[Federal Register Volume 79, Number 84 (Thursday, May 1, 2014)]
[Notices]
[Pages 24779-24789]
[FR Doc No: 2014-09921]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-72025; File No. SR-NYSEMKT-2014-17]

Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing of
Amendment No. 2 and Order Granting Accelerated Approval of a Proposed
Rule Change, as Modified by Amendment No. 2, Adopting Rule 971.1NY for
an Electronic Price Improvement Auction for Single-Leg Options Orders

April 25, 2014.

I. Introduction

    On February 21, 2014, NYSE MKT LLC (``Exchange'' or ``NYSE MKT'')
filed with the Securities and Exchange Commission (``Commission''),
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to
adopt new Rule 971.1NY (``Rule 971.1NY'' or ``Rule'') to provide for an
electronic crossing mechanism with a price improvement auction for
options trading on the Exchange, to be referred to as the Customer Best
Execution Auction (``CUBE Auction'' or ``Auction''). The proposal also
would make related changes to certain Exchange rules to accommodate the
new

CUBE Auction. The proposed rule change was published for comment in the
Federal Register on March 11, 2014.\3\ The Commission received no
comments regarding the proposal. On April 21, 2014, the Exchange filed
Amendment No. 1 to the proposed rule change. On April 23, 2014, the
Exchange withdrew Amendment No. 1 and filed Amendment No. 2 to the
proposed rule change.\4\ This order approves the proposed rule change,
as modified by Amendment No. 2, on an accelerated basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 71655 (March 5,
2014), 79 FR 13711 (``Notice'').
    \4\ The Exchange withdrew Amendment No. 1 due to a technical
error in the amendment. In Amendment No. 2, the Exchange clarified
that Exchange-sponsored Floor Broker systems are not enabled to
accept orders into the CUBE Auction mechanism from Floor Brokers;
(2) revised the rule text to clarify that unrelated quotes and
orders will never trade through their limit prices; and (3) revised
the rule text to clarify that the Contra Order may not be cancelled
or modified. Amendment No. 2 has been placed in the public comment
file for SR-NYSEMKT-2014-17 at http://www.sec.gov/comments/sr-nysemkt-2014-17/nysemkt201417.shtml (see letter from Janet
McGinness, EVP, Legal, NYSE MKT, to Secretary, Commission, dated
April 23, 2014) and also is available on the Exchange's Web site at
http://www.nyse.com/nysenotices/nyseamex/rule-filings/pdf.action;jsessionid=0C79EAD580B05432B779CC2C14D4CDC2?file--no=SR-
NYSEMKT-2014-17&seqnum=3.
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II. Description of the Proposal

    Proposed Rule 971.1NY would provide for an electronic price
improvement auction for single leg options orders. The CUBE Auction
would be available to Amex Trading Permit Holders (``ATP Holders'')
both on and off the trading floor of the Exchange, subject to the
requirements of Section 11(a) of the Act (discussed below).\5\ In the
Notice, the Exchange stated that the CUBE Auction would operate in a
manner consistent with--but not identical to--the operation of
electronic price improvement auctions available on other options
markets.\6\ The Exchange stated that the CUBE Auction is designed to
work seamlessly with the Exchange's Consolidated Book, which is the
Exchange's single electronic order book where all quotes and limit
orders sent to the Exchange are placed and reside as a file on the NYSE
Amex System (``System'').\7\
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    \5\ See Notice, 79 FR at 13711. See also Amendment No. 2, supra
note 4. In addition to utilizing the CUBE Auction, floor-based ATP
Holders would be permitted to continue to use existing floor-based
crossing rules. See Notice, 79 FR at 13711.
    \6\ See Chicago Board Options Exchange, Inc. (``CBOE'') Rule
6.74A--Automated Improvement Mechanism (``AIM''); NASDAQ OMX PHLX,
INC. (``PHLX'') Rule 1080(n)--Price Improvement XL (``PIXL''); BOX
Options Exchange LLC (``BOX'') Rule 7150--Price Improvement Period
(``PIP''); International Securities Exchange (``ISE'') Rule 723--
Price Improvement Mechanism (``PIM''). NYSE MKT noted that the AIM,
PIXL, PIP and PIM have features similar to the CUBE Auction
including: (a) Providing the opportunity for price improvement; (b)
delineating an exposure period for the original agency order; (c)
setting guidelines for the types of orders eligible for
participation; and (d) setting allocation rules for orders
considered by the mechanism. See Notice, 79 FR at 13711, n.4.
    \7\ See Notice, 79 FR at 13711-12.
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    Under proposed Rule 971.1NY(a), an ATP Holder would be able to seek
to guarantee the execution of a limit order it represents as agent on
behalf of a public customer, broker-dealer, or any other entity (``CUBE
Order'') through the CUBE Auction. The ATP Holder that submits the CUBE
Order (``Initiating Participant'') would agree to guarantee the
execution of the CUBE Order at a specified price (``single stop
price'') by submitting a contra-side order (``Contra Order'')
representing principal interest or interest that it has solicited to
trade with the CUBE Order. In lieu of a specifying a stop price, the
Initiating Participant could utilize the auto-match or auto-match limit
features of Rule 971.1NY(c)(1) (discussed below). The Initiating
Participant's manner of guaranteeing the CUBE Order and the price(s)
\8\ at which the CUBE Order is stopped would not be displayed. The
Exchange stated that, although the Contra Order would guarantee the
CUBE Order an execution, the purpose of the CUBE Auction is to provide
the opportunity for price improvement for the CUBE Order, as well as
the opportunity for other market participants to interact with the CUBE
Order.\9\
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    \8\ When the Initiating Participant utilizes the auto-match or
auto-match limit features, there would be no single price at which
the CUBE Order is stopped.
    \9\ See Notice, 79 FR at 13712. The proposal also would amend
Rule 900.2NY(18A) to provide that, for purposes of the CUBE Auction,
Professional Customers as defined in that rule would be treated as
broker-dealers. The Exchange stated that its proposed treatment of
Professional Customers as broker-dealers for purposes of the CUBE
Auction is consistent with the rules of the CBOE. See CBOE Rule
1.1(ggg). Further, the proposal would make a technical, non-
substantive amendment to Rule 900.2NY(18A) that is unrelated to the
CUBE Auction proposal and also would add a new provision to Rule
935.NY to provide an exception from the order exposure requirement
if the CUBE Auction is utilized.
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A. Initiating Price

    As set forth in Rule 971.1NY(a), an Auction begins with an
initiating price, which would be announced to all ATP Holders who
subscribe to receive the Request for Response (``RFR'') messages that
are sent by the Exchange over ArcaBook \10\ upon receipt of a CUBE
Order.\11\ In addition to the initiating price, the RFR would identify
the series, side of market, and size of the CUBE Order.\12\ For a CUBE
Order to buy (sell), the initiating price would be the lower (higher)
of the CUBE Order's limit price or the National Best Offer (``NBO'')
(National Best Bid) (``NBB''),\13\ except as provided for in proposed
paragraph (b)(1)(B) of the Rule (discussed below).\14\ The initiating
price of the CUBE Order, as well as the Contra Order and any responsive
GTX Orders (discussed below) could be priced in one cent increments,
regardless of the Minimum Price Variation (``MPV'') applicable to the
series.\15\
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    \10\ ArcaBook is a proprietary data feed offered by the Exchange
and is available to anyone (including all ATP Holders) by
subscription. The Exchange represents that RFRs for CUBE Auctions
would be included in the options data feed at no incremental cost to
the ArcaBook subscriber. Thus, any subscriber that opts to receive
the options data, including any ATP Holder subscriber, would have
the ability to enter an order in response to those RFRs (i.e., the
election to receive RFRs would not be on a case-by-case basis).
    \11\ See proposed Rule 971.1NY(c)(2), discussed further below.
    \12\ See id.
    \13\ See proposed Rule 971.1NY(a).
    \14\ See proposed Rule 971.1NY(b)(1). See also Notice, 79 FR at
13712 for examples illustrating the initiating price.
    \15\ See proposed Rule 971.1NY(b)(7). See also Notice, 79 FR at
13712 for an example illustrating the pricing increments and see
infra notes 62-63 and accompanying text regarding unrelated orders
arriving on the Exchange on the opposite side of the CUBE Order,
which would be permitted to participate in an Auction but only if
submitted in the MPV for the series.
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B. Permissible Range of Executions

    At the conclusion of the CUBE Auction, the CUBE Order would be
executed at a price or prices within a permissible range of executions,
as specified in proposed Rule 971.1NY(b)(1).\16\ A CUBE Order to buy
(sell) generally would have a permissible range of executions with an
upper (lower) bound equal to the initiating price and the lower (upper)
bound equal to the NBB (NBO). However, pursuant to proposed paragraphs
(b)(1)(A) and (b)(1)(B) of the Rule, tighter ranges of executions would
apply when there is Customer interest \17\ in the BBO for orders of 50
contracts or more or for when there are orders for fewer than 50
contracts,\18\ as follows:
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    \16\ See infra Section III.0. for a discussion of the
application of exceptions to Rule 991.NY (the Exchange's Trade
Through rule) in the context of a CUBE Auction.
    \17\ For purposes of the proposed Rule, the term ``customer''
(when capitalized) means an individual or organization that is not a
broker-dealer, as set forth in Rule 900.2NY(18).
    \18\ See proposed Rule 971.1NY(b)(1)(A).
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    If the CUBE Order to buy (sell) is for 50 contracts or more and
there is Customer interest in the Consolidated Book at the Exchange
Best Bid (``BB'') (Exchange Best Offer (``BO'')), the lower

(upper) bound of executions would be the higher (lower) of the BB plus
one cent (BO minus one cent) or the NBB (NBO).\19\ If the CUBE Order to
buy (sell) is for fewer than 50 contracts, the upper bound of
executions would be the lower (higher) of the CUBE Order's limit price,
the NBO (NBB), or the BO minus one cent (BB plus one cent) and the
lower (upper) bound of executions would be the higher (lower) of the
NBB (NBO) or the BB plus one cent (BO minus one cent).\20\
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    \19\ See proposed Rule 971.1NY(b)(1)(B).
    \20\ See also Notice, 79 FR at 13713 for examples illustrating
the initiating price and the permissible ranges of executions for
various potential CUBE Orders. As discussed in further detail below,
the provision concerning a CUBE Order for fewer than 50 contracts
was proposed by NYSE MKT on a pilot basis. The Exchange stated that
this is consistent with how electronic price improvement mechanisms
of other markets operate, citing to CBOE Rule 6.74A Interpretation
and Policies .03; PHLX Rule 1080(n)(vii); ISE Rule 723 Supplementary
Material .03; and BOX IM-7150-1. Id.
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    An added stipulation regarding the initiation of a CUBE Auction
relates to the Exchange's ``Trade Collar Protection'' rules, which are
utilized to mitigate the risk of advancing too far through the
Consolidated Book during periods of increased volatility or reduced
liquidity.\21\ A Marketable Order (as defined in Rule 967NY(a)(1)) held
at a Trading Collar (as defined in Rule 967NY(a)(2)) represents
interest that is eligible to trade at a specific price, even though
that price is not displayed. The Exchange determined that such orders
must be taken into consideration in determining the range of
permissible executions in a CUBE Auction.
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    \21\ See Rules 967NY(a)(1) and 967NY(a)(4)(A).
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    Thus, under the proposal, if, at the time a CUBE Order is
submitted, there are orders subject to Trade Collar Protection, i.e.,
collared orders, the range of permissible executions for the CUBE Order
would be narrowed to ensure the priority of the collared order(s).
Pursuant to proposed Rule 971.1NY(b)(1)(D), if at the time the CUBE
Auction is initiated, there is a Marketable Order to sell (buy) that
has been displayed pursuant to Rule 967NY(a)(4)(A), the displayed price
of the collared order minus (plus) one Trading Collar would be
considered the BO (BB) when determining the range of permissible
executions.\22\
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    \22\ See Rule 967NY(a)(2).
    See also Notice, 79 FR at 13713 for an example illustrating
Trade Collar Protection.
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    A CUBE Order, once accepted, would never execute outside the range
of permissible executions and would never trade through its own limit
price nor would unrelated quotes and orders that participate in the
CUBE Auction trade through their own limit price.\23\
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    \23\ See Notice, 79 FR at 13714. See also Amendment No. 2, supra
note 4.
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C. Time of Execution and Duration of the CUBE Auction

    Proposed Rule 971.1NY(b) would set forth that the time at which the
CUBE Auction is initiated would be considered the time of execution for
the CUBE Order.\24\ Thus, the Exchange stated, even though the
execution would print after the CUBE Auction has completed, the CUBE
Auction would qualify for the exception to the general prohibition
against Trade-Throughs for stopped orders.\25\ Similarly, according to
the Exchange, because the CUBE Auction would have a maximum duration of
750 milliseconds (as discussed below), to the extent that the NBBO may
improve during the Auction, the CUBE Auction also would qualify for the
exception to Trade-Through liability for transactions within one second
prior to execution of the transaction.\26\
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    \24\ The Exchange stated that, as a result, even though the
execution would print after the CUBE Auction has completed, the CUBE
Auction would qualify for an exception to the general prohibition
against Trade-Throughs of the NBBO, pursuant to Rule 991NY(b)(9)
(Order Protection, Exceptions to Trade-Through Liability) (``The
transaction that constituted the Trade-Through was the execution of
an order that was stopped at a price that did not Trade-Through an
Eligible Exchange at the time of the stop''). Similarly, because the
CUBE Auction would have a maximum duration of 750 milliseconds (as
discussed below), to the extent that the NBBO may improve during the
Auction, the Exchange stated that the CUBE Auction also would
qualify for an exception to Trade-Through liability, pursuant to
Rule 991NY(b)(5) (Order Protection, Exceptions to Trade-Through
Liability) (``The Eligible Exchange displaying the Protected
Quotation that was traded through had displayed, within one second
prior to execution of the Trade-Through, a Best bid or Best offer,
as applicable, for the options series with a price that was equal or
inferior to the price of the Trade-Through transaction''). The
Exchange stated that the proposed CUBE Auction is consistent with
how the electronic price improvement auctions of other markets
operate. See, e.g., CBOE Rule 6.74A; PHLX Rule 1080(n); BOX Rule
7150; ISE Rule 723.
    \25\ See Rule 991NY(b)(9).
    \26\ See Rule 991NY(b)(5).
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D. Causes for Rejection of a CUBE Order

    Rule 971.1NY(b) sets forth several instances in which a CUBE Order
would be ineligible to commence an Auction and would be rejected along
with its accompanying Contra Order. The Auction will reject CUBE Orders
that are submitted to buy (sell) with a limit price below (above) the
lower (upper) bound of the permissible range of executions; \27\ and
those that are submitted before the opening of trading; \28\ during the
final second of the trading session; \29\ when the BBO is one cent wide
if the CUBE Order is for fewer than 50 contracts; \30\ and when the
NBBO is crossed.\31\
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    \27\ See proposed Rule 971.1NY(b)(2). See also Notice, 79 FR at
13713 for an example illustrating such a case. The Exchange stated
that it is appropriate to reject CUBE Orders to buy (sell) that are
priced below (above) the lower (upper) bound because they are not
the best-priced interest available and should not trade ahead of
better-priced interest on the same side of the market. Id. at 13713-
14.
    \28\ See proposed Rule 971.1NY(b)(4). The Exchange stated that
it is appropriate to reject such CUBE Orders because a CUBE Order is
deemed executed at the time of entry, and any CUBE Orders entered
before the opening of trading would not be able to execute. See
Notice, 79 FR at 13714.
    \29\ See proposed Rule 971.1NY(b)(5). The Exchange stated that,
as the length of the CUBE Auction would be at least 500
milliseconds, it is appropriate to reject CUBE Orders submitted
during the final second of the trading session to assure that the
processing of a CUBE Order may be completed. See Notice, 79 FR at
13714.
    \30\ See proposed Rule 971.1NY(b)(6). The Exchange stated that
it is appropriate to reject CUBE Orders in such scenarios because
such orders would not be able to meet the permissible range of
executions. See Notice, 79 FR at 13714.
    \31\ See proposed Rule 971.1NY(b)(9). The Exchange stated that
this is appropriate because the Exchange would not be able to
determine a permissible range of executions if the NBBO is crossed.
See Notice, 79 FR at 13714.
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E. Price Increments and Minimum Size

    As noted above, CUBE Orders and Contra Orders would be permitted to
be entered in one cent increments regardless of the MPV of the series
being traded.\32\ Contra Orders may be priced in such increments when
the Initiating Participant elects to submit a single stop price or the
auto-match limit price.\33\ In addition, the minimum size requirement
for a CUBE Order is one contract.\34\
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    \32\ See proposed Rule 971.1NY(b)(7).
    \33\ Id. ``Single stop price'' and ``auto-match limit'', as well
as a third option, ``auto-match'', are discussed in Section III.0.,
infra.
    \34\ See proposed Rule 971.1NY(b)(8). As discussed in Section
III.0., infra, CUBE Orders for fewer than 50 contracts would be
subject to a pilot program.
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F. Initiation of the CUBE Auction Process

    To initiate a CUBE Auction, the Initiating Participant would be
permitted to elect one of three ways in which it would guarantee the
execution of a CUBE Order--a single stop price, ``auto-match'', or
``auto-match limit.'' \35\
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    \35\ See proposed Rule 971.1NY(c)(1).
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    The Initiating Participant may elect to specify a single stop
price, at which it would participate in the CUBE Auction at a single
price only, regardless of the prices of other responses to the CUBE
Auction. For a CUBE Order to buy (sell), an Initiating Participant
would be permitted to specify a single stop price that is at or below
(above) the initiating price of the CUBE Auction.\36\
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    \36\ See proposed Rule 971.1NY(c)(1)(A).

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    A stop price specified for a CUBE Order to buy (sell) that is below
(above) the lower (upper) bound of the range of permissible executions
would be repriced to the lower (upper) bound (i.e., the best-priced
interest on the opposite side of the CUBE Order).\37\ In this instance,
the stop price is below the lower bound of permissible execution
prices, and thus, the Exchange explains, the execution could be priced
back to within the permissible execution range.\38\ However, a stop
price specified for a CUBE Order to buy (sell) that is above (below)
the initiating price would not be eligible to initiate a CUBE
Auction.\39\ The Exchange explains that, because in such an instance,
the stop price is inferior to the pre-existing trading interest, it
would not result in an execution within the permissible range.\40\ Both
the CUBE Order and the Contra Order would be rejected.\41\
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    \37\ See id. See also infra note 55 for the Exchange's
explanation of this provision.
    \38\ See Notice, 79 FR at 13714.
    \39\ See proposed Rule 971.1NY(c)(1)(A).
    \40\ See Notice, 79 FR at 13714-15.
    \41\ See Notice, 79 FR at 13715 for an example illustrating the
impact of various single stop prices on a CUBE Order.
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    The Initiating Participant may elect the ``auto-match'' option,
which would automatically match both the price and size of all RFR
Responses.\42\ Accordingly, the Initiating Participant could receive
executions at multiple prices. Where the auto-match option is selected
for a CUBE Order to buy (sell), the Initiating Participant would
automatically match as principal or as agent on behalf of a Contra
Order the price and size of all RFR Responses that are lower (higher)
than the initiating price and within the range of permissible
executions.\43\
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    \42\ See proposed Rule 971.1NY(c)(1)(B). See Section III.0.,
infra, for a discussion of RFR Responses.
    \43\ See id. See also Notice, 79 FR at 13715 for an example
illustrating the impact of auto-match on a CUBE Order.
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    The Initiating Participant may elect the ``auto-match limit''
option, which for a CUBE Order to buy (sell) would automatically match
the price and size of all RFR Responses at each price level that is
lower (higher) than the initiating price down (up) to a specified limit
price, referred to as the ``auto-match limit price.'' \44\ Thus, for a
CUBE Order to buy (sell), the Initiating Participant would
automatically match, as principal or as agent on behalf of a Contra
Order, the price and size of RFR Responses that are lower (higher) than
the initiating price down (up) to the auto-match limit price.\45\
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    \44\ See proposed Rule 971.1NY(c)(1)(C).
    \45\ See id. See also Notice, 79 FR at 13715 for an example
illustrating the impact of auto-match limit on a CUBE Order.
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    Only one Auction would be permitted to be conducted at one
time.\46\ In addition, once an Auction has commenced, the Initiating
Participant would not be permitted to cancel or modify either the CUBE
Order or the Contra Order.\47\
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    \46\ See proposed Rule 971.1NY(c).
    \47\ See id. The Exchange stated that this requirement reduces
the potential for misuse of the CUBE Auction by ATP Holders that are
not legitimately interested in making a bona fide trade in the CUBE
Auction. See Notice, 79 FR at 13715. See also Amendment No. 2, supra
note 4, which would revise the rule text to clarify that the Contra
Order may not be cancelled or modified.
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G. Request for Responses, Response Time Interval, Responses, and
Unrelated Orders and Quotes That Are Posted to the Consolidated Book

    Upon receipt of a valid CUBE Order (i.e., the CUBE Order is not
rejected), the Exchange would announce the CUBE Auction by
disseminating an RFR to all participants who subscribe to receive RFR
messages, which, the Exchange stated, would be included in the data
feed from ArcaBook for options.\48\ As noted above, the RFR would
identify the following characteristics of a CUBE Order: The series, the
side of the market, the size, and the initiating price.
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    \48\ See supra note 10 for a description of ArcaBook.
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    Once the RFR is disseminated, ATP Holders would be able to enter
responses to the Auction for the duration of the CUBE Auction
(``Response Time Interval''), which would last for a random period of
time between 500 and 750 milliseconds.\49\ The Exchange stated that the
length of the Response Time Interval would be determined by the CUBE
Auction mechanism following the receipt of a valid CUBE Order and
contemporaneously with the dissemination of the RFR.\50\
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    \49\ See proposed Rule 971.1NY(c)(2).
    \50\ See Notice, 79 FR at 13715.
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    The Exchange stated that the use of an undisclosed random Response
Time Interval of between 500 and 750 milliseconds would provide the
CUBE Auction with a functional difference to distinguish it from
similar price improvement mechanisms offered by other exchanges.\51\
The Exchange remarked that the length of time allotted on the CUBE
Auction timer would provide ATP Holders with sufficient time to submit
RFR Responses and would encourage competition among participants,
thereby enhancing the potential for price improvement for the CUBE
Order.\52\
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    \51\ See id. See also, e.g., CBOE Rule
6.74A(b)(2)(A); PHLX Rule 1080(n)(ii)(B)(1); ISE Rule 723(c)(5)(I).
    \52\ The Exchange stated that in December 2013, to determine
whether the CUBE Auction timer would provide sufficient time to
respond to an RFR, the Exchange asked ATP Holders that both
subscribe to ArcaBook and act as Market Makers on the Exchange
(``Relevant ATP Holders'') whether their firms ``could respond to an
Auction with a random duration of 500-750 milliseconds.'' The
Exchange reported that, of the 21 Relevant ATP Holders that
responded to the question, 100% (n=21) indicated that their firms
could respond in this time frame. Thus, the Exchange stated that the
CUBE Auction duration of at least 500 milliseconds, which the
Exchange noted is the mid-range of auction mechanisms at other
market centers, would provide a meaningful opportunity for
participants on NYSE Amex to respond to an Auction while at the same
time facilitating the prompt execution of orders. See Notice, 79 FR
at 13715, n.29.
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    The Exchange stated that any ATP Holder would be able to respond to
the RFR, either as principal or as agent on behalf of customers,
provided that the RFR Response was properly marked specifying price,
size, and side of the market.\53\ Proposed Rule 971.1NY would introduce
a new order type, the ``GTX Order,'' to serve as one way to respond to
a CUBE Auction, designed solely for that purpose.\54\ A ``GTX Order''
would be defined as a non-routable order with a time-in-force
contingency for the Response Time Interval and would be required to
specify price, size, and side of the market.\55\ GTX Orders would not
be displayed to the Consolidated Book nor disseminated to any
participants \56\ because, as explained by the Exchange, these orders
would interact only with liquidity available during the Auction.\57\
The minimum price increment for a GTX Order would be one cent,
regardless of the MPV for the series subject to the Auction.\58\ ATP
Holders that submitted GTX Orders would be permitted to cancel
them.\59\
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    \53\ See proposed Rule 971.1NY(c)(2)(C).
    \54\ See proposed Rule 971.1NY(c)(2)(C)(i).
    \55\ See proposed Rule 971.1NY(c)(2)(C)(i). For a CUBE Order to
buy (sell), a GTX Order priced below (above) the lower (upper) bound
of executions would be repriced to the lower (upper) bound of
executions as specified in proposed Rule 971.1NY(b)(1). See proposed
Rule 971.1NY(c)(2)(C)(i)(f). According to the Exchange, such
repricing would ensure that GTX Orders eligible to participate in
the Auction would not be excluded if they are priced more
aggressively than the lower (upper) bound of execution. See Notice,
79 FR at 13716 for an example illustrating the repricing of a GTX
Order.
    \56\ See proposed Rule 971.1NY(c)(2)(C)(i)(a).
    \57\ Any portion of a GTX Order that is not executed in the CUBE
Auction would be cancelled at the conclusion of the Auction. See id.
However, see infra notes 75-76 and accompanying text for a case in
which a GTX Order would interact with an unrelated order that
arrived on the Exchange on the CUBE Order's side of the market.
    \58\ See proposed Rule 971.1NY(c)(2)(C)(ii)(a).
    \59\ See proposed Rule 971.1NY(c)(2)(C)(i)(d).

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    In addition, any unrelated orders and quotes received on the
opposite side of the CUBE Order during the Response Time Interval and
in the same series at the CUBE Order would be considered as RFR
Responses that are eligible to participate in the Auction, provided
that such unrelated orders and quotes are priced within the permissible
range of executions, are not marked as GTX Orders, and are not
marketable against the NBBO. The Exchange stated that considering these
unrelated orders and quotes as RFR Responses--even if submitted
coincidentally, as opposed to purposefully in response to an RFR--
should increase the number of participants against which the CUBE Order
may be executed, and should thus maximize opportunities for price
improvement on the CUBE Order.\60\ Such opposite-side, unrelated orders
and quotes would be posted to the Consolidated Book \61\ and, if they
are at the best RFR Response price at the conclusion of the Auction,
they would participate in the execution of the CUBE Order.\62\
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    \60\ See Notice, 79 FR at 13716.
    \61\ See generally Rule 964NY(a) (``The System shall display to
Users all non-marketable limit orders in the Display Order Process,
unless indicated otherwise'').
    \62\ Any portion of these unrelated orders or quotes remaining
after the CUBE Order is executed would remain on the Consolidated
Book and processed in accordance with Rule 964NY, the Exchange's
options priority and order allocation rules. See proposed Rule
971.1NY(c)(5)(C).
---------------------------------------------------------------------------

    Unrelated orders and quotes would be able to participate in an
Auction, however, only if priced in the MPV for the series in the CUBE
Auction.\63\ Only CUBE Orders, GTX Orders and Contra Orders--which are
specifically slated for the CUBE Auction--would be permitted to be
priced in one cent increments, regardless of the MPV for that
option.\64\ Thus, an order or quote other than a CUBE Order, GTX Order
or Contra Order submitted in a one cent increment when the series has
either a $0.05 or $0.10 MPV would be rejected as invalid.
---------------------------------------------------------------------------

    \63\ See proposed Rule 971.1NY(c)(2)(C)(ii)(c).
    \64\ See id.
---------------------------------------------------------------------------

    Unrelated orders and quotes arriving on the Exchange during the
Response Time Interval on the same side of the market as the CUBE Order
likewise would be posted on the Consolidated Book, provided that those
orders and quotes do not cross the initiating price.\65\ If such an
order or quote does cross the initiating price--i.e., if an order to
buy (sell) is priced higher (lower) than the initiating price--it would
cause the CUBE Auction to conclude early and the unrelated order would
be then posted to the Consolidated Book.\66\
---------------------------------------------------------------------------

    \65\ See generally Rule 964NY(a) (``The System shall display to
Users all non-marketable limit orders in the Display Order Process,
unless indicated otherwise'').
    \66\ See id. See also infra note 86 and accompanying text for a
more detailed discussion of this provision.
---------------------------------------------------------------------------

H. Conclusion of the CUBE Auction and Order Allocation

    Unless there is an early conclusion to the Auction, as described
more fully below, the CUBE Auction would conclude at the end of the
Response Time Interval \67\ and the CUBE Order would be allocated among
the participants in the Auction at the best prices as set forth in
proposed Rule 971.1NY(c)(5), as follows:
---------------------------------------------------------------------------

    \67\ See proposed Rule 971.1NY(c)(3). However, as described in
proposed Rule 971.1NY(c)(4) (and discussed below), certain events
may result in the early conclusion of the CUBE Auction.
---------------------------------------------------------------------------

    The Auction mechanism would determine whether the RFR Responses can
fill the CUBE Order at a price or prices better than the initiating
price. If so, the CUBE Order is matched against the better-priced RFR
Responses, thereby granting the CUBE Order the maximum amount of price
improvement possible.
    When there are multiple RFR Responses at a given price, at each
price level, any Customer orders resting on the Consolidated Book at
the start of the CUBE Auction would have first priority, followed by
Customer orders that arrived during the CUBE Auction as RFR Responses.
The remaining contracts would be allocated among the RFR Responses at
that price level on a pro rata basis in accordance with the size pro
rata algorithm set forth in Rule 961.1NY(b)(3),\68\ subject, however,
to the following:
---------------------------------------------------------------------------

    \68\ Any single RFR Response that has a contract size that
exceeds the size of the CUBE Order would be treated as if it were
the same size as (i.e., would be capped at) the size of the CUBE
Order for allocation purposes. See Proposed Rule 971.1NY(c)(5). The
Exchange stated that this encourages participation in the CUBE
Auction (by not rejecting these RFR Responses) and assists in
avoiding the opportunity for an ATP Holder to subvert the size pro
rata allocation method by submitting outsized trading interest. See
Notice, 79 FR at 13717.
---------------------------------------------------------------------------

    If sufficient interest in the CUBE Order remains after executing
against Customer interest or better priced interest, the Contra Order
then would be entitled to a participation guarantee equal to the
greater of one contract or either (a) 40% of the size of the initial
CUBE Order (if there are multiple RFR Responses to the CUBE Auction) or
(b) 50% of the size of the initial CUBE Order (if there is only one RFR
Response to the CUBE Auction). The remaining contracts would then be
allocated among the RFR Responses pursuant to the pro rata trading
algorithm.\69\ If all RFR Responses were filled, any remaining CUBE
Order contracts would be allocated to the Contra Order.
---------------------------------------------------------------------------

    \69\ The Exchange stated that the participation guarantee is a
fair inducement in exchange for guaranteeing that the entire size
the CUBE Order, for which the Initiating Participant is an agent,
and is consistent with the rules of NYSE MKT and other option
exchanges. See Notice, 79 FR at 13717.
---------------------------------------------------------------------------

    As discussed above, an Initiating Participant can opt to guarantee
the execution of a CUBE Order by specifying a single stop price, auto-
match or an auto-match limit price.\70\ Proposed Rule
971.1NY(c)(5)(B)(i)-(iii) sets forth the details of how an order is
allocated in the case of each of these elections.\71\
---------------------------------------------------------------------------

    \70\ See supra notes 35-45 and accompanying text.
    \71\ See Notice, 79 FR at 13717-18 for examples illustrating
trade allocations for guarantees with a single stop price, with
auto-match and with auto-match limit.
---------------------------------------------------------------------------

    Where the Initiating Participant elects auto-match or auto-match
limit to guarantee the execution of a CUBE Order, the Contra Order
would be allocated size equal to all other RFR Responses at each price
point or at each price point within the limit price range--if a limit
is specified--until a price point is reached where the balance of the
CUBE Order could be fully executed (the ``clean-up price''). At the
clean-up price, if there is sufficient interest in the CUBE Order
remaining after better-priced interest and Customer interest has been
executed, the Contra Order would be allocated additional contracts to
ensure its guaranteed participation rate--the greater of one contract
or 40% (or 50%, if only one Response) of the size of the initial CUBE
Order. If the Contra Order met its allocation guarantee at a price
below (above) the clean-up price, it would cease matching RFR Responses
that may be priced above (below) the price at which the Contra Order
received its allocation guarantee. In addition, if there were other RFR
Responses at the clean-up price, the remaining CUBE Order contracts
would be allocated pursuant to the size pro rata algorithm set forth in
Rule 964NY(b)(3) and any remaining CUBE Order contracts shall be
allocated to the Contra Order at the initiating price. In the event
that there were no RFR Responses to the Auction and an auto-match
feature is selected, the CUBE Order would execute against the Contra
Order at the initiating price.

I. Early Conclusion of a CUBE Auction

    Proposed Rule 971.1NY describes certain events that would cause a
CUBE

Auction to conclude early (i.e., before the end of the Response Time
Interval) and sets forth how the CUBE Order is to be allocated in each
case.
    Pursuant to proposed Rule 971.1NY(c)(3), a trading halt in the
affected series would result in the early conclusion of an Auction.\72\
In such case, the CUBE Order would execute according to the procedures
set forth in proposed Rule 971.1NY(c)(5).
---------------------------------------------------------------------------

    \72\ See proposed Rule 971.1NY(c)(3).
---------------------------------------------------------------------------

    Proposed Rule 971.1NY(c)(4) describes additional events where a
CUBE Auction would conclude early. First, if, during a CUBE Auction, a
new CUBE Auction in the same series is received by the Exchange, the
original CUBE Order would conclude and execute according to the
procedures set forth in proposed Rule 971.1NY(c)(5).\73\ The new CUBE
Auction would proceed as described in proposed Rule 971.1NY(c).
---------------------------------------------------------------------------

    \73\ See proposed Rule 971.1NY(c)(4)(A).
---------------------------------------------------------------------------

    Second, if, during a CUBE Auction, the Exchange receives an
unrelated order or quote on the same side of the market as the CUBE
Order that is marketable against any RFR Response or the NBBO (or BBO,
if a non-routable order \74\) at the time of arrival, the CUBE Auction
would conclude early and the CUBE Order would be executed according to
the procedures for a full term auction set forth in proposed Rule
971.1NY(c)(5).\75\ In this circumstance, however, any GTX Orders that
do not execute in the CUBE Auction would execute against the unrelated
order or quote that caused the CUBE Auction to conclude early to the
extent possible and would then cancel.\76\ Any contracts remaining from
the unrelated order or quote would then be posted to the Consolidated
Book and processed in accordance with the Rule 964NY.\77\
---------------------------------------------------------------------------

    \74\ The Exchange's rules provide that an order that has been
designated as an order type that is not eligible to be routed away
would either be placed on the Consolidated Book or cancelled if such
order would lock or cross the NBBO. See Rule 964NY(c)(2)(E). The
Exchange noted that, if an incoming non-routable order is marketable
against the NBBO, but not the BBO, and by its terms, such order,
e.g., an IOC Order, would cancel, it would not cause an early
conclusion to an Auction. However, if such an order were marketable
against the BBO, i.e., if the BBO equaled the NBBO, it would cause
an early conclusion to the CUBE Auction. See Notice, 79 FR at 13719,
n.40.
    \75\ See proposed Rule 971.1NY(c)(4)(B). See also Notice, 79 FR
at 13719 for an example illustrating the early conclusion of the
Auction due to a same side order marketable against the NBBO at the
time of arrival. The Exchange stated the early conclusion of the
Auction in this instance would ensure that the priority of quotes
and orders on the Consolidated Book would not be disrupted.
    \76\ See proposed Rule 971.1NY(c)(4)(B).
    \77\ See id.
---------------------------------------------------------------------------

    Third, a CUBE Auction would conclude early if, during the Auction,
the Exchange receives any RFR Response (that is, on the opposite side
of the CUBE Order) that is marketable against the NBBO (or BBO, if a
non-routable order) at the time of arrival.\78\ The Auction would
conclude early whether the RFR Response was a GTX Order or an unrelated
order or quote that is a marketable limit order or a market order.\79\
However, the allocation would differ, as follows:
---------------------------------------------------------------------------

    \78\ See proposed Rule 971.1NY(c)(4)(C). The Exchange stated
that early conclusion in such circumstances would ensure that the
Auction interacts seamlessly with the Consolidated Book so as not to
disturb the priority of orders on the Book. The unrelated order or
quote that caused the Auction to end early would be considered an
RFR Response for purposes of allocation pursuant to proposed Rule
971.1NY(c)(5), and thus would participate in the CUBE Auction
consistent with its limit price and order instructions. See Notice,
79 FR at 13719.
    \79\ The Exchange noted that, while the incoming order that is
on the opposite side of the CUBE Order may be marketable against an
NBBO that updated during the Response Time Interval, the fact that
the NBBO updated during the Response Time Interval in of itself does
not cause an early conclusion to the CUBE Auction. Id. See also id.
at 13720 for an example illustrating the early conclusion of an
Auction as a result of the arrival of an opposite-side limit order
that was marketable against an updated NBBO.
---------------------------------------------------------------------------

     If the CUBE Auction concluded early because the Exchange
received during the Response Time Interval an unrelated marketable
limit order or quote on the opposite side of the CUBE Order, the CUBE
Order would execute in accordance with the procedures set forth in
proposed Rule 971.1NY(c)(5). Contracts remaining, if any, from
unrelated orders or quotes at the time the CUBE Auction concludes would
be processed in accordance with Rule 964NY. Any unfilled GTX Orders
would cancel.\80\
---------------------------------------------------------------------------

    \80\ See proposed Rule 971.1NY (c)(4)(C)(i). Regarding the
cancellation of unfilled GTX Orders, see also supra note 57 and
accompanying text. See also Notice, 79 FR at 13719-20 for examples
illustrating the early conclusion of an Auction as a result of the
arrival of an opposite-side marketable limit order.
---------------------------------------------------------------------------

     If the opposite-side order that caused the CUBE Auction to
conclude early was a market order, the allocation of the CUBE Order
would vary, depending on how the Initiating Participant guaranteed the
execution of the CUBE Order and what, if any, RFR Responses were
received before the CUBE Auction concluded.
    [ssquf] If the Initiating Participant selected auto-match and no
RFR Responses had been received before the market order arrived that
caused the CUBE Auction to conclude early, if the CUBE Order is to buy
(sell), the CUBE Order would execute against the market order at the
midpoint of the initiating price and the lower (upper) bound of the
range of permissible executions.\81\ If no midpoint is possible, the
execution would be rounded up (down) to the nearest whole penny toward
the initiating price. Any unfilled size of the CUBE Order will then
execute according to the procedures set forth in proposed Rule
971.1NY(c)(5).\82\
---------------------------------------------------------------------------

    \81\ See proposed Rule 971.1NY(c)(4)(C)(ii). See also Notice, 79
FR at 13720 for an example illustrating the early conclusion of an
Auction due to the arrival of an opposite-side market order in a
case where auto-match was selected and no RFR Responses had been
received. The Exchange stated that rounding in the manner described
ensures not only that the CUBE Order is afforded price improvement,
but also that the priority of existing interest in the Consolidated
Book is protected. Id.
    \82\ As discussed above, the Exchange stated that the CUBE
Auction would be permitted to execute orders in the CUBE Auction as
exceptions to Trade-Through Liability pursuant to Rule 991NY(b)(5).
Accordingly, an opposite-side market order that arrives during the
CUBE Auction, which by definition is less than a second, may trade
through any updated NBBO published by an away market. Because,
pursuant to proposed Rule 971.1NY(b)(3), an update to the CUBE
Order's same-side BBO would update the permissible range of
executions, an opposite-side market order would execute consistent
with that updated permissible range of executions. See Notice, 79 FR
at 13720, n.49.
---------------------------------------------------------------------------

    [ssquf] If the Initiating Participant selected auto-match and other
RFR Responses are received before the arrival of the market order that
caused the CUBE Auction to conclude early, if the CUBE Order is to buy
(sell) and the market order is to sell (buy), the CUBE Order would
execute against the unrelated market order at the lowest (highest) RFR
Response price within the range of permissible executions. Any unfilled
size of the CUBE Order would then execute according to the procedures
set forth in proposed Rule 971.1NY(c)(5).\83\
---------------------------------------------------------------------------

    \83\ See proposed Rule 971.1NY(c)(4)(C)(iii). See also Notice,
79 FR at 13721 for an example illustrating the early conclusion of
an Auction as a result of the arrival of an opposite-side market
order in a case where auto-match was selected and other RFR
Responses were received.
---------------------------------------------------------------------------

    [ssquf] If the Initiating Participant selected a single stop price
or auto-match limit to guarantee the execution of a CUBE Order to buy
(sell) and a market order to sell (buy) caused the CUBE Auction to
conclude early, the CUBE Order would execute against the unrelated
market order at the lowest (highest) price at which an execution could
occur within the range of permissible executions, which may be either
an RFR Response price, the single stop price, or the auto-match limit
price. Any unfilled size of the CUBE Order would then execute according
to the procedures set forth in proposed Rule 971.1NY(c)(5).\84\
---------------------------------------------------------------------------

    \84\ See proposed Rule 971.1NY(c)(4)(C)(iv). See also Notice, 79
FR at 13721 for examples illustrating the early conclusion of an
Auction as a result of the arrival of an opposite-side market order
where the Initiating Participant had selected a single stop price or
the auto-match limit option.

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

    Fourth, the CUBE Auction also would conclude early upon the arrival
of an unrelated, non-marketable quote or limit order on the same side
as the CUBE Order that improves the CUBE Order's initiating price.\85\
Specifically, if, during a CUBE Auction where the CUBE Order is to buy
(sell), the Exchange receives such an order that is priced higher
(lower) than the initiating price, and therefore creates a new BB (BO)
that is higher (lower) than the initiating price, the CUBE Order would
first execute against the RFR Response according to the procedures set
forth in proposed Rule 971.1NY(c)(5).\86\ Any unfilled GTX Orders would
be eligible to execute against the unrelated order or quote that caused
the CUBE Auction to conclude early and would then cancel. Any contracts
that remain from the unrelated non-marketable order after that order
traded against interest in the CUBE Auction would then be processed in
accordance with Rule 964NY.\87\
---------------------------------------------------------------------------

    \85\ See proposed Rule 971.1NY(c)(4)(D). See also supra note 66
and accompanying text.
    \86\ See proposed Rule 971.1NY(c)(5) regarding the allocation
procedures of a full-term Auction, discussed above. The Exchange
stated that early conclusion would avoid disturbing priority in the
Consolidated Book, in accordance with Rule 964NY, which dictates the
priority of bids within the NYSE Amex System, and would allow the
Exchange to appropriately handle unrelated orders without the CUBE
Auction impacting that handling, while at the same time allowing the
CUBE Order to execute against the Contra Order and any RFR Responses
that may have been entered up to that point. See Notice, 79 FR at
13716.
    \87\ See Notice, 79 FR at 13722 for an example illustrating the
early conclusion of an Auction due to a same-side order that creates
a new BBO that improves the initiating price. The Exchange stated
that early conclusion in this circumstance would ensure that the
CUBE Auction interacts seamlessly with the Consolidated Book so as
not to disturb the priority of orders on the Book, while affording
the CUBE Order (and the unrelated order) opportunities for price
improvement. Id.
---------------------------------------------------------------------------

    Fifth, a CUBE Auction would conclude early when an All-or-None
(``AON'') order is present on the same side as the CUBE Order. An AON
order, whether it was resting on the book prior to an Auction or it
arrived during Auction, would be permitted to trade only if sufficient
size remained to fill the entire AON order after the CUBE Order was
fully executed. If sufficient interest to fill an entire AON order was
received during the Response Time Interval, the Auction would conclude
early and the CUBE Order would be executed according to procedures set
forth in proposed Rule 971.1NY(c)(5). After the Auction concluded, the
Exchange would evaluate whether the AON could be executed.\88\
---------------------------------------------------------------------------

    \88\ See Notice, 79 FR at 13722 for an example illustrating the
early conclusion of an Auction due to sufficient interest to fill a
resting AON order. The Exchange stated that early conclusion in this
circumstance would ensure that the CUBE Auction interacts seamlessly
with the Consolidated Book so as not to disturb the priority of
orders on the Book, while affording the CUBE Auction opportunities
for price improvement. Id.
---------------------------------------------------------------------------

J. Conduct Inconsistent With Just and Equitable Principles of Trade

    The Exchange is proposing Commentary .02 to the proposed Rule to
state that certain activity in connection with the CUBE Auction would
be considered conduct inconsistent with just and equitable principles
of trade to discourage ATP Holders from attempting to misuse or
manipulate the CUBE Auction process. The following would be considered
inconsistent with just and equitable principles of trade: (1) An ATP
Holder entering RFR Responses to a CUBE Auction for which the ATP
Holder is the Initiating Participant; (2) an ATP Holder engaging in a
pattern and practice of trading or quoting activity for the purpose of
causing a CUBE Auction to conclude early; (3) the Initiating
Participant breaking up an agency order into separate CUBE Orders for
the purpose of gaining a higher allocation percentage; and (4) an ATP
Holder engaging in a pattern or practice of sending multiple RFR
Responses at the same time that exceed the size of the CUBE Order.\89\
---------------------------------------------------------------------------

    \89\ See also infra note 92 discussing Rule 935NY, Commentary
.01.
---------------------------------------------------------------------------

K. Order Exposure

    Rule 935NY prohibits ATP Holders from executing as principal any
orders they represent as agent unless (i) agency orders are first
exposed on the Exchange for at least one second or (ii) the ATP Holder
has been bidding or offering on the Exchange for at least one second
prior to receiving an agency order that is executable against such bid
or offer. According to the Exchange, Rule 935NY helps to ensure that
orders are properly exposed to market participants, affording them
reasonable time in which to participate in the execution of agency
orders.\90\
---------------------------------------------------------------------------

    \90\ See Notice, 79 FR at 13722.
---------------------------------------------------------------------------

    The Exchange stated that the Response Time Interval, with a random
length of between 500 and 750 milliseconds, would be of sufficient
length to permit ATP Holders time to respond to a CUBE Auction, thereby
enhancing opportunities for competition among participants and
increasing the likelihood of price improvement for the CUBE Order.\91\
Accordingly, the Exchange's proposal would amend Rule 935NY to state
that a CUBE Order would not be subject to the one-second order exposure
requirement of Rule 935NY. The Exchange stated that, consistent with
Rule 935NY, Commentary .01, ATP Holders would be permitted to utilize
the CUBE Auction only where there is a genuine intention to execute a
bona fide transaction.\92\
---------------------------------------------------------------------------

    \91\ See supra note 52.
    \92\ See Notice, 79 FR at 13237. Rule 935NY, Commentary .01,
states: ``Rule 935NY prevents a[n ATP Holder] from executing agency
orders to increase its economic gain from trading against the order
without first giving other trading interest on the Exchange an
opportunity to either trade with the agency order or to trade at the
execution price when the [ATP Holder] was already bidding or
offering on the book.''
---------------------------------------------------------------------------

L. Proposed Pilot Period for Auctions of Fewer Than 50 Contracts

    Under the proposal, proposed Rules 971.1NY(b)(1)(B), which relates
to CUBE Auctions for fewer than 50 contracts, and 971.1NY(b)(8), which
states that the minimum size for a CUBE Auction would be one contract,
would be adopted for a pilot period effective for one year beginning on
the approval date of the proposed rule change (``Pilot Period'').\93\
The Exchange stated that, during the Pilot Period, it would submit
certain data, periodically as required by the Commission, to provide
supporting evidence that, among other things, there is meaningful
competition for all size orders and that there is an active and liquid
market functioning on the Exchange outside of the CUBE Auction.\94\
---------------------------------------------------------------------------

    \93\ See proposed Rule 971.1NY, Commentary .01.
    \94\ To aid the Commission in its evaluation of the Pilot
Program, the Exchange will provide the following additional
information each month: (1) The number of orders of 50 contracts or
greater entered into the CUBE Auction; (2) The number of orders of
fewer than 50 contracts entered into the CUBE Auction; (3) The
percentage of all orders of 50 contracts or greater sent to the
Exchange that are entered into the CUBE; (4) The percentage of all
orders of fewer than 50 contracts sent to the Exchange that are
entered into the CUBE Auction; (5) The percentage of all Exchange
trades represented by orders of fewer than 50 contracts; (6) The
percentage of all Exchange trades effected through the CUBE Auction
represented by orders of fewer than 50 contracts; (7) The percentage
of all contracts traded on the Exchange represented by orders of
fewer than 50 contracts; (8) The percentage of all contracts
effected through the CUBE Auction represented by orders of fewer
than 50 contracts; (9) The spread in the option, at the time an
order of 50 contracts or greater is submitted into the CUBE Auction;
(10) The spread in the option, at the time an order of fewer than 50
contracts is submitted into the CUBE Auction; (11) Of CUBE Auction
trades for orders of fewer than 50 contracts, the percentage of CUBE
Auction trades executed at the NBBO, NBBO plus $.01, NBBO plus $.02,
NBBO plus $.03, etc.; (12) Of CUBE Auction trades for orders of 50
contracts or greater, the percentage of CUBE Auction trades executed
at the NBBO, NBBO plus $.01, NBBO plus $.02, NBBO plus $.03, etc.;
and (13) The number of orders submitted by an ATP Holder when the
bid-ask spread was at a particular increment (e.g., $.01, $.02,
$.03, etc.). Also, relative to Item 13, for each spread, the
Exchange will provide the percentage of contracts in orders of fewer
than 50 contracts submitted to the CUBE Auction where the contra-
side was: (a) The ATP Holder that submitted the order to the CUBE
Auction; (b) market makers assigned to the class; (c) other Exchange
Participants; (d) Customers; (e) Professional Customers and (f)
unrelated orders. For each spread, also specify the percentage of
contracts in orders of 50 contracts or greater submitted to the CUBE
Auction where the contra-side was: (a) The ATP Holder that submitted
the order to the CUBE Auction; (b) market makers assigned to the
class; (c) other Exchange Participants; (d) Customers; (e)
Professional Customers and (f) unrelated orders. See, e.g.,
Securities Exchange Act Release Nos. 53222 (February 3, 2006); 71 FR
7089 (February 10, 2006) (File No. SR-CBOE-2005-60); 63027 (October
1, 2010); 75 FR 62160 (October 7, 2010) (File No. SR-Phlx-2010-108);
and 66871 (April 27, 2012) 77 FR 26323 (May 3, 2012) (File No. 10-
206).

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

    The Exchange further states that any data that is submitted to the
Commission will be provided on a confidential basis.\95\
---------------------------------------------------------------------------

    \95\ Further, the Exchange will provide, for the first and third
Wednesday of each month, the: (A) Total number of CUBE Auctions on
that date; (B) number of CUBE Auctions where the order submitted to
the CUBE Auction was fewer than 50 contracts; (C) number of CUBE
Auctions where the order submitted to the CUBE Auction was 50
contracts or greater; (D) number of CUBE Auctions (where the order
submitted to the CUBE Auction was fewer than 50 contracts and where
the order submitted was 50 contracts or greater) where the number of
Participants (excluding the Contra Order) was zero, one, two, three,
four, etc. The Exchange will also provide: The percentage of all
Exchange trades effected through the CUBE Auction in which the
Initiating Participant has elected to auto-match with a limit price
and the percentage of such trades in which the Initiating
Participant has elected to auto-match without a limit price, and the
average amount of price improvement provided to the CUBE Order when
the Initiating Participant has elected to auto-match with a limit
price and the average without a limit price, versus the average
amount of price improvement provided to the CUBE Order when the
Initiating Participant has chosen a single stop price.
    Finally, during the Pilot Program, the Exchange will provide
information each month with respect to situations in which the CUBE
Auction is terminated prematurely or a market or marketable limit
order immediately executes with an initiating order before the CUBE
Auction's conclusion. The following information will be provided:
(a) The number of times that the Auction concluded early upon the
arrival of an unrelated quote or order that is on the same side of
the market as the CUBE Order, that is marketable against any RFR
Responses or the NBBO (or the BBO, for a non-routable order) at the
time of arrival, and at what time such unrelated order/quote ended
the Auction. Also, (i) the number of times such orders were entered
by the same (or affiliated) firm that initiated the CUBE Auction
that was concluded early, and (ii) the number of times such orders
were entered by a firm (or an affiliate of such firm) that
participated in the execution of the CUBE Order; (b) For the orders
addressed in each of (a)(i) and (a)(ii) above, the percentage of
CUBE Auctions that concluded early due to the receipt, during the
CUBE Auction, of an unrelated quote or order on the same side of the
market as the CUBE Order, that is marketable against any RFR
Responses or the NBBO (or the BBO, for a non-routable order) at the
time of arrival; and the average amount of price improvement
provided to the CUBE Order where the CUBE Auction is concluded
early; (c) The number of times that the Auction concluded early upon
the arrival of any RFR Response that is marketable against the NBBO
(or the BBO, for a non-routable order) at the time of arrival, and
at what time such RFR Response ended the Auction. Also, (i) the
number of times such RFR Responses were entered by the same (or
affiliated) firm that initiated the CUBE Auction, and (ii) the
number of times such RFR Responses were entered by a firm (or an
affiliate of such firm) that participated in the execution of the
CUBE Order; (d) For the orders addressed in each of (c)(i) and
(c)(ii) above, the percentage of CUBE Auctions that concluded early
due to the receipt, during the CUBE Auction, of any RFR Response
that is marketable against the NBBO (or the BBO, for a non-routable
order) at the time of arrival; and the average amount of price
improvement provided to the CUBE Order where the CUBE Order is
immediately executed; (e) The number of times that the Auction
concluded early due to a trading halt and at what time the trading
halt ended the CUBE Auction. Of the CUBE Auctions that concluded
early due to a trading halt, the number that resulted in price
improvement over the CUBE Order stop price, and the average amount
of price improvement provided to the CUBE Order. Further, in the
Auctions that concluded early due to a trading halt, the percentage
of contracts that received price improvement over the CUBE Order
stop price; (f) The number of times that the Auction concluded early
upon the initiation of a new CUBE Auction in the same series and at
what time the initiation of a new CUBE Auction ended the ongoing
CUBE Auction; (g) The number of times that the Auction concluded
early upon the receipt of an order with either an IOC, FOK or NOW
contingency and at what time the receipt of such order ended the
ongoing CUBE Auction; (h) The number of times that the Auction
concluded early because sufficient interest to fill an entire AON
order is received during the Response Time Interval and at what time
the ongoing CUBE Auction was completed; and (i) The average amount
of price improvement provided to the initiating order when the CUBE
Auction is not concluded early.
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M. Implementation

    The Exchange stated that it would announce the implementation date
of the proposed rule change in a Trader Update to be published no later
than 60 days following Commission approval. The implementation date
would be no later than 60 days following publication of the Trader
Update announcing Commission approval. The Exchange stated that this
implementation schedule would provide ATP Holders with adequate notice
of the CUBE Auction and would allow ample time for ATP Holders to
prepare their systems for participation in the CUBE Auction process, if
such participation is desired.

III. Discussion and Commission Findings

    After careful review, the Commission finds that the proposed rule
change is consistent with the requirements of the Act and the rules and
regulations thereunder applicable to a national securities exchange
and, in particular, with Section 6(b) of the Act.\96\ In particular,
the Commission finds that the proposed rule change is consistent with
Sections 6(b)(5) of the Act,\97\ which requires, among other things,
that the rules of a national securities exchange be designed to prevent
fraudulent and manipulative acts and practices, to promote just and
equitable principles of trade, to foster cooperation and coordination
with persons engaged in regulating, clearing, settling, processing
information with respect to, and facilitating transactions in
securities, to remove impediments to and perfect the mechanism of a
free and open market and a national market system, and, in general, to
protect investors and the public interest; and not be designed to
permit unfair discrimination between customers, issuers, brokers or
dealers.
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    \96\ 15 U.S.C. 78f(b). In approving this proposed rule change,
the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
    \97\ 15 U.S.C. 78f(b)(5).
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    The Commission believes that approving the Exchange's proposal to
establish the CUBE Auction mechanism may increase competition among
those options exchanges that offer similar mechanisms. The Commission
further believes that allowing ATP Holders to enter orders into the
CUBE Auction mechanism may provide additional opportunities for such
orders to receive price improvement over the NBBO.
    The Exchange's CUBE Auction mechanism is similar to electronic
price improvement auction mechanisms available at other options
exchanges.\98\ The features of the CUBE Auction are similar in many
aspects to the features found in the price improvement mechanisms of
other exchanges, including: The characteristics of the CUBE Order that
are identified in the RFR; \99\ the auto-match and auto-match limit
options; \100\ the participation guarantee allocated to the Initiating
Participant; \101\ early conclusions of the auction in specific
circumstances, including trading halts \102\ and same-side unrelated
orders that create a BBO that crosses the initiating price; \103\ and
provisions regarding just and equitable principles of trade.\104\
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    \98\ See supra note 6 and accompanying text.
    \99\ See supra note 48 and accompanying text, and see, e.g., ISE
Rule 723(c).
    \100\ See supra notes 42-45 and accompanying text, and see,
e.g., Phlx Rule 1080(n)(ii)(A)(1).
    \101\ See supra notes 68-69 and accompanying text. Participation
guarantees are a basic feature of electronic improvement mechanisms
of all options exchanges that have them.
    \102\ See supra note 72 and accompanying text, and see, e.g.,
CBOE Rule 6.74A(b)(2)(F) and Phlx Rule 1080(n)(ii)(B)(4).
    \103\ See supra notes 85-87 and accompanying text, and see,
e.g., Phlx Rule 1080(n)(ii)(B)(2), which sets forth a very similar
provision.
    \104\ See supra note 89 and accompanying text. All the exchanges
with electronic price improvement mechanisms have similar rules.
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    The Commission notes that the initiating price would be equal to or
better than the NBBO at the time of commencement of the CUBE Auction
and that an ATP Holder that enters a

CUBE Order in the CUBE Auction must submit a Contra Order for the full
size of that CUBE Order.\105\ Once the CUBE Order and the Contra Order
are submitted to the Auction, they may not be cancelled or
modified.\106\ Therefore, a CUBE Order submitted to the CUBE Auction,
regardless of its size, would be guaranteed an execution price of at
least NBBO at the time the CUBE Auction commences and, moreover, would
be given an opportunity for price improvement beyond the NBBO by being
exposed to ATP Holders during the CUBE Auction.
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    \105\ Rule 971.1NY(a).
    \106\ Rule 971.1NY(c). See also Amendment No. 2.
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    The CUBE Auction mechanism also provides for responses to the RFR
on behalf of all types of interest, including unrelated quotes and
orders as well as GTX Orders that are specifically designated as
responses. The Commission believes that this feature provides the
potential for a CUBE Order to be exposed to a competitive auction.
Further, when the Exchange receives a properly designated CUBE Order
for CUBE Auction processing, it will send to all subscribers of its
ArcaBook data feed, an RFR detailing the series, side and size of the
CUBE Order and the initiating price. This RFR message, available to any
ArcaBook subscriber, is designed to help attract responses to a CUBE
Auction, which may result in a competitive CUBE Auction and ultimately
better prices for the CUBE Order to the extent that the RFR message is
successful in attracting competitive responses.
    The RFR will be subject to a Response Time Interval for a random
period of time between 500 and 750 milliseconds. In December 2013, to
determine whether the CUBE Auction timer would provide sufficient time
to respond to an RFR, the Exchange asked Relevant ATP Holders whether
their firms ``could respond to an Auction with a random duration of
500-750 milliseconds.'' \107\ Of the 21 Relevant ATP Holders that
responded to the question, all indicated that their firms could respond
in this time frame. Based on NYSE MKT's statements, the Commission
believes that the random Response Time Interval could facilitate the
prompt execution of CUBE Orders in the CUBE Auction, while providing
market participants with an opportunity to compete for exposed bids and
offers. The Commission notes that it has previously approved auction
mechanisms with a random time feature \108\ and with a 500 millisecond
auction response period.\109\
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    \107\ See supra note 52. See also Notice, 79 FR at 13715, n.29.
    \108\ See Securities Exchange Act Release No. 53222 (February 3,
2006), 71 FR 7089 (February 10, 2006) (approval of File No. SR-CBOE-
2005-60, CBOE's proposal to adopt AIM, which included a random time
period of three to five seconds for exposure of orders entered into
that mechanism). See also Securities Exchange Act Release No. 58088
(July 2, 2008), 73 FR 39747 (July 10, 2008) (approval of File No.
SR-CBOE-2008-16, which eliminated the random time period and
established an exposure period of one second).
    \109\ See ISE Rule 723(c)(5)(i). See also Securities Exchange
Act Release No. 68849 (February 6, 2013), 78 FR 9973 (February 12,
2013) (approval of File No. SR-ISE-2012-100, ISE's proposal to adopt
a 500 millisecond response period).
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    At the conclusion of a CUBE Auction, Customer orders resting on the
Consolidated Book have first priority to trade against the CUBE Order,
followed by Customer orders that arrived during the CUBE Auction as RFR
Responses. After execution of Customer responses and orders, the
Initiating Participant may be allocated a limited percentage of the
CUBE Order, not to exceed 40% of the contracts at the applicable price
point (except that, if only one response matches the Initiating
Participant's single price submission at the best price, then the
Initiating Participant may be allocated up to 50% of the order). The
Commission notes that the established principles of priority of
interest contained in Rule 964NY would apply to the CUBE Auction. The
Commission believes that the proposed matching algorithm set forth in
proposed Rule 971.1NY is sufficiently clear regarding how orders are to
be allocated in the CUBE Auction and does not raise any novel issues.
    Under the Exchange's proposal, there would be no minimum size
requirement for orders entered into the CUBE for a pilot period
expiring on April 25, 2015.\110\ The Commission believes that approval
of these provisions on a pilot basis is appropriate and that the
Exchange's proposal should provide small customer orders with the
opportunity for price improvement in a manner that is consistent with
the Act. The Commission expects that the data submitted to the
Commission by the Exchange will be used by both the Exchange and the
Commission staff to analyze whether there is meaningful competition for
all size orders and that there is an active and liquid market
functioning on the Exchange outside of the CUBE Auction. In addition,
data submitted by the Exchange with respect to situations in which the
CUBE Auction is terminated prematurely will afford both the Commission
and the Exchange an opportunity to analyze the impact of early
terminations and unrelated orders on the CUBE Auction.\111\ The
Commission will evaluate the CUBE Auction during the Pilot Period to
determine whether it would be beneficial to customers and to the
options market as a whole to approve any proposal requesting permanent
approval to permit orders of fewer than 50 contracts to be submitted to
the CUBE Auction .
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    \110\ Rule 971.1NY(b)(1)(B), which relates to CUBE Auctions for
fewer than 50 contracts, and Rule 971.1NY(b)(8), which states that
the minimum size for a CUBE Auction would be one contract. See also
BOX Rule 7150, IM-7150-1, CBOE Rule 6.74A, Interpretations and
Policies .03, ISE Rule 723, Supplementary Material .03, and Phlx
Rule 1080(n)(i)(C) (establishing pilot programs regarding the no
minimum size requirement for orders entered into price improvement
auctions).
    \111\ See supra notes 94-95 and accompanying text.
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IV. Section 11(a) of the Act

    Section 11(a)(1) of the Act \112\ prohibits a member of a national
securities exchange from effecting transactions on that exchange for
its own account, the account of an associated person, or an account
over which it or its associated person exercises discretion
(collectively, ``covered accounts''), unless an exception applies.
Section 11(a)(1) and the rules thereunder contain a number of
exceptions for principal transactions by members and their associated
persons, including the exceptions set forth in Rule 11a2-2(T) under the
Act.\113\ The Exchange has represented that it has analyzed its rule
proposed hereunder, and has determined that they are consistent with
Section 11(a) of the Act and rules thereunder. For the reason set forth
below, the Commission believes that the proposed CUBE Auction rules are
consistent with the requirements of Section 11(a) of the Act and the
rules thereunder.
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    \112\ 15 U.S.C. 78k(a)(1).
    \113\ 17 CFR 240.11a2-2(T).
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A. Rule 11a2-2(T) Under the Act (``Effect Versus Execute'' Rule)

    Rule 11a2-2(T) under the Act,\114\ known as the ``effect versus
execute'' rule, provides exchange members with an exception from the
Section 11(a)(1) prohibition. Rule 11a2-2(T) permits an exchange
member, subject to certain conditions, to effect transactions for
covered accounts by arranging for an unaffiliated member to execute the
transactions on the exchange. To comply with the conditions of Rule
11a2-2(T), a member: (1) May not be affiliated with the executing
member; (2) must transmit the order from off the exchange floor; (3)
may not participate in the execution of the transaction once it has
been transmitted to the member

performing the execution; \115\ and (4) with respect to an account over
which the member has investment discretion, neither the member nor its
associated person may retain any compensation in connection with
effecting the transaction except as provided in the Rule. The Exchange
believes that orders sent by off-floor ATP Holders, for covered
accounts, to the proposed CUBE Auction would qualify for this ``effect
versus execute'' exception.
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    \114\ Id.
    \115\ The member may, however, participate in clearing and
settling the transaction. See Securities Exchange Act Release No.
14563 (March 14, 1978), 43 FR 11542 (March 17, 1978) (regarding the
Designated Order Turnaround System of the New York Stock Exchange
(``1978 Release'')).
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    Rule 11a2-2(T) requires that the order be executed by an exchange
member who is unaffiliated with the member initiating the order. The
Commission has stated that the requirement is satisfied when automated
exchange facilities, such as MKT's CUBE Auction, are used, as long as
the design of these systems ensures that members do not possess any
special or unique trading advantages in handling their orders after
transmitting them to the Exchange.\116\ The Exchange represents that
the design of the CUBE Auction ensures that ATP Holders do not have any
special or unique trading advantages in the handling of their orders
after transmission. Based on the Exchange's representations, the
Commission believes that the CUBE Auction's rules satisfy this
requirement.
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    \116\ In considering the operation of automated execution
systems operated by an exchange, the Commission has noted that,
while there is no independent executing exchange member, the
execution of an order is automatic once it has been transmitted into
each system. Because the design of these systems ensures that
members do not possess any special or unique trading advantages in
handling their orders after transmitting them to the exchange, the
Commission has stated that executions obtained through these systems
satisfy the independent execution requirement of Rule 11a2-2(T). See
Securities Exchange Act Release No. 15533 (January 29, 1979), 44 FR
6084 (January 31, 1979) (regarding the American Stock Exchange's
Post Execution Reporting System and Switching System, the
Intermarket Trading System, the Multiple Dealer Trading Facility of
the Cincinnati Stock Exchange, the PCX Communications and Execution
System, and the Philadelphia Stock Exchange Automated Communications
and Execution System (``1979 Release'')).
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    Second, Rule 11a2-2(T) requires orders for covered accounts be
transmitted from off the exchange floor. The Exchange represents that
orders for covered accounts sent to the CUBE Auction from off-floor ATP
Holders will be transmitted from remote terminals directly to the CUBE
Auction by electronic means. In the context of other automated trading
systems, the Commission has found that the off-floor transmission
requirement is met if a covered account order is transmitted from a
remote location directly to an exchange's floor by electronic
means.\117\ With respect to such orders transmitted electronically from
remote terminals directly to the CUBE Auction, the Commission believes
that the CUBE Auction's rules satisfy the off-floor transmission
requirement.\118\ The Commission believes that, based on the foregoing,
the proposal satisfies the off-floor transmission requirement for the
purposes of ``effect versus execute'' rule.
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    \117\ See, e.g., Securities Exchange Act Release Nos. 59154
(December 23, 2008), 73 FR 80468 (December 31, 2008) (SR-BSE-2008-
48) (approving, among other things, the equity rules of the Boston
Stock Exchange (``BSE'')); 57478 (March 12, 2008), 73 FR 14521
(March 18, 2008) (SR-NASDAQ-2007-004 and SR-NASDAQ-2007-080)
(approving rules governing the trading of options on The NASDAQ
Options Market); 49068 (January 13, 2004), 69 FR 2775 (January 20,
2004) (SR-BSE-2002-15) (approving the Boston Options Exchange as an
options trading facility of BSE); the 1979 Release; and the 1978
Release.
    \118\ The Exchange further represents that there may be
instances of orders for a covered account that may be sent by an
off-floor ATP Holder to an unaffiliated Floor Broker for entry into
the CUBE Auction mechanism. The Exchange represents that at the
current time, Exchange-sponsored Floor Broker systems are not
enabled to accept orders into the CUBE Auction mechanism from Floor
Brokers. The Exchange further represents that, if a Floor Broker
were to gain access to the CUBE Auction mechanism via a third-party
system, that Floor Broker may not rely on any exceptions found in
Section 11(a) of the Act or rules thereunder to enter orders for
their own covered accounts into the Auction mechanism from on the
floor, or transmit such orders from on the floor to off of the floor
for entry into the CUBE Auction mechanism. See Amendment No. 2,
supra note 4.
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    Third, Rule 11a2-2(T) requires that the member not participate in
the execution of its order once it has been transmitted to the member
performing the execution. The Exchange represents that, upon submission
to the CUBE Auction, an order will be executed automatically pursuant
to the proposed rules set forth for the Auction. The Exchange states
that, in particular, execution of an order sent to the Auction depends
not on the ATP Holder entering the order, but rather on what other
orders are present and the priority of those orders. Thus, at no time
following the submission of an order is an ATP Holder able to acquire
control or influence over the result or timing of order execution.\119\
Accordingly, the Commission believes that an ATP Holder does not
participate in the execution of an order submitted into the CUBE
Auction. Based on the Exchange's representations, the Commission
believes that the proposal satisfies the non-participation requirement
of Rule 11a2-2(T).
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    \119\ The Exchange represents that the Initiating Participant
may not cancel or modify a CUBE Order once a CUBE Auction has
started. See proposed Rule 971.1NY(c).
---------------------------------------------------------------------------

    Fourth, in the case of a transaction effected for an account with
respect to which the initiating member or an associated person thereof
exercises investment discretion, neither the initiating member nor any
associated person thereof may retain any compensation in connection
with effecting the transaction, unless the person authorized to
transact business for the account has expressly provided otherwise by
written contract referring to Section 11(a) of the Act and Rule 11a2-
2(T).\120\ The Exchange recognizes that ATP Holders trading for covered
accounts over which they exercise investment discretion must comply
with this condition to rely on the Rule's exception. The Exchange
represents that it will enforce this requirement pursuant to its
obligation under Section 6(b)(1) of the Act to enforce compliance with
the federal securities laws.
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    \120\ 17 CFR 240.11a2-2(T)(a)(2)(iv). In addition, Rule 11a2-
2(T)(d) requires a member or associated person authorized by written
contract to retain compensation, in connection with effecting
transactions for covered accounts over which such member or
associated person thereof exercises investment discretion, to
furnish at least annually to the person authorized to transact
business for the account a statement setting forth the total amount
of compensation retained by the member in connection with effecting
transactions for the account during the period covered by the
statement. See 17 CFR 240.11a2-2(T)(d). See also 1978 Release
(stating ``[t]he contractual and disclosure requirements are
designed to assure that accounts electing to permit transaction-
related compensation do so only after deciding that such
arrangements are suitable to their interests'').
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V. Solicitation of Comments

    Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether Amendment No. 2
is consistent with the Act. Comments may be submitted by any of the
following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-NYSEMKT-2014-17 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSEMKT-2014-17. 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 such filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change; the Commission does not edit
personal identifying information from submissions. You should submit
only information that you wish to make publicly available. All
submissions should refer to File Number SR-NYSEMKT-2014-17 and should
be submitted on or before May 22, 2014.

VI. Accelerated Approval of Proposed Rule Change, as Modified by
Amendment No. 2

    The Commission finds good cause for approving the proposed rule
change, as amended by Amendment No. 2, prior to the 30th day after the
date of publication of notice in the Federal Register. Amendment No. 2:
(1) Clarified that Exchange-sponsored Floor Broker systems are not
enabled to accept orders into the CUBE Auction mechanism from Floor
Brokers; (2) revised the rule text to clarify that unrelated quotes and
orders will never trade through their limit prices; and (3) revised the
rule text to clarify that the Contra Order may not be cancelled or
modified. As to the first item, Amendment No. 2 provides additional
clarity in the discussion concerning the analysis of the original
proposal's compliance with the requirements of Section 11(a) of the
Act. As to the second item, Amendment No. 2 merely clarifies the rule
text. As to the third item, Amendment No. 2 merely conforms the rule
text to the description of the limitation in the Notice. The CUBE
Auction will function in a manner substantially similar to that
described in the Notice and Amendment No. 2 simply provides additional
clarity regarding a few features of the proposal.

VII. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\121\ that the proposed rule change, as modified by Amendment No. 2
(SR-NYSEMKT-2014-17) is approved on an accelerated basis, except that
(1) paragraphs (b)(1)(B) and (b)(8) of Rule 971.1NY are approved on a
pilot basis until April 25, 2015; and (2) there shall be no minimum
size requirements for orders entered into the CUBE Auction for a pilot
period expiring on April 25, 2015.
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    \121\ 15 U.S.C. 78s(b)(2).
    \122\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\122\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-09921 Filed 4-30-14; 8:45 am]
BILLING CODE P