Notice2025-04662
Self-Regulatory Organizations; NYSE National, Inc.; Notice of Filing of Proposed Change To Amend Rules 7.37 and 7.44
Primary source
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Published
March 20, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 90 Issue 53 (Thursday, March 20, 2025)</title>
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[Federal Register Volume 90, Number 53 (Thursday, March 20, 2025)]
[Notices]
[Pages 13231-13233]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-04662]
[[Page 13231]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-102683; File No. SR-NYSENAT-2025-05]
Self-Regulatory Organizations; NYSE National, Inc.; Notice of
Filing of Proposed Change To Amend Rules 7.37 and 7.44
March 14, 2025.
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 12, 2025, NYSE National, Inc. (``NYSE National'' or the
``Exchange'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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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 7.37 and 7.44 to provide for
the use of an optional routing strategy available for Type 1 Retail
Orders. The proposed 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 Rules 7.37 (Order Execution and
Routing) and 7.44 (Retail Liquidity Program) to adopt the Retail Price
Improvement Seeking routing strategy, an optional routing strategy
available for Type 1 Retail Orders.
The Exchange first proposes to amend Rule 7.44(f)(1), which defines
a Type 1 Retail Order. The Exchange operates a Retail Liquidity Program
that is intended to attract retail order flow to the Exchange and allow
such order flow to receive potential price improvement at the midpoint
or better. A Retail Order, as defined in Rule 7.44(a)(2), is an agency
order or riskless principal order that meets the criteria of FINRA Rule
5320.03, originating from a natural person, and that is submitted to
the Exchange by a Retail Member Organization (``RMO''), provided that
no change is made to the terms of the order with respect to price or
side of market and the order does not originate from a trading
algorithm or any other computerized methodology.\3\ Rule 7.44(f)(1)
currently defines a Type 1 Retail Order to buy (sell) as an MPL IOC
Order with a working price at the lower (higher) of the midpoint of the
PBBO or its limit price that trades only with available Retail Price
Improvement Orders \4\ to sell (buy) and all other orders to sell (buy)
with a working price below (above) or equal to the midpoint of the PBBO
on the Exchange Book. A Type 1 Retail Order does not route (except as
specified in Rule 7.44(f)(1)), and the quantity of a Type 1 Retail
Order to buy (sell) that does not trade with eligible orders to sell
(buy) will be immediately and automatically cancelled. A Type 1 Retail
Order would be cancelled on arrival if there is no PBBO or the PBBO is
locked or crossed.
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\3\ To qualify as an RMO, an ETP Holder must conduct a retail
business or route retail orders on behalf of another broker-dealer.
See Rule 7.44(b)(1). To become an RMO, an ETP Holder must submit an
application form, supporting documentation to confirm that the RMO
applicant's order flow would meet the requirements of the Retail
Order definition, and an attestation that substantially all orders
submitted as Retail Orders will qualify as such. See Rule
7.44(b)(2).
\4\ A Retail Price Improvement Order is an MPL Order that is
eligible to trade only with incoming Retail Orders submitted by an
RMO. See Rule 7.44(a)(3).
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The last sentence of Rule 7.44(f)(1) currently provides that a Type
1 Retail Order may be designated with the Retail Midpoint Ping routing
strategy, and that a Type 1 Retail Order designated with such routing
strategy would be accepted and routed pursuant to such strategy even if
there is no PBBO or the PBBO is locked or crossed. The Exchange
proposes to amend this sentence to provide that a Type 1 Retail Order
may also be designated with a Retail Price Improvement Seeking routing
strategy.
The Exchange next proposes to amend Rule 7.37(b)(9) to add new
subparagraph (C) providing for the Retail Price Improvement Seeking
routing strategy. Proposed Rule 7.37(b)(9)(C) would provide that the
Retail Price Improvement Seeking routing strategy would be available
for Type 1 Retail Orders. A Type 1 Retail Order designated with the
Retail Price Improvement Seeking routing strategy would first check the
Exchange book for available shares. Any remaining quantity of the order
would then route as a Retail Order \5\ to New York Stock Exchange, LLC
(``NYSE''). Any shares that remain unexecuted after routing to NYSE
will be cancelled. The Retail Price Improvement Seeking routing
strategy is intended to offer any remaining quantity of Type 1 Retail
Orders, after executing against interest on the Exchange Book, the
opportunity to access liquidity on the NYSE, which also operates a
retail liquidity program.\6\ Type 1 Retail Orders routed to the NYSE
with the Retail Price Improvement Seeking routing strategy would be
able to interact with Retail Price Improvement Orders \7\ and other
interest on the NYSE book as a Retail Order in the NYSE retail
liquidity program, thereby providing such orders with additional price
improvement opportunities.\8\ Type 1 Retail Orders designated with the
Retail Price Improvement Seeking routing strategy will be routed to the
NYSE by the Exchange's routing broker, Archipelago Securities LLC
(``ArcaSec''), on behalf of the NYSE National RMOs that originally
submitted such orders, and ArcaSec will be qualified as an NYSE RMO
under NYSE Rule 7.44(b) for purposes of routing such orders.\9\
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\5\ The requirements and obligations for NYSE National RMOs are
the same as those for NYSE RMOs, as are the definitions of Retail
Order on NYSE National and NYSE. See NYSE Rules 7.44(a)(2) (defining
RMO); 7.44(a)(3) (defining Retail Order); 7.44(b) and 7.44(h)
(describing RMO qualifications).
\6\ See NYSE Rule 7.44.
\7\ See NYSE Rule 7.44(a)(4).
\8\ As proposed, Type 1 Retail Orders (which are MPL IOC Orders)
routed pursuant to the Retail Price Improvement Seeking routing
strategy would be converted to Limit IOC Orders to comport with the
definition of Retail Order in the NYSE Retail Liquidity Program. See
NYSE Rule 7.44(k) (``A Retail Order to buy (sell) is a Limit IOC
Order that will trade only with available Retail Price Improvement
Orders to sell (buy) and all other orders to sell (buy) with a
working price below (above) the PBO (PBB) on the Exchange Book. . .
.'').
\9\ ArcaSec will rely on representations made by NYSE National
RMOs with respect to their Retail Orders and is not responsible for
verifying that orders routed pursuant to the Retail Price
Improvement Seeking routing strategy satisfy the definition of a
Retail Order under exchange rules.
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[[Page 13232]]
Subject to approval of this proposed rule change, the Exchange will
implement this change no later than in the third quarter of 2025 and
announce the implementation date by Trader Update.
2. Statutory Basis
The proposed rule change is consistent with Section 6(b) of the
Act,\10\ in general, and furthers the objectives of Section
6(b)(5),\11\ in particular, because it is designed to prevent
fraudulent and manipulative acts and practices, to promote just and
equitable principles of trade, to foster cooperation and coordination
with persons engaged in facilitating transactions in securities, to
remove impediments to, and perfect the mechanism of, a free and open
market and a national market system and, in general, to protect
investors and the public interest.
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\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(5).
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The Exchange believes the proposed change 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 by providing for the optional
use of routing functionality that would offer Type 1 Retail Orders the
opportunity to pursue additional price improvement opportunities on
another market offering retail liquidity. Although the proposed routing
strategy is not identical to any existing routing strategies offered by
an equity exchange, the Exchange believes it is not dissimilar to
routing options already offered by the Exchange, its affiliated
exchanges, and/or other equity exchanges. The Retail Price Improvement
Seeking routing strategy, as proposed, would be available specifically
to retail order flow, like the Retail Midpoint Ping routing strategy
currently offered on the Exchange and a routing option currently
offered by another equity exchange,\12\ and offers functionality
similar to routing options available on the Exchange and other equity
exchanges in that it would route orders to an affiliated exchange.\13\
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\12\ See, e.g., NYSE National Rule 7.37(b)(9)(B) (describing the
Retail Midpoint Ping routing strategy, which is also available only
to Type 1 Retail Orders); Nasdaq Rule 4758(a)(1)(A)(v) (describing
RFTY routing option available for Designated Retail Orders).
\13\ See, e.g., NYSE National Rule 7.37(b)(9)(B) (describing the
Retail Midpoint Ping routing strategy, which also routes to
affiliated exchanges); NYSE National Rule 7.37(b)(9)(A) (describing
the Midpoint Ping routing strategy, which routes to affiliated
exchanges); NYSE Rule 7.37(c)(9)(A) (same); NYSE American, LLC Rule
7.37E(b)(9)(A) (same); NYSE Arca, Inc. Rule 7.37-E(b)(9)(A) (same);
NYSE Chicago, Inc. Rule 7.37(b)(9)(A) (same); BYX Rule
11.13(b)(3)(Q) (describing the RMPT and RMPL routing options, under
which a Mid-Point Peg Order checks the originating book for
available shares before any remaining shares are routed to
destinations on the System routing table that support midpoint
eligible orders); BZX Rule 11.14(b)(3)(O) (describing the ALLB
routing option, which checks the originating order book for
available shares before routing to other markets in the Cboe group
of exchanges); BYX Rule 11.13(b)(3)(M) (same); EDGA Rule 11.11(g)(7)
(same); EDGX Rule 11.11(g)(7) (same); Nasdaq Rule 4758(a)(1)(A)(xv)
(describing the SCAR routing option, which checks the originating
order book for available shares and routes to other markets in the
Nasdaq group of exchanges); BX Rule 4758(a)(1)(A)(x) (same); PHLX
Rule 3315(a)(1)(A)(x) (same).
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The Exchange further believes that the proposed change 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 it
would afford greater flexibility to market participants through the
optional use of a routing strategy providing retail order flow with the
option to seek additional price improvement opportunities on another
market offering retail liquidity. The Exchange also believes that the
proposed change would promote just and equitable principles of trade
and remove impediments to, and perfect the mechanism of, a free and
open market and a national market system because it is intended to
attract retail order flow to the Exchange, including by facilitating
additional opportunities for such order flow to receive potential price
improvement on both the Exchange and on another market offering retail
liquidity. The proposed change could also promote competition for
retail order flow among execution venues, which would benefit retail
investors by creating additional price improvement opportunities for
marketable retail order flow on multiple public exchanges. The Exchange
also believes that the proposed change would allow it to compete with
other equity exchanges that similarly promote additional trading
opportunities for retail order flow at the midpoint,\14\ as well as
with other equity exchanges that offer similar routing options.
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\14\ See, e.g., Investors Exchange LLC (``IEX'') Rule 11.232
(describing the IEX Retail Program, which is designed to provide
retail order flow with price improvement opportunities at the
midpoint).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. As noted above, the Exchange
believes that the proposed change could instead encourage competition
by offering the optional use of routing strategies similar to those
already offered by other equity exchanges, as well as by promoting
additional trading opportunities (including for retail order flow, in
particular).
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, 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#8ffdfae3eaa2ece0e2e2eae1fbfccffceaeca1e8e0f9"><span class="__cf_email__" data-cfemail="592b2c353c743a3634343c372d2a192a3c3a773e362f">[email protected]</span></a>. Please include
file number SR-NYSENAT-2025-05 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-NYSENAT-2025-05. 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
[[Page 13233]]
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-NYSENAT-2025-05 and should be submitted
on or before April 10, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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Vanessa A. Countryman,
Secretary.
[FR Doc. 2025-04662 Filed 3-19-25; 8:45 am]
BILLING CODE 8011-01-P
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