Notice2023-18189
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 7.44-E
Primary source
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Published
August 24, 2023
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 88 Issue 163 (Thursday, August 24, 2023)</title>
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[Federal Register Volume 88, Number 163 (Thursday, August 24, 2023)]
[Notices]
[Pages 57980-57982]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-18189]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-98168; File No. SR-NYSEARCA-2023-55]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend Rule 7.44-
E
August 18, 2023.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that, on August 8, 2023, NYSE Arca, Inc. (``NYSE Arca'' or the
``Exchange'') filed with the Securities and Exchange Commission
(``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\ 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 Rule 7.44-E 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
[[Page 57981]]
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
NYSE Arca Rule 7.44-E currently sets forth the Exchange's Retail
Liquidity Program (the ``Program''), which is intended to attract
retail order flow to the Exchange and allow such order flow to receive
potential price improvement.\3\ Currently, Rule 7.44-E provides for a
class of market participant called Retail Liquidity Providers
(``RLPs'') who, along with non-RLP ETP Holders, 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'').\4\
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.\5\ 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.\6\ The segmentation in the Program
is intended to allow retail order flow to receive potential price
improvement as a result of their order flow being deemed more desirable
by liquidity providers.
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\3\ The Program was established on a pilot basis in 2013 and was
approved by the Commission to operate on a permanent basis in 2019.
See Securities Exchange Act Release No. 87350 (October 18, 2019), 84
FR 57106 (October 24, 2019) (SR-NYSEArca-2019-63).
\4\ See Rules 7.44-E(a)(1) (defining an RLP) and 7.44-E(a)(4)
(defining RPI Order).
\5\ See Rule 7.44-E(j).
\6\ See Rule 7.44-E(a)(2) (defining RMO); Rules 7.44-E(a)(3) and
7.44-E(k) (describing Retail Orders).
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The Exchange has determined to discontinue the Program, as its
affiliated exchange NYSE National, Inc. (``NYSE National'') is
proposing to implement a similarly structured Retail Liquidity
Program.\7\ Accordingly, the Exchange proposes to delete the text of
Rule 7.44-E and designate the rule as Reserved. The Exchange notes that
its affiliate New York Stock Exchange LLC (``NYSE'') also currently
offers a similarly structured Retail Liquidity Program,\8\ and both the
NYSE Retail Liquidity Program and the proposed NYSE National Retail
Liquidity Program would be available to RMOs that currently participate
in the Program. The Exchange further notes that several other equities
exchanges currently offer retail price improvement programs as well.\9\
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\7\ See SR-NYSENAT-2023-17. The Exchange proposes to
decommission the Program in tandem with the introduction of the NYSE
National Retail Liquidity Program in the third quarter of 2023, on a
date to be announced via Trader Update.
\8\ See NYSE Rule 7.44 (setting forth NYSE Retail Liquidity
Program).
\9\ See, e.g., Cboe BYX Exchange, Inc. (``BYX'') Rule 11.24
(setting forth BYX's Retail Price Improvement Program); Nasdaq BX,
Inc. (``BX'') Rule 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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Subject to the effectiveness of this proposed rule change, the
Exchange will implement this change in the third quarter of 2023 and
announce the implementation date by Trader Update.
2. Statutory Basis
The proposed rule change is consistent with section 6(b) of the
Act,\10\ in general, and furthers the objectives of section
6(b)(5),\11\ 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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\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(5).
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Specifically, the Exchange believes that the proposed designation
of Rule 7.44-E as Reserved in conjunction with the decommissioning of
the Program would remove impediments to and perfect the mechanism of a
free and open market and a national market system by deleting rule text
that would no longer have application, thereby promoting clarity,
transparency, and consistency in the Exchange's rulebook. In addition,
the proposed change would ensure that the Exchange's rules accurately
reflect the functionality offered by the Exchange.
The Exchange further believes that the proposed change would remove
impediments to and perfect the mechanism of a free and open market and
a national market system and would not be inconsistent with the public
interest or the protection of investors because the proposed change to
designate Rule 7.44-E as Reserved would alleviate any potential
confusion among market participants regarding the availability of the
Program. The Exchange also believes that investors would not be harmed
by the proposed change, as a similarly structured Retail Liquidity
Program is offered on its affiliated exchange NYSE and is proposed to
be offered on its affiliate NYSE National; in addition, several other
equities exchanges also currently offer price improvement programs for
retail order flow.\12\ The Exchange further notes that it is not under
any requirement to offer the Program and that participation in the
Program is voluntary.
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\12\ See notes 8, 9 & 10, supra.
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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. As noted above, multiple
equities exchanges currently offer retail price improvement programs,
and investors can readily choose to direct retail order flow to any of
the other available programs (including the NYSE Retail Liquidity
Program or the proposed NYSE National Retail Liquidity Program, both of
which are structured similarly to the Program). Accordingly, the
Exchange does not believe that the discontinuation of the Program would
harm 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
The Exchange has filed the proposed rule change pursuant to section
19(b)(3)(A)(iii) of the Act \13\ and Rule 19b-4(f)(6) thereunder.\14\
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
[[Page 57982]]
proposed rule change has become effective pursuant to section
19(b)(3)(A) of the Act \15\ and Rule 19b-4(f)(6)(iii) thereunder.\16\
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\13\ 15 U.S.C. 78s(b)(3)(A)(iii).
\14\ 17 CFR 240.19b-4(f)(6).
\15\ 15 U.S.C. 78s(b)(3)(A).
\16\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires the Exchange to give the Commission written notice of the
Exchange's 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.
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A proposed rule change filed under Rule 19b-4(f)(6) \17\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b4(f)(6)(iii),\18\ 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 immediately upon filing. As discussed above, the
Exchange states that this proposed change would remove impediments to
and perfect the mechanism of a free and open market and a national
market system and would not be inconsistent with the public interest or
the protection of investors because it would remove the Program from
the rulebook of Exchange and prevent potential confusion among market
participants regarding the availability of the Program. The Exchange
also states that retiring the Program should not harm investors
because: (1) NYSE, an affiliated exchange, will continue to offer a
similarly structured Retail Liquidity Program, and (2) NYSE National,
an affiliated exchange, proposes to introduce a Retail Liquidity
Program concurrent with this Program's discontinuance. The Exchange
further states that both its offering of the Program and participation
therein by ETP Holders are voluntary. The Commission believes that
waiver of the operative delay is consistent with the protection of
investors and the public interest because it will reduce the likelihood
of any potential confusion among market participants regarding the
availability of the Program on the Exchange. Accordingly, the
Commission hereby waives the 30-day operative delay and designates the
proposal operative upon filing.\19\
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\17\ 17 CFR 240.19b-4(f)(6).
\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's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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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) \20\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\20\ 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="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#552720393078363a3838303b2126152630367b323a23"><span class="__cf_email__" data-cfemail="7604031a135b15191b1b131802053605131558111900">[email protected]</span></a>. Please include
file number SR-NYSEARCA-2023-55 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-NYSEARCA-2023-55. 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="https://www.sec.gov/rules/sro.shtml">https://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
a.m. and 3 p.m. Copies of the filing also will be available for
inspection and copying at the principal office of the Exchange. Do not
include personal identifiable information in submissions; you should
submit only information that you wish to make available publicly. We
may redact in part or withhold entirely from publication submitted
material that is obscene or subject to copyright protection. All
submissions should refer to file number SR-NYSEARCA-2023-55 and should
be submitted on or before September 14, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\21\
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\21\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-18189 Filed 8-23-23; 8:45 am]
BILLING CODE 8011-01-P
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