Notice2021-13914
Self-Regulatory Organizations; NYSE American LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 7.31E To Add a Retail Order Modifier and the NYSE American Equities Price List and Fee Schedule To Cross Reference the Retail Order Modifier
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
June 30, 2021
Issuing agencies
Securities and Exchange Commission
Full Text
<html>
<head>
<title>Federal Register, Volume 86 Issue 123 (Wednesday, June 30, 2021)</title>
</head>
<body><pre>
[Federal Register Volume 86, Number 123 (Wednesday, June 30, 2021)]
[Notices]
[Pages 34819-34821]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-13914]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-92254; File No. SR-NYSEAMER-2021-31]
Self-Regulatory Organizations; NYSE American LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Amend
Rule 7.31E To Add a Retail Order Modifier and the NYSE American
Equities Price List and Fee Schedule To Cross Reference the Retail
Order Modifier
June 24, 2021.
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 June 21, 2021, NYSE American LLC (``NYSE American'' 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.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend its rules to add new subparagraph
(i)(4) to Rule 7.31E and amend the NYSE American Equities Price List
and Fee Schedule. The proposed rule change is available on the
Exchange's website at <a href="http://www.nyse.com">www.nyse.com</a>, 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
The Exchange proposes to amend its rules to add new subparagraph
(i)(4) to Rule 7.31E (Orders and Modifiers) to add a description of a
Retail Order modifier and to amend the Price List to add a cross-
reference to Rule 7.31E(i)(4).
Proposed Rule Change
The Exchange proposes to amend Rule 7.31E to add new subparagraph
(i)(4) to provide for ETP Holders \4\ to designate an order with a
retail modifier (``Retail Order''). An order designated as a ``Retail
Order'' pursuant to proposed Rule 7.31E(i)(4) would be eligible for the
Retail Order Rates specified on the Exchange's Price List.
---------------------------------------------------------------------------
\4\ See Rules 1.1E(m) (definition of ETP) & (n) (definition of
ETP Holder).
---------------------------------------------------------------------------
Proposed Modifier for ``Retail Orders''
To define ``Retail Orders,'' the Exchange proposes to amend Rule
7.31E (Orders and Modifiers) to add a new subsection (i)(4), titled
``Retail Modifier'' to establish requirements for Retail Orders on the
Exchange. These requirements are based on the requirements to enter
orders with ``retail'' modifiers for purposes of rates
[[Page 34820]]
available for such orders on the Exchange's affiliates, New York Stock
Exchange, LLC (``NYSE'') and NYSE Arca, Inc. (``NYSE Arca'').\5\
---------------------------------------------------------------------------
\5\ See NYSE Rule 13 regarding Retail Modifiers and the NYSE
Arca procedures for designating orders with a retail modifier for
purposes of fee rates. See Securities Exchange Act Release No. 67540
(July 30, 2012), 77 FR 46539 (August 3, 2012) (SR-NYSEArca-2012-77).
These requirements are distinct from, but related to, the
requirements for a ``Retail Order'' on the Retail Liquidity Programs
available on NYSE and NYSE Arca. See NYSE Rule 7.44 and NYSE Arca
Rule 7.44-E. The Exchange does not offer a ``Retail Liquidity
Program.''
---------------------------------------------------------------------------
Proposed Rule 7.31E(i)(4)(A) would define ``Retail Order'' as an
agency order or a riskless principal order that meets the criteria of
FINRA Rule 5320.03 that originates from a natural person and is
submitted to the Exchange by an ETP Holder, provided that no change is
made to the terms of the order with respect to price or side of market
and the order does not originate from a trading algorithm or any other
computerized methodology.
Proposed Rule 7.31E(i)(4)(B) would specify that in order for an ETP
Holder to access the proposed Retail Order pricing, the ETP Holder
would be required to designate an order as a Retail Order in the form
and/or manner prescribed by the Exchange.
Proposed Rule 7.31E(i)(4)(C) would specify that in order to submit
a Retail Order, an ETP Holder must submit an attestation, in a form
prescribed by the Exchange, that substantially all orders designated as
``Retail Orders'' would meet the requirements set out in the definition
above.
Proposed Rule 7.31E(i)(4)(D) would specify that an ETP Holder must
have written policies and procedures reasonably designed to assure that
it would only designate orders as ``Retail Orders'' if all requirements
of a Retail Order are met. Such written policies and procedures must
require the ETP Holder to (i) exercise due diligence before entering a
Retail Order to assure that entry as a Retail Order is in compliance
with the requirements specified by the Exchange, and (ii) monitor
whether orders entered as Retail Orders meet the applicable
requirements. If an ETP Holder represents Retail Orders from another
broker-dealer customer, the ETP Holder's supervisory procedures must be
reasonably designed to assure that the orders it receives from such
broker-dealer customer that it designates as Retail Orders meet the
definition of a Retail Order. The ETP Holder must (i) obtain an annual
written representation, in a form acceptable to the Exchange, from each
broker-dealer customer that sends it orders to be designated as Retail
Orders that entry of such orders as Retail Orders would be in
compliance with the requirements specified by the Exchange, and (ii)
monitor whether its broker-dealer customer's Retail Order flow
continues to meet the applicable requirements. Proposed Rule
7.31E(i)(4)(E) would specify that an ETP Holder that fails to abide by
the requirements specified in paragraphs (i)(4)(A)-(D) of Rule 7.31E
would not be eligible for the Retail Order rates for orders it
designates as ``Retail Orders.''
Proposed Cross-Reference in the Price List to Rule 7.31E(i)(4)
The Price List currently contains a subheading ``b. Retail Order
Rates *,'' with text at the asterisk as follows: ``See section III
under `General' at the end of this Price List for information on
designating orders as `Retail Orders.' '' The Exchange proposes to
amend that text to also include a reference to Rule 7.31E(i)(4).
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\6\ in general, and furthers the
objectives of Sections 6(b)(5) of the Act,\7\ in particular, because it
is designed to prevent fraudulent and manipulative acts and practices,
to promote just and equitable principles of trade, to foster
cooperation and coordination with persons engaged in 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 because it is not designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------
\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The Exchange believes that the proposed amendment to Rule 7.31E(i)
to add a Retail Modifier would remove impediments to and perfect the
mechanism of a free and open market and a national market system
because the proposed requirements are based on existing requirements
for orders designated as ``retail'' on NYSE and NYSE Arca for purposes
of fees and credits on those exchanges, and therefore are not novel. In
addition, the proposed designation, attestation, and written policies
and procedures are also based on existing procedures for similarly-
defined orders on NYSE and NYSE Arca, and therefore are not novel.\8\
The Exchange believes that the proposed requirements to submit
attestations and to maintain written policies and procedures are not
unfairly discriminatory, because they apply equally to all ETP Holders
that wish to receive the Retail Order Rates. The Exchange further
believes that the proposed addition of a cross-reference to proposed
Rule 7.31E(i)(4) in the Price List would remove impediments to and
perfect the mechanism of a free and open market and a national market
system because it would enhance the clarity and transparency of the
Price List and reduce any potential customer confusion.
---------------------------------------------------------------------------
\8\ As noted above (see supra note 11[sic]), the proposed
changes are based not on the Retail Liquidity Programs available on
NYSE and NYSE Arca, but on the availability of retail fees on those
exchanges for orders properly designated as ``retail'' orders. See
NYSE Rule 13; Securities Exchange Act Release No. 72253 (May 27,
2014), 79 FR 31353 (June 2, 2014) (SR-NYSE-2014-26) (approving the
addition of ``retail'' order modifier at NYSE Rule 13(f)); and
Securities Exchange Act Release No. 67540 (July 30, 2012), 77 FR
46539 (August 3, 2012) (SR-NYSEArca-2012-77) (approving the addition
of ``retail'' order modifier on NYSE Arca).
---------------------------------------------------------------------------
The proposed retail modifier for purposes of providing different
rates for ``Retail Orders'' is also based in part on the availability
of such modifiers on the Nasdaq Stock Market LLC (``Nasdaq'') and Cboe
EDGX Exchange, Inc. (``EDGX''), which both offer pricing for orders
designated as ``retail'' under their respective rules, even in the
absence of a retail price improvement program. For example, Nasdaq
defines the term ``Designated Retail Order'' on its Price List as:
[A]n agency or riskless principal order that meets the criteria
of FINRA Rule 5320.03 and that originates from a natural person and
is submitted to Nasdaq by a member that designates it pursuant to
this section, provided that no change is made to the terms of the
order with respect to price or side of market and the order does not
originate from a trading algorithm or any other computerized
methodology. An order from a ``natural person'' can include orders
on behalf of accounts that are held in a corporate legal form--such
as an Individual Retirement Account, Corporation, or a Limited
Liability Company--that has been established for the benefit of an
individual or group of related family members, provided that the
order is submitted by an individual. Members must submit a signed
written attestation, in a form prescribed by Nasdaq, that they have
implemented policies and procedures that are reasonably designed to
ensure that substantially all orders designated by the member as
``Designated Retail Orders'' comply with these requirements. Orders
may be designated on an order by-order basis, or by designating all
orders on a particular order entry port as Designated Retail
Orders.\9\
---------------------------------------------------------------------------
\9\ Nasdaq Equity 7, section 118; see also Cboe EDGX Rule 11.21
(defining ``Retail Order'' and establishing attestation requirement
to access preferential pricing for such orders).
[[Page 34821]]
---------------------------------------------------------------------------
Nasdaq does not have a corresponding definition of ``Designated
Retail Order'' in its trading rules.
B. Self-Regulatory Organization's Statement on Burden on Competition
In accordance with Section 6(b)(8) of the Act,\10\ the Exchange
believes that the proposed rule change would not impose any burden on
competition that is not necessary or appropriate in furtherance of the
purposes of the Act. Instead, the Exchange believes that the proposed
rule change would promote competition because it is based on the
availability of similar ``retail'' modifiers on NYSE, NYSE Arca,
Nasdaq, and EDGX. More specifically, multiple other cash equity
exchanges offer pricing for orders designated as ``retail'' orders,
even in the absence of a retail price improvement program on those
exchanges.\11\ The Exchange believes that the proposed change could
promote competition between the Exchange and other execution venues,
including those that currently offer similar order types and comparable
transaction pricing, by encouraging additional orders to be sent to the
Exchange for execution.
---------------------------------------------------------------------------
\10\ 15 U.S.C. 78f(b)(8).
\11\ See supra note 17 [sic].
---------------------------------------------------------------------------
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 \12\ and Rule 19b-4(f)(6) thereunder.\13\
Because the proposed rule change: (i) Does not significantly affect the
protection of investors or the public interest; (ii) does not impose
any significant burden on competition; and (iii) does not 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.\14\
---------------------------------------------------------------------------
\12\ 15 U.S.C. 78s(b)(3)(A)(iii).
\13\ 17 CFR 240.19b-4(f)(6).
\14\ 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.
---------------------------------------------------------------------------
A proposed rule change filed under Rule 19b-4(f)(6) \15\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\16\ 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 Commission notes that
the proposal is based on the rules of other national securities
exchanges and finds that the proposal presents no legal or novel
regulatory questions.\17\ For these reasons, the Commission believes
that waiving the 30-day operative delay is consistent with the
protection of investors and the public interest. Accordingly, the
Commission waives the 30-day operative delay and designates the
proposed rule change operative upon filing.\18\
---------------------------------------------------------------------------
\15\ 17 CFR 240.19b-4(f)(6).
\16\ 17 CFR 240.19b-4(f)(6)(iii).
\17\ See supra note 5.
\18\ For purposes only of waiving the operative delay for this
proposal, the Commission has considered the proposed rule's impact
on efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
---------------------------------------------------------------------------
At any time within 60 days of the filing of such 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 under
Section 19(b)(2)(B) \19\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
---------------------------------------------------------------------------
\19\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------
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
<bullet> Use the Commission's internet comment form (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#c3b1b6afa6eea0acaeaea6adb7b083b0a6a0eda4acb5"><span class="__cf_email__" data-cfemail="0270776e672f616d6f6f676c7671427167612c656d74">[email protected]</span></a>. Please include
File Number SR-NYSEAMER-2021-31 on the subject line.
Paper Comments
<bullet> 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-2021-31. 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 (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>).
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-NYSEAMER-2021-31 and should be submitted
on or before July 21, 2021.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\20\
---------------------------------------------------------------------------
\20\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-13914 Filed 6-29-21; 8:45 am]
BILLING CODE 8011-01-P
</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>Indexed from Federal Register on June 30, 2021.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.