set forth in proposed Rule 7.16P(f)(5),
would remove impediments to and perfect the mechanism of a fair and
orderly market because the proposed processing would assure that sell
short orders would neither trade at the NBB or be displayed at the NBB,
unless an order is eligible for an exemption pursuant to proposed Rule
7.16P(f)(6) or (f)(7). More specifically, the Exchange believes that
the proposal to expand the existing reject option for sell short orders
that would be required to be re-priced to apply also to resting orders
would remove impediments to and perfect the mechanism of a fair and
orderly market because it would be consistent with the intent of the
instruction, which is to not have such orders re-price. The Exchange
further believes that the proposed processing in Pillar of odd-lot
orders that are ranked Priority 2, Pegged Orders, Cross Orders, and
Tracking Orders would remove impediments to and perfect the mechanism
of a fair and orderly market and is consistent with Rule 201 of
Regulation SHO because the proposed processing would assure that such
orders would not trade at the NBB or be displayed at the NBB as the NBB
moves both up and down.
    With respect to proposed Rule 7.11P, the Exchange believes that the
proposed substantive difference to expand the number of Limit Orders
eligible for re-pricing instructions would be consistent with the LULD
Plan, and therefore would remove impediments to and perfect the
mechanism of a fair and orderly market, because the proposed re-pricing
of such orders would assure that such orders would not trade at or be
displayed at prices outside of the Price Bands. The Exchange further
believes that expanding the number of orders eligible for re-pricing
instructions would provide ETP Holders with more options regarding how
orders would be processed in compliance with the LULD Plan. With
respect to MPL Orders, the Exchange believes that proposed Rule
7.11P(a)(6)(C) would remove impediments to and perfect the mechanism of
a fair and orderly market because the proposal would provide ETP
Holders with the choice for such orders not to be cancelled, and
instead remain on the NYSE Arca Book until such time that the working
price would be at a price eligible to trade consistent with the LULD
Plan. The Exchange further believes that using Pillar terminology to
describe how orders would be re-priced would promote consistency in
Exchange rules, making them easier to navigate.
    With respect to proposed Rule 7.38P, the Exchange believes that the
proposed rule would promote consistency in the Exchange's rule book by
using Pillar terminology to describe how the Exchange would price odd
lot orders so that they would not trade through the PBBO. The Exchange
further believes that proposed Rule 7.38P(b)(2) would remove
impediments to and perfect the mechanism of a fair and orderly market
because it would promote transparency in Exchange rules regarding the
working time that would be assigned to an order that has been partially
routed and if when it returns, would be displayed as a new BBO. The
proposed assignment of the working time of the returned order would
assure that such new BBO, which would be comprised of the returned
quantity together with the resting odd-lot quantity, would be evaluated
for whether it would lock or cross a protected quotation.
    Finally, the Exchange believes that proposed Rule 7.10P, regarding
clearly erroneous executions, would remove impediments to and perfect
the mechanism of a fair and orderly market because it would use Pillar
terminology, without any substantive differences from current Rule
7.10.

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

    The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The proposed change is not
designed to address any competitive issue but rather to adopt new rules
to support the Exchange's new Pillar trading platform. As discussed in
detail above, the Exchange proposes new rules for Pillar to address
trading halts, Short Sales, the LULD Plan, and odd lots, which would be
based on current rules with both substantive and non-substantive
differences. The proposed substantive differences would promote
competition because the Exchange would be offering functionality that
is consistent with the proposed new orders and modifiers, as discussed
in the Pillar II Filing, in a manner consistent with Rule 201 of
Regulation SHO and the LULD Plan and to assure that odd lot orders
would not

trade through the PBBO. With respect to trading halts, the Exchange
believes that proposed Rule 7.18P would promote price discovery and
liquidity on the primary listing market for re-opening auctions
following a halt, suspension, or trading pause, thereby supporting
competition. The proposed non-substantive differences would be to use
new Pillar terminology, which would promote consistent use of
terminology to support the Pillar trading platform making the
Exchange's rules easier to 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

    Within 45 days of the date of publication of this notice in the
Federal Register or up to 90 days (i) as the Commission may designate
if it finds such longer period to be appropriate and publishes its
reasons for so finding or (ii) as to which the self-regulatory
organization consents, the Commission will:
    (A) By order approve or disapprove the proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule
change
    should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-NYSEARCA-2015-58 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSEARCA-2015-58. 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 will also be available
for inspection and copying at the NYSE's principal office and on its
Internet Web site at www.nyse.com. All comments received will be posted
without change; the Commission does not edit personal identifying
information from submissions. You should submit only information that
you wish to make available publicly. All submissions should refer to
File Number SR-NYSEARCA-2015-58 and should be submitted on or before
August 12, 2015.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\53\
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    \53\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-17895 Filed 7-21-15; 8:45 am]
BILLING CODE 8011-01-P