Notice2022-23239
Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Modify Rule 7.44
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Published
October 26, 2022
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 87 Issue 206 (Wednesday, October 26, 2022)</title>
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[Federal Register Volume 87, Number 206 (Wednesday, October 26, 2022)]
[Notices]
[Pages 64831-64833]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-23239]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-96112; File No. SR-NYSE-2022-47]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Modify Rule 7.44
October 20, 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 October 11, 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, II,
and III 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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[[Page 64832]]
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to modify Rule 7.44 relating to the Retail
Liquidity Program. 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 to modify Rule 7.44, which sets forth the
Exchange's Retail Liquidity Program (the ``Program'').\4\ The purpose
of the Program is to attract retail order flow to the Exchange and
allow such order flow to receive potential price improvement. Rule 7.44
provides for a class of market participant called Retail Liquidity
Providers (``RLPs''), and non-RLP member organizations are able to
provide potential price improvement to retail investor orders in the
form of a non-displayed order that is priced better than the best
protected bid or offer, called a Retail Price Improvement Order (``RPI
Order'').\5\ When there is an RPI Order in a particular security, the
Exchange disseminates an indicator, known as the Retail Liquidity
Identifier, that such interest exists.\6\ Retail Member Organizations
(``RMOs'') can submit a Retail Order to the Exchange, which interacts,
to the extent possible, with available contra-side RPI Orders and then
may interact with other liquidity on the Exchange or elsewhere,
depending on the Retail Order's instructions.\7\ The segmentation in
the Program allows retail order flow to receive potential price
improvement as a result of their order flow being deemed more desirable
by liquidity providers. The Program is currently limited to trades in
NYSE-listed securities.\8\
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\4\ The Program was established on a pilot basis in 2012 and was
approved by the Commission to operate on a permanent basis in 2019.
See Securities Exchange Act Release No. 85160 (February 15, 2019),
84 FR 5754 (February 22, 2019) (SR-NYSE-2018-28). In connection with
the Commission's approval of the Program on a pilot basis, the
Commission granted the Exchange's request for exemptive relief from
Rule 612 of Regulation NMS, 17 CFR 242.612 (the ``Sub-Penny Rule''),
which, among other things, prohibits a national securities exchange
from accepting or ranking orders priced greater than $1.00 per share
in an increment smaller than $0.01. See Securities Exchange Act
Release No. 67347 (July 3, 2012), 77 FR 40673 (July 10, 2012) (SR-
NYSE-2011-55). The Exchange notes that the change proposed in this
filing has no substantive impact under the Sub-Penny Rule and thus
does not require an update or revision to the exemptive relief
previously granted by the Commission.
\5\ See Rules 7.44(a)(1) (defining an RLP) and 7.44(a)(4)
(defining RPI Order).
\6\ See Rule 7.44(j).
\7\ See Rule 7.44(a)(2) (defining RMO); Rules 7.44(a)(3) and
7.44(k) (describing Retail Orders).
\8\ See Rule 7.44(a)(4).
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The Exchange now proposes to modify Rule 7.44 to expand the
Program's availability to all securities traded on the Exchange. Rule
7.44(a)(4) currently defines an RPI Order as consisting of ``non-
displayed interest in NYSE-listed securities that would trade at prices
better than the PBB or PBO by at least $0.001 and that is identified as
such.'' To expand the program to permit RPI Orders in all securities on
the Exchange (i.e., both NYSE-listed securities and securities traded
on the Exchange pursuant to unlisted trading privileges), the Exchange
proposes to modify Rule 7.44(a)(4) to delete the reference to ``NYSE-
listed securities,'' such that the rule would provide that an RPI Order
is ``non-displayed interest that would trade at prices better than the
PBB or PBO by at least $0.001 and that is identified as such.''
The Exchange also proposes a conforming change to Rule 7.44(j),
which describes the Retail Liquidity Identifier disseminated when RPI
interest priced at least $0.001 better than the PBB or PBO for a
particular security is available in Exchange systems. Rule 7.44(j)
currently provides that the Retail Liquidity Identifier will be
disseminated through proprietary data feeds and through the
Consolidated Quotation System.\9\ Because the Exchange proposes to
permit RPI Orders in all securities, the Exchange proposes to update
Rule 7.44(j) to provide that the Retail Liquidity Identifier would also
be disseminated through the UTP Quote Data Feed, as applicable.\10\
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\9\ The Exchange also proposes a non-substantive change to
correct a typographical error in Rule 7.44(j) and replace
``Consolidation Quotation System'' with ``Consolidated Quotation
System.''
\10\ The Exchange notes that this proposed change would align
Rule 7.44(j) with the comparable rule of its affiliated exchange,
NYSE Arca, Inc. (``NYSE Arca''). NYSE Arca currently operates a
retail price improvement program that includes securities that trade
on that exchange pursuant to unlisted trading privileges. See NYSE
Arca Rule 7.44-E(j).
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Subject to the effectiveness of this proposed rule change, the
Exchange will implement this change in the fourth quarter of 2022 and
announce the implementation date by Trader Update.
2. Statutory Basis
The proposed rule change is consistent with Section 6(b) of the
Act,\11\ in general, and furthers the objectives of Section
6(b)(5),\12\ 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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\11\ 15 U.S.C. 78f(b).
\12\ 15 U.S.C. 78f(b)(5).
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The Exchange believes expanding the Program's availability to all
securities traded on the Exchange 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 by
enabling RPI Orders in all securities to participate in the Program and
receive potential price improvement. The Exchange believes that this
expansion of the Program would benefit retail investors by providing
increased opportunities for price improvement in all securities traded
on the Exchange, rather than limiting the Program to NYSE-listed
securities only. The Exchange also believes that the proposed change
would allow it to compete with other exchanges that operate retail
price improvement programs that are available to all securities traded
on such exchanges.\13\ The Exchange believes that the proposed
conforming change to Rule 7.44(j) would also remove impediments to, and
perfect the mechanism of, a free
[[Page 64833]]
and open market and a national market system and, in general, protect
investors and the public interest by updating Rule 7.44(j) to provide
for the dissemination of the Retail Liquidity Identifier for RPI Orders
on the UTP Quote Data Feed. The proposed change would ensure that the
Retail Liquidity Identifier would also be disseminated as appropriate
for RPI Orders in securities traded on the Exchange pursuant to
unlisted trading privileges.
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\13\ See, e.g., Cboe BYX Exchange, Inc. (``BYX'') Rule 11.24
(setting forth BYX's Retail Price Improvement Program, with Retail
Price Improvement Order defined in Rule 11.24(a)(3)); Nasdaq BX,
Inc. (``BX'') Rules 4702(b)(5)(A) (defining ``Retail Price Improving
Order'') and 4780 (setting forth BX's Retail Price Improvement
Program); Investors Exchange LLC (``IEX'') Rule 11.232 (setting
forth IEX's Retail Price Improvement Program).
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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 change could promote competition by permitting RPI Orders
in all securities traded on the Exchange, thereby supporting price
improvement opportunities for retail investors. The Exchange further
believes that the proposed expansion of the Program to include all
securities traded on the Exchange would promote competition between the
Exchange and other exchanges that offer retail price improvement
programs for which all securities traded on such exchanges are eligible
to participate.\14\
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\14\ See id.
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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 \15\ and Rule 19b-4(f)(6) thereunder.\16\
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)(iii) of the Act \17\ and Rule
19b-4(f)(6)(iii) thereunder.\18\
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\15\ 15 U.S.C. 78s(b)(3)(A)(iii).
\16\ 17 CFR 240.19b-4(f)(6).
\17\ 15 U.S.C. 78s(b)(3)(A)(iii).
\18\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
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 fulfilled this requirement.
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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) \19\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\19\ 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#f183849d94dc929e9c9c949f8582b1829492df969e87"><span class="__cf_email__" data-cfemail="fe8c8b929bd39d9193939b908a8dbe8d9b9dd0999188">[email protected]</span></a>. Please include
File Number SR-NYSE-2022-47 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-2022-47. 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-2022-47 and should be submitted on
or before November 16, 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. 2022-23239 Filed 10-25-22; 8:45 am]
BILLING CODE 8011-01-P
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