Notice2022-17749
Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Adopt a New Rule 7.39 and Delete Current Rules 900-907
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
August 18, 2022
Issuing agencies
Securities and Exchange Commission
Full Text
<html>
<head>
<title>Federal Register, Volume 87 Issue 159 (Thursday, August 18, 2022)</title>
</head>
<body><pre>
[Federal Register Volume 87, Number 159 (Thursday, August 18, 2022)]
[Notices]
[Pages 50906-50909]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-17749]
[[Page 50906]]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-95498; File No. SR-NYSE-2022-37]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Adopt a New Rule 7.39 and Delete Current Rules 900-907
August 12, 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 August 5, 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.
---------------------------------------------------------------------------
\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 (1) adopt a new Rule 7.39 governing its
Off-Hours Trading Facility based on the rule adopted by its affiliate
NYSE American LLC for the Pillar trading platform, and (2) delete
current Rules 900-907 governing Off-Hours Trading. 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 Exchange proposes (1) adopt a new Rule 7.39 governing its Off-
Hours Trading Facility based on the rule adopted by its affiliate NYSE
American LLC for the Pillar trading platform, and (2) delete current
Rules 900-907 governing Off-Hours Trading.
Background
In 2017, in connection with the transition to the Pillar trading
platform, the Exchange's affiliate NYSE American LLC (then NYSE MKT
LLC) (``NYSE American'') adopted NYSE American Rule 7.39E in order to
maintain certain functionality in its Off-Hours Trading Facility. At
the time, NYSE American Rules 900--Equities through 907--Equities
governed off-hours trading activity on NYSE American.\3\ NYSE American
Rules 900--Equities through 907--Equities were based in turn on the
Exchange's current Rules 900-907.\4\ When NYSE American added Rule
7.39E, it described how each element of Rule 7.39E was related to
former NYSE American Rules 900-Equities through 907- Equities.\5\
---------------------------------------------------------------------------
\3\ See Securities Exchange Act Release No. 80590 (May 4, 2017),
82 FR 21843, 21847 (May 10, 2017) (SR-NYSEMKT-2017-01) (Order
Granting Accelerated Approval of Proposed Rule Change, as Modified
by Amendment No. 1, To Adopt New Equity Trading Rules To Transition
Trading on the Exchange From a Floor-Based Market With a Parity
Allocation Model to a Fully Automated Market With a Price-Time
Priority Model on the Exchange's New Trading Technology Platform,
Pillar).
\4\ See Securities Exchange Act Release No. 58705 (Oct. 1,
2008), 73 FR 58995 (Oct. 8, 2008) (SR-Amex-2008-63) (approving
adoption of new equity trading rules by NYSE American that are
substantially identical to the equity trading rules of NYSE).
\5\ See Securities Exchange Act Release No. 79993 (February 9,
2017), 82 FR 10814, 10822-10823 (February 15, 2017) (SR-NYSEMKT-
2017-01) (``NYSE American Notice'').
---------------------------------------------------------------------------
As described in NYSE American Rule 7.39E, the only functionality
available on its Off-Hours Trading Facility following the transition to
Pillar is for ETP Holders to enter aggregate-price coupled orders. NYSE
American Rules 900--Equities through 907--Equities were designated as
inapplicable to trading on the Pillar trading platform and later
deleted.\6\
---------------------------------------------------------------------------
\6\ See Securities Exchange Act Release No. 82212 (December 4,
2017), 82 FR 58036 (December 8, 2017) (SR-NYSEAMER-2017-34) (Notice
of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend Exchange Rules To Delete Obsolete Cash Equities Rules That Are
Not Applicable to Trading on the Pillar Trading Platform and To
Delete Other Obsolete Rules).
---------------------------------------------------------------------------
NYSE American recently determined to cease offering an after-hours
crossing session and that it would delete NYSE American Rule 7.39E.
Currently, the Exchange offers an off-hours trading facility known
as Crossing Session II pursuant to NYSE Rules 900-907 that operates
between 4:00 p.m. and 6:30 p.m.\7\ Like the NYSE American after-hours
trading facility, the NYSE's off-hours trading facility only accepts
aggregate-price coupled orders. In 2018, NYSE began its own multi-phase
transition to the Pillar trading platform.\8\ As described below, the
Exchange proposes to continue to offer the current functionality
pursuant to an updated and streamlined rule modeled on NYSE American
Rule 7.39E that reflects current Pillar terminology.
---------------------------------------------------------------------------
\7\ See Securities Exchange Act Release No. 52026 (July 13,
2005), 70 FR 41806 (July 20, 2005) (SR-NYSE-2005-26) (Order)
(extending hours of operation of Crossing Session II from 4:00 p.m.
to 6:30 p.m., instead of 6:15 p.m.); NYSE Information Memo 05-57
(August 19, 2005).
\8\ See Securities Exchange Act Release No. 82945 (March 26,
2018), 83 FR 13553 (March 29, 2018) (SR-NYSE-2017-36) (Notice of
Filing of Amendment No. 1 and Order Granting Accelerated Approval of
a Proposed Rule Change, as Modified by Amendment No. 1, To Adopt New
Equity Trading Rules To Trade Securities Pursuant to Unlisted
Trading Privileges, Including Orders and Modifiers, Order Ranking
and Display, and Order Execution and Routing on Pillar, the
Exchange's New Trading Technology Platform); Securities Exchange Act
Release No. 85962 (May 29, 2019), 84 FR 26188 (June 5, 2019) (SR-
NYSE-2019-05) (Notice of Filing of Amendment No. 3 and Order
Granting Accelerated Approval of Proposed Rule Change, as Modified
by Amendment No. 3, To Amend NYSE Rules 7.31, 7.36, 7.37; Make
Conforming Amendments to NYSE Rules 1.1, 7.11, 7.12, 7.16, 7.18,
7.32, 7.34, and 7.36; and Amend the Preambles on Current Exchange
Rules Relating to Their Applicability to the Pillar Trading
Platform).
---------------------------------------------------------------------------
Proposed Rule Change
The Exchange proposes to delete Rules 900-907 and add new Rule 7.39
to describe the Exchange's Off-Hours-Trading Facility. With this
proposed rule change, the Exchange would permit member organizations to
enter into the Off-Hours Trading Facility Aggregate-Price Coupled
Orders, defined as orders to buy or sell a group of securities, which
group includes no fewer than 15 Exchange-listed or traded securities
having a total market value of $1 million or more. The Exchange would
not otherwise change the functionality available on the current Off-
Hours Trading Facility. The Exchange believes that proposed Rule 7.39,
which would be located in the rule book together with rules describing
trading on the Exchange and is based on NYSE American Rule 7.39E, would
streamline the Exchange's rules and make them easier to navigate.
[[Page 50907]]
Proposed Rule 7.39 would be titled ``Off-Hours Trading'' and the
current ``Reserved'' designation would be deleted.
Proposed Rule 7.39(a) would provide that Rule 7.39 would apply to
all Exchange contracts made on the Exchange through its ``Off-Hours
Trading Facility.'' This proposed rule text is identical to current
NYSE American Rule 7.39E(a).
Proposed Rule 7.39(b) would establish the definitions for the Off-
Hours Trading Facility.
Proposed Rule 7.39(b)(i) would define the term ``Aggregate-Price
Coupled Order'' to mean an order to buy or sell a group of securities,
which group includes no fewer than 15 Exchange-listed or traded
securities having a total market value of $1 million or more. This
proposed definition is identical to that in NYSE American Rule
7.39E(b)(i).
Proposed Rule 7.39(b)(ii) would define the term ``Off-Hours Trading
Facility,'' to mean the Exchange facility that permits member
organizations to effect securities transactions on the Exchange under
proposed Rule 7.39. Except for the non-substantive difference to use
the term ``member organization'' rather than ``ETP Holder,'' proposed
Rule 7.39(b)(ii) would be identical to NYSE American Rule 7.39E(b)(ii).
Proposed Rule 7.39(b)(ii) would also define the term ``Off-Hours
Trading'' to mean trading through the Off-Hours Trading Facility. This
text is based on NYSE American Rule 7.39E(b)(ii) without difference.
Because the Exchange would only be trading Aggregate-Price Coupled
Orders in the Off-Hours Trading Facility, the Exchange proposes that
Rule 7.39(b) would not include definitions for ``closing price,''
``closing-price order,'' or ``guaranteed price coupled order,'' which
are defined in current Rule 900(e)(ii)-(iv).
Proposed Rule 7.39(c) would establish that only such NMS Stocks, as
the Exchange may specify, including Exchange-listed securities and UTP
Securities, would be eligible to trade in the Off-Hours Trading
Facility. The proposed rule text is based on NYSE American Rule
7.39E(c) without difference.
Proposed Rule 7.39(d) would establish the procedures for entering
Aggregate-Price Coupled Orders into the Off-Hours Trading Facility. As
proposed, a member organization may only enter into the Off-Hours
Trading Facility an Aggregate-Price Coupled Order to buy (sell) that is
matched with an Aggregate-Price Coupled Order to sell (buy) the same
quantities of the same securities, including in odd lot and mixed lot
quantities. The proposed rule text is based on NYSE American Rule
7.39E(d) with a non-substantive difference to use the term ``member
organization'' instead of ``ETP Holder.''
Proposed Rule 7.39(d)(i) would provide that transactions effected
through the Off-Hours Trading Facility pursuant to Aggregate-Price
Coupled Orders may be for delivery at such time as the parties entering
the orders may agree. The proposed rule text is identical to NYSE
American Rule 7.39E(d)(i).
Proposed Rule 7.39(d)(ii) would provide that member organizations
would mark all sell orders as ``long'' as appropriate. The proposed
rule text is based on NYSE American Rule 7.39E(d)(ii) with a non-
substantive difference to use the term ``member organization'' instead
of ``ETP Holder.''
Proposed Rule 7.39(d)(iii) would provide that each side of an
Aggregate-Price Coupled Order entered on a matched basis would be
traded on entry against the other side without regard to the priority
of other orders entered into the Off-Hours Trading Facility. The
proposed rule text would be identical to NYSE American Rule
7.39E(d)(iii).
Proposed Rule 7.39(d)(iv) would provide that a transaction
described in the Rule would be an Exchange contract that is binding in
all respects and without limit on the member organization that enters
any of the transaction's component orders and that the member
organization would be fully responsible for the Exchange contract. The
proposed rule text is identical to NYSE American Rule 7.39E(d)(iv) with
non-substantive differences to use the term ``member organization''
instead of ``ETP Holder.''
Proposed Rule 7.39(e) would provide that each member organization
would report to the Exchange such information, in such manner, and at
such times, as the Exchange may from time to time prescribe in respect
of Off-Hours Trading, including reports relating to Off-Hours Trading
orders, proprietary or agency activity and activity in related
instruments. This proposed rule text is based on NYSE American Rule
7.39E(e) with a non-substantive difference to use the term ``member
organization'' instead of ``ETP Holder.''
Proposed Rule 7.39(f) would provide that each member organization
would maintain and preserve such records, in such manner, and for such
period of time, as the Exchange may from time to time prescribe in
respect of Off-Hours Trading, including, but not limited to, records
relating to orders, cancellations, executions and trading volume,
proprietary trading activity, activity in related instruments and
securities and other records necessary to allow the member organization
to comply with the reporting provisions of proposed paragraph (e) of
proposed Rule 7.39. The proposed rule text is based on NYSE American
Rule 7.39E(f) with non-substantive differences to use the term ``member
organization'' instead of ``ETP Holder.''
Proposed Rule 7.39(g) would provide that notwithstanding a trading
halt in any security (other than a trading halt pursuant to Rule 7.12
(Trading Halts Due to Extraordinary Market Volatility)) or a corporate
development, member organizations may enter Aggregate-Price Coupled
Orders into the Off-Hours Trading Facility under this Rule. The
proposed rule text is based on NYSE American Rule 7.39E(g) with non-
substantive differences to cross-reference Rule 7.12 instead of Rule
7.12E and to use the term ``member organizations'' instead of ``ETP
Holders.''
The Exchange notes that, like its affiliate, the Exchange would not
include rule text from Rule 903(d)(ii) and Rule 906(b) in proposed Rule
7.39E because these provisions relate to Floor-based use of the Off-
Hours Trading Facility, which the Exchange proposes would not be
available once the new rule is operative. In addition, the Exchange
proposes that proposed Rule 7.39 would not include any provisions from
Rule 907, which describes now obsolete crossing session functionality.
Finally, the Exchange will announce the implementation date by
Trader Update. Although the Exchange is not proposing any new or
different functionality for its the Off-Hours Trading Facility, the
Exchange wants to provide member organizations utilizing the Off-Hours
Trading Facility with sufficient time to transition to the new rule
set. The Exchange anticipates that the proposed change will be
implemented on September 1, 2022.
2. Statutory Basis
The proposed rule change is consistent with Section 6(b) of the
Act,\9\ in general, and furthers the objectives of Section 6(b)(5),\10\
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
[[Page 50908]]
and a national market system and, in general, to protect investors and
the public interest.
---------------------------------------------------------------------------
\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
Specifically, the Exchange believes that proposed Rule 7.39 would
remove impediments to and perfect the mechanism of a free and open
market and a national market system because it would permit member
organizations to continue using the Exchange's off-hours trading
facility pursuant to a streamlined and updated rule that reflects
current Pillar terminology. As noted, the Exchange proposes to adopt
NYSE American's streamlined rule for off-hours trading utilizing Pillar
terminology to permit entry into the Off-Hours Trading Facility of
Aggregate-Price Coupled Orders, defined as orders to buy or sell a
group of securities, which group includes no fewer than15 Exchange-
listed or traded securities having a total market value of $1 million
or more. The Exchange believes that using text based on NYSE American
Rule 7.39E would remove impediments and perfect the mechanism of a free
and open market and a national market system because, as described in
the NYSE American Notice, NYSE American Rule 7.39E is based on former
NYSE American Rule 900--Equities through Rule 907--Equities, which in
turn were based on NYSE Rules 900-907. The proposed rule, like the NYSE
American rule on which it is based, would permit member organizations
to enter Aggregate-Price Coupled Orders while deleting obsolete text
and references and updating the rule language to reflect trading on the
Pillar trading platform. As such, the proposed rule change would foster
cooperation and coordination with persons engaged in facilitating
transactions in securities and would remove impediments to and perfect
the mechanism of a free and open market and a national market system.
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 Exchange believes that
the proposed rules would promote competition by providing a streamlined
and modernized rule governing off-hours trading on the Exchange based
on the version adopted by the Exchange's affiliate without substantive
differences. The Exchange believes that the proposed rules would not
impose any burden on competition that is not necessary or appropriate
because the proposed rules are designed to provide member organizations
with continuity in utilizing the after-hours facility by offering the
ability to enter Aggregate-Price Coupled Orders as currently provided
for under the Rule 900 Series while deleting obsolete text and
references and updating the rule language to reflect trading on the
Pillar trading platform.
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 \11\ and Rule 19b-4(f)(6) thereunder.\12\
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 \13\ and Rule 19b-
4(f)(6)(iii) thereunder.\14\
---------------------------------------------------------------------------
\11\ 15 U.S.C. 78s(b)(3)(A)(iii).
\12\ 17 CFR 240.19b-4(f)(6).
\13\ 15 U.S.C. 78s(b)(3)(A).
\14\ 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, along
with a brief description and text of 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.
---------------------------------------------------------------------------
A proposed rule change filed under Rule 19b-4(f)(6) \15\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\16\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has asked
the Commission to waive the 30-day operative delay so that the proposal
may become operative on September 1, 2022.
---------------------------------------------------------------------------
\15\ 17 CFR 240.19b-4(f)(6).
\16\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------
The Commission believes that waiver of the operative delay is
consistent with the protection of investors and the public interest
because it will allow member organizations to continue to utilize the
Exchange's current off-hours trading facility without interruption.
Accordingly, the Commission hereby waives the 30-day operative delay
and designates the proposal operative on September 1, 2022.\17\
---------------------------------------------------------------------------
\17\ For purposes only of accelerating the operative date of
this proposal, the Commission has considered the proposed rule's
impact on efficiency, competition, and capital formation. 15 U.S.C.
78c(f).
---------------------------------------------------------------------------
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) \18\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
---------------------------------------------------------------------------
\18\ 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="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#3240475e571f515d5f5f575c4641724157511c555d44"><span class="__cf_email__" data-cfemail="fc8e899099d19f9391919992888fbc8f999fd29b938a">[email protected]</span></a>. Please include
File Number SR-NYSE-2022-37 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-2022-37. 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
[[Page 50909]]
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-2022-37 and should be submitted on or before September 8, 2022.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
---------------------------------------------------------------------------
\19\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-17749 Filed 8-17-22; 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 August 18, 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.