Notice2025-04338
Self-Regulatory Organizations; NYSE Chicago, Inc.; Notice of Filing of Proposed Rule Change for Amendments to Rules 1.1, 5, 7.18, 8 and Article 22, Rules 24-27
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
March 18, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 90 Issue 51 (Tuesday, March 18, 2025)</title>
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[Federal Register Volume 90, Number 51 (Tuesday, March 18, 2025)]
[Notices]
[Pages 12578-12587]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-04338]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-102617; File No. SR-NYSECHX-2025-04]
Self-Regulatory Organizations; NYSE Chicago, Inc.; Notice of
Filing of Proposed Rule Change for Amendments to Rules 1.1, 5, 7.18, 8
and Article 22, Rules 24-27
March 12, 2025.
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 March 10, 2025, the NYSE Chicago, Inc.
[[Page 12579]]
(``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes amendments to Rules 5, 7.18, and 8 based on
the rules of its affiliate NYSE Arca, Inc., to permit the listing and
trading of certain Exchange Traded Products on the Exchange, and to
Rule 1.1 to include Exchange-Traded Fund Shares in the definition of
``UTP Derivative Securities Product.'' The Exchange also propose to
delete redundant listing rules set forth in Article 22, Rules 24-27.
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 amendments to (1) Rules 5, 7.18, and 8 to
permit the listing and trading of certain Exchange Traded Products
(``ETP'') on the Exchange,\4\ and (2) Rule 1.1 to include Exchange-
Traded Fund Shares in the definition of ``UTP Derivative Securities
Product.'' The proposed rule changes would adopt the initial and
continued listing standards for these products based on the rules of
the Exchange's affiliate NYSE Arca, Inc (``NYSE Arca'') without
substantive change. The Exchange also proposes to delete redundant
listing rules in Article 22, Rules 24-27.
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\4\ Rule 1.1(k) defines ``Exchange Traded Product'' as a
security that meets the definition of ``derivative securities
product'' in Rule 19b-4(e) under the Securities and Exchange Act of
1934 (the ``Act'').
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Background
Current rules permit the trading on the Exchange of securities,
including ETPs, on an unlisted trading privileges (``UTP'') basis. Rule
1.1(k) defines ``UTP Exchange Traded Product'' to mean one of the
following ETPs that trades on the Exchange on a UTP basis:
<bullet> Equity Linked Notes, Investment Company Units listed
pursuant to NYSE Arca Rule 5.2-E(j)(3) and Index Fund Shares listed
pursuant to Cboe BZX Exchange, Inc. (``Cboe BZX'') Rule 14.11(c) or
Nasdaq Stock Exchange LLC (``Nasdaq'') Rule 5705(b);
<bullet> Index-Linked Exchangeable Notes;
<bullet> Equity Gold Shares;
<bullet> Equity Index-Linked Securities;
<bullet> Commodity-Linked Securities;
<bullet> Currency-Linked Securities;
<bullet> Fixed-Income Index-Linked Securities;
<bullet> Futures-Linked Securities;
<bullet> Multifactor-Index-Linked Securities;
<bullet> Trust Certificates;
<bullet> Currency and Index Warrants;
<bullet> Portfolio Depository Receipts;
<bullet> Trust Issued Receipts;
<bullet> Commodity-Based Trust Shares;
<bullet> Currency Trust Shares;
<bullet> Commodity Index Trust Shares;
<bullet> Commodity Futures Trust Shares;
<bullet> Partnership Units;
<bullet> Paired Trust Shares;
<bullet> Trust Units, Managed Fund Shares;
<bullet> Managed Trust Securities;
<bullet> Managed Portfolio Shares; and
<bullet> Active Proxy Portfolio Shares listed pursuant to NYSE
Arca, Inc. Rule 8.601-E, Tracking Fund Shares listed pursuant to Cboe
BZX Rule 14.11(m), and Proxy Portfolio Shares listed pursuant to Nasdaq
Rule 5750.
The Exchange proposes substantially identical rules to those of
NYSE Arca for the qualification and listing of ETPs on the Exchange.
Each proposed rule corresponds to the same rule number as the NYSE Arca
rule on which it is based and each is being adopted in substantially
the same form.
Proposed Rule Change
The Exchange proposes certain non-substantive, technical and
conforming changes throughout the proposed rules, as follows. In
addition to minor spelling, grammatical and other similar changes and
edits, the Exchange proposes to use:
<bullet> ``Exchange'' rather than ``NYSE Arca'' or ``NYSE Arca
Marketplace'';
<bullet> ``will'' rather than ``shall'';
<bullet> ``Participant'' rather than ``ETP Holder'' to reflect the
Exchange's membership structure; and
<bullet> ``Core Trading Hours'' rather than ``NYSE Arca Marketplace
trading hours.''
Further, as discussed below, the Exchange proposes to amend Rule
7.18 (Halts) to add a new section (c)(2) governing trading halts for
listed ETPs based on the corresponding NYSE Arca rule. The proposed
rules would accordingly reference Rule 7.18.
Rule 1.1
The Exchange proposes to amend Rule 1.1, which sets forth
definitions of terms used in Exchange rules, including the meanings of
``Derivative Securities Product'' and ``UTP Derivative Securities
Product.'' Specifically, the Exchange proposes to amend the definition
of ``UTP Derivative Securities Product'' to include Exchange-Traded
Fund Shares listed pursuant to NYSE Arca Rule 5.2-E(j)(8), Exchange-
Traded Fund Shares listed pursuant to New York Stock Exchange LLC
(``NYSE'') Rule 5.2(j)(8), Exchange-Traded Fund Shares listed pursuant
to Cboe BZX Rule 14.11(l), and Exchange Traded Fund Shares listed
pursuant to Nasdaq Rule 5704 as additional types of Exchange Traded
Product (``ETPs'') that may trade on the Exchange pursuant to unlisted
trading privileges (``UTP'').
To effect this change, the Exchange proposes to add a bullet point
listing ``Exchange Traded Fund Shares listed pursuant to NYSE Arca,
Inc. Rule 5.2-E(j)(8), New York Stock Exchange LLC (``NYSE'') Rule
5.2(j)(8), or Cboe BZX Rule 14.11(l) and Exchange Traded Fund Shares
listed pursuant to Nasdaq Stock Market LLC Rule 5704'' at the end of
Rule 1.1 to include them in the enumerated list of Derivative
Securities Products that may trade on the Exchange. The Exchange also
proposes non-substantive changes to accommodate the addition of this
bullet point as the final item in the bulleted list in Rule 1.1.
The Exchange believes that the proposed change would ensure that
the definition of ``UTP Derivative Securities Product'' in Rule 1.1
reflects a complete list of Derivative Securities Products that may
trade on the Exchange pursuant to UTP, thereby improving the clarity
and transparency of Exchange Rules.
Proposed Rule 5--Exchange Traded Products Listing Requirements
The Exchange proposes to amend Rule 5, titled ``Trading on an
Unlisted
[[Page 12580]]
Trading Privileges Basis,'' \5\ to add listing (proposed Rule 5.2) and
continued listing (proposed Rule 5.5) rules, as follows.
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\5\ Rule 5 would be re-named ``Exchange Traded Products Listed
and Traded [sic].''
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Proposed Rules 5.2(j)(2)-(j)(8)
Proposed Rules 5.2(j)(2)-(j)(8) would permit the Exchange to list
and trade the following ETPs:
<bullet> Equity Linked Notes that (proposed Rule 5.2(j)(2));
<bullet> Investment Company Units (proposed Rule 5.2(j)(3));
<bullet> Index-Linked Exchangeable Notes (proposed Rule 5.2(j)(4));
<bullet> Equity Gold Shares (proposed Rule 5.2(j)(5));
<bullet> Equity Index Linked Securities, Commodity-Linked
Securities, Currency-Linked Securities, Fixed Income Index-Linked
Securities, Futures-Linked Securities, and Multifactor Index-Linked
Securities (proposed Rule 5.2(j)(6));
<bullet> Trust Certificates (proposed Rule 5.2(j)(7)); and
<bullet> Exchange-Traded Securities (proposed Rule 5.2(j)(8)).
The text of these proposed rules is identical to NYSE Arca Rules
5.2-E(j)(2)-5.2(j)(8), other than certain non-substantive and technical
differences explained below.
In order to maintain the same rule numbers as the NYSE Arca rules,
the Exchange proposes to mark paragraphs 5.2(a)-(i) \6\ and (j)(1) \7\
as ``Reserved.''
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\6\ NYSE Arca Rules 5.2-E(a) and (b) relate to certain
requirements and structures unique to NYSE Arca, while NYSE Arca
Rules 5.2-E(c)-(g) relate to listing standards for securities that
are not ETPs. Finally, NYSE Arca Rule 5.2-E(h) pertains to Unit
Investment Trusts (``UITs'') that the Exchange proposes to list and
trade pursuant to proposed Rule 5.2(j)(3) (Investment Company Units)
or proposed Rule 8.100 (Portfolio Depository Receipts).
\7\ NYSE Arca Rule 5.2-E(j)(1) pertains to ``Other Securities''
not otherwise covered by the requirements contained in the other
listing rules of NYSE Arca. Article 22, Rule 13 is the Exchange's
comparable rule. See the discussion, infra.
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Proposed Rule 5.2(j)(2)--Equity Linked Notes (``ELNs'')
Proposed Rule 5.2(j)(2) would provide rules for the listing and
trading of ELNs. Other than certain non-substantive, technical and
conforming changes described above and substitution of the Exchange's
delisting rule contained in Article 22, Rule 4 for NYSE Arca's
delisting rule, there are no substantive differences between the
proposed rule and NYSE Arca Rule 5.2-E(j)(2).
Proposed Rule 5.2(j)(3)--Investment Company Units
Proposed Rule 5.2(j)(3) would provide rules for the listing and
trading of investment company units, a security that represents an
interest in a registered investment company that could be organized as
a unit investment trust, an open-end management investment company, or
similar entity. Other than certain non-substantive, technical and
conforming changes described above and substitution of the Exchange's
delisting rule contained in Article 22, Rule 4 for NYSE Arca's
delisting rule, there are no substantive differences between the
proposed rule and NYSE Arca Rule 5.2-E(j)(3).
Proposed Rule 5.2(j)(4)--Index-Linked Exchangeable Notes
Proposed Rule 5.2(j)(4) would provide rules for the listing and
trading of index-linked exchangeable notes, which are debt securities
exchangeable at the option of the holder (subject to certain
requirements). In addition to certain non-substantive, technical and
conforming changes described above, the Exchange proposes the following
additional non-substantive differences between the proposed rule and
NYSE Arca Rule 5.2-E(j)(4): \8\
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\8\ The changes are similar to those made by the Exchange's
affiliate NYSE when it adopted NYSE Arca Rule 5.2-E(j)(4). See NYSE
Rule 5.2(j)(4).
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<bullet> To qualify for listing and trading under NYSE Arca Rule
5.2-E(j)(4), an index-linked exchangeable note and its issuer must meet
the criteria set forth in NYSE Arca Rule 5.2-E(j)(1) (Other
Securities), except that the minimum public distribution would be
150,000 notes with a minimum of 400 public note-holders unless traded
in thousand dollar denominations, in which case there is no minimum
public distribution and number of holders. The Exchange proposes to
reference Article 22, Rule 13 (Tier 1 Listing Requirements for Other
Securities), the Exchange's rule that is comparable to NYSE Arca Rule
5.2-E(j)(1), in subparagraphs (a) and (c) of proposed Rule 5.2(j)(4) in
order to establish the criteria an issuer and issue must satisfy.
<bullet> To qualify for listing and trading under NYSE Arca Rule
5.2-E(j)(4), an index to which an exchangeable note is linked and its
underlying securities must meet (1) the procedures in NYSE Arca Rules
5.13-O(b)-(c); or (2) the criteria set forth in subsections (C) and (D)
of NYSE Arca Rule 5.2-E(j)(2), the index concentration limits set forth
in NYSE Arca Rule 5.13-O(b)(6), and Rule 5.13-O(b)(12) insofar as it
relates to Rule 5.13-O(b)(6).\9\
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\9\ NYSE Arca Rule 5.13-O sets forth criteria for narrow-based
and micro narrow-based indexes on which an options contract may be
listed without a rule filing under Section 19(b) of the Act. The
NYSE Arca rules incorrectly refer to NYSE Arca Rule 5.13-E(b) & (c).
The correct reference should be to NYSE Arca's options rules.
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The Exchange does not have and is not proposing a rule for listing
of index option contracts comparable to NYSE Arca Rule 5.13-O. The
Exchange hence proposes to retain the reference to NYSE Arca Rule 5.13-
O in paragraph (d) of proposed Rule 5.2(j)(4) and apply the criteria
set forth in NYSE Arca Rule 5.13-O in determining whether an index
underlying an index-linked exchangeable note satisfies the requirements
of proposed Rule 5.2(j)(4)(d).
<bullet> Replace ``further dealings of the Exchange'' in NYSE Arca
Rule 5.2-E(j)(4)(f)(v) with ``further dealings on the Exchange'' in
proposed Rule 5.2(j)(4)(f)(v).
<bullet> Finally, the Exchange proposes to reference its delisting
rule contained in Article 22, Rule 4 in subsections (f) and (g) for
NYSE Arca's delisting rule.
Proposed Rule 5.2(j)(5)--Equity Gold Shares
Proposed Rule 5.2(j)(5) would provide rules for the listing and
trading of equity gold shares, which represent units of fractional
undivided beneficial interest in and ownership of the Equity Gold
Trust. Other than certain non-substantive, technical and conforming
changes described above, there are no differences between the proposed
rule and NYSE Arca Rule 5.2-E(j)(5).
Proposed Rule 5.2(j)(6)--Index-Linked Securities
Proposed Rule 5.2(j)(6) would provide rules for the listing and
trading of index-linked securities, which are certificates representing
an interest in a special purpose trust created pursuant to a trust
agreement. In addition to certain non-substantive, technical and
conforming changes described above, the Exchange proposes the following
additional non-substantive differences between the proposed rule and
NYSE Arca Rule 5.2-E(j)(6): \10\
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\10\ The changes are similar to those made by the Exchange's
affiliate NYSE when it adopted this rule. See NYSE Rule 5.2(j)(6).
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<bullet> To qualify for listing and trading under NYSE Arca Rule
5.2-E(j)(6), both the issue and issuer of an index-linked security must
meet the criteria in NYSE Arca Rule 5.2-E(j)(1) (Other Securities),
with certain specified exceptions. The Exchange proposes to reference
Article 22, Rule 13 (Tier 1 Listing Requirements for Other Securities),
the Exchange's rule that is comparable to NYSE Arca Rule 5.2-E(j)(1),
in proposed Rule 5.2(j)(6) in order to establish the criteria an issue
and issuer must satisfy.
[[Page 12581]]
<bullet> The listing standards for Equity Index-Linked Securities
in NYSE Arca Rule 5.2-E(j)(6) reference NYSE Arca Rule 5.3-O in
describing the criteria for securities that compose 90% of an index's
numerical value and at least 80% of the total number of components.
Since the Exchange does not have and is not proposing a rule comparable
to NYSE Arca Rule 5.3-O, the Exchange proposes to reference to NYSE
Arca Rule 5.3-O in paragraph (B)(I)(1)(b)(2)(iv) of proposed Rule
5.2(j)(6) establishing the initial listing criteria that an index must
meet to trade on the Exchange.
<bullet> Finally, the Exchange proposes to reference its delisting
rule contained in Article 22, Rule 4 for NYSE Arca's delisting rule.
Proposed Rule 5.2(j)(7)--Trust Certificates
Proposed Rule 5.2(j)(7) would provide rules for the listing and
trading of trust certificates, which are securities representing an
interest in a special purpose trust created pursuant to a trust
agreement.
In addition to certain non-substantive, technical and conforming
changes described above, the Exchange proposes the following additional
non-substantive difference between the proposed rule and NYSE Arca Rule
5.2-E(j)(7).
<bullet> Commentary .08 to NYSE Arca Rule 5.2-E(j)(7) provides
that, in the event that the Trust Certificates are exchangeable at the
option of the holder and contains an Index Warrant, then the ETP Holder
must ensure that the holder's account is approved for options trading
in accordance with NYSE Arca Rule 9.2-E \11\ in order to exercise such
rights. The Exchange does not currently have and is not proposing to
add rules that pertain to the opening of accounts that are approved for
options trading. The Exchange thus proposes to require a Participant to
ensure that the account of a holder of a Trust Certificate that is
exchangeable, at the holder's option, into securities that participate
in the return of the applicable underlying asset is approved for
options trading in accordance with NYSE Arca Rule 9.18-O.
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\11\ NYSE Arca Rule 5.2-E(j)(7) incorrectly cites NYSE Arca Rule
9.2-E. The correct reference should be to NYSE Arca Rule 9.18-O,
which the Exchange proposes to adopt.
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<bullet> The Exchange proposes to reference its delisting rule
contained in Article 22, Rule 4 for NYSE Arca's delisting rule.
Proposed Rule 5.2(j)(8)--Exchange-Traded Fund Shares
Proposed Rule 5.2(j)(8) would establish ``generic'' listing
standards for listing and trading ETPs that are permitted to operate in
reliance on Rule 6c-11 under the Investment Company Act of 1940 (the
``1940 Act''). Other than certain non-substantive, technical and
conforming changes described above and substitution of the Exchange's
delisting rule contained in Article 22, Rule 4 for NYSE Arca's
delisting rule, there are no differences between the proposed rule and
NYSE Arca Rule 5.2-E(j)(8).
Proposed Rule 5.5
Proposed Rule 5.5 would set forth additional continued listing
standards and procedures that the Exchange would undertake for non-
compliant ETPs. The text of these proposed rules is identical to NYSE
Arca Rules 5.5-E(g)(2), (i)-1, and (j)-1, other than certain non-
substantive and technical differences describe above. In order to
maintain the same rule numbers as the NYSE Arca rules with respect to
rules that the Exchange does not propose to adopt, the Exchange would
mark paragraphs 5.5(a)-(g),\12\ (h)-(i),\13\ (j),\14\ and (k)-(m) \15\
as ``Reserved.''
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\12\ NYSE Arca Rule 5.5-E(a) relates to continued listing (i.e.,
maintenance) requirements and delisting procedures generally. NYSE
Arca Rule 5.5-E(b) through (g)(1) specify continuing listing
requirements for common stock (select market companies, equity
securities and similar issues); preferred stock and similar issues;
bonds and debentures; warrants; contingent value rights; and unit
investment trusts, respectively.
\13\ NYSE Rule 5.5-E(h) specifies continued listing requirements
for the common stock of development stage companies. NYSE Arca Rule
5.5-E(i) specifies continued listing requirements for the preferred
stock and similar issues.
\14\ NYSE Arca Rule 5.5-E(j) sets forth continued listing
requirements for bonds and debentures.
\15\ NYSE Rule 5.5-E(k) specifies continuing listing
requirements for warrants. NYSE Rules 5.5-E(l) and (m) set forth
delisting criteria and procedures, respectively.
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Proposed Rule 5.5(g)(2)
Proposed Rule 5.5(g)(2) would set forth continued listing criteria,
halt parameters and delisting criteria for investment company units
listed under proposed Rule 5.2(j)(3). Other than certain non-
substantive, technical and conforming changes described above and
substitution of the Exchange's delisting rule contained in Article 22,
Rule 4 for NYSE Arca's delisting rule, there are no substantive
differences between the proposed rule and NYSE Arca Rule 5.5-E(g)(2).
Proposed Rule 5.5(i)-1 \16\
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\16\ The heading of both NYSE Arca Rule 5.5-E(i)-1 and 5.5-E(j)-
1 state ``The Exchange will commence.'' The Exchange does not
propose to adopt the same heading for either rule.
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Proposed Rule 5.5(i)-1 would set forth continued listing criteria
and delisting criteria for securities listed pursuant to Article 22,
Rule 13. Other than certain non-substantive, technical and conforming
changes described above and substitution of the Exchange's delisting
rule contained in Article 22, Rule 4 for NYSE Arca's delisting rule,
there are no substantive differences between the proposed rule and NYSE
Arca Rule 5.5-E(g)(2).
Proposed Rule 5.5(j)-1
Proposed Rule 5.5(j)-1 would set forth continued listing criteria
and delisting criteria for ELNs listed under proposed Rule 5.2(j)(2).
Other than certain non-substantive, technical and conforming changes
described above and substitution of the Exchange's delisting rule
contained in Article 22, Rule 4 for NYSE Arca's delisting rule, there
are no substantive differences between the proposed rule and NYSE Arca
Rule 5.5-E(j)-1.
Proposed Rule 7.18(c)(2)--Trading Halts for ETPs
The Exchange proposes new Rule 7.18(c)(2) modeled on NYSE Arca Rule
7.18-E(d)(2) that would govern trading halts for listed ETPs for which
a Net Asset Value (``NAV'') (and, in the case of Managed Fund Shares
under proposed Rule 8.600 and Managed Trust Securities under proposed
Rule 8.700, a Disclosed Portfolio), is disseminated. Under the proposed
rule, if the Exchange becomes aware that the NAV (or in the case of
Managed Fund Shares or Managed Trust Securities, the Disclosed
Portfolio) is not being disseminated to all market participants at the
same time, it will halt trading in the affected ETP on the Exchange
until such time as the NAV (or in the case of Managed Fund Shares or
Managed Trust Securities, the Disclosed Portfolio, as applicable) is
available to all market participants.
Except for certain non-substantive, technical and conforming
changes described above, there are no differences between proposed Rule
7.18(c)(2) and NYSE Arca Rule 7.18-E(d)(2).
Proposed Rule 8--Trading of Certain Exchange Traded Products
The Exchange proposes rules to permit the Exchange to list and
trade the following securities:
[[Page 12582]]
<bullet> Currency and Index Warrants (proposed Rules 8.1-8.13)
<bullet> Portfolio Depositary Receipts (proposed Rule 8.100)
<bullet> Trust Issued Receipts (proposed Rule 8.200)
<bullet> Commodity Based Trust Shares (proposed Rule 8.201)
<bullet> Currency Trust Shares (proposed Rule 8.202)
<bullet> Commodity Index Trust Shares (proposed Rule 8.203)
<bullet> Commodity Futures Trust Shares (proposed Rule 8.204)
<bullet> Partnership Units (proposed Rule 8.300)
<bullet> Paired Trust Shares (proposed Rule 8.400)
<bullet> Trust Units (proposed Rule 8.500)
<bullet> Managed Fund Shares (proposed Rule 8.600)
<bullet> Active Proxy Portfolio Shares (proposed Rule 8.601)
<bullet> Managed Trust Securities (proposed Rule 8.700)
<bullet> Managed Portfolio Shares (proposed Rule 8.900)
The Exchange proposes to reserve Rule 8.100(g) to maintain the same
rule numbers as the NYSE Arca rules with which it conforms. Once again,
except for the non-substantive and technical differences described
above, the rules are being adopted in substantially the same form as
the NYSE Arca rules.
Proposed Rules 8.1-8.13--Currency and Index Warrants
Proposed Rules 8.1-8.13 would provide rules for the listing and
trading (including sales-practice rules such as those relating to
suitability and supervision of accounts) of currency and index
warrants. In addition to certain non-substantive, technical and
conforming changes described above and the additional non-substantive
differences with respect to specific rules described below, there are
no substantive differences between the proposed rules and NYSE Arca
Rules 8.1-E through 8.13-E.
<bullet> Proposed Rule 8.1--General. No substantive differences are
proposed between the proposed rule and NYSE Arca Rule 8.1-E other than
certain non-substantive, technical and conforming changes described
above.
<bullet> Proposed Rule 8.2--Definitions. No substantive differences
are proposed between the proposed rule and NYSE Arca Rule 8.2-E other
than certain non-substantive, technical and conforming changes
described above.
<bullet> Proposed Rule 8.3--Listing of Currency and Index Warrants.
NYSE Arca Rule 8.3-E references the size and earnings requirements for
a warrant issuer set forth in NYSE Arca Rule 5.2-E(c) (Common Stock-
Select Market Companies). The Exchange does not currently have and is
not proposing a rule comparable to NYSE Arca Rule 5.2-E(c), and thus
proposes to reference the requirements of NYSE Arca Rule 5.2-E(c) in
proposed Rule 8.3(b)(1). In addition, the Exchange would substitute its
delisting rule contained in Article 22, Rule 4 for NYSE Arca's
delisting rule in proposed Rule 8.3.
<bullet> Proposed Rule 8.4--Account Approval. NYSE Arca Rule 8.4-E
references the requirements of NYSE Arca 9.18-E(b) (Doing a Public
Business in Options) regarding the opening and approval of a customer
accounts for options trading. The Exchange does not trade options and
does not have or intend to adopt a rule comparable rule to NYSE Arca
Rule 9.18-E(b). The Exchange thus proposes to reference the
requirements of NYSE Arca Rule 9.18-E(b) in proposed Rule 8.4.
<bullet> Proposed Rule 8.5--Suitability. NYSE Arca Rule 8.5-E
provides that the suitability requirement of NYSE Arca Rule 9.18-E(c)
(Suitability) apply to recommendations made in stock index, currency
index and currency warrants and that the term ``option'' as used
therein shall be deemed for purposes of this Rule to include warrants.
Once again, the Exchange does not trade options and does not have or
intend to adopt a rule comparable rule to NYSE Arca Equities Rule
9.18(c). The Exchange would reference the requirements of NYSE Arca
Rule 9.18-E(b) in proposed Rule 8.4.
<bullet> Proposed Rule 8.6--Discretionary Accounts. NYSE Arca Rule
8.6-E provides that NYSE Arca Rule 9.6-E(a), which prohibits discretion
as to customers' accounts, shall not apply to customer accounts insofar
as an ETP Holder exercises discretion to trade in stock index, currency
index and currency warrants, and that any such customer account shall
instead be subject to NYSE Arca Rule 9.18-E(e). Article 9, Rule 21 is
the Exchange's equivalent rule to NYSE Arca Rule 9.6-E(a), which the
Exchange would reference in proposed Rule 8.6. The Exchange would
retain references to NYSE Arca Rule 9.18-E(e), which governs the
exercise of discretion with respect to trading in option contracts,
currency warrants, or index warrants in a customer's account.
<bullet> Proposed Rule 8.7--Supervision of Accounts. NYSE Arca Rule
8.7-E provides that NYSE Arca Rule 9.18-E (d) shall apply to all
customer accounts of an ETP Holder in which transactions in stock
index, currency index or currency warrants are effected. NYSE Arca Rule
9.18-E(d) provides supervisory guidelines for operating an options
business. The Exchange does not trade options and does not have or
intend to adopt a rule comparable rule to NYSE Arca Rule 9.18-E(d). The
Exchange thus proposes to reference the requirements of NYSE Arca Rule
9.18-E(e) in proposed Rule 8.7.
<bullet> Proposed Rule 8.8--Customer Complaints. NYSE Arca Rule
8.8-E provides that NYSE Arca Rule 9.18-E(l) shall apply to all
customer complaints received by an ETP Holder regarding stock index,
currency index or currency warrants. The Exchange does not trade
options and does not have or intend to adopt a rule comparable rule to
NYSE Arca Rule 9.18-E(l). The Exchange thus proposes to reference the
requirements of NYSE Arca Rule 9.18-E(l) in proposed Rule 8.8.
<bullet> Proposed Rule 8.9--Prior Approval of Certain
Communications to Customers. NYSE Arca Rule 8.9-E provides that all
advertisements, sales literature and educational material issued by an
ETP Holder to any customer or member of the public pertaining to stock
index, currency index or currency warrants shall comply with the
requirements set forth in the Commentaries to NYSE Arca Rule 9.28-E.
NYSE Arca Rule 9.28-E governs advertisements, Market Letters and Sales
Literature Relating to Options. The Exchange does not trade options and
thus does not have a comparable rule. The Exchange accordingly proposes
to retain the reference to the Commentaries to NYSE Arca Rule 9.28-E in
proposed Rule 8.9.
<bullet> Proposed Rule 8.10--Position Limits. No substantive
differences are proposed between the proposed rule and NYSE Arca Rule
8.10-E other than certain non-substantive, technical and conforming
changes described above.
<bullet> Proposed Rule 8.11--Exercise Limits. No substantive
differences are proposed between the proposed rule and NYSE Arca Rule
8.11-E other than certain non-substantive, technical and conforming
changes described above.
<bullet> Proposed Rule 8.12--Trading Halts or Suspensions. No
substantive differences are proposed between the proposed rule and NYSE
Arca Rule 8.12-E other than certain non-substantive, technical and
conforming changes described above. In addition, the Exchange would
substitute its delisting rule contained in Article 22, Rule 4 for NYSE
Arca's delisting rule in proposed Rule 8.12.
<bullet> Proposed Rule 8.13--Reporting of Warrant Positions. No
substantive differences are proposed between the proposed rule and NYSE
Arca Rule 8.13-E other than certain non-
[[Page 12583]]
substantive, technical and conforming changes described above. The
Exchange would correct a typographical error in subsection (a) and
substitute the phrase ``the ETP Holder filing the same file with the
Exchange such additional periodic reports with respect to such account
as the Exchange may from time to time prescribe'' with ``the
Participant filing the report will file with the Exchange such
additional periodic reports with respect to such account as the
Exchange may from time to time prescribe.''
Proposed Rule 8.100--Portfolio Depositary Receipts
Proposed Rule 8.100 would establish rules to list and trade
portfolio depositary receipts, a security based on a unit investment
trust that holds securities comprising an index or portfolio underlying
a series of portfolio depositary receipts. Other than certain non-
substantive, technical and conforming changes described above and
substitution of the Exchange's delisting rule contained in Article 22,
Rule 4 for NYSE Arca's delisting rule, there are no differences between
the proposed rule and NYSE Arca Rule 8.100-E.
Proposed Rule 8.200--Trust Issued Receipts
Proposed Rule 8.200 would establish rules to list and trade trust
issued receipts, a security issued by a trust that holds specific
securities deposited with the Trust. Other than certain non-
substantive, technical and conforming changes described above and
substitution of the Exchange's delisting rule contained in Article 22,
Rule 4 for NYSE Arca's delisting rule, there are no differences between
the proposed rule and NYSE Arca Rule 8.200-E.
Proposed Rule 8.201--Commodity-Based Trust Shares
Proposed Rule 8.201 would establish rules to list and trade
commodity-based trust shares, a security issued by a trust that holds a
specified commodity deposited with the trust or a specified commodity
and cash. Other than certain non-substantive, technical and conforming
changes described above and substitution of the Exchange's delisting
rule contained in Article 22, Rule 4 for NYSE Arca's delisting rule,
there are no differences between the proposed rule and NYSE Arca Rule
8.201-E.
Proposed Rule 8.202--Currency Trust Shares
Proposed Rule 8.202 would establish rules to list and trade
currency trust shares, a security issued by a trust that holds a
specified non-U.S. currency or currencies deposited with the Trust.
Other than certain non-substantive, technical and conforming changes
described above and substitution of the Exchange's delisting rule
contained in Article 22, Rule 4 for NYSE Arca's delisting rule, there
are no differences between the proposed rule and NYSE Arca Rule 8.202-
E.
Proposed Rule 8.203--Commodity Index Trust Shares
Proposed Rule 8.203 would establish rules to list and trade
commodity index trust shares, a security that is a commodity pool as
defined in the Commodity Exchange Act and regulations thereunder, that
is managed by a commodity pool operator registered with the Commodity
Futures Trading Commission, and that holds long positions in futures
contracts on a specified commodity index, or interests in a commodity
pool which, in turn, holds such long positions. Other than certain non-
substantive, technical and conforming changes described above and
substitution of the Exchange's delisting rule contained in Article 22,
Rule 4 for NYSE Arca's delisting rule, there are no differences between
the proposed rule and NYSE Arca Rule 8.203-E. The Exchange proposes to
correct a typographical error in the first sentence of subsection (d)
to replace ``one more more'' with ``one or more.''
Proposed Rule 8.204--Commodity Futures Trust Shares
Proposed Rule 8.204 would establish rules to list and trade
commodity futures trust shares, a security issued by a trust that is a
commodity pool as defined in the Commodity Exchange Act and regulations
thereunder, that is managed by a commodity pool operator registered
with the Commodity Futures Trading Commission, and that holds positions
in futures contracts that track the performance of a specified
commodity, or interests in a commodity pool which, in turn, holds such
positions. Other than certain non-substantive, technical and conforming
changes described above and substitution of the Exchange's delisting
rule contained in Article 22, Rule 4 for NYSE Arca's delisting rule and
the Exchange's books and records rule in Article 11, Rule 2 for NYSE
Arca's rule, there are no differences between the proposed rule and
NYSE Arca Rule 8.204-E.
Proposed Rule 8.300--Partnership Units
Proposed Rule 8.300 would establish rules to list and trade
partnership units, a security issued by a partnership that invests in
any combination of futures contracts, options on futures contracts,
forward contracts, commodities and/or securities and that is issued and
redeemed daily in specified aggregate amounts at net asset value. Other
than certain non-substantive, technical and conforming changes
described above and substitution of the Exchange's delisting rule
contained in Article 22, Rule 4 for NYSE Arca's delisting rule and the
Exchange's books and records rule in Article 11, Rule 2 for NYSE Arca's
rule, there are no differences between the proposed rule and NYSE Arca
Rule 8.300-E.
Proposed Rule 8.400--Paired Trust Shares
Proposed Rule 8.400 would establish rules to list and trade paired
trust shares, which can be of a ``holding'' or ``tradeable'' variety.
Other than certain non-substantive, technical and conforming changes
described above and substitution of the Exchange's delisting rule
contained in Article 22, Rule 4 for NYSE Arca's delisting rule and the
Exchange's books and records rule in Article 11, Rule 2 for NYSE Arca's
rule, there are no differences between the proposed rule and NYSE Arca
Rule 8.400-E.
Proposed Rule 8.500--Trust Units
Proposed Rule 8.500 would establish rules to list and trade trust
units, a security issued by a trust or similar entity constituted as a
commodity pool that holds investments comprising or otherwise based on
any combination of futures contracts, options on futures contracts,
forward contracts, swap contracts, commodities and/or securities. Other
than certain non-substantive, technical and conforming changes
described above and substitution of the Exchange's delisting rule
contained in Article 22, Rule 4 for NYSE Arca's delisting rule, there
are no differences between the proposed rule and NYSE Arca Rule 8.500-
E.
Proposed Rule 8.600--Managed Fund Shares
Proposed Rule 8.600 would establish rules to list and trade managed
fund shares, a security that represents an interest in a registered
investment company organized as an open-end management investment
company or similar entity that invests in a portfolio of securities
selected by the investment company's investment adviser consistent with
its investment objectives and policies. Other than certain non-
substantive, technical and conforming changes described above and
[[Page 12584]]
substitution of the Exchange's delisting rule contained in Article 22,
Rule 4 for NYSE Arca's delisting rule, there are no differences between
the proposed rule and NYSE Arca Rule 8.600-E.
Proposed Rule 8.601--Active Proxy Portfolio Shares
Proposed Rule 8.601 would establish rules to list and trade active
proxy portfolio shares, a security issued by a registered investment
company organized as an open-end management investment company or
similar entity that invests in a portfolio of securities selected by
the investment company's investment adviser consistent with its
investment objectives and policies. Other than certain non-substantive,
technical and conforming changes described above, deletion of
``pursuant to unlisted trading privileges'' and the reference to
subsection (d)(1) of NYSE Arca Rule 7.18 in proposed Rule
8.601(d)(2)(D)(ii), and substitution of the Exchange's delisting rule
contained in Article 22, Rule 4 for NYSE Arca's delisting rule, there
are no differences between the proposed rule and NYSE Arca Rule 8.601-
E.
Proposed Rule 8.700--Managed Trust Securities
Proposed Rule 8.700 would establish rules to list and trade managed
trust securities, a security registered under the Securities Act of
1933, as amended, and issued by a trust that is a commodity pool as
defined in the Commodity Exchange Act and regulations thereunder, is
not registered or required to be registered as an investment company
under the Investment Company Act of 1940, as amended, and managed by a
commodity pool operator registered with the Commodity Futures Trading
Commission that holds long and/or short positions in exchange-traded
futures contracts and/or certain currency forward contracts and/or
swaps. Other than certain non-substantive, technical and conforming
changes described above and substitution of the Exchange's delisting
rule contained in Article 22, Rule 4 for NYSE Arca's delisting rule and
the Exchange's books and records rule in Article 11, Rule 2 for NYSE
Arca's rule, there are no differences between the proposed rule and
NYSE Arca Rule 8.700-E.
Proposed Rule 8.900--Managed Portfolio Shares
Proposed Rule 8.900 would establish rules to list and trade managed
portfolio shares, a security registered under the Investment Company
Act of 1940 and organized as an open-end management investment company
that invests in a portfolio of securities selected by the investment
company's investment adviser. Other than certain non-substantive,
technical and conforming changes described above and substitution of
the Exchange's delisting rule contained in Article 22, Rule 4 for NYSE
Arca's delisting rule, there are no differences between the proposed
rule and NYSE Arca Rule 8.900-E.\17\
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\17\ The Exchange would adopt NYSE Arca's numbering and skip
8.800.
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Deletion of Obsolete Listing Rules--Article 22, Rules 24-27
The Exchange's listing rules are set forth in Article 22. The
Exchange proposes to delete the following listing rule that would be
superseded by the ETP listing and trading rules in proposed Rules 5 and
8:
<bullet> Article 22, Rule 24 (Investment Company Units);
<bullet> Article 22, Rule 25 (Portfolio Depositary Receipts);
<bullet> Article 22, Rule 26 (Equity-Linked Debt Securities); and
<bullet> Article 22, Rule 27 (Trust Issued Receipts).
The remaining Article 22 rules would be re-numbered. Article 22,
Rule 28 (Additional Requirements for Listed Securities Issued by
Intercontinental Exchange, Inc. or its Affiliates) would become Article
22, Rule 24 and Article 22, Rule 29 (Erroneously Awarded Compensation)
would become Article 22, Rule 25.
The Exchange believes that the proposed change would make the
Exchange's rules more accessible and add clarity and transparency to
its rule by removing superseded text.
Surveillance
The Exchange represents that listed ETPs would be subject to the
existing trading surveillances administered by the Exchange, as well as
cross-market surveillances administered by the Financial Industry
Regulatory Authority (``FINRA'') on behalf of the Exchange, which are
designed to detect violations of Exchange rules and applicable federal
securities laws. The Exchange represents that these procedures are
adequate to properly monitor the Exchange's listing and trading of ETPs
in all trading sessions and to deter and detect violations of Exchange
rules and federal securities laws applicable to trading on the
Exchange.\18\
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\18\ FINRA conducts cross-market surveillances on behalf of the
Exchange pursuant to a regulatory services agreement. The Exchange
is responsible for FINRA's performance under this regulatory
services agreement.
---------------------------------------------------------------------------
The surveillances referred to above generally focus on detecting
securities trading outside their normal patterns which could be
indicative of manipulative or other violative activity. When such
situations are detected, surveillance analysis follows and
investigations are opened, where appropriate, to review the behavior of
relevant parties for relevant trading violations. The Exchange or
FINRA, on behalf of the Exchange, or both, will communicate as needed
regarding trading in ETPs, as well as certain other securities and
financial instruments underlying such ETPs, with other markets and
other entities that are members of the Intermarket Surveillance Group
(``ISG''). The Exchange or FINRA, on behalf of the Exchange, or both,
may obtain trading information regarding trading in ETPs and financial
instruments from such markets and other entities. In addition, the
Exchange may obtain information regarding trading in ETPs, as well as
certain other securities and financial instruments underlying such
ETPs, from markets and other entities with which the Exchange has in
place a comprehensive surveillance sharing agreement (``CSSA'').
Further, the Exchange's affiliates, the NYSE and NYSE Arca, currently
list ETPs pursuant to rules that are substantially identical to the
rules proposed by the Exchange in this filing. NYSE Regulation conducts
initial and continued listing reviews for ETPs listed on the NYSE and
NYSE Arca. The Exchange represents that NYSE Regulation will conduct
initial and continued listing reviews of ETPs listed on the Exchange in
the same manner as it does for the NYSE and NYSE Arca.
Participant Duties and Responsibilities
The Exchange notes that Participants, including Market Makers,\19\
would be subject to all Exchange rules applicable to equities trading
and the duties and responsibilities of Exchange Participants.
Specifically, Participants would continue to be subject to the
requirement to make and preserve books and records pursuant to Article
11, Rule 2 and to provide those books and records to the Exchange upon
demand under Article 11, Rule 1. Market Makers in particular would be
subject to the
[[Page 12585]]
obligations set forth in Article 16, Rule 4 (Obligations of Market
Makers), including the responsibility to engage in a course of dealings
for their own account to assist in the maintenance, insofar as
reasonably practicable, of fair and orderly markets on the Exchange;
Article 16, Rule 5 (Limitation on Dealings of Market Makers) regarding
information barrier requirements when engaged in other business
activities, including the prohibition on trading by a person while in
possession of material, non-public information received as a result of
the breach of the internal controls required under the Rule; and
Article 16, Rule 6 (Reporting of Position Information by Market Makers)
requiring Market Makers to record its long or short position in all
securities for which it is registered on the Exchange as a Market
Maker, including the number of shares which it is long or short, as of
the time that it initiates an order in such securities on the trading
facilities of the Exchange, and to provide that information to the
Exchange on demand. All Participants would further be subject to the
requirements of Rule 11.3110 establish and maintain a system to
supervise the activities of each associated person that is reasonably
designed to achieve compliance with applicable securities laws and
regulations, and with applicable Exchange rules, and sets forth the
minimum requirements for such supervisory system. Under Rule 11.3110,
final responsibility for proper supervision rests with the Participant.
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\19\ As set forth in the preamble to Article 16, the current
Market Maker rules contained in Article 16 are inapplicable to
trading on the Pillar trading platform. The Exchange proposes to
promptly submit a separate rule filing to delete this preamble and
reinstate the Market Maker rules contained in Article 16, including
the specific rules referenced in this section relating to Market
Maker obligations and limitations.
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Firewalls
Commentary .01(b)(1) and Commentary .02(b) to proposed Rule
5.2(j)(3) (applicable to Investment Company Units) and Commentary .06
to proposed Rule 8.600 (applicable to Managed Fund Shares) require the
establishment and maintenance of a ``firewall'' around personnel who
have access to information concerning changes to an index or the
composition and/or changes to a fund's portfolio; and that specified
persons or entities be subject to procedures designed to prevent the
use and dissemination of material non-public information regarding the
applicable index or portfolio.
In the Rule 6c-11 Release, the Commission, in the context of index-
based ETFs with affiliated index providers (``self-indexed ETFs''),
noted the federal securities law provisions that currently relate to
implementation by funds of appropriate measures to deal with misuse of
non-public information.\20\ The Exchange notes that these federal
securities law requirements will continue to apply to issues of index
and actively-managed ETFs and the proposed generic listing rules for
Exchange-Traded Fund Shares are consistent with such requirements.
---------------------------------------------------------------------------
\20\ See Release Nos. 33-10695; IC-33646; File No. S7-15-18
(ETFs) (September 25, 2019), 84 FR 57162, 57168-57169 (October 24,
2019) (the ``Rule 6c-11 Release''). See also 17 CFR 270.38a-1 (Rule
38a-1 under the 1940 Act) (requiring funds to adopt policies and
procedures reasonably designed to prevent violation of federal
securities laws); 17 CFR 270.17j-1(c)(1) (Rule 17j-1(c)(1) under the
Investment Company Act) (requiring funds to adopt a code of ethics
containing provisions designed to prevent certain fund personnel
(``access persons'') from misusing information regarding fund
transactions); section 204A of the Investment Advisers Act of 1940
(``Advisers Act'') (15 U.S.C. 80b-204A) (requiring an adviser to
adopt policies and procedures that are reasonably designed, taking
into account the nature of its business, to prevent the misuse of
material, non-public information by the adviser or any associated
person, in violation of the Advisers Act or the Exchange Act, or the
rules or regulations thereunder); section 15(g) of the Exchange Act
(15 U.S.C. 78o(f)) (requiring a registered broker or dealer to adopt
policies and procedures reasonably designed, taking into account the
nature of the broker's or dealer's business, to prevent the misuse
of material, nonpublic information by the broker or dealer or any
person associated with the broker or dealer, in violation of the
Exchange Act or the rules or regulations thereunder).
---------------------------------------------------------------------------
The Exchange notes that proposed Commentary .02(a) to Rule
5.2(j)(8) provides that, with respect to series of Exchange-Traded Fund
Shares that are based on an index, if the underlying index is
maintained by a broker-dealer or fund adviser, the broker-dealer or
fund adviser will erect and maintain a ``fire wall'' around the
personnel who have access to information concerning changes and
adjustments to the index and the index shall be calculated by a third
party who is not a broker-dealer or fund advisor. In addition, proposed
Commentary .02(b) to Rule 5.2(j)(8) provides that, with respect to
series of Exchange-Traded Fund Shares that are actively managed if, the
investment adviser to the Exchange-Traded Fund issuing Exchange-Traded
Fund Shares is affiliated with a broker-dealer, such investment adviser
will erect and maintain a ``fire wall'' between the investment adviser
and the broker-dealer with respect to access to information concerning
the composition and/or changes to such Exchange-Traded Fund portfolio.
Personnel who make decisions on the applicable Exchange-Traded Fund's
portfolio composition must be subject to procedures designed to prevent
the use and dissemination of material nonpublic information regarding
the applicable Exchange-Traded Fund portfolio. Proposed Commentary
.02(a) to Rule 5.2(j)(8)(k) is based on Commentary .02(a) to NYSE Arca
Rule 5.2-E(j)(8) without any differences.
As noted, proposed Rule is based on NYSE Arca Rule 5.2-E(j)(8). The
Exchange believes that adopting the same generic standards for
Exchange-Traded Fund Shares would facilitate efficient procedures for
ETFs that are permitted to operate in reliance on Rule 6c-11. The
Exchange further believes that the proposed rule is, like its NYSE Arca
counterpart, fully consistent with, and will further, the Commission's
goals in adopting Rule 6c-11.
For all of the reasons stated above, the proposal is therefore
consistent with the requirements of the Act.
Statutory Basis
The Exchange believes that the proposal is consistent with Section
6(b) of the Act,\21\ in general, and furthers the objectives of
Sections 6(b)(5) of the Act,\22\ 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. In addition, the Exchange
believes that the proposed changes would promote just and equitable
principles of trade, remove impediments to, and perfect the mechanism
of, a free and open market and a national market system, and protect
investors and the public interest because the proposed rules are based
on rules of the Exchange's affiliated market, NYSE Arca, that have been
approved by the Commission. Accordingly, the proposed rule changes
promote continuity across affiliated exchanges, permitting ETPs to list
and trade on the Exchange by meeting the same listing standards as on
the Exchange's affiliated market.
---------------------------------------------------------------------------
\21\ 15 U.S.C. 78f(b).
\22\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The Exchange believes that the proposed rule change is consistent
with the above principles. By providing rules for the listing and
trading of ETPs, the Exchange believes its proposal would lead to the
addition of liquidity to the broader market and to increased
competition among the existing group of liquidity providers. The
Exchange also believes that, by so doing, the proposed rule change
would encourage the additional utilization of, and interaction with,
the exchange market, and provide market participants with improved
price
[[Page 12586]]
discovery, increased liquidity, more competitive quotes and greater
price improvement for listed ETPs.
The Exchange further believes that listing ETPs on the Exchange
would help raise investors' confidence in the fairness of the market,
generally, and their transactions in particular. As such, the listing
of ETPs would foster cooperation and coordination with persons engaged
in facilitating securities transactions, enhance the mechanism of a
free and open market, and promote fair and orderly markets in
securities on the Exchange.
The proposal is also designed to promote just and equitable
principles of trade by way of initial and continued listing standards
which, if not maintained, would result in the discontinuation of
trading in the affected products. These requirements, together with the
applicable Exchange trading rules (which apply to the proposed
products), ensure that no investor would have an unfair advantage over
another respecting the trading of the subject products. On the
contrary, all investors would have the same access to, and use of,
information concerning the specific products and trading in the
specific products, all to the benefit of public customers and the
marketplace as a whole. The proposal is intended to ensure that
investors receive up-to-date information on the value of certain
underlying securities and indices in the products in which they invest,
and protect investors and the public interest, enabling investors to:
(i) respond quickly to market changes through intra-day trading
opportunities; (ii) engage in hedging strategies; and (iii) reduce
transaction costs. Consequently, the proposed rule change is consistent
with the protection of investors and the public interest.
Furthermore, the proposal is designed to remove impediments to and
perfect the mechanism of a free and open market and a national market
system by adopting rules that would lead ultimately to the listing and
trading of new products on the Exchange. The proposed changes do
nothing more than match Exchange rules with what is currently available
on other exchanges for the listing of ETPs. The Exchange believes that
by allowing for listing opportunities on the Exchange that are already
allowed by rule on another market, the proposal would offer another
venue for listing ETPs and thereby promote broader competition among
exchanges. The Exchange believes that individuals and entities
permitted to list ETPs on the Exchange should enhance competition
within the mechanism of a free and open market and a national market
system, and customers and other investors in the national market system
should benefit from more depth and liquidity in the market for the
ETPs.
Additionally, the proposal is designed to prevent fraudulent and
manipulative acts and practices, as trading would be subject to
existing Exchange trading rules, together with specific requirements
for registered market makers, books and record production, surveillance
procedures, suitability and prospectus requirements, and requisite
Exchange approvals, all set forth above. The proposed rule changes
accomplish these objectives by enhancing Exchange rules by clarifying
that most initial listing standards, as well as certain representations
included in Exchange rule filings to list an ETP, are considered
continued listing standards. Additionally, the ETP rules will also
require that issuers of securities listed under proposed rule must
notify the Exchange regarding instances of non-compliance and to
clarify that deficiencies will be subject to the delisting process in
Article 22, Rule 4. The Exchange believes that these proposed rules
will enhance the Exchange's rules, thereby serving to improve the
national market system and protect investors and the public interest.
In addition, as noted, under the proposal Participants would be subject
to the Exchange's structure for trading listed securities, including
books and records requirements, and Market Makers would be subject to
the specific obligations and limitations of Market Makers set forth in
Article 16, Rules 4, 5 and 6.
With respect to the deletion of superseded listing rules in Article
22, the Exchange believes that the proposed change would remove
impediments to and perfect the mechanisms of a free and open market by
eliminating rules that would be superseded, thereby improving the
clarity of the Exchange's rules and enabling market participants to
more easily navigate the Exchange's rules. The Exchange also believes
that the proposed change would protect investors and the public
interest because the deletion of obsolete text would make the
Exchange's rules more accessible and transparent.
Finally, the proposed change is not designed to address any
competitive issue, but rather to adopt new rules that allow the
Exchange to list and trade ETPs. The proposed rules are identical to
the rules of NYSE Arca (other than with respect to certain non-
substantive and technical changes described above), which currently
lists ETPs pursuant to the same rule set. These proposed rules support
competition by allowing for ETP listings on the Exchange.
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 adopt new
rules that allow the Exchange to list and trade ETPs. The proposed
rules are identical to the rules of NYSE Arca (other than with respect
to certain non-substantive and technical changes described above),
which currently lists ETPs pursuant to the same rule set. The proposed
rules in fact support competition by allowing for ETP listings on the
Exchange. Limiting trading of ETPs on the Exchange solely to UTP
securities limits competition in that there are certain products that
the Exchange cannot list, while other exchanges, with identical listing
rules, can list such products. The proposed rule change would thus
promote competition by allowing the Exchange to compete with other
national securities exchanges for the listing and trading of ETPs. With
respect to the proposed deletion of obsolete listing rules, the
proposed changes would not have any impact on competition, because they
are solely designed to eliminate obsolete text.
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
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(A) by order approve or disapprove the proposed rule change, or
(B) institute proceedings to determine whether the proposed rule
change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing,
[[Page 12587]]
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#6012150c054d030f0d0d050e1413201305034e070f16"><span class="__cf_email__" data-cfemail="8dfff8e1e8a0eee2e0e0e8e3f9fecdfee8eea3eae2fb">[email protected]</span></a>. Please include
file number SR-NYSECHX-2025-04 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-NYSECHX-2025-04. 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-NYSECHX-2025-04 and should
be submitted on or before April 8, 2025.
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. 2025-04338 Filed 3-17-25; 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 March 18, 2025.
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