Notice2024-29927
Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 309
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
December 18, 2024
Issuing agencies
Securities and Exchange Commission
Full Text
<html>
<head>
<title>Federal Register, Volume 89 Issue 243 (Wednesday, December 18, 2024)</title>
</head>
<body><pre>
[Federal Register Volume 89, Number 243 (Wednesday, December 18, 2024)]
[Notices]
[Pages 103030-103032]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-29927]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-101900; File No. SR-NYSE-2024-79]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend Rule 309
December 12, 2024.
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 December 10, 2024, 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.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 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 amend Rule 309 to permit direct debiting
of undisputed or final fees or other sums due the Exchange by member
organizations with one or more equity trading licenses and each
applicant for an equities trading license. 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 amend Rule 309 (Failure to Pay Exchange
Fees) to permit direct debiting of undisputed or final fees or other
sums due to the Exchange by member organizations with one or more
equity trading licenses and each applicant for an equities trading
license.
Rule 309 currently governs failure to pay Exchange fees, except for
fines levied in connection with a disciplinary action governed by Rule
8320 of the Exchange's disciplinary rules or failure to make timely
payment of trading license fee installments as governed by Rule 300(h).
The Exchange proposes to require member organizations that hold an
equities trading license, and each applicant for an equities trading
license, to provide one or more clearing account numbers that
correspond to an account(s) at the National Securities Clearing
Corporation (``NSCC'') for purposes of permitting the Exchange to
collect through direct debit any undisputed or final fees and/or other
sums due to the Exchange. The Exchange would, however, permit a member
organization or applicant for a trading license to opt-out of the
requirement to provide NSCC clearing account numbers and establish
alternative payment arrangements. In addition, consistent with current
Rule 309, the proposed change would not apply to disciplinary fines or
monetary sanctions governed by Rule 8320 or failures to make payment of
trading license fees governed by Rule 300(h). The proposed rule would
also not apply to regulatory fees related to the Central Registration
Depository (``CRD system''), which are collected by the Financial
Industry Regulatory Authority, Inc. (``FINRA'').\4\ The proposed change
is based on the rules of the Exchange's affiliates NYSE American LLC
(``NYSE American''), NYSE Arca, Inc. (``NYSE Arca''), NYSE Chicago,
Inc. (``NYSE Chicago''), NYSE National, Inc. (``NYSE National'') as
well as the rules of other exchanges.\5\
---------------------------------------------------------------------------
\4\ The CRD system is the central licensing and registration
system for the U.S. securities industry. The CRD system enables
individuals and firms seeking registration with multiple states and
self-regulatory organizations to do so by submitting a single form,
fingerprint card and a combined payment of fees to FINRA. Through
the CRD system, FINRA maintains the qualification, employment and
disciplinary histories of registered associated persons of broker-
dealers. Certain of the regulatory fees provided in the Price List
are collected and retained by FINRA via the CRD system for the
registration of employees of member organizations of the Exchange
that are not FINRA members. These fees would be excluded from direct
debiting.
\5\ See NYSE American Rule 41 (Collection of and Failure to Pay
Exchange Fees); NYSE Arca Rule 3.7 (Dues, Fees and Charges); NYSE
Chicago Article 7, Rule 11 (Fixing and Payng Fees and Charges; NYSE
National Rule 2.9 (Dues, Assessments and Other Charges). See also,
e.g., Members Exchange Rule 15.3(a) (Collection of Exchange Fees and
Other Claims and Billing Policy); Investors Exchange Rule 15.120
(Collection of Exchange Fees and Other Claims and Billing Policy);
The Nasdaq Stock Market LLC Equity 7, Section 70 (Collection of
Exchange Fees and Other Claims and Billing Policy); Nasdaq BX, Inc.
Equity 7, Section 111 (Collection of Exchange Fees and Other Claims
and Billing Policy); and Nasdaq PHLX Equity 7, Section 2 (Collection
of Exchange Fees and Other Claims). The Exchange's current billing
disputes policy is set forth under ``I'' of the General section in
its Price List, available at <a href="https://www.nyse.com/publicdocs/nyse/markets/nyse/NYSE_Price_List.pdf">https://www.nyse.com/publicdocs/nyse/markets/nyse/NYSE_Price_List.pdf</a>, and provides that all fee disputes
must be submitted no later than sixty days after receipt of a
billing invoice. This proposed change does not modify or rescind the
Exchange's billing disputes policy, and that policy would continue
to apply to all billing disputes.
---------------------------------------------------------------------------
[[Page 103031]]
Under the proposal, the Exchange would send a monthly invoice to
each equities member organization, generally on the 5th business day of
each month as is currently the practice, for the debit amount due to
the Exchange for the prior month. The Exchange would also send files to
NSCC each month by the 11th business day of the month in order to
initiate the debit of the amount due to the Exchange as provided for in
the prior month's invoice.\6\ The Exchange anticipates that NSCC will
process the debits on the day it receives the file or the following
business day. Because member organizations would be provided with an
invoice approximately 1 week before the debit date, member
organizations will have adequate time to contact the Exchange with any
questions concerning the invoice. If a member organization disagrees
with the invoice in whole or in part, the Exchange would not commence
the debit for the disputed amount until the dispute is resolved.
Specifically, the Exchange would not include the disputed amount (or
the entire invoice if it is not feasible to identify the disputed
amounts) in the NSCC debit amount where the member organization
provides written notification of the dispute to the Exchange by the
later of the 15th of the month, or the following business day if the
15th is not a business day, and the amount in dispute is at least
$10,000 or greater.
---------------------------------------------------------------------------
\6\ As discussed below, if a member organization disputes an
invoice, the Exchange would not include the disputed amount in the
automatic debit if the member organization has disputed the amount
in writing to the Exchange by the 15th of the month, or the
following business day if the 15th is not a business day, and the
disputed amount is at least $10,000 or greater. As a practical
matter, the Exchange would not send a file to the NSCC until the
proposed time in Rule 309 for a member organization to dispute an
invoice subject to automatic debit has passed.
---------------------------------------------------------------------------
Following receipt of the file from the Exchange, NSCC would proceed
to debit the amounts indicated from the account of the member
organization that clears the applicable transactions (``Clearing Member
Organization,'' i.e., either a member organization that is self-
clearing or another member organization that provides clearing services
on behalf of the member organization) and disburse such amounts to the
Exchange. Where a member organization clears through another member
organization, the Exchange understands that the estimated transaction
fees owed to the Exchange are typically debited by the Clearing Member
Organization on a daily basis using daily transaction detail reports
provided by the Exchange to the Clearing Member Organization in order
to ensure adequate funds have been escrowed. The Exchange notes that it
is proposing to permit a member organization to designate one or more
clearing account numbers that correspond to an account(s) at NSCC to
permit member organizations that clear through multiple different
clearing accounts to set up the billing process with the Exchange in a
manner that is most efficient for internal reconciliation and billing
purposes of the member organization.
The Exchange believes that the proposed debiting process would
provide an efficient method of collecting undisputed or final fees and/
or sums due to the Exchange consistent with the practice on its
affiliated exchanges and other exchanges.\7\ Moreover, the Exchange
believes that it is reasonable to permit member organizations and
applicants for equities trading licenses to opt-out of the requirement
to provide an NSCC account number to permit direct debiting and instead
establish alternative payment arrangements. Finally, the Exchange
believes that it is also reasonable to provide for a $10,000 limitation
on pre-debit billing disputes since it would be inefficient to delay a
direct debit for a de minimis amount. Member organizations would still
be able to dispute billing amounts that are less than $10,000 pursuant
to the billing policy set forth in the Price List.\8\
---------------------------------------------------------------------------
\7\ See note 5, supra.
\8\ See note 5, supra.
---------------------------------------------------------------------------
To effectuate this change, the Exchange would add ``Collection of
and'' before ``Failure to Pay Exchange Fees'' in the heading of Rule
309. The Exchange would also add the following new subsection (a) to
Rule 309 (italicized):
(a) Collection of Exchange Fees. Each member organization that
has one or more equity trading licenses, and each applicant for an
equities trading license, shall be required to provide one or more
clearing account numbers that correspond to an account(s) at the
National Securities Clearing Corporation (``NSCC'') for purposes of
permitting the Exchange to collect through direct debit any
undisputed or final fees and/or other sums due to the Exchange;
provided, however, that a member organization or applicant may
request to opt-out of the requirement to provide an NSCC clearing
account number and establish alternative payment arrangements. If a
member organization disputes an invoice, the Exchange will not
include the disputed amount in the debit if the member has disputed
the amount in writing to the Exchange by the 15th of the month, or
the following business day if the 15th is not a business day, and
the amount in dispute is at least $10,000 or greater. The Exchange
will not debit fees related to the CRD system set forth in the NYSE
Price List, which are collected and retained by FINRA.
The current two paragraphs of Rule 309 would become new subsection
(b), which would be titled ``Failure to Pay Exchange Fees.''
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
and a national market system and, in general, to protect investors and
the public interest. Specifically, the Exchange believes that the
proposed direct debit process would provide member organizations with
an efficient process to pay undisputed or final fees and/or sums due to
the Exchange.
---------------------------------------------------------------------------
\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The Exchange believes that the proposal to debit NSCC accounts
directly is reasonable because it would ease the administrative burden
on member organizations of paying monthly invoices and avoiding overdue
balances, and would provide efficient collection from all member
organizations who owe monies to the Exchange. Moreover, the Exchange
believes that the minimum time frame provided to member organizations
to dispute invoices is reasonable and adequate to enable member
organizations to identify potentially erroneous charges. In addition,
the Exchange believes that the $10,000 limitation on pre-debit billing
disputes is reasonable because it would be inefficient to delay a
direct debit for a de minimis amount. The same $10,000 limitation is in
place on exchanges that have adopted direct debit rules.\11\ Member
organizations will still be able to dispute billing amounts that are
less than $10,000 pursuant to the Exchange's Price List. Finally, the
Exchange believes that it is reasonable to permit member organizations
or applicants to request to opt-out of the requirement to provide NSCC
account information and instead establish alternative payment
arrangements with the Exchange.
---------------------------------------------------------------------------
\11\ See note 5, supra.
---------------------------------------------------------------------------
[[Page 103032]]
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 rule change
would apply uniformly to all member organizations that have one or more
trading licenses and to all applicants for equities trading licenses,
and will not disproportionately burden or otherwise impact any single
member organization.
The Exchange does not believe that the proposal will create an
intermarket burden on competition since the Exchange will only debit
fees (other than de minimis fees below $10,000) that are undisputed by
the member organization and member organizations will have a reasonable
opportunity to dispute the fees both before and after the direct debit
process. In addition, member organizations will have a reasonable
opportunity to opt-out of the requirement to provide clearing account
information and instead adopt alternative payment arrangements.
The Exchange also does not believe that the proposal will create an
intramarket burden on competition, since the proposed direct debit
process will be applied equally to all member organizations. Moreover,
other exchanges (including the Exchange's affiliates) utilize a similar
process which the Exchange believes is generally familiar to member
organizations. Consequently, the Exchange does not believe that the
proposal raises any new or novel issues that have not been previously
considered by the Commission in connection with direct debit and
billing policies of other exchanges. Further, this proposal is expected
to provide a cost savings to the Exchange in that it would alleviate
administrative processes related to the collection of monies owed to
the Exchange. In addition, the debiting process would mitigate against
member organization accounts becoming overdue.
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 \12\ and Rule 19b-4(f)(6) thereunder.\13\
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)(iii) of the Act \14\ and subparagraph (f)(6) of
Rule 19b-4 thereunder.\15\
---------------------------------------------------------------------------
\12\ 15 U.S.C. 78s(b)(3)(A)(iii).
\13\ 17 CFR 240.19b-4(f)(6).
\14\ 15 U.S.C. 78s(b)(3)(A)(iii).
\15\ 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 satisfied this requirement.
---------------------------------------------------------------------------
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) \16\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
---------------------------------------------------------------------------
\16\ 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="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#5123243d347c323e3c3c343f2522112234327f363e27"><span class="__cf_email__" data-cfemail="99ebecf5fcb4faf6f4f4fcf7edead9eafcfab7fef6ef">[email protected]</span></a>. Please include
file number SR-NYSE-2024-79 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-2024-79. 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-NYSE-2024-79 and should be
submitted on or before January 8, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
---------------------------------------------------------------------------
\17\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-29927 Filed 12-17-24; 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 December 18, 2024.
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.