[Federal Register Volume 85, Number 103 (Thursday, May 28, 2020)]
[Notices]
[Pages 32059-32062]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-11474]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-88933; File No. SR-NYSE-2020-47]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Extend the Temporary Period for Specified Commentaries to Rules 7.35,
7.35A, 7.35B, and 7.35C
May 22, 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 20, 2020, New York Stock Exchange LLC (``NYSE'' 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 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 period for specified
Commentaries to Rules 7.35, 7.35A, 7.35B, and 7.35C to end on the
earlier of a full reopening of the Trading Floor facilities to DMMs or
after the Exchange closes on June 30, 2020. 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.
[[Page 32060]]
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to extend the temporary period for specified
Commentaries to Rules 7.35, 7.35A, 7.35B, and 7.35C to end on the
earlier of a full reopening of the Trading Floor facilities to DMMs or
after the Exchange closes on June 30, 2020. The current temporary
period that these Rules are in effect ends on the earlier of the
reopening of the Trading Floor facilities or after the Exchange closes
on May 22, 2020.
Background
To slow the spread of COVID-19 through social-distancing measures,
on March 18, 2020, the CEO of the Exchange made a determination under
Rule 7.1(c)(3) that, beginning March 23, 2020, the Trading Floor
facilities located at 11 Wall Street in New York City would close and
the Exchange would move, on a temporary basis, to fully electronic
trading.\4\ On May 14, 2020, the CEO of the Exchange made a
determination under Rule 7.31(c)(3) to reopen the Trading Floor on a
limited basis on May 26, 2020 to a subset of Floor brokers, subject to
safety measures designed to prevent the spread of COVID-19.\5\
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\4\ Pursuant to Rule 7.1(e), the CEO notified the Board of
Directors of the Exchange of this determination. The Exchange's
current rules establish how the Exchange will function fully-
electronically. The CEO also closed the NYSE American Options
Trading Floor, which is located at the same 11 Wall Street
facilities, and the NYSE Arca Options Trading Floor, which is
located in San Francisco, CA. See Press Release, dated March 18,
2020, available here: https://ir.theice.com/press/press-releases/all-categories/2020/03-18-2020-204202110.
\5\ See Trader Update, available here: https://www.nyse.com/trader-update/history#110000251588. Pursuant to Rule 7.1(e), the CEO
notified the Board of Directors of the Exchange of this
determination. All Floor broker firms are being provided the
opportunity for a subset of their staff to return to the Trading
Floor.
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With this partial reopening, beginning May 26, 2020, Floor brokers
present on the Trading Floor will have access to Floor-based trading
systems and, thus, be able to enter orders on behalf of their customers
as provided for under Exchange rules, including D Orders,\6\ Opening
and Closing D Orders,\7\ Pegged Orders,\8\ and orders with a Yielding
Modifier,\9\ and have access to Closing Auction Imbalance Information,
as provided for in Rule 7.35B(e)(1)(B).
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\6\ See Rule 7.31(d)(4).
\7\ See Rules 7.31(c)(1)(C) and (c)(2)(C).
\8\ See Rule 7.31(h).
\9\ See Rule 7.31(i)(5).
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DMMs will continue to be provided access to the Trading Floor on
trading days when an IPO Auction or Core Open Auction for a post-IPO
public offering is scheduled.\10\ Floor brokers present on the Trading
Floor will be able to interact with DMMs in connection with such
Auctions. DMMs will continue to otherwise be absent from the Trading
Floor and, thus, all intra-day trading and other Auctions will be
conducted remotely by the DMM \11\ and Floor brokers will not be able
to enter orders that require DMM involvement.\12\
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\10\ On March 25, 2020, the CEO of the Exchange made a
determination to partially reopen the Trading Floor on trading days
when there is an IPO Auction to allow a DMM on the Trading Floor for
the limited purpose of effecting such IPO Auction manually. See
Securities Exchange Act Release Nos. 88488 (March 26, 2020), 85 FR
18286 (April 1, 2020) (SR-NYSE-2020-23) (Notice of filing and
immediate effectiveness of proposed rule change). On April 1, 2020,
the CEO of the Exchange made a determination to partially reopen the
Trading Floor on trading days when a Core Open Auction is scheduled
in connection with a listed company's post-IPO public offering to
allow a DMM on the Trading Floor for the limited purpose of
effecting such Core Open Auctions manually. See Securities Exchange
Act Release No. 88546 (April 2, 2020), 85 FR 19782 (April 8, 2020)
(SR-NYSE-2020-28) (Notice of filing and immediate effectiveness of
proposed rule change).
\11\ If a DMM is unable to facilitate an Auction electronically,
the Exchange would facilitate such Auction pursuant to Rule 7.35C.
\12\ See, e.g., Rules 76 (describing crossing orders) and
7.35B(a)(1) (describing Floor broker interest that is verbally
represented by a Floor broker by the end of Core Trading Hours,
which must be electronically accepted by the DMM before it can
participate in the Closing Auction).
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Proposed Rule Change
For the period while the Trading Floor has been temporarily closed,
the Exchange has modified the rules governing Auctions to add
Commentaries to Rules 7.35, 7.35A, 7.35B, and 7.35C \13\ that are in
effect until the earlier of the reopening of the Trading Floor
facilities or after the Exchange closes on May 22, 2020.\14\
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\13\ See Securities Exchange Act Release Nos. 88413 (March 18,
2020), 85 FR 16713 (March 24, 2020) (SR-NYSE-2020-19) (amending Rule
7.35C to add Commentary .01); 88444 (March 20, 2020), 85 FR 17141
(March 26, 2020) (SR-NYSE-2020-22) (amending Rules 7.35A to add
Commentary .01, 7.35B to add Commentary .01, and 7.35C to add
Commentary .02); 88488 (March 26, 2020), 85 FR 18286 (April 1, 2020)
(SR-NYSE-2020-23) (amending Rule 7.35A to add Commentary .02); 88546
(April 2, 2020), 85 FR 19782 (April 8, 2020) (SR-NYSE-2020-28)
(amending Rule 7.35A to add Commentary .03); 88562 (April 3, 2020),
85 FR 20002 (April 9, 2020) (SR-NYSE-2020-29) (amending Rule 7.35C
to add Commentary .03); 88705 (April 21, 2020), 85 FR 23413 (April
27, 2020) (SR-NYSE-2020-35) (amending Rule 7.35A to add Commentary
.04); 88725 (April 22, 2020), 85 FR 23583 (April 28, 2020) (SR-NYSE-
2020-37) (amending Rule 7.35 to add Commentary .01); and 88829 (May
6, 2020), 85 FR 28115 (May 12, 2020) (SR-NYSE-2020-41) (amending
Rule 7.35B to add Commentary .02 to Rule 7.35B).
\14\ See Securities Exchange Act Release No. 88891 (May 15,
2020) (SR-NYSE-2020-45) (Notice of filing and immediate
effectiveness of proposed rule change to extend the temporary period
for Commentaries to Rules 7.35, 7.35A, 7.35B, and 7.35C to end on
the earlier of the reopening of the Trading Floor facilities or
after the Exchange closes on May 22, 2020).
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Because DMM access to the Trading Floor will not change with the
partial reopening on May 26, 2020, the Exchange is proposing to extend
the following Commentaries related to the absence of DMMs from the
Trading Floor, until such time that there is a full reopening of the
Trading Floor facilities to DMMs:
Commentary .01 to Rule 7.35; \15\
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\15\ Although a subset of Floor brokers will be on the Trading
Floor after May 26, 2020, an IPO Auction may still be conducted by a
DMM remotely as provided for in Commentary .04 to Rule 7.35A. If a
DMM chooses to conduct an IPO Auction remotely, Floor brokers on the
Trading Floor will not have access to IPO Auction imbalance
information. For this reason, the Exchange is proposing to extend
the temporary rule providing for the dissemination of Auction
Imbalance Information for IPO Auctions.
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Commentaries .01, .02, .03, and .04 to Rule 7.35A;
Commentary .01 to Rule 7.35B; \16\ and
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\16\ The Exchange is not proposing to extend the effective date
of Commentary .02 to Rule 7.35B.
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Commentaries .01, .02, and .03 to Rule 7.35C
To reflect that the Trading Floor facilities will continue to be
closed to DMMs after May 22, 2020, except on trading days when there is
an IPO or post-IPO public offering scheduled to allow a DMM on the
Trading Floor for the limited purpose of effecting such IPO Auction or
Core Open Auction manually, the Exchange proposes to extend the end
date of each of the above Commentaries to provide that such Rules would
be in effect for the temporary period that ends on the earlier of a
full reopening of the Trading Floor facilities to DMMs or after the
Exchange closes on June 30, 2020.
The Exchange is not proposing any substantive changes to these
Rules.
2. Statutory Basis
The proposed rule change is consistent with Section 6(b) of the
Act,\17\ in general, and furthers the objectives of Section 6(b)(5) of
the Act,\18\ in particular, in that it is designed to prevent
fraudulent and manipulative acts and practices, to promote just and
equitable principles of trade, to foster cooperation and coordination
with persons engaged in facilitating transactions in securities, and to
remove
[[Page 32061]]
impediments to and perfect the mechanism of a free and open market and
a national market system.
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\17\ 15 U.S.C. 78f(b).
\18\ 15 U.S.C. 78f(b)(5).
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To reduce the spread of COVID-19, the CEO of the Exchange made a
determination under Rule 7.1(c)(3) that beginning March 23, 2020, the
Trading Floor facilities located at 11 Wall Street in New York City
would close and the Exchange would move, on a temporary basis, to fully
electronic trading. In connection with such temporary closure of the
Trading Floor, the Exchange adopted Commentaries to Rules 7.35, 7.35A,
7.35B, and 7.35C, which are in effect until May 22, 2020. On May 14,
2020, the CEO made a determination under Rule 7.1(c)(3) that, beginning
May 26, 2020, the Trading Floor would be partially reopened to allow a
subset of Floor brokers to return to the Trading Floor. DMM access to
the Trading Floor will not change after May 22, 2020.
The Exchange believes that the proposed rule change would remove
impediments to and perfect the mechanism of a free and open market and
a national market system because DMM access to the Trading Floor will
not change after May 22, 2020. Accordingly, the Exchange believes that
the temporary rule changes in effect pursuant to the Commentaries to
Rules 7.35, 7.35A, 7.35B, and 7.35C (other than Commentary .02 to Rule
7.35B), which are intended to be in effect during the temporary period
while the Trading Floor is closed to DMMs, should be extended until
such time that there is a full reopening of the Trading Floor
facilities to DMMs. The Exchange is not proposing any substantive
changes to these Rules.
The Exchange believes that, by clearly stating that this relief
will be in effect through the earlier of a full reopening of the
Trading Floor facilities to DMMs or the close of the Exchange on June
30, 2020, market participants will have advance notice of the temporary
period during which the Commentaries to Rules 7.35, 7.35A, 7.35B, and
7.35C will be in effect, including that Commentary .02 to Rule 7.35B
will sunset on May 22, 2020.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change would
impose any burden on competition that is 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 would extend
the period during which Commentary .01 to Rule 7.35; Commentaries .01,
.02, .03, and .04 to Rule 7.35A; Commentary .01 to Rule 7.35B; and
Commentaries .01, .02, and .03 to Rule 7.35C will be in effect. These
Commentaries are intended to be in effect during the temporary period
while the Trading Floor is closed to DMMs and currently expire on May
22, 2020. Because the Trading Floor will remain temporarily closed to
DMMs past May 22, 2020, the Exchange proposes to extend the temporary
period for these Commentaries to end on the earlier of a full reopening
of the Trading Floor facilities to DMMs or after the Exchange closes on
June 30, 2020.
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 \19\ and Rule 19b-4(f)(6) thereunder.\20\
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 for 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 \21\ and Rule 19b-
4(f)(6) thereunder.\22\
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\19\ 15 U.S.C. 78s(b)(3)(A)(iii).
\20\ 17 CFR 240.19b-4(f)(6).
\21\ 15 U.S.C. 78s(b)(3)(A).
\22\ 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) \23\ normally
does not become operative for 30 days after the date of the filing.
However, pursuant to Rule 19b-4(f)(6)(iii),\24\ 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 period during which Commentary .01 to Rule 7.35;
Commentaries .01, .02, .03, and .04 to Rule 7.35A; Commentary .01 to
Rule 7.35B; and Commentaries .01, .02, and .03 to Rule 7.35C will be in
effect to end on the earlier of a full reopening of the Trading Floor
facilities to DMMs or after the Exchange closes on June 30, 2020.\25\
The proposal would not make any substantive changes to these
Commentaries. The Exchange has represented that these Commentaries are
intended to be in effect during the temporary period while the Trading
Floor is closed to DMMs and currently expire on May 22, 2020. According
to the Exchange, while the Trading Floor will partially reopen to a
subset of Floor brokers on May 26, 2020, DMM access to the Trading
Floor will not change after May 22, 2020.\26\ The Commission notes
that, without a waiver of the operative delay, these Commentaries would
cease to apply while the Exchange's Trading Floor facilities are still
temporary closed to DMMs.\27\ 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.\28\
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\23\ 17 CFR 240.19b-4(f)(6).
\24\ 17 CFR 240.19b-4(f)(6)(iii).
\25\ Commentary .02 to Rule 7.35B will sunset on May 22, 2020.
\26\ According to the Exchange, the Trading Floor facilities
will continue to be closed to DMMs, except on trading days when an
IPO Auction or Core Open Auction for a post-IPO public offering is
scheduled to allow a DMM on the Trading Floor for the limited
purpose of effecting such IPO Auction or Core Open Auction manually.
\27\ See supra note 26 and accompanying text.
\28\ 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.
[[Page 32062]]
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-NYSE-2020-47 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-NYSE-2020-47. 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-NYSE-2020-47, and should be submitted on
or before June 18, 2020.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\29\
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\29\ 17 CFR 200.30-3(a)(12), (59).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-11474 Filed 5-27-20; 8:45 am]
BILLING CODE 8011-01-P