Notice2022-25470
Self-Regulatory Organizations; NYSE National, Inc.; Notice of Filing and Order Granting Accelerated Approval of a Proposed Rule Change To Make Certain Revisions to the Preamble to Rule 10.9217 and Add Rule 2.1210 to the List of Minor Rule Violations in Rule 10.9217(f)
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
November 23, 2022
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 87 Issue 225 (Wednesday, November 23, 2022)</title>
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[Federal Register Volume 87, Number 225 (Wednesday, November 23, 2022)]
[Notices]
[Pages 71722-71726]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-25470]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-96336; File No. SR-NYSENAT-2022-25]
Self-Regulatory Organizations; NYSE National, Inc.; Notice of
Filing and Order Granting Accelerated Approval of a Proposed Rule
Change To Make Certain Revisions to the Preamble to Rule 10.9217 and
Add Rule 2.1210 to the List of Minor Rule Violations in Rule 10.9217(f)
November 17, 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 November 4, 2022, NYSE National, Inc. (``NYSE National''
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 Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons and approving the proposal
on an accelerated basis.
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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 (1) make certain revisions to the preamble
to Rule 10.9217 (Violations Appropriate for Disposition Under Rule
10.9216(b)); (2) add Rule 2.1210 (Registration Requirements) to the
list of minor rule violations in Rule 10.9217(f) and associated fine
levels in Rule 10.9217(g); and (3) make certain non-substantive
clarifying changes to Rule 10.9217. 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 III below. The Exchange has prepared
summaries, set forth in sections A, B, and C below,
[[Page 71723]]
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 (1) make certain revisions to the preamble
to Rule 10.9217 (Violations Appropriate for Disposition Under Rule
10.9216(b)); (2) add Rule 2.1210 (Registration Requirements) to the
list of minor rule violations in Rule 10.9217(f) and associated fine
levels in Rule 10.9217(g); and (3) make certain non-substantive
clarifying changes to Rule 10.9217.
Preamble to Rule 10.9217
The preamble to current Rule 10.9217 consists of four subsections
(a) through (d). The Exchange propose to modify subsections (a) through
(d) based on the preamble to the version of Rule 10.9217 adopted by the
Exchange's affiliate NYSE Arca, Inc. (``NYSE Arca''), as follows.
Subsection (a) currently provides that any ETP Holder or Associated
Person may be subject to a fine under Rule 10.9216(b) with respect to
any rules listed in the rule and that the fine amounts and fine levels
set forth therein apply to the fines imposed. Subsection (a) further
provides that any fine imposed pursuant to the rule and not contested
shall not be publicly reported, except as may be required by Rule 19d-1
under the Exchange Act or as may be required by any other regulatory
authority.
The Exchange proposes that the current first sentence of subsection
(a) would be unchanged except that the Exchange would add ``, not to
exceed $5,000,'' after ``fine'' to clarify that a minor rule fine on
the Exchange cannot exceed $5,000.\4\ The Exchange proposes to delete
the second sentence providing that any fine imposed pursuant to this
Rule and not contested shall not be publicly reported, except as may be
required by Rule 19d-1 under the Exchange Act or as may be required by
any other regulatory authority. This information is duplicative of
information contained in Rule 10.9216(b)(4) and 10.9217(c) in greater
detail and further contains a process for contesting a fine which, as
discussed below, the Exchange proposes to eliminate. As proposed, NYSE
National Rule 10.9217(a) would be the same as NYSE Arca Rule
10.9217(a).
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\4\ See Securities Exchange Act Release No. 83289 (May 17,
2018), 83 FR 23968, 23968 n.6 (May 23, 2018) (SR-NYSENAT-2018-02)
(Notice of Filing of Amendment No. 1 and Order Granting Accelerated
Approval of a Proposed Rule Change, as Amended by Amendment No. 1,
To Support the Re-Launch of NYSE National, Inc. on the Pillar
Trading Platform). As part of Amendment No. 1, the Exchange, among
other things, adopted NYSE American's maximum $5,000 fine for minor
rule violations under Rule 10.9217. See Amendment No.1, n. 59,
available at: <a href="https://www.sec.gov/comments/sr-nysenat-2018-02/nysenat201802-3653908-162416.pdf">https://www.sec.gov/comments/sr-nysenat-2018-02/nysenat201802-3653908-162416.pdf</a>.
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Subsection (b) currently provides that if a person or organization
that has been fined pursuant to the rule pays the fine, such payment
shall be deemed a waiver of any right to a disciplinary proceeding
under the Rule 10.9000 Series and of any right to review of the matter
by the BCC, CFR or the Board of Directors. This provision incorporated
requirements originally set forth in the Exchange's legacy Rule
8.15(c). The Exchange's affiliates' rules contained similar
provisions.\5\ The Exchange believes that provision would be redundant
and unnecessary. As discussed below, the Exchange proposes to eliminate
the specific process detailed in Rule 10.9217(c) to convert a minor
rule fine into a disciplinary hearing. Moreover, under the Exchange's
current procedures set forth in Rule 10.9216(b)(1), if Enforcement has
reason to believe a violation has occurred and if the ETP Holder or
Associated Person does not dispute the violation, Enforcement may
prepare and request that the ETP Holder or Associated Person execute a
minor rule violation plan letter accepting a finding of violation,
consenting to the imposition of sanctions, and agreeing to waive such
ETP Holder's or Associated Person's right to a hearing before a Hearing
Panel or, if applicable, an Extended Hearing Panel, and any right of
review by the Exchange Board of Directors, the SEC, and the courts, or
to otherwise challenge the validity of the letter, if the letter is
accepted. Under current Rule 10.9216(b)(4), if an ETP Holder or
Associated Person executes the minor rule violation plan letter and the
letter is accepted by the CRO, it is deemed final. The Exchange
accordingly proposes to replace the current text of subsection (b) with
the sentence ``Regulatory Staff designated by the Exchange shall have
the authority to impose a fine pursuant to this Rule.'' As proposed,
NYSE National Rule 10.9217(b) would be the same as NYSE Arca Rule
10.9217(b).
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\5\ For instance, the New York Stock Exchange LLC's (``NYSE'')
legacy Rule 476A(c) provided that if the person against whom a minor
rule violation fine is imposed pays the fine, such payment is deemed
to be a waiver by such person of such person's right to a
disciplinary proceeding under NYSE Rule 476 and any review of the
matter by a Hearing Panel or the Exchange Board of Directors. NYSE's
legacy rules came into effect when the NYSE adopted disciplinary
rules modeled on the rules of the Financial Industry Regulatory
Authority, Inc. (``FINRA''). See Securities Exchange Act Release No.
69045 (March 5, 2013), 78 FR 15394 (March 11, 2013) (SR-NYSE-2013-
02) (Order Approving Proposed Rule Change Adopting Investigation,
Disciplinary, Sanction, and Other Procedural Rules That Are Modeled
on the Rules of the Financial Industry Regulatory Authority and To
Make Certain Conforming and Technical Changes). The NYSE recently
proposed to delete its legacy disciplinary rules. See SR-NYSE-2022-
48.
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Subsection (c) currently provides that any person or organization
that has been fined pursuant to Rule 10.9217 may contest such fine by
filing with Enforcement a written application containing: (1) an
identification of the Exchange action over which the review is being
requested; (2) the reason(s) why the applicant disagrees with such
action; and (3) the relief sought. Such written application must be
submitted not more than five (5) business days after receipt of written
notification that a fine has been imposed pursuant to this Rule. The
subsection further provides that if a determination is contested
pursuant to this subsection, the matter shall become a formal
disciplinary action, and any penalty imposed by a hearing panel shall
be publicly reported to the Exchange membership after such decision has
become ``final'' pursuant to Rule 10.8313. Further, any person or
organization found in violation of a minor rule under this plan is not
required to report such violation on SEC Form BD or Form U-4, provided
that the sanction imposed consists of a fine not exceeding $2,500 and
the sanctioned person or organization has not sought an adjudication,
including a hearing, or otherwise exhausted the administrative remedies
available with respect to the matter. Finally, any fine imposed in
excess of $2,500 will be subject to current rather than quarterly
reporting pursuant to Rule 19d-1 under the Act.
The Exchange proposes to no longer permit persons or organizations
fined pursuant to Rule 10.9217 to contest the minor rule violation
letter by filing a written application and converting it into a regular
disciplinary proceeding. None of the Exchange's affiliates that adopted
the FINRA disciplinary rules permit persons or organizations fined
pursuant to their version of Rule 10.9217 to contest the fine in this
manner, including affiliates such as the NYSE that also permitted such
a procedures under its legacy rules.\6\ The
[[Page 71724]]
proposed changes would thereby further harmonize the Exchange's Rule
10.9217 with the version adopted by the Exchange's affiliates.
Moreover, the Exchange believes that its current disciplinary rules
already provide similar and sufficient procedural protections to
persons fined under Rule 10.9217. Currently, if an ETP Holder or
Associated Person disputes a minor rule fine, Enforcement's only
recourse would be to file a complaint under Rule 10.9211. Similarly, if
an ETP Holder or Associated Person executes a minor rule plan letter
under Rule 10.9216 and the CRO rejects the letter, the Exchange may
take any other appropriate disciplinary action with respect to the
alleged violation. Further, the ETP Holder or Associated Person shall
not be prejudiced by the execution of the minor rule violation plan
letter under Rule 10.9216(b)(1) and, under Rule 10.9216(b)(4), the
letter may not be introduced into evidence in connection with the
determination of the issues set forth in any complaint or in any other
proceeding.
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\6\ Under legacy NYSE Rule 476A(d), any person against whom a
minor rule violation was imposed could contest the Exchange's
determination by timely filing a written response meeting the
requirements of an answer as provided in NYSE Rule 476(d), at which
point the matter became a disciplinary proceeding subject to NYSE
Rule 476. As adopted, NYSE Rule 9216 does not permit a Respondent
(as defined in the disciplinary rules) to contest a minor rule
violation letter by filing an answer and convert it into a regular
disciplinary proceeding. See Securities Exchange Act Release No.
68678 (January 16, 2013), 78 FR 5213, 5226 (January 24, 2013) (SR-
NYSE-2013-02) (Notice of Filing of Proposed Rule Change Adopting
Investigation, Disciplinary, Sanction, and Other Procedural Rules
That Are Modeled on the Rules of the Financial Industry Regulatory
Authority and To Make Certain Conforming and Technical Changes). As
noted above, the NYSE recently filed to delete its legacy
disciplinary rules. See also note 4, supra.
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In order to effectuate this change, the Exchange proposes to delete
the first three sentences of subsection (c). The last two sentences,
which are identical to NYSE Arca Rule 10.9217(c), would remain
unchanged.
The Exchange does not proposes any changes to current Rule
10.9217(d).
Addition of Rule 2.1210 to the List of Eligible Rules
The Exchange proposes to add Rule 2.1210 the list of eligible rules
in Rule 10.9217(f).
Rule 2.1210, which was adopted in 2018,\7\ sets forth the
requirements for persons engaged in the investment banking or
securities business of an ETP Holder to be registered with the Exchange
as a representative or principal in each category of registration
appropriate to his or her functions and responsibilities as specified
in Rule 2.1220.
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\7\ See Securities Exchange Act Release No. 84350 (October 3,
2018), 83 FR 51030 (October 10, 2018) (SR-NYSENAT-2018-21) (Notice
of Filing and Immediate Effectiveness of Amendments to Rules
Regarding Qualification, Registration and Continuing Education
Applicable to Equity Trading Permit Holders).
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The Exchange proposes to add Rule 2.1210 to the list of rules in
Rule 10.9217(f) eligible for disposition pursuant to a fine. A
substantially similar version of Rule 2.1210 was adopted by the NYSE in
2018 \8\ and is currently eligible for minor rule fines under the
NYSE's version of Rule 9217.\9\ The Exchange also proposes to add
first, second and third level fines for violations of Rule 2.1210 to
Rule 10.9217(g)(2) as new item 6. As proposed, failure to comply with
the registration requirements of Rule 2.1210 would be eligible for a
$1,000 fine for the first violation, $2,500 for the second violation
and $5,000 for the third and subsequent violations. The proposed fine
levels would be the same as the applicable fine levels for individuals
violating NYSE Rule 1210 set forth in NYSE Rule 9217.\10\ Current item
6 under Rule 10.9217(g)(2) governing failure to comply with the CAT
Compliance Rules in the Rule 6.6800 Series would become new item 7. As
discussed below, the Exchange would add a new footnote 2 to current
item 6 (new item 7) setting forth the range for violations of the CAT
Compliance Rules and delete ``Up to $2,500.00'' from the chart.
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\8\ See Securities Exchange Act Release No. 84336 (October 2,
2018), 83 FR 50727 (October 9, 2018) (SR-NYSE-2018-44) (Notice of
Filing and Immediate Effectiveness of Amendments To Rules Regarding
Qualification, Registration and Continuing Education Applicable to
Members and Member Organizations).
\9\ See NYSE Rule 9217.
\10\ As set forth in Rule 10.9217(c), any fine imposed in excess
of $2,500 would be subject to current rather than quarterly
reporting to the Commission pursuant to Rule 19d-1 under the Act.
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The Exchange believes that the proposed change would strengthen the
Exchange's ability to carry out its oversight and enforcement
responsibilities in cases where full disciplinary proceedings are
unwarranted in view of the minor nature of the particular violation.
Non-Substantive Clarifying Changes
The Exchange proposes to add clarifying language regarding the
disposition of minor rule fines for violations of the CAT Compliance
Rules in the Rule 6.6800 Series based on language adopted by the
Exchange's affiliates. Specifically, the Exchange would add a new
footnote 2 to current item 6 (proposed item 7, discussed above) of Rule
10.9217(g)(2) that would provide as follows:
For failures to comply with the Consolidated Audit Trail
Compliance Rule requirements of the Rule 6.6800 Series, the Exchange
may impose a minor rule violation fine of up to $2,500. For more
serious violations, other disciplinary action may be sought.
The language is identical to that adopted by the Exchange's
affiliates NYSE and NYSE Chicago, Inc.\11\ As noted, ``Up to
$2,500.00'' would be deleted from the chart in current item 6 as
redundant of proposed footnote 2. The proposed change is not intended
to make a substantive change. Violations of the CAT Compliance Rules
are currently eligible for minor rule fines and $2,500 is currently the
maximum eligible fine.
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\11\ See NYSE Rule 9217(d) (``For failures to comply with the
Consolidated Audit Trail Compliance Rule requirements of the Rule
6800 Series, the Exchange may impose a minor rule violation fine of
up to $2,500. For more serious violations, other disciplinary action
may be sought.''); NYSE Chicago 10.9217(f), n. ** (same).
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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),\13\ 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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\12\ 15 U.S.C. 78f(b).
\13\ 15 U.S.C. 78f(b)(5).
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Preamble to Rule 10.9217
The Exchange believes that harmonizing the preamble to Rule 10.9217
with that of its affiliates would remove impediments to and perfect the
mechanism of a free and open market and a national market system by a
providing greater harmonization between Exchange rules and those of its
affiliates in connection with minor rule fines, thereby fostering
cooperation and coordination with persons engaged in facilitating
transactions in securities and will remove impediments to and perfect
the mechanism of a free and open market and a national market system.
Moreover, by adopting the same applicable minor rule standards for
violations of those standards as its affiliates, the Exchange would
promote regulatory consistency.
More specifically, the Exchange believes that the proposed changes
to Rule 10.9217(a) clarifying that minor rule fines cannot exceed
$5,000 and deleting duplicative information
[[Page 71725]]
regarding the public reporting of uncontested minor rule fines would
further the goal of transparency and add clarity to the Exchange's
rules. The Exchange believes that the proposed changes would also be
consistent with the public interest and the protection of investors
because investors will not be harmed and in fact would benefit from
increased transparency, thereby reducing potential confusion. In
addition, the Exchange believes that deleting current rule text in Rule
10.9217(b) providing that payment of a minor fine is deemed a waiver of
any right to a disciplinary proceeding and of any right to review would
be redundant of the Exchange's current procedures set forth in Rule
10.9216(b)(1) whereby execution of a minor rule violation plan letter
accepted by the CRO is final and waives the right to a hearing and any
right of review by an ETP Holder or Associated Person. Finally, the
proposed elimination of the procedure set forth in Rule 10.9217(c) to
contest the minor rule violations would further harmonize the
Exchange's Rule 10.9217 with the version adopted by the Exchange's
affiliates. As discussed above, the Exchange believes that its current
disciplinary rules already provide similar and sufficient procedural
protections to persons fined under Rule 10.9217. Eliminating the legacy
contestation procedure in Rule 10.9217(c) would accordingly promote
efficiency by applying uniform procedures for contesting a minor rule
fine across exchanges.
Addition of Rule 2.1210 to the List of Eligible Rules
Minor rule fines provide a meaningful sanction for minor or
technical violations of rules when the conduct at issue does not
warrant stronger, immediately reportable disciplinary sanctions. The
inclusion of a rule in Rule 10.9217 does not minimize the importance of
compliance with the rule, nor does it preclude the Exchange from
choosing to pursue violations of eligible rules through formal
disciplinary action if the nature of the violations or prior
disciplinary history warrants more significant sanctions. Rather, the
Exchange believes that the proposed rule change will strengthen the
Exchange's ability to carry out its oversight and enforcement
responsibilities in cases where full disciplinary proceedings are
unwarranted in view of the minor nature of the particular violation.
The option to impose a minor rule sanction gives the Exchange
additional flexibility to administer its enforcement program in the
most effective and efficient manner while still fully meeting the
Exchange's remedial objectives in addressing violative conduct.
The proposed rule change is thus designed to prevent fraudulent and
manipulative acts and practices because it will provide the Exchange
the ability to issue a minor rule fine for violations of the
registration requirements set forth in Rule 2.1210 where a more formal
disciplinary action may not be warranted or appropriate. In addition,
the Exchange believes that adding rules based on the rules of its
affiliate to the Exchange's minor rule plan, and adding associated fine
levels based on the treatment of similar registration rule violations
by its affiliate NYSE, would promote fairness and consistency in the
marketplace by permitting the Exchange to issue a minor rule fine for
violations of substantially similar rules that are already eligible for
minor rule treatment, thereby harmonizing minor rule plan fines across
affiliated exchanges for the same conduct. As noted, the proposed fine
levels would be the same as the applicable fine levels for individuals
violating NYSE Rule 1210 set forth in NYSE Rule 9217.
The Exchange further believes that the proposed amendments to Rule
10.9217 are consistent with Section 6(b)(6) of the Act,\14\ which
provides that members and persons associated with members shall be
appropriately disciplined for violation of the provisions of the Act,
the rules and regulations thereunder and the rules of the exchange, by
expulsion, suspension, limitation of activities, functions, and
operations, fine, censure, being suspended or barred from being
associated with a member, or any other fitting sanction. As noted, the
proposed rule change would provide the Exchange ability to sanction
minor or technical violations of proposed Rule 2.1210 pursuant to the
Exchange's rules. Finally, the Exchange also believes that the proposed
changes are designed to provide a fair procedure for the disciplining
of members and persons associated with members, consistent with
Sections 6(b)(7) and 6(d) of the Act.\15\ Rule 10.9217 does not
preclude an ETP Holder or Associated Person from contesting an alleged
violation under Rule 10.9216(b)and receiving a hearing on the matter
with the same procedural rights through a litigated disciplinary
proceeding.
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\14\ 15 U.S.C. 78f(b)(6).
\15\ 15 U.S.C. 78f(b)(7) and 78f(d).
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Non-Substantive Clarifying Changes
The Exchange believes that the proposed non-substantive clarifying
changes described above would add clarity, consistency and transparency
to the Exchange's rules. The Exchange believes that adding such clarity
and transparency would also be consistent with the public interest and
the protection of investors because investors will not be harmed and in
fact would benefit from increased transparency, thereby reducing
potential confusion. In addition, the Exchange believes that the
incorporating language relating to violations of the CAT Compliance
Rules adopted by the Exchange's affiliates would promote fairness and
consistency in the marketplace by eliminating differences and
harmonizing language related to minor rule treatment of similar rule
violations across affiliates. The proposed change is not intended to
make any substantive change to the applicability of minor rule fines to
violations of the CAT Compliance Rules or the amount of those fines.
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 update the
Exchange's rules to strengthen the Exchange's ability to carry out its
oversight and enforcement functions and deter potential violative
conduct and to align the Exchange's rule setting forth violations
eligible for a minor rule fine more closely with that of its
affiliates.
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. 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#d1a3a4bdb4fcb2bebcbcb4bfa5a291a2b4b2ffb6bea7"><span class="__cf_email__" data-cfemail="9ceee9f0f9b1fff3f1f1f9f2e8efdceff9ffb2fbf3ea">[email protected]</span></a>. Please include
File Number SR-NYSENAT-2022-25 on the subject line.
[[Page 71726]]
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-NYSENAT-2022-25. 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-NYSENAT-2022-25 and should be submitted
on or before December 14, 2022.
IV. Commission's Findings and Order Granting Accelerated Approval of
Proposed Rule Change
The Commission finds that the proposed rule change is consistent
with the requirements of the Act and the rules and regulations
thereunder applicable to a national securities exchange.\16\ In
particular, the Commission finds that the proposed rule change is
consistent with Section 6(b)(5) of the Act,\17\ which requires that the
rules of an exchange be designed to promote just and equitable
principles of trade, to remove impediments and to perfect the mechanism
of a free and open market and a national market system, and, in
general, to protect investors and the public interest. The Commission
also believes that the proposal is consistent with Sections 6(b)(1) and
6(b)(6) of the Act \18\ which require that the rules of an exchange
enforce compliance with, and provide appropriate discipline for,
violations of Commission and Exchange rules. Finally, the Commission
finds that the proposal is consistent with the public interest, the
protection of investors, or otherwise in furtherance of the purposes of
the Act, as required by Rule 19d-1(c)(2) under the Act,\19\ which
governs minor rule violation plans.
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\16\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
\17\ 15 U.S.C. 78f(b)(5).
\18\ 15 U.S.C. 78f(b)(1) and 78f(b)(6).
\19\ 17 CFR 240.19d-1(c)(2).
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As stated above, the Exchange proposes to (1) make certain
revisions to the preamble to Rule 10.9217 (Violations Appropriate for
Disposition Under Rule 10.9216(b)); (2) add Rule 2.1210 (Registration
Requirements) to the list of minor rule violations in Rule 10.9217(f)
and associated fine levels in Rule 10.9217(g); and (3) make certain
non-substantive clarifying changes to Rule 10.9217.
The Commission believes that Rules 10.9216(b) and 10.9217 are an
effective way to discipline a member for a minor violation of a rule.
More specifically, the Commission believes that the proposed revisions
to the preamble of Rule 10.9217 are consistent with the Act because
they would add clarity to the Exchange's rules and may help the
Exchange's ability to better carry out its oversight and enforcement
responsibilities. The proposed revisions to the preamble of Rule
10.9217 also would align Rule 10.9217 with the rules of the Exchange's
affiliates. The Commission believes that the proposed addition of Rule
2.1210 (Registration Requirements) to the Exchange's list of current
minor rule violations provides a reasonable means of addressing
violations that do not rise to the level of requiring formal
disciplinary proceedings, while providing greater flexibility in
handling certain violations. Furthermore, the Commission believes that
amending the associated fine schedule is consistent with the Act
because it may help the Exchange's ability to better carry out its
oversight and enforcement responsibilities by levying appropriate fines
for minor violations of the rules included in Rule 10.9217, including
minor violations of Rule 2.1210. Finally the Commission believes that
the Exchange's proposal to make certain non-substantive changes to Rule
10.9217 are consistent with the Act because these changes will add
clarity to the Exchange's rules.
In approving the proposed rule change, the Commission in no way
minimizes the importance of compliance with the Exchange's rules and
all other rules subject to fines under Rules 10.9216(b) and 10.9217.
The Commission believes that a violation of any self-regulatory
organization's rules, as well as Commission rules, is a serious matter.
However, Rules 10.9216(b) and 10.9217 provide a reasonable means of
addressing rule violations that may not rise to the level of requiring
formal disciplinary proceedings, while providing greater flexibility in
handling certain violations. The Commission expects that the Exchange
will continue to conduct surveillance with due diligence and make a
determination based on its findings, on a case-by-case basis, whether a
fine of more or less than the recommended amount is appropriate for a
violation under Rules 10.9216(b) and 10.9217 or whether a violation
requires formal disciplinary action.
For the same reasons as discussed above, the Commission finds good
cause, pursuant to Section 19(b)(2) of the Act,\20\ for approving the
proposed rule change prior to the thirtieth day after the date of
publication of the notice of the filing thereof in the Federal
Register. The proposal will assist the Exchange in preventing
fraudulent and manipulative practices by allowing the Exchange to
adequately enforce compliance with, and provide appropriate discipline
for, violations of Exchange rules. Moreover, the proposed changes raise
no new or novel issues. Accordingly, the Commission believes that a
full notice-and-comment period is not necessary before approving the
proposal.
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\20\ 15 U.S.C. 78s(b)(2).
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V. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the Act
\21\ and Rule 19d-1(c)(2) thereunder,\22\ that the proposed rule change
(SR-NYSENAT-2022-25) be, and hereby is, approved on an accelerated
basis.
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\21\ 15 U.S.C. 78s(b)(2).
\22\ 17 CFR 240.19d-1(c)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\23\
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\23\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2022-25470 Filed 11-22-22; 8:45 am]
BILLING CODE 8011-01-P
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</html>Indexed from Federal Register on November 23, 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.