Notice2022-17533
Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend and Update Rule 35
Primary source
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Published
August 16, 2022
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 87 Issue 157 (Tuesday, August 16, 2022)</title>
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[Federal Register Volume 87, Number 157 (Tuesday, August 16, 2022)]
[Notices]
[Pages 50366-50368]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-17533]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-95466; File No. SR-NYSE-2022-34]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend and Update Rule 35
August 10, 2022.
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 July 28, 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 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 and update Rule 35 (Floor Employees
To Be Registered) to remove certain provisions that are obsolete and no
longer necessary. 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 purpose of this filing is to amend and update Rule 35, which
governs the requirements for admittance to the Floor of the Exchange,
to remove certain provisions that are obsolete and no longer
necessary.\4\ In addition, the Exchange proposes to re-number the
remaining paragraphs of Rule 35 to conform with the proposed deletions,
which are described below.
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\4\ Rule 35 provides, in relevant part that ``[n]o employee of a
member or member organization shall be admitted to the Floor unless
he is registered with, qualified by and approved by the Exchange,
and upon compliance of both the employer and employee with such
requirements as the Exchange may determine.''
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Rule 35.10 and 35.30 govern the issuance of ``Floor tickets'' and
``Employee Floor Tickets''--each of which may be ``Regular'' or
``Special''--to Floor employees as a prerequisite to enter the trading
Floor. A Regular ticket would ``admit holders to the telephone booths
around the perimeter of the stock trading Floor, and the area behind
the stock trading posts'' and ``are issued only to employees of members
or member organizations that are assigned telephone or post spaces.''
\5\ Special tickets are issued ``only for the purpose of assisting or
relieving a Floor employee of the same member or member organization.''
\6\ The Exchange no longer issues Floor tickets but instead requires
Trading Floor Badges for admittance to the Floor, which requirement was
codified in Exchange rules earlier this year. Specifically, paragraph
(d) to Rule 37 (Admission and Conduct on the Trading Floor), provides
that:
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\5\ See Rule 37(d). See also Securities Exchange Act Release No.
94217 (February 10, 2022), 87 FR 8901 (February 10, 2022) (SR-NYSE-
2021-73) (``Rule 37 Approval Order''). The Exchange notes that Rule
37 is administered by the Exchange's regulatory staff.
\6\ See Rule 35.10.
Admission to the Floor will be by Exchange-issued badge only.
Exchange-issued badges must be appropriately displayed, with the
photo visible, at all times while on the Floor. Use of an Exchange-
issued badge belonging to another member or Floor employee to enter
or exit the Floor is prohibited. Authorized persons seeking
admission to the Floor without a badge must show proper
identification and obtain a temporary badge from the Security
Office. Visitor's badges are not acceptable identification cards for
Floor employees.\7\
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\7\ See Rule 35.30.
Further, Rule 303(a) provides that members who execute orders on
the Floor must be provided with an identification badge and must wear
the same while on the Floor, and that every member's badge must contain
his or her name and a number and the name of his or her member
organization.\8\
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\8\ See Rule 303(a).
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Rule 35.10 and 35.30
In light of the Trading Floor badge requirements set forth in Rule
37(d) and Rule 303(a), and the fact that the Exchange no longer issues
nor relies upon Floor tickets for admission to the Floor, the Exchange
proposes to delete Rule 35.10 and 35.30 as obsolete.
Rule 35.20 sets forth ``Regulations pertaining to Floor
employees.'' The regulations set forth include requirements that:
<bullet> all Floor employees be at their booths or posts on the
Floor one-half hour prior to the opening of business or such earlier
time as directed by the Exchange;
<bullet> all members or member organizations with a telephone space
on the Floor, have at least one Floor employee at such space for
fifteen minutes (or as determined by the Exchange) following the later
of the close of the market each day or until all reports due said
member or member organization have been received;
[[Page 50367]]
<bullet> Floor employees may not be upon or to cross the trading
area of the Floor ten minutes preceding the market opening and five
minutes following the market, other than as specified in the Exchange's
Floor Conduct and Safety Guidelines'';
<bullet> Floor employees who, because of illness or injury, are
relieved from duty by the medical clinic located in the Exchange
building, must report to that clinic before returning to duty and that
any such Floor employees that is absent for more than two days, without
having previously reported to the Exchange's medical clinic, must
likewise report to that clinic before returning to duty;
<bullet> Floor employees are to be instructed that they must keep a
day's supply of stationery on hand, and that arrangements should be
made for this stationery to be delivered to the Exchange either after
the close by the employer's messengers or one-half hour prior to the
opening of business by the Floor employees; and
<bullet> Floor employees may not make bids or offers nor may any
employee interfere with any order during its transmission.\9\
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\9\ See Rule 35.20.
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Of the foregoing requirements, the Exchange proposes to delete as
obsolete all but the last requirement (i.e., that Floor employees not
make bids or offers nor interfere with order transmission), which it
proposes to re-number at Rule 35.10.\10\ During continuous trading,
Floor Brokers must verbally announce crossing transactions at the point
of sale prior to such transactions printing to the tape. To avoid
interference with the announcement and consummation of such interest,
the Exchange believes it is appropriate to retain the prohibition
against Floor employees making bids/offers or otherwise interfering
with order transmission.\11\
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\10\ See proposed Rule 35.10.
\11\ See proposed Rule 35.10.
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As set forth below, advancements in technology related to trading
on the Exchange and electronic communications have rendered nearly all
of the remaining Rule 35.20 requirements as obsolete and no longer
necessary.
First, because of technical enhancements that allow the Exchange to
process, disseminate, and publish trading information in ``real-time'',
the requirements that Floor employees (including those with telephones
on the Floor) report to and remain at their booths/posts at specified
times before the open and after the close of trading are no longer
necessary.\12\ These technical advancements have alleviated the need
for the physical presence of Floor employees by the times specified in
the current provisions. As such, the Exchange proposes to delete such
provisions.
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\12\ See, e.g., Rule 7.35A (DMM-Facilitated Core Open and
Trading Halt Auctions) and Rule 7.35B (DMM-Facilitated Closing
Auctions) and Rule 7.35C (Exchange-Facilitated Auctions) (providing,
in relevant part, that certain Auction Imbalance Information would
be disseminated and published by the Exchange).
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The Exchange likewise proposes to delete the prohibition against
Floor employees being in (upon) or crossing through the trading area of
the Floor for specified times before and after the close of trading.
The purpose of this prohibition was to restrict movement on the trading
Floor at the opening or closing of trading to prevent anyone from
blocking access to point of sale or interfering order executions.
Because of advancements in technology that allow for fewer Floor
personnel to be physically on the Floor during the open and close of
trading, the Exchange proposes to delete this provision as no longer
necessary. With respect to reference to the Floor Conduct and Safety
Guidelines (``Guidelines''), which historically regulated the behavior
and conduct of members and was administered by Floor Officials, the
NYSE eliminated the role and function of Floor Officials and recently
adopted a new Rule 37, setting forth standards of dress and conduct for
the Floor. For the foregoing reason, the Exchange proposes to delete
this provision as obsolete and no longer necessary.
In addition, due to communication enhancements, the Exchange
proposes to delete as obsolete the requirement that Floor employees
keep a certain amount of stationary on hand. Communication is no longer
limited to written correspondence on physical stationary and Floor
employees have the ability to communicate through others means (such as
the cell phone, email and internet) at any time. Thus, the Exchange
proposes to delete this provision as obsolete and no longer necessary.
Finally, the Exchange no longer operates an on-site medical clinic
and therefore the requirement that Floor employees be cleared by the
Exchange clinic before returning to the Floor after an illness-related
absence is obsolete and no longer necessary.
Consistent with the foregoing, the Exchange proposes to re-number
the balance of Rule 35 as Rule 35.20-Rule 35.60.\13\
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\13\ See proposed Rule 35.20-Rule 35.60.
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2. Statutory Basis
The proposed rule change is consistent with Section 6(b) of the
Act,\14\ in general, and furthers the objectives of Section
6(b)(5),\15\ 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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\14\ 15 U.S.C. 78f(b).
\15\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that the proposal to delete certain
provisions of Rule 35, which have been determined to be obsolete and
unnecessary, would add clarity, transparency and internal consistency
to Exchange rules making them easier to navigate and comprehend.
Further, the Exchange believes that the proposed revisions are
consistent with the Act as no regulatory purposes are currently served
by the aforementioned obsolete (and in some cases anachronistic)
requirements. The Exchange believes that market participants would
benefit from the increased clarity, thereby reducing potential
confusion and ensuring that persons subject to the Exchange's
jurisdiction, regulators, and the investing public can more easily
navigate and understand the Exchange's rules.
Finally, the proposed non-substantive conforming changes (to
renumber the remaining provisions of Rule 35) would remove impediments
to and perfect the mechanism of a free and open market and a national
market system and, in general, protect investors and the public
interest because the proposed non-substantive changes would add
clarity, transparency and consistency to the Exchange's rules.
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 is
not intended to address competitive issues but is rather concerned with
deleting obsolete references that and making non-substantive conforming
changes to the Exchange rules. Since the proposal does not
substantively modify system functionality or processes on the
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Exchange, the proposed changes will 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
Because the foregoing 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 for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \16\ and Rule 19b-
4(f)(6) \17\ thereunder.
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\16\ 15 U.S.C. 78s(b)(3)(A).
\17\ 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 five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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The Exchange has asked the Commission to waive the 30-day operative
delay.\18\ The Commission finds that waiving the 30-day operative delay
is consistent with the protection of investors and the public interest
because waiver of the operative delay will reduce the potential for
confusion related to how to comply with aspects of Rule 35 rules that
are now obsolete or impracticable. The Exchange requested the operative
delay in order to update the text of Rule 35 to be consistent with
current requirements by removing provisions that, because of technical
enhancements to trading and improvements to electronic communications,
are obsolete and no longer necessary without delay. Accordingly, the
Commission hereby waives the 30-day operative delay and designates the
proposal operative upon filing.\19\
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\18\ 17 CFR 240.19b-4(f)(6)(iii).
\19\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule change's impact on
efficiency, competition, and capital formation. 15 U.S.C. 78c(f).
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At any time within 60 days of the filing of the 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 will institute proceedings to
determine whether the proposed rule change should be approved or
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#6a181f060f47090507070f041e192a190f09440d051c"><span class="__cf_email__" data-cfemail="0e7c7b626b236d6163636b607a7d4e7d6b6d20696178">[email protected]</span></a>. Please include
File Number SR-NYSE-2022-34 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-2022-34. 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-2022-34 and should be submitted on
or before September 6, 2022.
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\20\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\20\
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-17533 Filed 8-15-22; 8:45 am]
BILLING CODE 8011-01-P
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