Notice2024-07220
Self-Regulatory Organizations; NYSE American LLC; Notice of Filing and Immediate Effectiveness of Proposed Change To Amend Rules 7.4E, 64, 236, and 257, as Well as Sections 510, 512, and 521 of the NYSE American LLC Company Guide
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
April 5, 2024
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 89 Issue 67 (Friday, April 5, 2024)</title>
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[Federal Register Volume 89, Number 67 (Friday, April 5, 2024)]
[Notices]
[Pages 24049-24051]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-07220]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-99872; File No. SR-NYSEAMER-2024-23]
Self-Regulatory Organizations; NYSE American LLC; Notice of
Filing and Immediate Effectiveness of Proposed Change To Amend Rules
7.4E, 64, 236, and 257, as Well as Sections 510, 512, and 521 of the
NYSE American LLC Company Guide
April 1, 2024.
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 March 25, 2024, NYSE American LLC (``NYSE American'' or the
``Exchange'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I and II
below, which Items have been prepared by the self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 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 Rules 7.4E, 64, 236, and 257, as
well as Sections 510, 512, and 521 of the NYSE American LLC Company
Guide, to conform to amendments to Rule 15c6-1(a) of the Act to shorten
the standard settlement cycle for most broker-dealer transactions from
two business days after the trade date (``T+2'') to one business day
after the trade date (``T+1''). 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
On March 6, 2023, the Commission adopted amendments to Rule 15c6-
1(a) of the Act to shorten the standard settlement cycle for most
broker-dealer transactions from T+2 to T+1.\3\ Accordingly, the
Exchange proposes to amend the rules identified below to conform with
the amendments to Rule 15c6-1(a) and reflect a standard settlement
cycle of T+1:
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\3\ See Securities Exchange Act Release No. 96930, 88 FR 13872
(March 6, 2023) (``T+1 Adopting Release'').
<bullet> Rule 7.4E (Ex-Dividend or Ex-Rights Dates)
<bullet> Rule 64 (Equities. Bonds, Rights and 100-Share-Unit Stocks)
<bullet> Rule 236 (Equities.Ex-Warrants)
<bullet> Rule 257 (Equities. Deliveries After `Ex' Date)
<bullet> Section 510 of the NYSE American LLC Company Guide (Two Day
Delivery Plan)
<bullet> Section 512 of the NYSE American LLC Company Guide (Ex-
Dividend Procedure)
Proposed Rule Change
The Exchange proposes the following changes to reflect a T+1
settlement cycle.
<bullet> Rule 7.4E currently provides that transactions in stocks
traded regular way are generally ``ex-dividend'' or ``ex-rights'' on
the business day preceding the record date or the date of the closing
of transfer books, or else on the second preceding business day when
the record date or closing of transfer books occurs on a non-business
day. To reflect settlement on T+1 rather than T+2, the Exchange
proposes to amend this rule to provide that transactions would be ex-
dividend or ex-rights on the record date or date of the closing of
transfer books, or on the preceding business day when the record date
or closing of transfer books occurs on a non-business day.
<bullet> Current Rule 64(a)(i) defines regular way delivery as
occurring on the second business day following the day of the contract.
To conform with the transition to a T+1 settlement cycle, the Exchange
proposes to amend Rule 64(a)(i) to delete the word ``second,'' such
that the rule would provide that regular way delivery occurs on the
business day following the day of the contract.\4\
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\4\ The Exchange also proposes to delete the obsolete
parenthetical reference to Rule 14 in current Rule 64(a)(i), as Rule
14 is not applicable to trading on the Pillar platform. 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). The Exchange further proposes to delete Rules
64(a)(ii), 64(b), and 64(c), as the non-regular way settlement
options described in such rules are no longer available on the
Exchange. See id. The Exchange also proposes non-substantive
conforming changes in Rule 64(a) to reflect the deletion of Rules
64(a)(ii), 64(b), and 64(c).
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<bullet> Current Rule 236 \5\ provides that ex-warrant trading will
begin on the business day preceding the date of expiration of the
warrants, except that when expiration occurs on a non-business day, it
will begin on the second business day preceding expiration. To conform
with a T+1 settlement cycle, the Exchange proposes to delete the phrase
``the business day preceding,'' such that the rule would provide that
these transactions would be ex-warrants on the date of expiration, and
the word ``second,'' such that the rule would provide for expiration on
the business day preceding expiration when
[[Page 24050]]
expiration occurs on a non-business day.\6\
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\5\ The Exchange also proposes to amend the section header above
Rule 236 to conform it with the current title and substance of Rule
236.
\6\ The Exchange also proposes to delete the parenthetical
reference to Rule 14 because, as noted above, Rule 14 is no longer
applicable to trading on the Exchange. See note 4, supra.
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<bullet> Current Rule 257 provides that when a security is sold
before it is ex-dividend or ex-rights and delivery is made too late to
enable the buyer to obtain transfer in time to become a holder of
record to receive the distribution to be made with respect to such
security, the seller shall pay or deliver the distribution to the buyer
as set forth in this rule. In the case of stock dividends or rights to
subscribe, the seller must deliver to the buyer within two days after
the record date either the dividend or rights (or due-bill for the
same). In the case of cash dividends, the seller must deliver to the
buyer within two days after the record date a due-bill-check for the
amount of the dividend. The Exchange proposes to amend Rule 257 to
replace the references to ``two days after the record date'' with
references to ``one day after the record date,'' to conform with the
transition to a T+1 settlement cycle.\7\
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\7\ The Exchange further proposes to delete the reference to
Rule 14 because, as noted above, Rule 14 is no longer applicable to
trading on the Exchange. See note 4, supra.
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<bullet> Section 510 of the NYSE American LLC Company Guide
provides that transactions effected regular way on the Exchange are due
for settlement in two business days. To conform with the transition
from T+2 to T+1 settlement, the Exchange proposes to amend Section 510
to provide that transactions on the Exchange will be settled in one
business day and are due for settlement on the business day after the
transaction date. The Exchange further proposes to amend the days of
the week in the example provided in Section 510 from Tuesday to Monday
and from Wednesday to Tuesday, to reflect the shortened settlement
cycle.
<bullet> Section 512 of the NYSE American LLC Company Guide
currently provides that transactions are ex-dividend on the business
day preceding the record date, except that if the record date is not a
business day, the transaction would be ex-dividend on the second
preceding business day. To conform with T+1 settlement, the Exchange
proposes to amend Section 512 to provide that transactions would be ex-
dividend on the record date or, if the record date is a non-business
day, on the preceding business day.\8\
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\8\ The Exchange also proposes to delete references to cash
transactions in Section 521 as obsolete. See note 4, supra.
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Implementation
The Exchange proposes that the operative date of this proposed rule
change will be Tuesday, May 28, 2024, which is the compliance date
specified in the T+1 Adopting Release, or such later date as may be
announced by the Commission for compliance with the amendments to Rule
15c6-1(a) set forth in the T+1 Adopting Release.\9\ With the
implementation of the T+1 settlement cycle and as described in the
proposed changes outlined above, the ex-dividend date for ``normal''
distributions will be the same business day as the record date.
Accordingly, the Exchange proposes that Wednesday, May 29, 2024 would
be the first date to which the proposed rules described herein would
apply (i.e., the first record date to which the new ex-dividend date
rationale will be applied). During the implementation of the T+1
settlement cycle, the Exchange proposes that the ex-dividend dates will
be as follows:
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\9\ See note 3, supra.
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Record date Ex-dividend date
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May 24, 2024.............................. May 23, 2024.
May 28, 2024.............................. May 24, 2024.
May 29, 2024.............................. May 29, 2024.
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A record date of Friday, May 24, 2024 would be a date prior to the
effective date of the amendments to Rule 15c6-1(a) of the Act to
shorten the standard settlement cycle for most broker-dealer
transactions from T+2 to T+1.\10\ The rules described above would apply
to this record date in their current form and, thus, the ``ex-dividend
date'' would be the first business day preceding the record date or
Thursday, May 23, 2024. Monday, May 27, 2024 is Memorial Day, which is
an Exchange holiday; accordingly, there would be no record date on a
holiday. A record date of Tuesday, May 28, 2024 would also fall under
the Exchange's current rules, and the first business day preceding such
record date would be Friday, May 24, 2024. On Wednesday, May 29, 2024,
the proposed rules described above would apply, such that, for the
record date of May 29, 2024, the ``ex-dividend date'' would be the same
business day.
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\10\ See note 3, supra.
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The Exchange will issue a Trader Notice regarding the
implementation of the proposed rule change and T+1 settlement cycle,
which date would correspond with the industry-led transition to a T+1
standard settlement, and the compliance date of the Commission's
amendment of Rule 15c6-1(a) of the Act to require standard settlement
no later than T+1.
2. Statutory Basis
The Exchange believes that 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) of the Act,\12\ in particular, because it
is designed to prevent fraudulent and manipulative acts and practices,
promote just and equitable principles of trade, to foster cooperation
and coordination with persons engaged in regulating, clearing,
settling, processing information with respect to, and 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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In particular, the proposed rule change would amend the Exchange's
rules to reflect a standard settlement cycle of T+1, in support of the
industry-led initiative to shorten the settlement cycle to one business
day. Moreover, the proposed rule change is consistent with the
Commission's amendments to Rule 15c6-1(a) of the Act to require
standard settlement no later than T+1. The Exchange believes that the
proposed rule change would provide regulatory certainty to facilitate
the industry-led move to a T+1 settlement cycle. The Exchange further
believes that, by shortening the time period for settlement of most
securities transactions, the proposed rule change would protect
investors and the public interest by reducing the number of unsettled
trades in the clearance and settlement system at any given time,
thereby reducing the risk inherent in settling securities transactions
to clearing corporations, their members, and public investors.
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 support the
industry's transition to a T+1 regular-way settlement cycle in
conformity with the Commission's amendment of Rule 15c6-1(a). The
proposed change amends the Exchange's rules pertaining to securities
settlement, which rules would apply uniformly to all contracts for the
purchase or sale of a security (other than exempted securities) that
provide for payment of funds and delivery of securities that occur on
the Exchange or
[[Page 24051]]
other self-regulatory organizations and is intended to facilitate the
industry-wide transition to a T+1 settlement cycle. The Exchange also
believes that the proposed rule change will serve to promote clarity
and consistency in its rules, thereby reducing burdens on the
marketplace and facilitating investor protection. Accordingly, the
Exchange believes that the proposed changes do not impose any burden on
competition other than that necessary to implement the amendments to
Rule 15c6-1(a) of the Act as set forth in the T+1 Adopting Release.\13\
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\13\ See note 3, supra.
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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
Because the foregoing proposed rule change does not:
(i) significantly affect the protection of investors or the public
interest;
(ii) impose any significant burden on competition; and
(iii) become operative for 30 days from the date on which it was
filed, or such shorter time as the Commission may designate, it has
become effective pursuant to Section 19(b)(3)(A) of the Act and Rule
19b-4(f)(6) thereunder.
At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act.
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#a4d6d1c8c189c7cbc9c9c1cad0d7e4d7c1c78ac3cbd2"><span class="__cf_email__" data-cfemail="7b090e171e56181416161e150f083b081e18551c140d">[email protected]</span></a>. Please include
file number SR-NYSEAMER-2024-23 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-NYSEAMER-2024-23. 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-NYSEAMER-2024-23 and should
be submitted on or before April 26, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2024-07220 Filed 4-4-24; 8:45 am]
BILLING CODE 8011-01-P
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