Notice2025-07811
Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Exchange Rules 1400 and 1401
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
May 6, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 90 Issue 86 (Tuesday, May 6, 2025)</title>
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[Federal Register Volume 90, Number 86 (Tuesday, May 6, 2025)]
[Notices]
[Pages 19234-19236]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-07811]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-102960; File No. SR-NYSE-2025-16]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend Exchange Rules 1400 and 1401
April 30, 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 April 28, 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 and II
below, which Items have been prepared by the self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 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 Exchange Rules 1400 and 1401
relating to trading unlisted debt securities on the NYSE
Bonds<SUP>SM</SUP> platform. 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
NYSE Bonds is an electronic order-driven matching system for fixed
income securities to which Exchange members and member organizations
subscribe and through which they enter and match customer bond orders
on a strict price and time priority basis. NYSE Bonds provides member
subscribers with access to the order book in each bond which displays
orders and in the time sequence received. Upon execution, trades are
submitted for clearing to the Depository Trust Clearing Corporation.
NYSE Bonds centralizes bond trading and publishes a real-time bond data
feed to NYSE Bonds customers and subscribers that reflects all orders
in time sequence on the NYSE Bonds order book. NYSE Bonds primarily
serves the ``small-lot'' corporate bond market. Small-lot bond buyers
and sellers are primarily individuals, bank trust accounts, and small
institutions. In addition, bond dealers use NYSE Bonds to offset so-
called ``tail-end'' bond positions acquired in the course of large-lot
trading. NYSE Bonds is the only system that provides the public with
real-time disclosure of quotations and trade prices, exclusive of mark-
ups/mark-downs, commissions, or other charges.
NYSE Rules 1400 and 1401 set forth requirements for trading Debt
Securities. Rule 1400 defines the term ``Debt Securities'' as any
unlisted note, bond, debenture or evidence of indebtedness that is: (1)
statutorily exempt from the registration requirements of Section 12(b)
\4\ of the Exchange Act, or (2) eligible to be traded under a
Securities and Exchange Commission (``Commission'') exemptive order.\5\
Rule
[[Page 19235]]
1401 specifies the qualitative and quantitative standards that must be
met for unlisted Debt Securities to be initially and continually traded
on NYSE Bonds. Among other things, these standards specify that only
unlisted Debt Securities with an outstanding market value or principal
amount of at least $5 million will be permitted to be traded by NYSE
members and member organizations, and that such trading will be
suspended if (a) the market value or principal amount falls below $1
million, or (b) the Debt Securities either: (1) no longer qualify for a
statutory exemption from the registration requirements of Section 12(b)
of the Exchange Act, or (2) may no longer be traded by NYSE members and
member organizations on an unregistered basis pursuant to the 2006
Order.
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\4\ 15 U.S.C. 781(b).
\5\ See Securities Exchange Act Release No. 54766 (November 16,
2006), 71 FR 67657 (November 22, 2006) (the ``2006 Order''). Under
the 2006 Order, among other things, the issuer of the debt security
must have at least one class of common or preferred equity security
listed on the Exchange. Further, for purposes of NYSE Rule 1400(2),
the term Debt Securities includes only securities that, if they were
to be listed on the NYSE, would be listed under Sections 102.03 or
103.05 of the NYSE's Listed Company Manual, except that such
securities shall not include any security that is defined as an
``equity security'' under Section 3(a)(11) of the Exchange Act; the
term Debt Securities also does not include a security that, if
listed on the NYSE, would have been listed under Section 703.19 of
the NYSE's Listed Company Manual or any equity-linked debt
securities listed under Rule 5P. See NYSE Rule 1400.
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On April 12, 2024, the Exchange submitted an application to request
further exemptive relief from the Commission. In its application, the
Exchange requested that the Commission extend the relief granted in the
2006 Order and allow NYSE members and member organizations to trade
debt securities not registered under the Exchange Act on NYSE Bonds,
subject to certain conditions. One of those conditions is that an
issuer of the debt securities, or the issuer's parent if the issuer is
a wholly-owned subsidiary, has at least one class of common or
preferred equity securities that is: (i) registered under Section 12(b)
of the Exchange Act; and (ii) listed on the NYSE. The Exchange's
application sought to amend the 2006 Order by revising part (ii) of
this condition so that debt securities not registered under the
Exchange Act would be permitted to trade on NYSE Bonds if their issuer,
or the issuer's parent if the issuer is a wholly-owned subsidiary, has
a class of common or preferred equity securities listed on any national
securities exchange, not only the NYSE.
Further, in its application, the Exchange undertook that it would
continue to provide the following information:
(a) Provide definitions of ``listed'' debt securities and
``traded'' debt securities on NYSE Bonds and on the NYSE's website;
(b) Identify on NYSE Bonds and on the NYSE's website whether a
particular debt security is ``listed'' or ``traded''; \6\
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\6\ The NYSE will distinguish debt securities ``listed'' on NYSE
Bonds from those ``traded'' on NYSE Bonds in the following manner:
(1) The Exchange will uniquely identify ``listed'' and ``traded''
debt securities on the NYSE Bonds Bond Directory located on the
NYSE's website; (2) The Exchange will also make such information
available on the NYSE Bonds Security Master File on a daily basis
through ICE Data Services (``IDS''); and (3) The Exchange will
publish a Trader Update to notify members and member organizations
each time a debt security becomes available to trade on NYSE Bonds.
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(c) Provide members and member organizations notification prior to
the date that trading of the debt securities commences on NYSE Bonds to
clarify the distinction between ``listed'' debt securities and
``traded'' debt securities and to provide notification that eligible
debt securities will be traded on NYSE Bonds;
(d) Issue a press release upon approval of this exemption request
stating that ``listed'' debt securities would trade alongside
``traded'' debt securities on NYSE Bonds; and
(e) Obtain corporate action information from IDS for debt
securities covered by the request for exemptive relief.
With respect to undertaking (e), IDS, an affiliate of the Exchange,
is a bond issue tracking service that provides the NYSE a customized
on-line reference for corporate actions relevant to bonds. The tracking
system provides information and data electronically to the NYSE, and
provides:
<bullet> Notification of calls (redemptions) of traded bonds,
<bullet> Notification of tender offers for traded bonds,
<bullet> Notice of defaults in payment of interest on traded bonds,
<bullet> Notice of consent solicitations for traded bonds, and
<bullet> Notice of corporate actions for traded bonds (includes
tender offers, issuer name changes, CUSIP number changes).\7\
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\7\ The tracking system does not provide notification of changes
in trustees, obligors or transfer agents with respect to traded debt
securities. NYSE receives this information electronically from IDS
on a daily basis. IDS independently obtains, researches and
organizes the information. The NYSE does not itself verify the
information provided by IDS.
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The Exchange's application was approved for publication by the
Commission on October 29, 2024.\8\ In the 2025 Notice, the Commission
proposed one additional undertaking, i.e., that the NYSE monitor daily
the delisting of equity securities of each issuer whose debt securities
are listed for trading on NYSE Bonds or, if the issuer of the debt
securities is a wholly-owned subsidiary, equity securities of the
issuer's parent company. The Commission received one comment letter,
which supported the Exchange's application.\9\
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\8\ See Securities Exchange Act Release No. 34-101468 (October
29, 2024), 89 FR 87668 (November 4, 2024) (Notice of an Application
of the New York Stock Exchange LLC for an Exemption Pursuant to
Section 36 of the Securities Exchange Act of 1934) (the ``2025
Notice'').
\9\ Letter from Thomas M. Merritt, Virtu Financial, Inc. (Dec.
2, 2024), available at <a href="https://www.sec.gov/comments/s7-2024-07/s7202407-544515-1559362.pdf">https://www.sec.gov/comments/s7-2024-07/s7202407-544515-1559362.pdf</a>.
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On February 26, 2025, the Commission granted the exemptive relief
\10\ subject to the one additional undertaking that the Commission
proposed in the 2025 Notice. The granting of the exemptive relief paves
the way for the Exchange to commence trading in a greater number of
debt securities on the Exchange's NYSE Bonds platform.
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\10\ See Securities Exchange Act Release No. 102490 (February
26, 2025), 90 FR 11194 (March 4, 2025) (Order Under Section 36 of
the Securities Exchange Act of 1934 Granting the New York Stock
Exchange LLC's Application To Amend a Conditional Exemption From
Section 12(a) of the Exchange Act) (the ``2025 Order'').
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The purpose of this proposed rule change is to amend Exchange Rules
1400 and 1401 to accommodate the 2025 Order. Specifically, the Exchange
proposes to add reference to the Securities Exchange Act citation for
the 2025 Order and adopt a more general reference to describe both the
2006 Order and the 2025 Order by replacing the defined term ``2006
Order'' with ``SEC Orders'' throughout Rules 1400 and 1401. The
proposed revision is intended to reflect the relief provided by the
Commission in the 2006 Order and in the 2025 Order. The Exchange also
proposes to replace the words ``the New York Stock Exchange'' from the
text of Rule 1400(b) with ``a registered national securities exchange''
to reflect the exemptive relief granted in the 2025 Order.\11\
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\11\ The Exchange also proposes a non-substantive change to
replace the name ``Automated Bond System, or ABS'' with ``NYSE
Bonds'' in Rule 1400. Automated Bond System is the legacy name of
the Exchange's bond platform. The ABS platform was re-named NYSE
Bonds in 2007. The Exchange, however, inadvertently failed to make
the name change in Rule 1400, as it did in Rule 86, when it filed to
establish NYSE Bonds. See Securities Exchange Act Release No. 55496
(March 20, 2007), 72 FR 14631 (March 28, 2007) (SR-NYSE-2006-37).
The Exchange proposes to correct the oversight at this time.
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2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Exchange Act,\12\ in general, and furthers the
objectives of Section 6(b)(5) of the Exchange Act,\13\ 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
[[Page 19236]]
persons engaged in regulating, clearing, settling, processing
information with respect to, and facilitating transactions in
securities, to remove impediments to, and perfect the mechanisms 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. The Exchange believes the proposed rule changes
are consistent with these principles in that they seek to expand the
number of Debt Securities that can be traded on the NYSE, thereby
benefitting investors with increased transparency and choice with
respect to secondary market trading.
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\12\ 15 U.S.C. 78f(b).
\13\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
In accordance with Section 6(b)(8) of the Exchange Act,\14\ the
Exchange believes that the proposed rule change would not impose any
burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Exchange Act. Instead, the Exchange
believes that the proposed change would contribute to competition
because it would expand investor choices on NYSE Bonds and allow the
Exchange to compete better with ATSs that already have the ability to
trade Debt Securities that is the subject of the Exchange's proposed
rule change. The proposed rule change would also facilitate additional
bond transactions on a national securities exchange, which would
contribute to greater price transparency.
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\14\ 15 U.S.C. 78f(b)(8).
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C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \15\ and Rule 19b-4(f)(6) thereunder.\16\
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.\17\
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\15\ 15 U.S.C. 78s(b)(3)(A)(iii).
\16\ 17 CFR 240.19b-4(f)(6).
\17\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file 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) \18\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\18\ 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#cbb9bea7aee6a8a4a6a6aea5bfb88bb8aea8e5aca4bd"><span class="__cf_email__" data-cfemail="0c7e796069216f6361616962787f4c7f696f226b637a">[email protected]</span></a>. Please include
file number SR-NYSE-2025-16 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-2025-16. 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-2025-16 and should be
submitted on or before May 27, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
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\19\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-07811 Filed 5-5-25; 8:45 am]
BILLING CODE 8011-01-P
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