Notice2021-28245
Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend its Rules To Add New Subparagraph (i)(6) to Rule 7.31
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
December 29, 2021
Issuing agencies
Securities and Exchange Commission
Full Text
<html>
<head>
<title>Federal Register, Volume 86 Issue 247 (Wednesday, December 29, 2021)</title>
</head>
<body><pre>
[Federal Register Volume 86, Number 247 (Wednesday, December 29, 2021)]
[Notices]
[Pages 74119-74122]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-28245]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-93850; File No. SR-NYSE-2021-75]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend its Rules To Add New Subparagraph (i)(6) to Rule 7.31
December 22, 2021.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on December 16, 2021, New York Stock Exchange LLC (``NYSE'' or the
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') a 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.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 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 (1) add new
subparagraph (i)(6) to Rule 7.31 (Orders and Modifiers) regarding
orders designated with a ``retail'' modifier and (2) delete current
Rule 13 (Retail Modifier). 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,
[[Page 74120]]
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 (1) add new
subparagraph (i)(6) to Rule 7.31 (Orders and Modifiers) regarding
orders designated with a ``retail'' modifier and (2) delete current
Rule 13 (Retail Modifiers).
Proposed Rule Change
Currently, the Exchange's Rule 13 (Retail Modifiers) permits member
organizations to designate an order with a ``retail'' modifier. Such
orders, if properly designated, are eligible for ``Retail Modifier''
rates available for such orders on the Exchange's Price List.\3\
---------------------------------------------------------------------------
\3\ These requirements are distinct from, but related to, the
Exchange's requirements for a ``Retail Order'' under its Retail
Liquidity Program pursuant to Rule 7.44.
---------------------------------------------------------------------------
The Exchange proposes to move the text of Rule 13 to the Exchange's
Pillar rules, and specifically, to new subparagraph (i)(6) to Rule 7.31
(Orders and Modifiers), and to make modifications to the rule text to
conform it to rules currently in effect on its affiliate exchanges NYSE
American LLC (``NYSE American'') \4\ and NYSE National, Inc. (``NYSE
National'').\5\ The Exchange does not propose any changes to the fees
applicable to orders designated with a ``retail'' modifier.
---------------------------------------------------------------------------
\4\ See Securities Exchange Act Release No. 92254 (June 24,
2021), 86 FR 34819 (June 30, 2021) (SR-NYSEAMER-2021-31) (notice of
filing and immediate effectiveness of proposed rule change to add
the ``retail'' order modifier to NYSE American Rule 7.31E(i)(4)).
\5\ See Securities Exchange Act Release No. 92446 (July 20,
2021), 86 FR 40108 (July 26, 2021) (SR-NYSENAT-2021-15) (notice of
filing and immediate effectiveness of proposed rule change to add
the ``retail'' order modifier to NYSE National Rule 7.31(i)(4)).
---------------------------------------------------------------------------
Proposed Rule 7.31(i)(6)
Proposed Rule 7.31(i)(6)(A) would specify that an order designated
with a ``retail'' modifier is 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 a member
organization, 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. It would also specify that an order with a ``retail''
modifier is separate and distinct from a ``Retail Order'' under Rule
7.44. This proposed rule is based on the Exchange's current Rule
13(f)(2)(A) without any differences, except that the cross-reference in
Rule 13 to former Rule 107C (Retail Liquidity Program) would be updated
to instead cross-reference Rule 7.44 (Retail Liquidity Program).
Proposed Rule 7.31(i)(6)(B) would specify that a member
organization would be required to designate an order as ``retail'' in
the form and/or manner prescribed by the Exchange. This proposed rule
is based on the Exchange's current Rule 13(f)(2)(B) without any
differences, except that the introductory language `` 'Retail' modifier
designation'' would be deleted.
Proposed Rule 7.31(i)(6)(C) would specify that in order to submit
an order with a ``retail'' modifier, a member organization must submit
an attestation, in a form prescribed by the Exchange, that
substantially all orders designated as ``retail'' would meet the
requirements set out in paragraph (A) above. This proposed rule is
based on the Exchange's current Rule 13(f)(2)(C) without any
differences, except that the Exchange proposes to change the phrase
``submitted as `retail' '' to ``designated as `retail,' '' to conform
the rule text to that of NYSE American Rule 7.31E(i)(4)(C) and NYSE
National Rule 7.31(i)(4)(C).
Proposed Rule 7.31(i)(6)(D) would specify that a member
organization must have written policies and procedures reasonably
designed to assure that it will only designate orders as ``retail'' if
all requirements of Rule 7.31(i)(6)(A) are met. Such written policies
and procedures must require the member organization 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 a member organization
represents ``retail'' orders from another broker-dealer customer, the
member organization'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 member organization 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 will
be in compliance with the requirements specified by the Exchange, and
(ii) monitor whether its broker-dealer customer's ``retail'' order flow
meets the applicable requirements. This proposed rule is based on the
Exchange's current Rule 13(f)(2)(D) without any differences.
Proposed Rule 7.31(i)(6)(E) would specify that a member
organization that fails to abide by the requirements specified in
paragraphs (i)(6)(A)-(D) of Rule 7.31 would not be eligible for the
``Retail Modifier'' rates for orders it designates as ``retail''
orders. This proposed rule is based on NYSE American Rule
7.31E(i)(4)(E) and NYSE National Rule 7.31(i)(4)(E) with the following
non-substantive differences: The proposed rule (i) would use the term
``member organization'' instead of ``ETP Holder,'' and, (ii) because
the Exchange operates a Retail Liquidity Provider Program (``RLP'')
pursuant to Rule 7.44 that separately defines the term ``Retail
Order,'' the proposed rule would use the terms ``order designated as
`retail'' or ``Retail Modifier'' instead of the term ``Retail Order.''
\6\
---------------------------------------------------------------------------
\6\ The Exchange does not propose to copy text from Rule
13(f)(2)(E) or (F) into the Rule 7.31(i)(6) definition of ``Retail
Modifier.'' Those sections provide that a member organization that
fails to abide by the requirements pertaining to orders designated
as ``retail'' will be ``disqualified'' from submitting ``retail''
orders, which disqualification the member organization may appeal.
The Exchange believes that the appropriate consequence for
incorrectly designating an order with a ``retail'' modifier would be
that such orders would be ineligible for preferential ``retail''
fees, as proposed Rule 7.31(i)(6)(E) would provide. Such orders
would still be eligible to trade pursuant to the non-``retail'' fees
in the Exchange's Price List.
---------------------------------------------------------------------------
Deletion of Rule 13
Because the Exchange is relocating current Rule 13 to proposed Rule
7.31(i)(6) and such subsection would define the term ``Retail
Modifier'' and corresponding requirements, the Exchange proposes to
delete Rule 13 in its entirety.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\7\ in general, and furthers the
objectives of Sections 6(b)(5) of the Act,\8\ 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
[[Page 74121]]
public interest and because it is not designed to permit unfair
discrimination between customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------
\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The Exchange believes that moving the text described above from
Rule 13 to new subparagraph (i)(6) of Rule 7.31 would remove
impediments to and perfect the mechanism of a free and open market and
a national market system by bringing the Exchange's rule for ``retail''
modifiers into Rule 7.31, the Exchange's Pillar rule regarding Orders
and Modifiers. Relocating the rule text regarding ``retail'' modifiers
into Rule 7.31 and deleting Rule 13 would eliminate any potential
confusion among market participants regarding the availability of the
``retail'' modifier for orders on the Exchange's Pillar trading system.
The Exchange believes that the requirements specified in proposed
Rule 7.31(i)(6) regarding the proposed designation of ``retail''
orders, along with the requirements for member organization
attestations and written policies and procedures, would remove
impediments to and perfect the mechanism of a free and open market and
a national market system because they are substantively identical to
the requirements for designating orders as ``retail'' on NYSE American
and NYSE National, and therefore would harmonize the requirements for
designating orders as ``retail'' across the three affiliated exchanges.
Such uniformity will enhance market participants' understanding of the
process for designating orders as ``retail'' across the exchanges, and
will minimize any potential confusion that could result from having
slightly different programs on each exchange.
The Exchange believes that it would remove impediments to and
perfect the mechanism of a free and open market and a national market
system to omit text from Rule 13(f)(2)(E) and (F) from proposed Rule
7.31(i)(6). The Exchange believes that the proposed change providing
that orders that fail to meet the ``retail'' modifier requirements
would be ineligible for such preferential fees would remove impediments
to and perfect the mechanism of a free and open market system, because
orders failing to meet the requirements of ``retail'' orders would not
receive the corresponding pricing benefits. Orders failing to meet the
requirements of ``retail'' orders would still be eligible to trade
pursuant to the non-``retail'' prices in the Exchange's Price List.
B. Self-Regulatory Organization's Statement on Burden on Competition
In accordance with Section 6(b)(8) of the Act,\9\ 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. The proposed rule change is not intended to
address competition at all, but merely moves, with minor changes, the
Exchange's existing rule for designating orders as ``retail'' into the
Exchange's Pillar rule regarding Orders and Modifiers.
---------------------------------------------------------------------------
\9\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------
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 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
\10\ and Rule 19b-4(f)(6) \11\ thereunder.
---------------------------------------------------------------------------
\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least give business days prior to the date of filing of the propose
rule change, or such short time as designated by the Commission. The
Exchange has satisfied this requirement.
---------------------------------------------------------------------------
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) \12\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
---------------------------------------------------------------------------
\12\ 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="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#cbb9bea7aee6a8a4a6a6aea5bfb88bb8aea8e5aca4bd"><span class="__cf_email__" data-cfemail="2f5d5a434a024c4042424a415b5c6f5c4a4c01484059">[email protected]</span></a>. Please include
File Number SR-NYSE-2021-75 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-2021-75. 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-NYSE-2021-75, and should be submitted on
or before January 19, 2022.
[[Page 74122]]
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
---------------------------------------------------------------------------
\13\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-28245 Filed 12-28-21; 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 December 29, 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.