Notice2021-28244
Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing of Proposed Rule Change Proposes To Amend the Provisions of Rule 7.35B
Primary source
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Published
December 29, 2021
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 86 Issue 247 (Wednesday, December 29, 2021)</title>
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[Federal Register Volume 86, Number 247 (Wednesday, December 29, 2021)]
[Notices]
[Pages 74204-74206]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-28244]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-93849; File No. SR-NYSE-2021-74]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing of Proposed Rule Change Proposes To Amend the
Provisions of Rule 7.35B
December 22, 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 December 14, 2021, 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, II,
and III 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 amend the provisions of Rule 7.35B
relating to the cancellation of MOC, LOC, and Closing IO Orders before
the Closing Auction. 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 Rule 7.35B (DMM-Facilitated Closing
Auctions). Specifically, the Exchange proposes to modify Rule
7.35B(f)(2), which sets forth rules pertaining to the cancellation of
MOC, LOC, and Closing IO Orders before the Closing Auction Imbalance
Freeze, and make conforming changes to Rule 7.35B(j)(2)(B).
Rule 7.35B(f) provides that the Auction Imbalance Freeze for the
Closing Auction will begin at the Closing Auction Imbalance Freeze Time
and specifies how order entry and cancellation will be processed during
the Closing Auction Imbalance Freeze.\4\ Rule 7.35B(f)(2)(A) currently
provides that, between the beginning of the Auction Imbalance Freeze
and two minutes before the scheduled end of the Core Trading Hours,
MOC, LOC, and Closing IO Orders \5\ may be cancelled or reduced in size
only to correct a Legitimate Error.\6\ Rule 7.35B(f)(2)(B) currently
specifies that, except as provided for in Rule 7.35B(j)(2)(B),\7\ a
request to cancel, cancel and replace, or reduce in size a MOC, LOC, or
Closing IO Order entered two minutes or less before the scheduled end
of the Core Trading Hours will be rejected.
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\4\ The ``Auction Imbalance Freeze'' is the period that begins
before the scheduled time for an Auction. See Rule 7.35(a)(3).
``Auction'' means the process for the opening, reopening, or closing
of the trading of Auction-Eligible Securities on the Exchange, and
an ``Auction-Eligible Security'' is a security for which the
Exchange is the primary listing market. See Rules 7.35(a)(1) and
7.35(a)(2). The ``Closing Auction'' is the Auction that closes
trading at the end of the Core Trading Session, and the ``Closing
Auction Imbalance Freeze Time'' is 10 minutes before the scheduled
end of Core Trading Hours. See Rules 7.35(a)(1)(C) and 7.35(a)(8).
\5\ A ``MOC Order'' or ``Market-on-Close Order'' is a Market
Order that is to be traded only during a closing auction. See Rule
7.31(c)(2)(B). A ``LOC Order'' or ``Limit-on-Close Order'' is a
Limit Order that is to be traded only during a closing auction. See
Rule 7.31(c)(2)(A). A ``Closing IO Order'' or ``Closing Imbalance
Offset Order'' is a Limit Order to buy (sell) an in an Auction-
Eligible Security that it to be traded only in a Closing Auction.
See Rule 7.31(c)(2)(D).
\6\ ``Legitimate Error'' means an error in any term of an order,
such as price, number of shares, side of the transaction (buy or
sell), or identification of the security. See Rule 7.35(a)(13).
\7\ Rule 7.35B(j)(2)(B) currently specifies the circumstances
under which the Exchange may temporarily suspend the prohibition on
canceling an MOC or LOC Order in connection with the Closing
Auction.
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The Exchange proposes to modify Rule 7.35B(f)(2) to provide that
any requests to cancel, cancel and replace, or reduce in size a MOC,
LOC, or Closing IO Order that are entered between the beginning of the
Auction Imbalance Freeze and the scheduled end of Core Trading Hours
would be rejected. That is, requests to cancel, replace, and/or reduce
in size a MOC, LOC, or Closing IO Order must be received prior to the
beginning of the Auction Imbalance Freeze (i.e., 10
[[Page 74205]]
minutes prior to the scheduled end of Core Trading Hours), even in the
case of a Legitimate Error. To facilitate this change, the Exchange
proposes to delete current Rule 7.35B(f)(2)(A) and modify current Rule
7.35B(f)(2)(B) to replace the reference to ``two minutes or less
before'' with ``from the beginning of the Auction Imbalance Freeze
until,'' in relation to the scheduled end of Core Trading Hours. The
Exchange also proposes to renumber current Rule 7.35B(f)(2)(B) as Rule
7.35B(f)(2).\8\
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\8\ The Exchange also proposes a non-substantive formatting
change to italicize the heading of Rule 7.35B(f)(2).
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The Exchange proposes conforming changes to Rule 7.35B(j)(2)(B) to
reflect the proposed changes to Rule 7.35B(f)(2), described above. Rule
7.35B(j)(2)(B) currently provides that the Exchange may temporarily
suspend the prohibition on cancelling an MOC or LOC Order after two
minutes before the scheduled end of Core Trading Hours when (1) the
cancellation is necessary to correct a Legitimate Error, or (2) the
execution of such an MOC or LOC Order would cause significant price
dislocation at the close. To make Rule 7.35B(j)(2)(B) consistent with
the proposed changes to Rule 7.35B(f)(2), the Exchange proposes to (1)
replace the reference to ``two minutes before the scheduled end of Core
Trading Hours'' with ``the beginning of the Auction Imbalance Freeze,''
and (2) replace the reference to ``paragraph (f)(2)(B)'' with
``paragraph (f)(2).'' Thus, Rule 7.35B(j)(2)(B), as amended, will
provide that the Exchange may temporarily suspend the prohibition on
cancelling an MOC or LOC Order after the beginning of the Auction
Imbalance Freeze (as such prohibition will be set forth in Rule
7.35B(f)(2), as amended).
2. Statutory Basis
The proposed rule change is consistent with Section 6(b) of the
Securities Exchange Act of 1934,\9\ in general, and furthers the
objectives of Section 6(b)(5),\10\ 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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\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that the proposed rule change is designed to
prevent fraudulent and manipulative acts and practices, to promote just
and equitable principles of trade, and to remove impediments to and
perfect the mechanism of a free and open market and, in general,
protect investors and the public interest because it would streamline
the Exchange's processing of MOC, LOC, and Closing IO Orders in
connection with the Auction Imbalance Freeze. Specifically, rather than
permitting MOC, LOC, and Closing IO Orders to be cancelled, replaced,
and/or reduced in size for the limited purpose of correcting a
Legitimate Error up until two minutes before the scheduled end of Core
Trading Hours, the Exchange proposes to modify Rule 7.35B(f)(2) to
provide that requests to cancel, cancel and replace, or reduce in size
such orders would be rejected after the beginning of the Auction
Imbalance Freeze. The Exchange notes that, since August 2021, it has
not received any requests to cancel, cancel and replace, or reduce in
size an MOC, LOC, or Closing IO Order between the beginning of the
Auction Imbalance Freeze and two minutes before the scheduled end of
Core Trading Hours. Accordingly, the Exchange believes that the
proposed rule change would also remove impediments to and perfect the
mechanism of a free and open market by providing greater determinism of
the Closing Auction Imbalance Information because MOC, LOC, and Closing
IO Orders would not be eligible to be cancelled once the Auction
Imbalance Freeze begins for any reason. The proposed change would also
eliminate a provision in Exchange rules that is not used by Members,
thereby simplifying the Exchange's rules and better aligning its rules
with the behavior of its Members.
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 that is not necessary or appropriate
in furtherance of the purposes of the Act. The proposed rule change
would apply to the processing of all MOC, LOC, and Closing IO Orders
during the Auction Imbalance Freeze and thus would not create any undue
burden on competition. Moreover, as described above, the Exchange has
not received any requests to cancel, cancel and replace, or reduce in
size a MOC, LOC, or Closing IO Order between the beginning of the
Auction Imbalance Freeze and two minutes before the scheduled end of
Core Trading Hours since August 2021 and thus believes that modifying
Rule 7.35B(f)(2) and making conforming changes to Rule 7.35B(j)(2)(B)
to permit such requests only up until the beginning of the Auction
Imbalance Freeze would not impose any burden on competition.
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
Within 45 days of the date of publication of this notice in the
Federal Register or up to 90 days (i) as the Commission may designate
if it finds such longer period to be appropriate and publishes its
reasons for so finding or (ii) as to which the self-regulatory
organization consents, the Commission will:
(A) by order approve or disapprove the proposed rule change, or
(B) institute proceedings to determine whether the proposed rule
change should be 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#a2d0d7cec78fc1cdcfcfc7ccd6d1e2d1c7c18cc5cdd4"><span class="__cf_email__" data-cfemail="94e6e1f8f1b9f7fbf9f9f1fae0e7d4e7f1f7baf3fbe2">[email protected]</span></a>. Please include
File Number SR-NYSE-2021-74 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-2021-74. 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
[[Page 74206]]
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-2021-74 and should be submitted on or before January 19, 2022.
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\11\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-28244 Filed 12-28-21; 8:45 am]
BILLING CODE 8011-01-P
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