Notice2022-12167
Self-Regulatory Organizations; NYSE Chicago, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Adopt a New Rule 11.2210
Primary source
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Published
June 7, 2022
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 87 Issue 109 (Tuesday, June 7, 2022)</title>
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[Federal Register Volume 87, Number 109 (Tuesday, June 7, 2022)]
[Notices]
[Pages 34740-34742]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-12167]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-95015; File No. SR-NYSECHX-2022-09]
Self-Regulatory Organizations; NYSE Chicago, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Adopt a
New Rule 11.2210
June 1, 2022.
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 May 20, 2022, the NYSE Chicago, Inc. (``NYSE Chicago''
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 Exchange. The
Exchange filed the proposed rule change as a ``non-controversial''
proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act
\4\ and Rule 19b-4(f)(6) thereunder.\5\ 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.
\4\ 15 U.S.C. 78s(b)(3)(A)(iii).
\5\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes, in connection with a companion filing to
adopt investigation, disciplinary, sanction, and other procedural rules
modeled on the rules of its affiliates, to adopt a new Rule 11.2210
governing communications with the public that would incorporate FINRA
Rule 2210 by reference and rename and amend Article 8, Rule 13
governing advertising, promotion and telemarketing. 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
In connection with a companion filing to adopt investigation,
disciplinary, sanction, and other procedural rules modeled on the rules
of its affiliates,\6\ the Exchange proposes to adopt a new Rule 11.2210
(Communications with the Public) governing communications with the
public that would incorporate FINRA Rule 2210 by reference and rename
and amend Article 8, Rule 13 governing advertising, promotion and
telemarketing.
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\6\ See SR-NYSECHX-2022-10.
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Background
Beginning in 2013, each of the Exchange's affiliates have adopted
rules relating to investigation, discipline, sanction, and other
procedural rules based on the rules of the Financial Industry
Regulatory Authority (``FINRA'').\7\ To facilitate rule
[[Page 34741]]
harmonization among self-regulatory organizations, the Exchange has
separately proposed the NYSE Chicago Rule 10.8000 and 10.9000 Series
based on the text of the NYSE Arca Rule 10.8000 and Rule 10.9000
Series, with certain changes, as described in its companion filing.
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\7\ In 2013, the Commission approved the New York Stock Exchange
LLC's (``NYSE'') adoption of FINRA's disciplinary rules. See
Securities Exchange Act Release No. 69045 (March 5, 2013), 78 FR
15394 (March 11, 2013) (SR-NYSE-2013-02). In 2016, NYSE American LLC
(``NYSE American'') adopted its Rule 8000 and Rule 9000 Series based
on the NYSE and FINRA Rule 8000 and Rule 9000 Series. See Securities
Exchange Act Release Nos. 77241 (February 26, 2016), 81 FR 11311
(March 3, 2016) (SR-NYSEMKT-2016-30). In 2018, the Commission
approved NYSE National, Inc.'s (``NYSE National'') adoption of the
NYSE National Rule 10.8000 and Rule 10.9000 Series based on the NYSE
American and FINRA Rule 8000 and Rule 9000 Series. See Securities
Exchange Act Release No. 83289 (May 17, 2018), 83 FR 23968 (May 23,
2018) (SR-NYSENat-2018-02). In 2019, NYSE Arca, Inc. (``NYSE Arca'')
adopted the NYSE Arca Rule 10.8000 and 10.9000 Series based on the
NYSE American Rule 8000 and Rule 9000 Series. See Securities
Exchange Act Release No. 85639 (April 12, 2019), 84 FR 16346 (April
18, 2019) (SR-NYSEArca-2019-15).
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The proposed NYSE Chicago Rule 10.8000 and 10.9000 Series contain
rules that presume that the Exchange has adopted FINRA Rule 2210.
Specifically, Rule 10.9551 (Failure to Comply with Public Communication
Standards Pursuant to FINRA Rule 2210 as Incorporated by Reference in
Rule 11.2210) would permit Exchange regulatory staff to issue a written
notice requiring a Participant or Participant Firm to file
communications with FINRA's Advertising Regulation Department at least
10 days prior to use if the staff determined that the Participant or
Participant Firm had departed from the standards of proposed Rule
11.2210. The Participant or Participant Firm could file a written
request for a hearing with the Office of Hearing Officers pursuant to
proposed Rule 10.9559. FINRA Rule 2210 proposed to be incorporated by
reference in proposed Rule 11.2210 references the procedures in FINRA
Rules 9551 and 9559, which are substantially the same as those in
proposed Rules 10.9551 and 10.9559. Similarly, FINRA Rule 2210 proposed
to be incorporated by reference in proposed Rule 11.2210 references the
procedures in the FINRA Rule 9600 Series for obtaining exemptive relief
as permitted under FINRA Rule 2210. The FINRA Rule 9600 Series is
substantially the same as the proposed Rule 10.9600 Series.
Current Article 8, Rule 13 governs advertising, promotion and
telemarketing.
Proposed Rule Change
Proposed Rule 11.2210 would provide that Participants, Participant
Firms and covered persons shall comply with FINRA Rule 2210, which is
incorporated by reference herein, as if such Rule were part of the
Exchange's rules. The proposed rule would further provide that
references to FINRA Rule 2210 would be construed as references to Rule
11.2210. The proposed rule would also provide that references to FINRA
Rules 9551 and 9559 and to the FINRA Rule 9600 Series in FINRA Rule
2210 shall be construed as references to the Exchange's Rules 10.9551
and 10.9559 and to the Rule 10.9600 Series, respectively. Finally,
proposed Rule 11.2210 would provide that all defined terms, including
any variations thereof, contained in the rule shall be read to refer to
the Exchange-related meaning of such term. The proposed rule is the
same as the version adopted by the Exchange's affiliate NYSE National
except that the Exchange would use ``Participants'' and ``Participant
Firms'' rather than ``ETP Holders'' and would use ``covered persons''
rather than ``Associated Persons of ETP Holders.'' \8\
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\8\ See Securities Exchange Act Release No. 83289 (May 17,
2018), 83 FR 23968 (May 23, 2018) (SR-NYSENat-2018-02). The Exchange
also proposes to insert a space between ``Rule 11.5190'' and
``Notification'' in the heading following proposed Rule 11.2210.
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Article 8, Rule 13, which governs advertising, promotion and
telemarketing, would be renamed ``Telemarketing'' by deleting
``Advertising'' and ``Promotion'' from the current heading. The
Exchange would also amend current Article 8, Rule 13 to remove those
portions of the current rule that are duplicative of the standards set
forth in FINRA Rule 2210. Specifically, the Exchange would delete
subsection (a) prohibiting false and misleading advertisement, which is
duplicative of FINRA Rule 2210(d)(1)(B); \9\ subsection (b) setting
forth categories and standards of advertisement, which is duplicative
of FINRA Rule 2210(a); and subsection (c) governing market letters and
sales literature, which is duplicative of the approval and review
requirements set forth in FINRA Rule 2210(b). The remaining thirteen
subsections of Article 8, Rule 13 from (d) to (p) governing
telemarketing practices would become new subsections (a) to (m),
respectively. The remaining subsections of Article 8, Rule 13 overlap
with FINRA Rule 3230 (Telemarketing).\10\
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\9\ Article 8, Rule 13(a) is currently subject to a plan for the
allocation of regulatory responsibilities pursuant to Rule 17d-2 of
the Act that the Exchange and FINRA have filed with the Commission
(``17d-2 Plan''). See 17 CFR 240.17d-2; Securities Exchange Act
Release No. 62657 (August 5, 2010), 75 FR 49005 (August 12, 2010)
(No. 4-274) (Notice); Securities Exchange Act Release No. 62866
(September 8, 2010), 75 FR 55833 (August 14, 2010) (No. 4-274)
(Order). The Exchange and FINRA are also parties to a Regulatory
Services Agreement pursuant to which FINRA has agreed to perform
certain regulatory functions of the Exchange on behalf of the
Exchange and which cover the remaining subsections of Article 8,
Rule 13 with the exception of subsection (d). See note 8, infra.
\10\ Article 8, Rule 13(d) is in fact part of the existing 17d-2
Plan. See Securities Exchange Act Release No. 85921 (May 23, 2019),
84 FR 25105 (May 30, 2019) (No. 4-274) (Notice); Securities Exchange
Act Release No. 86161 (June 20, 2019), 84 FR 29923 (June 25, 2019)
(No. 4-274) (Order).
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Exemption Request
The Exchange will request an exemption under Section 36 of the Act
from the rule filing requirements of Section 19(b) of the Act with
respect to the incorporation by reference of proposed Rule 11.2210 and
to the extent Rule 11.2210 is effected solely by virtue of a change to
cross-referenced FINRA rule.\11\
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\11\ See 15 U.S.C. 78s(b).
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Implementation
The proposed rule changes that are the subject of this filing will
be operative on the same date that the new disciplinary rules will be
effective but only if the Exchange's request for an exemption under
Section 36 of the Act from filing proposed rule changes, described
above, is granted by that date. As explained in the Exchange's
companion filing to adopt new disciplinary rules, once that proposed
rule change is effective, the Exchange intends to announce by
Information Memorandum with at least 30 days advance notice the
operative date of the new rules. In the event the exemption is not
granted by date announced in the proposed Information Memorandum, the
Exchange will submit a filing to designate a different operative date.
2. Statutory Basis
The proposed rule change is consistent with Section 6(b) of the
Act,\12\ in general, and furthers the objectives of Section 6(b)(5) of
the Act,\13\ in particular, in that 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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\12\ 15 U.S.C. 78f(b).
\13\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that proposed Rule 11.2210, which would be
new for the Exchange, would provide for a harmonized approach and
promote application of consistent regulatory standards to Participant
and Participant
[[Page 34742]]
Firm requirements relating to communications with the public by
incorporating by reference the FINRA communications with the public
rule, thereby promoting just and equitable principles of trade and
removing impediments to and perfecting the mechanism of a free and open
market and a national market system, and in general, protecting
investors and the public interest. In addition, incorporation of FINRA
Rule 2210 by reference would add clarity and transparency to the
Exchange's rules by separating the standards governing communications
with the public and telemarketing into distinct rules similar to the
approach taken by FINRA.
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 provide greater
harmonization between Exchange and FINRA rules of similar purpose
relating to communications with the public.
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
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \14\ and Rule 19b-4(f)(6) thereunder.\15\
Because the 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 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 and Rule 19b-
4(f)(6)(iii) thereunder.
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\14\ 15 U.S.C. 78s(b)(3)(A)(iii).
\15\ 17 CFR 240.19b-4(f)(6).
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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 under
Section 19(b)(2)(B) \16\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\16\ 15 U.S.C. 78s(b)(2)(B).
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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#97e5e2fbf2baf4f8fafaf2f9e3e4d7e4f2f4b9f0f8e1"><span class="__cf_email__" data-cfemail="8bf9fee7eea6e8e4e6e6eee5fff8cbf8eee8a5ece4fd">[email protected]</span></a>. Please include
File Number SR-NYSECHX-2022-09 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-NYSECHX-2022-09. 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-NYSECHX-2022-09 and should be submitted
on or before June 28, 2022.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
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\17\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-12167 Filed 6-6-22; 8:45 am]
BILLING CODE 8011-01-P
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