Notice2022-06382
Self-Regulatory Organizations; New York Stock Exchange LLC; Order Instituting Proceedings To Determine Whether To Approve or Disapprove a Proposed Rule Change To Amend the Provisions of NYSE Rule 7.35B
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 28, 2022
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 87 Issue 59 (Monday, March 28, 2022)</title>
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[Federal Register Volume 87, Number 59 (Monday, March 28, 2022)]
[Notices]
[Pages 17346-17347]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-06382]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-94483; File No. SR-NYSE-2021-74]
Self-Regulatory Organizations; New York Stock Exchange LLC; Order
Instituting Proceedings To Determine Whether To Approve or Disapprove a
Proposed Rule Change To Amend the Provisions of NYSE Rule 7.35B
March 22, 2022.
I. Introduction
On December 14, 2021, New York Stock Exchange LLC (``NYSE'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change to amend NYSE Rule 7.35B relating to the
cancellation of MOC, LOC, and Closing IO Orders before the Closing
Auction. The proposed rule change was published for comment in the
Federal Register on December 29, 2021.\3\ On February 8, 2022, pursuant
to Section 19(b)(2) of the Act,\4\ the Commission extended the time
period within which to approve the proposed rule change, disapprove the
proposed rule change, or institute proceedings to determine whether to
approve or disapprove the proposed change.\5\ The Commission has
received no comment letters on the proposed rule change.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 93849 (Dec. 22,
2021), 86 FR 74204 (Dec. 29, 2021 (``Notice'').
\4\ 15 U.S.C. 78s(b)(2).
\5\ See Securities Exchange Act Release No. 94181, (Feb. 8,
2022), 87 FR 8305 (Feb. 14, 2022).
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This order institutes proceedings under Section 19(b)(2)(B) of the
Act \6\ to determine whether to approve or disapprove the proposed rule
change.
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\6\ 15 U.S.C. 78s(b)(2)(B).
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II. Description of the Proposal
The Exchange proposes to modify NYSE 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 to make
conforming changes to NYSE Rule 7.35B(j)(2)(B).
NYSE 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.\7\ NYSE 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 \8\ may be
canceled or reduced in size only to correct a Legitimate Error.\9\ NYSE
Rule 7.35B(f)(2)(B) currently specifies that, except as provided for in
NYSE Rule 7.35B(j)(2)(B),\10\ 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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\7\ The ``Auction Imbalance Freeze'' is the period that begins
before the scheduled time for an Auction. See NYSE 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 NYSE 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 NYSE Rules 7.35(a)(1)(C) and
7.35(a)(8).
\8\ A ``MOC Order'' or ``Market-on-Close Order'' is a Market
Order that is to be traded only during a closing auction. See NYSE
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
NYSE 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 NYSE Rule 7.31(c)(2)(D).
\9\ ``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 NYSE Rule 7.35(a)(13).
\10\ NYSE 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 NYSE 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. As proposed, 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
minutes prior to the scheduled end of Core Trading Hours), even in the
case of a Legitimate Error.
Finally, NYSE proposes to make the following conforming changes to
make NYSE Rule 7.35B(j)(2)(B) consistent with the proposed changes
described above: (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, NYSE Rule
7.35B(j)(2)(B), as amended, would 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 would be set forth in NYSE Rule 7.35B(f)(2), as amended).
III. Proceedings To Determine Whether To Disapprove SR-NYSE-2021-74 and
Grounds for Disapproval Under Consideration
The Commission is instituting proceedings pursuant to Section
19(b)(2)(B) of the Act to determine whether the proposal should be
approved or disapproved. Institution of such proceedings is appropriate
at this time in view of the legal and policy issues raised by the
proposal. Institution of disapproval proceedings does not indicate that
the Commission has reached any conclusions with respect to any of the
issues involved. Rather, the Commission encourages interested persons
to provide additional comment on the proposal.
Pursuant to Section 19(b)(2)(B) of the Act, the Commission is
providing notice of the grounds for disapproval under consideration.
The Commission is instituting proceedings to allow for additional
analysis of the proposed rule change's consistency with the Act \11\
and, in particular, with Section 6(b)(5) of the Act, which requires,
among other things, that the rules of a national securities exchanges
be designed to prevent fraudulent and manipulative acts and practices,
to promote just and equitable principles of trade, 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.\12\ In addition, Section 6(b)(5) of the Act \13\
prohibits the rules
[[Page 17347]]
of an exchange from being designed to permit unfair discrimination
between customers, issuers, brokers, or dealers. Further, Section
6(b)(8) of the Act requires that the rules of an exchange not impose
any burden on competition that is not necessary or appropriate under
the Act.\14\
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\11\ 15 U.S.C. 78s(b)(2)(B).
\12\ 15 U.S.C. 78f(b)(5).
\13\ 15 U.S.C. 78f(b)(5).
\14\ 15 U.S.C. 78f(b)(8).
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The Exchange's proposal would change how cancellation of MOC, LOC,
and Closing IO Orders would be handled under NYSE Rule 7.35(B)(f)(2)
with respect to the NYSE Closing Auction. The Commission notes that the
Exchange has separately proposed a different set of changes to its
Closing Auction process and that the other proposal is currently in
proceedings before the Commission.\15\ The Commission believes that it
is appropriate to institute proceedings to allow for additional
analysis and input concerning the instant proposed rule change's
consistency with requirements of the Act and to evaluate this proposed
rule change in light of other pending proposed changes to the Closing
Auction.
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\15\ See Securities Exchange Act Release No. 93037 (Sept. 16,
2021), 86 FR 52719 (Sept. 22, 2021) (SR-NYSE-2021-44) (Notice);
Securities Exchange Act Release No. 93809 (Dec. 17, 2021), 86 FR
73060 (Dec. 23, 2021) (Order Instituting Proceedings).
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IV. Procedure: Request for Written Comments
The Commission requests that interested persons provide written
submissions of their views, data, and arguments with respect to the
issues identified above, as well as any other concerns they may have
with the proposal. In particular, the Commission invites the written
views of interested persons concerning whether the proposal is
consistent with Section 6(b)(5) or any other provision of the Act, or
the rules and regulation thereunder. Although there do not appear to be
any issues relevant to approval or disapproval that would be
facilitated by an oral presentation of views, data, and arguments, the
Commission will consider, pursuant to Rule 19b-4 under the Act,\16\ any
request for an opportunity to make an oral presentation.\17\
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\16\ 17 CFR 240.19b-4.
\17\ Rule 700(c)(2) of the Commission's Rules of Practice
provides that ``[t]he Commission, in its sole discretion, may
determine whether any issues relevant to approval or disapproval
would be facilitated by the opportunity for an oral presentation of
views.'' 17 CFR 201.700(c)(2).
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Interested persons are invited to submit written data, views, and
arguments regarding whether the proposal should be approved or
disapproved by April 18, 2022. Any person who wishes to file a rebuttal
to any other person's submission must file that rebuttal by May 2,
2022. The Commission asks that commenters address the sufficiency of
the Exchange's statements in support of the proposal which are set
forth in the Notice, in addition to any other comments they may wish to
submit about the proposed change. 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#cfbdbaa3aae2aca0a2a2aaa1bbbc8fbcaaace1a8a0b9"><span class="__cf_email__" data-cfemail="e89a9d848dc58b8785858d869c9ba89b8d8bc68f879e">[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 proposal that are filed with the
Commission, and all written communications relating to the proposal
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 such filings 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 April 18, 2022. Rebuttal comments
should be submitted by May 2, 2022.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
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\18\ 17 CFR 200.30-3(a)(57).
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-06382 Filed 3-25-22; 8:45 am]
BILLING CODE 8011-01-P
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