[Federal Register Volume 85, Number 99 (Thursday, May 21, 2020)]
[Notices]
[Pages 31014-31016]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-10926]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-88881; File No. SR-NYSECHX-2020-16]
Self-Regulatory Organizations; NYSE Chicago, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Extend
the Temporary Relief Granted to Institutional Brokers to Report Non-
Tape, Clearing-Only Submissions Into the Exchange's Systems to June 30,
2020 (or Earlier)
May 15, 2020.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that, on May 14, 2020, the NYSE Chicago, Inc. (``NYSE Chicago'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II below, which Items have been prepared by the self-regulatory
organization. The Commission is publishing this notice to
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solicit comments on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to extend the temporary relief granted to
Institutional Brokers to report non-tape, clearing-only submissions
into the Exchange's systems pursuant to Article 21, Rule 6(a)(3). The
proposed rule change is available on the Exchange's website at
www.nyse.com, at the principal office of the Exchange, and at the
Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
Pursuant to a filing submitted by the Exchange,\4\ for a temporary
period that began on April 20, 2020 and ends on the earlier of the
reopening of all the options trading floors or after the end of the day
on May 15, 2020, the Exchange has extended the time within which
Institutional Brokers \5\ are required to report non-tape, clearing-
only submissions into the Exchange's systems pursuant to Article 21,
Rule 6(a)(3). The Exchange provided this temporary relief due to
changes in work flow in the post-trade processing of transactions in
the cash equity leg of stock-option orders that are a consequence of
the precautionary measures to prevent the spread of COVID-19 taken by
options exchanges and their members and by Institutional Brokers.
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\4\ See Securities Exchange Act Release No. 88714 (April 21,
2020), 85 FR 23384 (April 27, 2020) (SR-NYSECHX-2020-11)
(``Temporary Relief Filing'')
\5\ The term ``Institutional Broker'' is defined in Article 1,
Rule 1(n) to mean a member of the Exchange who is registered as an
Institutional Broker pursuant to the provisions of Article 17 and
has satisfied all Exchange requirements to operate as an
Institutional Broker on the Exchange. There are currently five
Institutional Brokers on the Exchange.
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Given that the majority of the options trading floors continue to
remain closed,\6\ the Exchange is proposing to extend the relief
granted in the Temporary Relief Filing until the remaining options
floors reopen or after the end of the day on June 30, 2020. As
represented in the Temporary Relief Filing, the proposed rule change
would have no impact on trade reporting or clearing of trades, as all
trades would have already been reported to the Consolidated Tape in
accordance with applicable trade reporting rules of the Trade Reporting
Facility (``TRF'') and submitted to the Deposit Trust Clearing
Corporation (``DTCC'') for clearing. The Exchange is not proposing any
other change to the application of Article 21, Rule 6(a)(3), other than
to extend the effectiveness of the temporary relief granted in the
Temporary Relief Filing.
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\6\ On April 28, 2020, NYSE Arca Options announced the partial
reopening of its trading floor. See https://www.nyse.com/trader-update/history#110000241246. See also https://www.nyse.com/publicdocs/nyse/markets/arca-options/rule-interpretations/2020/Arca%20RB-20-02%20-%204.28.20%20-%20Final.pdf.
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Accordingly, the Exchange proposes that until the earlier of the
reopening of all the options trading floors or after the end of the day
on June 30, 2020, Institutional Brokers may enter non-tape, clearing-
only submissions into Brokerplex \7\ for non-Exchange transaction by
8:00 p.m. ET of the day of the trade, rather than within three hours as
required under the rule. To reflect this change, the Exchange proposes
amend Commentary .05 to Article 21, Rule 6 that sets forth the proposed
rule text that would replace Article 21, Rule 6(a)(3) during a
temporary period that began on April 20, 2020, and ends on the earlier
of the reopening of all the options trading floors or after the end of
the day on June 30, 2020. The Exchange believes that this temporary
relief will permit Institutional Brokers to comply with the reporting
requirements in Article 21, Rule 6(a) during a period when their staff
and staff of options floor traders are working from home and completing
such tasks within three hours is less straightforward and more complex.
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\7\ Brokerplex is an order entry, management and recordation
system provided by the Exchange for use by Institutional Brokers.
See Article 17, Rule 5.
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2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\8\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\9\ in particular, in that it is designed to promote
just and equitable principles of trade; to remove impediments to and
perfect the mechanism of a free and open market and a national market
system; and, in general to protect investors and the public interest.
As a result of uncertainty related to the ongoing spread of the COVID-
19 virus, three major options trading floors temporarily remain closed.
In addition, social-distancing measures have been implemented
throughout the country to reduce the spread of COVID-19, resulting in
staff of options floor traders and Institutional Brokers working from
home.
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\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(5).
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The proposed rule change would allow the Exchange to temporarily
extend the time by which Institutional Brokers would be required to
report non-tape, clearing-only submissions into the Exchange's systems
for a given non-Exchange transaction to 8:00 p.m. ET of the day on
which the execution of such transaction occurred rather than within
three (3) hours of the execution of such transaction. The Exchange
believes that this temporary relief is necessary and appropriate in the
public interest, and is consistent with the protection of investors,
given the changes to workflow that increase the time it takes for
Institutional Brokers to obtain complete information about
counterparties for such trades during a period when options trading
floors are closed and both options floor traders and Institutional
Brokers are working from home as precautionary measures to protect the
health and safety of their employees and to prevent the spread of
COVID-19. In particular, this proposed rule change would have no impact
on trade reporting or clearing of trades, as all trades would be
reported to the Consolidated Tape in accordance with applicable trade
reporting rules of the TRF and submitted to DTCC for clearing in a
timely manner.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. The proposed rule change is not
designed to address any competitive issues but rather to extend the
time of the temporary relief provided to Institutional Brokers that are
required to comply with Article 21, Rule 6(a)(3) during a temporary
period when the options trading floors are closed and staff of options
floor traders and Institutional Brokers are working from home.
[[Page 31016]]
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \10\ and Rule 19b-4(f)(6) thereunder.\11\
Because the proposed rule change does not: (i) significantly affect the
protection of investors or the public interest; (ii) impose any
significant burden on competition; and (iii) become operative prior to
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, if consistent with the protection of
investors and the public interest, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.\12\
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\10\ 15 U.S.C. 78s(b)(3)(A)(iii).
\11\ 17 CFR 240.19b-4(f)(6).
\12\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires the Exchange to give the Commission written notice of the
Exchange's intent to file the proposed rule change, along with a
brief description and text of the proposed rule change, at least
five business days prior to the date of filing of the proposed rule
change, or such shorter time as designated by the Commission. The
Exchange has satisfied this requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) \13\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\14\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has asked
the Commission to waive the 30-day operative delay so that the proposal
may become operative immediately upon filing. The proposal would extend
the temporary relief granted by the Exchange to provide additional time
to institutional brokers to report certain transactions while the
options trading floors are closed and market participants' staff are
working from home. The Commission notes that the proposal extends the
temporary measure designed to respond to current, unprecedented market
conditions. For these reasons, the Commission believes that waiver of
the 30-day operative delay is consistent with the protection of
investors and the public interest. Accordingly, the Commission hereby
waives the 30-day operative delay and designates the proposal operative
upon filing.\15\
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\13\ 17 CFR 240.19b-4(f)(6).
\14\ 17 CFR 240.19b-4(f)(6)(iii).
\15\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-NYSECHX-2020-16 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-NYSECHX-2020-16. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (http://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549, on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-NYSECHX-2020-16, and should be submitted
on or before June 11, 2020.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12) and (59).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-10926 Filed 5-20-20; 8:45 am]
BILLING CODE 8011-01-P