SEC invites comments on NYSE American proposed rule changes regarding MTS Modifier

Maria Nikolova

The Exchange proposes to amend its rules to make MTS Modifier functionality available for non-displayed orders that do not route, i.e., Non-Displayed Limit Orders.

The United States Securities and Exchange Commission (SEC) is inviting comments on plans by NYSE American LLC to amend its rules related to the Minimum Trade Size (MTS) Modifier.

The MTS Modifier is currently available for Limit IOC Orders, Midpoint-Liquidity (MPL) Orders, Tracking Orders, Non-Displayed Primary Pegged Orders, and Discretionary Pegged Orders. As such, the MTS Modifier is currently available only for orders that are not displayed and do not route.

On arrival, Limit IOC Orders, MPL Orders, Non-Displayed Primary Pegged Orders, and Discretionary Pegged Orders with an MTS Modifier will trade against contra-side orders in the Exchange Book that in the aggregate or individually, meet the MTS. Once resting, MPL Orders, Tracking Orders, Non-Displayed Primary Pegged Orders, and Discretionary Pegged Orders with an MTS Modifier function similarly: if a contra-side order does not meet the MTS, the incoming order will not trade with and may trade through the resting order with the MTS Modifier.

Also, MPL Orders, Tracking Orders, Non-Displayed Primary Pegged Orders, and Discretionary Pegged Orders with an MTS Modifier will be cancelled if such orders are traded in part or reduced in size and the remaining quantity is less than the MTS.

The Exchange proposes to amend its rules to make MTS Modifier functionality available for an additional non-displayed order that does not route, i.e., Non-Displayed Limit Orders. This proposed change is based on the rules of both the Nasdaq Stock Market LLC (Nasdaq) and Investors Exchange LLC (IEX), which both offer minimum trade size functionality for orders that are not displayed and that do not route.

The Exchange also proposes to allow ETP Holder to elect that Limit IOC Orders with an MTS Modifier trade on arrival against contra-side orders in the Exchange Book that individually meet such order’s MTS. Currently, an ETP Holder cannot elect that a Limit IOC Order with an MTS Modifier trade only with individual order(s) in the Exchange Book that each meets such order’s MTS. The Exchange proposes to remove this restriction from its rules.

NYSE American believes that the proposal to expand the availability of the Exchange’s existing MTS Modifier to an additional non-displayed, non-routable order, e.g., Non-Displayed Limit Orders, would 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, because the proposed rule change is based on similar minimum trade size functionality on Nasdaq and IEX, which both similarly make minimum trade size functionality available to non-displayed, non-routable orders.

Interested persons are invited to submit comments via the following methods:

  • Electronic comments:

Use the Commission’s Internet comment form (http://www.sec.gov/rules/sro.shtml); or send an e-mail to [email protected] Please include File Number SR-NYSEAMER-2019-01 on the subject line.

  • Paper comments:

Send paper comments in triplicate to: Secretary, Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549-1090. All submissions should refer to File Number SR-NYSEAMER-2019-01.

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