Notice2021-23532
Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend NYSE Rule 7.31
Primary source
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Published
October 28, 2021
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 86 Issue 206 (Thursday, October 28, 2021)</title>
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[Federal Register Volume 86, Number 206 (Thursday, October 28, 2021)]
[Notices]
[Pages 59774-59776]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-23532]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-93416; File No. SR-NYSE-2021-61]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend NYSE Rule 7.31
October 25, 2021.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that, on October 13, 2021, New York Stock Exchange LLC (``NYSE''
or the ``Exchange'') filed with the Securities and Exchange Commission
(the ``Commission'') the proposed rule change as described in Items I
and II below, which Items have been prepared by the Exchange. 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 amend NYSE Rule 7.31 to establish a
minimum dollar threshold into its rule for Limit Order Price
Protection. 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 NYSE Rule 7.31 (Orders and
Modifiers) to establish a minimum dollar threshold in its rule for
Limit Order Price Protection.
Rule 7.31(a)(2)(B) (``Limit Order Price Protection'') describes the
price protection mechanism for Limit Orders. Currently, the rule
provides that a Limit Order to buy (sell) will be rejected if it is
priced at or above (below) a specified percentage away from the
National Best Offer (National Best Bid) (``NBO'' and ``NBB,''
respectively).\4\
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\4\ For securities with a reference price between $0.00 and
$25.00, the specified percentage is 10%; for securities with a
reference price between $25.01 and $50.00, the specified percentage
is 5%; and for securities with a reference price greater than
$50.00, the specified percentage is 3%.
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The Exchange proposes to amend Rule 7.31(a)(2)(B) to introduce a
minimum dollar threshold of $0.15 into the Limit Order Price Protection
calculation for lower-priced securities. Accordingly, the proposed rule
would provide that a Limit Order to buy (sell) would be rejected if it
was priced at or above (below) the greater of $0.15 or a specified
percentage away from the NBO (NBB).
The Exchange believes that the introduction of this minimum dollar
threshold would enhance the Limit Order Price Protection mechanism for
securities with a reference price below $1.50 because using the current
10% multiplier for such securities would result in too narrow of a
price protection mechanism. Thus, the proposed rule change would
encourage price continuity, specifically in lower-priced illiquid
securities.
This proposed minimum dollar threshold of $0.15 is the same minimum
dollar threshold that currently exists in the Limit Order Price
Protection rules of the Exchange's affiliate exchanges NYSE American
LLC (``NYSE American''), NYSE Arca, Inc. (``NYSE Arca''), NYSE Chicago,
Inc. (``NYSE Chicago''), and NYSE National, Inc (``NYSE National'').\5\
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\5\ See NYSE American Rule 7.31E(a)(2)(B); NYSE Arca Rule 7.31-
E(a)(2)(B); NYSE Chicago Rule 7.31(a)(2)(B); and NYSE National Rule
7.31(a)(2)(B). See also Securities Exchange Act Release Nos. 81943
(October 25, 2017), 82 FR 50475 (October 31, 2017) (SR-NYSAMER-2017-
25) (adding $0.15 minimum dollar threshold to Limit Order Price
Protection in NYSE American Rule 7.31E(a)(2)(B)); 82004 (November 2,
2017), 82 FR 51890 (November 8, 2017) (SR-NYSEArca-2017-126) (adding
same to NYSE Arca Rule 7.31-E(a)(2)(B)); 87264 (October 9, 2019), 84
FR 55345 (October 16, 2019) (SR-NYSECHX-2019-08) (regarding NYSE
Chicago Rule 7.31(a)(2)(B)); 83289 (May 17, 2018), 83 FR 23968 (May
23, 2018) (SR-NYSENAT-2018-02) (regarding NYSE National Rule
7.31(a)(2)(B)).
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[[Page 59775]]
Implementation
The Exchange anticipates implementing the proposed change in
November 2021 and will announce the timing of such changes by Trader
Update.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\6\ in general, and with Section
6(b)(5),\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 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.
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\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that the proposed change adding a $0.15
minimum price threshold to Rule 7.31(a)(2)(B) would remove impediments
to and perfect the mechanism of a free and open market and a national
market system, and in general, protect investors and the public
interest, because the proposed change is based on the Limit Order Price
Protection rules currently in effect on NYSE American, NYSE Arca, NYSE
Chicago, and NYSE National, and therefore is not novel.\8\ The Exchange
further believes that the proposed change would enhance the Exchange's
Limit Order Price Protection mechanism, which protects from aberrant
prices, thus improving continuous trading and price discovery. In
addition, the proposal to enhance Limit Order Price Protection by
adding a minimum dollar threshold would assist with the maintenance of
fair and orderly markets because such mechanisms protect investors from
potentially receiving executions away from the prevailing market prices
at any given time.
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\8\ See supra note 4.
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange believes that the proposed rule change will not 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
intended to address competitive issues but rather would provide for a
more effective Limit Order Price Protection mechanism, specifically for
lower-priced securities.
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
Because the foregoing 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, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \9\ and Rule 19b-
4(f)(6) thereunder.\10\
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\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 17 CFR 240.19b 4(f)(6). In addition, Rule 19b 4(f)(6)(iii)
requires a self-regulatory organization to give the Commission
written notice of its 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) \11\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\12\ 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 to allow the
Exchange to make the proposed enhancement to its Limit Order Price
Protection mechanism when the technology associated with this proposed
change is available, which is anticipated to be less than 30 days from
the date of this filing.
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\11\ 17 CFR 240.19b-4(f)(6).
\12\ 17 CFR 240.19b-4(f)(6)(iii).
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The Exchange represents that the proposed change would assist with
the maintenance of fair and orderly markets by protecting investors
from potentially receiving executions away from the prevailing market
prices at any given time. And the Commission notes that the proposed
minimum dollar threshold is the same minimum dollar threshold that
currently exists in the Limit Order Price Protection rules of the
Exchange's affiliate exchanges.\13\ The Commission therefore believes
that waiver of 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
proposal operative upon filing.\14\
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\13\ See supra note 5 and accompanying text.
\14\ 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 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 to
determine whether the proposed rule 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
<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#3042455c551d535f5d5d555e4443704355531e575f46"><span class="__cf_email__" data-cfemail="156760797038767a7878707b6166556670763b727a63">[email protected]</span></a>. Please include
File Number SR-NYSE-2021-61 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-NYSE-2021-61. 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
[[Page 59776]]
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-2021-61, and should be submitted on or before November 18, 2021.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-23532 Filed 10-27-21; 8:45 am]
BILLING CODE 8011-01-P
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