Notice2025-05892
Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Commentary .03 to Rule 7.19
Primary source
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Published
April 7, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 90 Issue 65 (Monday, April 7, 2025)</title>
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[Federal Register Volume 90, Number 65 (Monday, April 7, 2025)]
[Notices]
[Pages 15017-15019]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-05892]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-102753; File No. SR-NYSE-2025-07]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend Commentary .03 to Rule 7.19
April 1, 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 24, 2025, 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.
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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 to amend Commentary .03 to Rule 7.19
regarding the availability of pre-trade risk controls to Floor brokers.
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 Commentary .03 to Rule 7.19
regarding
[[Page 15018]]
the availability of pre-trade risk controls to Floor brokers.
Paragraph (a) of Commentary .03 to Rule 7.19 currently provides
that with respect to a Floor broker's trading activity on the Exchange
on behalf of a customer that is a member organization, both the Floor
broker and the member organization may set certain Pre-Trade Risk
Controls and Kill Switch Actions \4\ if the Floor broker places the
order using the member organization's MPID. Apart from that narrow
case, a Floor broker may only set the Pre-Trade Risk Controls described
in Rule 7.19 when the Floor broker itself is identified as the
``Entering Firm''--i.e., when the Floor broker uses its own MPID.\5\
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\4\ Specifically, the Pre-Trade Risk Controls in paragraphs
(b)(1)(A) and (b)(2)(A) or Kill Switch Actions in paragraph (h).
\5\ The term ``Entering Firm'' is defined in Rule 7.19.
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The Exchange plans to make a technological change that would remove
the ability of a Floor broker to set any Pre-Trade Risk Controls or
Kill Switch Actions for its trading activity on the Exchange on behalf
of a member organization customer when using the member organization's
MPID. Such member organization would still have the ability to set risk
controls itself as the ``Entering Firm'' with respect to such orders
(as well as orders that the member organization sends directly to the
Exchange). A Floor broker would retain the ability to set risk controls
as the ``Entering Firm'' for order flow when the Floor broker uses its
own MPID.
Accordingly, the Exchange proposes to amend paragraph (a) of
Commentary .03 to provide:
(a) [Regarding a Floor broker's trading activity on the Exchange on
behalf of a customer that is a member organization (``Customer''),
either the Floor broker or the Customer may identify itself as the
``Entering Firm'' for purposes of setting the Pre-Trade Risk Controls
in paragraphs (b)(1)(A) and (b)(2)(A) or Kill Switch Actions. For the
other Pre-Trade Risk Controls described in this rule, the Floor broker
must be identified as the ``Entering Firm.''] A Floor broker may only
set the Pre-Trade Risk Controls and Kill Switch Actions described in
this rule as an ``Entering Firm'' for orders it places using its own
MPID.
The Exchange proposes no other changes to Rule 7.19 or its
Commentary.
Continuing Obligations of Member Organizations Under Rule 15c3-5
The proposed Pre-Trade Risk Controls described here are meant to
supplement, and not replace, the member organizations' own internal
systems, monitoring, and procedures related to risk management. The
Exchange does not guarantee that these controls will be sufficiently
comprehensive to meet all of a member organization's needs, the
controls are not designed to be the sole means of risk management, and
using these controls will not necessarily meet a member organization's
obligations required by Exchange or federal rules (including, without
limitation, the Rule 15c3-5 under the Act \6\ (``Rule 15c3-5'')). Use
of the Exchange's Pre-Trade Risk Controls will not automatically
constitute compliance with Exchange or federal rules and responsibility
for compliance with all Exchange and SEC rules remains with the member
organization.\7\
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\6\ See 17 CFR 240.15c3-5.
\7\ See also Commentary .01 to Rule 7.19, which provides that
``[t]he pre-trade risk controls described in this Rule are meant to
supplement, and not replace, the member organization's own internal
systems, monitoring and procedures related to risk management and
are not designed for compliance with Rule 15c3-5 under the Exchange
Act. Responsibility for compliance with all Exchange and SEC rules
remains with the member organization.''
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Timing and Implementation
The Exchange anticipates implementing the proposed change in the
second quarter of 2025 and, in any event, will implement the proposed
rule change no later than the end of third quarter of 2025. The
Exchange will announce the timing of such changes by Trader Update.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\8\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\9\ 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 regulating,
clearing, settling, processing information with respect to, and
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,
and because it is not designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
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\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that the proposed revision of paragraph (a)
of Commentary .03 will remove impediments to and perfect the mechanism
of a free and open market and a national market system by simplifying
the applicability of Pre-Trade Risk Controls and Kill Switch Actions to
Floor broker trading activity on the Exchange on behalf of member
organizations. Currently, such Pre-Trade Risk Controls and Kill Switch
Actions may be set by both the member organization itself and by the
Floor broker. The Exchange believes that a more streamlined approach
would be for the member organization to be the sole entity with the
ability to set ``Entering Firm'' risk controls with respect to its
orders that are placed by Floor brokers. As noted above, a Floor broker
would retain the ability to set ``Entering Firm'' risk controls for
order flow when the Floor broker uses its own MPID.
The Exchange believes that the proposed rule change does not
unfairly discriminate among market participants. Commentary .03 applies
only to the ability of a Floor broker to set Pre-Trade Risk Controls
and Kill Switch Actions for its trading activity on the Exchange on
behalf of member organizations, and the proposed change would apply
equally to all Floor brokers. Further, use of the Pre-Trade Risk
Controls and Kill Switch Actions described in the rule is optional and
is not a prerequisite for participation 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 rule change
does not address competition, but rather streamlines the applicability
of Pre-Trade Risk Controls and Kill Switch Actions to Floor broker
trading activity on the Exchange on behalf of a member organization, by
making the member organization the sole entity with the ability to set
risk controls as an ``Entering Firm'' with respect such orders entered
using the member organization's MPID. The proposed rule change would
apply equally to all Floor brokers.
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
[[Page 15019]]
19(b)(3)(A)(iii) of the Act \10\ and Rule 19b-4(f)(6) thereunder.\11\
Because the proposed rule change does not: (i) significantly affect the
protection of investors or the public interest; (ii) impose any
significant burden on competition; and (iii) become operative prior to
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, if consistent with the protection of
investors and the public interest, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.\12\
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\10\ 15 U.S.C. 78s(b)(3)(A)(iii).
\11\ 17 CFR 240.19b-4(f)(6).
\12\ 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.
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At any time within 60 days of the filing of such proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings under
Section 19(b)(2)(B) \13\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\13\ 15 U.S.C. 78s(b)(2)(B).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
<bullet> Use the Commission's internet comment form (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#90e2e5fcf5bdf3fffdfdf5fee4e3d0e3f5f3bef7ffe6"><span class="__cf_email__" data-cfemail="186a6d747d357b7775757d766c6b586b7d7b367f776e">[email protected]</span></a>. Please include
file number SR-NYSE-2025-07 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-2025-07. 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-2025-07 and should be
submitted on or before April 28, 2025.
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\14\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-05892 Filed 4-4-25; 8:45 am]
BILLING CODE 8011-01-P
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