Notice2022-06188
Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Order Granting Accelerated Approval of a Proposed Rule Change for Certain Amendments to the Preamble to Rule 9217
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
March 24, 2022
Issuing agencies
Securities and Exchange Commission
Full Text
<html>
<head>
<title>Federal Register, Volume 87 Issue 57 (Thursday, March 24, 2022)</title>
</head>
<body><pre>
[Federal Register Volume 87, Number 57 (Thursday, March 24, 2022)]
[Notices]
[Pages 16773-16775]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-06188]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-94467; File No. SR-NYSE-2022-13]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Order Granting Accelerated Approval of a Proposed
Rule Change for Certain Amendments to the Preamble to Rule 9217
March 18, 2022.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on March 4, 2022, 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 and approving the proposal on an
accelerated basis.
---------------------------------------------------------------------------
\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 certain amendments to the preamble to Rule
9217. 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 III 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 certain amendments to the preamble to Rule
9217.
[[Page 16774]]
The preamble to current Rule 9217 consists of two paragraphs. The
first provides that any member organization of covered person \3\ may
be subject to a fine under Rule 9216(b) with respect to any rules
listed therein and that the fine amounts and fine levels set forth
therein shall apply to the fines imposed. The second paragraph provides
that nothing in the rule requires the Exchange to impose a fine for a
violation of any rule under the Minor Rule Plan and that if the
Exchange determines that any violation is not minor in nature, the
Exchange may, at its discretion, proceed under the Rule 9000 Series
rather than under Rule 9217.
---------------------------------------------------------------------------
\3\ Rule 9120(g) defines covered person to mean a member,
principal executive, approved person, registered or non-registered
employee of a member organization, or other person (excluding a
member organization) subject to the jurisdiction of the Exchange.
---------------------------------------------------------------------------
The Exchange proposes to add two additional paragraphs to the
preamble based on the preamble to the version of Rule 9217 adopted by
the Exchange's affiliate NYSE Arca, Inc. (``NYSE Arca'') and to reorder
the paragraphs as subsections (a) through (d), as follows.
The current first paragraph of the preamble to Rule 9217 would
become new subsection (a). The text would be unchanged except that the
Exchange would add ``, not to exceed $5,000,'' after fine to clarify
that a minor rule fine on the Exchange cannot exceed $5,000.\4\
---------------------------------------------------------------------------
\4\ See Securities Exchange Act Release No. 87212 (October 3,
2019), 84 FR 54193 (October 9, 2019) (SR-NYSE-2019-44) (Order)
(increasing the maximum fine for minor rule violations to $5,000 in
order to align the Exchange's minor rule plan more closely with that
of its affiliates).
---------------------------------------------------------------------------
The Exchange would add a new subsection (b) that would provide that
Regulatory Staff designated by the Exchange shall have the authority to
impose a fine pursuant to this Rule. Proposed Rule 9217(b) is identical
to NYSE Arca Rule 10.9217(b).
The Exchange would also add the following text as new subsection
(c) to Rule 9217:
Any person or organization found in violation of a minor rule is
not required to report such violation on SEC Form BD or Form U-4 if
the sanction imposed consists of a fine not exceeding $2,500 and the
sanctioned person or organization has not sought an adjudication,
including a hearing, or otherwise exhausted the administrative
remedies available with respect to the matter. Any fine imposed in
excess of $2,500 is subject to current rather than quarterly
reporting to the Commission pursuant to Rule 19d-1 under the Act.
Proposed subsection (c) is identical to NYSE Arca Rule 10.9217(c).
Finally, the current second paragraph of the preamble to Rule 9217
would become new subsection (d). The text of proposed Rule 9217(d)
would be unchanged.
2. Statutory Basis
The proposed rule change is consistent with Section 6(b) of the
Act,\5\ in general, and furthers the objectives of Section 6(b)(5),\6\
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.
---------------------------------------------------------------------------
\5\ 15 U.S.C. 78f(b).
\6\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
Minor rule fines provide a meaningful sanction for minor or
technical violations of rules when the conduct at issue does not
warrant stronger, immediately reportable disciplinary sanctions. The
inclusion of a rule in Rule 9217 does not minimize the importance of
compliance with the rule, nor does it preclude the Exchange from
choosing to pursue violations of eligible rules through formal
disciplinary action if the nature of the violations or prior
disciplinary history warrants more significant sanctions. The option to
impose a minor rule sanction gives the Exchange additional flexibility
to administer its enforcement program in the most effective and
efficient manner while still fully meeting the Exchange's remedial
objectives in addressing violative conduct.
The Exchange believes that harmonizing the preamble to Rule 9217
with that of its affiliates would remove impediments to and perfect the
mechanism of a free and open market and a national market system by a
providing greater harmonization between Exchange rules and those of its
affiliates in connection with minor rule fines, thereby fostering
cooperation and coordination with persons engaged in facilitating
transactions in securities and will remove impediments to and perfect
the mechanism of a free and open market and a national market system.
Moreover, by adopting the same applicable minor rule standards for
violations of those standards as its affiliates, the Exchange would
promote regulatory consistency.
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 change is not
designed to address any competitive issue but rather to align the
Exchange's rule setting forth violations eligible for a minor rule fine
more closely with that of its affiliates.
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. 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#5c2e293039713f3331313932282f1c2f393f723b332a"><span class="__cf_email__" data-cfemail="81f3f4ede4ace2eeecece4eff5f2c1f2e4e2afe6eef7">[email protected]</span></a>. Please include
File Number SR-NYSE-2022-13 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-2022-13. 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
[[Page 16775]]
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-2022-13 and should be submitted on
or before April 14, 2022.
IV. Commission's Findings and Order Granting Accelerated Approval of
Proposed Rule Change
The Commission finds that the proposed rule change is consistent
with the requirements of the Act and the rules and regulations
thereunder applicable to a national securities exchange.\7\ In
particular, the Commission finds that the proposed rule change is
consistent with Section 6(b)(5) of the Act,\8\ which requires that the
rules of an exchange be designed to promote just and equitable
principles of trade, to remove impediments and to perfect the mechanism
of a free and open market and a national market system, and, in
general, to protect investors and the public interest. The Commission
also believes that the proposal is consistent with Sections 6(b)(1) and
6(b)(6) of the Act \9\ which require that the rules of an exchange
enforce compliance with, and provide appropriate discipline for,
violations of Commission and Exchange rules. Finally, the Commission
finds that the proposal is consistent with the public interest, the
protection of investors, or otherwise in furtherance of the purposes of
the Act, as required by Rule 19d-1(c)(2) under the Act,\10\ which
governs minor rule violation plans.
---------------------------------------------------------------------------
\7\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
\8\ 15 U.S.C. 78f(b)(5).
\9\ 15 U.S.C. 78f(b)(1) and 78f(b)(6).
\10\ 17 CFR 240.19d-1(c)(2).
---------------------------------------------------------------------------
As stated above, the Exchange proposes certain amendments to the
preamble of Rule 9217. Specifically, the Exchange proposes to add two
additional paragraphs to the preamble based on the preamble of NYSE
Arca, its affiliate exchange, add clarifying language regarding the
maximum fine amount for violations appropriate for disposition under
Rule 9216(b), and reorder the paragraphs to the preamble of Rule 9217.
The Commission believes that Rule 9217 is an effective way to
discipline a member for a minor violation of a rule. The Commission
finds that the Exchange's proposal to amend the preamble is consistent
with the Act because it may help the Exchange's ability to better carry
out its oversight and enforcement responsibilities. The Commission also
believes that the Exchange's proposal to add clarifying language
regarding the maximum fine amount for violations appropriate for
disposition under Rule 9216(b) and to reorder the paragraphs in the
preamble is consistent with the Act because such changes will add
clarity and accuracy to the Exchange's rules.
In approving the propose rule change, the Commission in no way
minimizes the importance of compliance with the Exchange's rules and
all other rules subject to fines under Rule 9217. The Commission
believes that a violation of any self-regulatory organization's rules,
as well as Commission rules, is a serious matter. However, Rules
9216(b) and 9217 provide a reasonable means of addressing rule
violations that may not rise to the level of requiring formal
disciplinary proceedings, while providing greater flexibility in
handling certain violations. The Commission expects that the Exchange
will continue to conduct surveillance with due diligence and make a
determination based on its findings, on a case-by-case basis, whether a
fine of more or less than the recommended amount is appropriate for a
violation under Rule 9217 or whether a violation requires formal
disciplinary action.
For the same reasons discussed above, the Commission finds good
cause, pursuant to Section 19(b)(2) of the Act,\11\ for approving the
proposed rule change prior to the thirtieth day after the date of
publication of the notice of the filing thereof in the Federal
Register. The proposal will assist the Exchange in preventing
fraudulent and manipulative practices by allowing the Exchange to
adequately enforce compliance with, and provide appropriate discipline
for, violations of Exchange rules. Accordingly, the Commission believes
that a full notice-and-comment period is not necessary before approving
the proposal.
---------------------------------------------------------------------------
\11\ 15 U.S.C. 78s(b)(2).
---------------------------------------------------------------------------
V. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the Act
\12\ and Rule 19d-1(c)(2) thereunder,\13\ that the proposed rule change
(SR-NYSE-2022-13) be, and hereby is, approved on an accelerated basis.
---------------------------------------------------------------------------
\12\ 15 U.S.C. 78s(b)(2).
\13\ 17 CFR 240.19d-1(c)(2).
\14\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-06188 Filed 3-23-22; 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 March 24, 2022.
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.