Notice2025-16071
Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing of Proposed Rule Change of Amendments to Rule 7.35A and Rule 7.35C
Primary source
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Published
August 22, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 90 Issue 161 (Friday, August 22, 2025)</title>
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[Federal Register Volume 90, Number 161 (Friday, August 22, 2025)]
[Notices]
[Pages 41149-41153]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-16071]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-103742; File No. SR-NYSE-2025-28]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing of Proposed Rule Change of Amendments to Rule 7.35A
and Rule 7.35C
August 19, 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 August 5, 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 amendments to Rule 7.35A (DMM-Facilitated
Core Open and Trading Halt Auctions) and Rule 7.35C (Exchange-
Facilitated Auctions) to enhance reference price calculations for Core
Open and Trading Halt Auctions conducted by Designated Market Makers
and the Exchange. The proposed rule change is available on the
Exchange's website at <a href="http://www.nyse.com">www.nyse.com</a> and at the principal office of the
Exchange.
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
[[Page 41150]]
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
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes amendments to Rule 7.35A (DMM-Facilitated
Core Open and Trading Halt Auctions) and Rule 7.35C (Exchange-
Facilitated Auctions) to enhance reference price calculations for Core
Open and Trading Halt Auctions conducted by Designated Market Makers
(``DMM'') and the Exchange.
The proposed changes would reflect an augmented calculation of the
reference price for opening and trading halt auctions conducted on the
Exchange that more accurately reflects price movements in a dynamic
market environment, thereby promoting greater transparency in the
auction process and the Exchange's marketplace.
Specifically, the reference price for opening auctions would
reflect a cascading calculation to be called the ``Opening Reference
Price'' that would consider the price of the last consolidated trade of
at least one round lot of that trading day or, if there were no such
trades, the midpoint of the Auction NBBO or, if the Auction NBBO is
locked, the locked price, or if there is no Auction NBBO, for the
initial calculation, the prior trading day's Official Closing Price.
Each subsequent calculation would then utilize the most recent Opening
Reference Price. As proposed, Opening Reference Price calculations
would be based on an evaluation of the period since the last
calculation of the Opening Reference Price and would exclude trades on
Trade Reporting Facilities during the Early Trading Session or Late
Trading Session, thus providing for a more accurate snapshot of the
current market. For reopening auctions, the reference price would
similarly be based on a dynamic calculation to be called the ``Trading
Halt Reference Price'' that would consider the price of the last
consolidated trade of at least one round-lot of that trading day and,
if none, the prior trading day's Official Closing Price. Trading Halt
Reference Price calculations would also exclude trades on Trade
Reporting Facilities during the Early Trading Session or Late Trading
Session.
The Exchange also proposes that for both the Core Open and Trading
Halt Auctions, the Opening Reference Price and the Trading Halt
Reference Price, as applicable, would be used to determine whether
there is a price disparity and whether to publish a pre-opening
indication for securities that have limited publicly-available pricing
information available. Similarly, the proposed Opening Reference Price
and the Trading Halt Reference Price, as applicable, would be used as
the Imbalance Reference Price for the Core Open and Trading Halt
Auctions. The Opening Reference Price and the Trading Halt Reference
Price would also be used for Core Open Auctions and certain Trading
Halt Auctions conducted by the Exchange.
The Exchange believes the proposed enhancements to the calculations
of the benchmarks for auctions on the Exchange would better reflect
more recent trading activity, and such price may reflect a more recent
valuation for a security with which to assess whether an Auction Price
would be at a price disparity and whether a security should be
indicated, to the benefit of investors.
Background
Rule 7.35A sets forth the process for DMM-facilitated Core Open
Auctions and Trading Halt Auctions. Rule 7.35A(a) sets forth both the
DMM and Floor broker responsibilities for the opening and reopening of
securities, and specifically provides that it is the responsibility of
each DMM to ensure that registered securities open as close to the
beginning of Core Trading Hours as possible or reopen at the end of the
halt or pause, while at the same time not unduly hasty, particularly
when at a price disparity from the Consolidated Last Sale Price, which
means the Official Closing Price of a security prior to the beginning
of Core Trading Hours, which may be the prior closing price on the
Exchange.\4\
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\4\ Pursuant to Rule 7.35(a)(12)(A), the term ``Consolidated
Last Sale Price'' means the most recent consolidated last-sale
eligible trade in a security during Core Trading Hours on that
trading day, and if none, the Official Closing Price from the prior
trading day for that security.
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Rule 7.35A(a)(4) provides that Trading Officials participate in the
opening and reopening process to provide an impartial professional
assessment of unusual situations, as well as to provide guidance with
respect to pricing when a significant disparity in supply and demand
exists. Rule 7.35A(a)(4) provides that DMMs should consult with a
Trading Official under specified circumstances, including if it is
anticipated that the opening or reopening price will be at a
significant disparity from the Consolidated Last Sale Price for such
security.\5\
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\5\ See Rule 7.35A(a)(4)(B).
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Rule 7.35A(c)(1) provides that, except under the conditions of
Rules 7.35A(c)(2) and (c)(3), a DMM may not effect a Core Open or
Trading Halt Auction electronically under the conditions specified in
subparagraphs (A)-(H) of Rule 7.35A. In particular, under subparagraph
(F), the DMM could not effect a Core Open or Trading Halt Auction where
there is no Consolidated Last Sale Price. Under subparagraph (G), the
DMM would be constrained where the Core Open Auction Price will be more
than 10% away from the Consolidated Last Sale Price, while under
subparagraph (H) where the Trading Halt Auction Price will be more than
5% away from the Consolidated Last Sale Price.
Rule 7.35A(d) provides that a pre-opening indication would include
the security and the price range within which the Auction Price is
anticipated to occur and that a pre-opening indication would be
published via the securities information processor and proprietary data
feeds. Rule 7.35A(d)(2) addresses Indication Reference Prices, and
provides that the Indication Reference Price for a security, other than
an American Depository Receipt (``ADR''), would be, among others, the
security's last Official Closing Price on the Exchange, adjusted as
applicable based on the publicly disclosed terms of a corporate
action,\6\ or the security's offering price in the case of an IPO.\7\
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\6\ See Rule 7.35A(d)(2)(A)(i).
\7\ See Rule 7.35A(d)(2)(A)(ii).
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Rule 7.35A(d)(2)(B) provides that the Indication Reference Price
for an ADR would be, among others, the closing price of the security
underlying the ADR in the primary foreign market for such security when
the trading day of the primary foreign market concludes after trading
on the Exchange for the previous day has ended.\8\
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\8\ See Rule 7.35A(d)(2)(B)(i).
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Rule 7.35A(d)(2)(C) provides that the Indication Reference Price
for reopening a security following a halt would be the Exchange Last
Sale Price.
Rule 7.35A(e) specifies Auction Imbalance Information for the Core
Open and Trading Halt Auctions. Rule 7.35A(e)(1)(D) provides that the
Exchange would not disseminate Auction Imbalance Information for the
Core Open Auction or Trading Halt Auction if there is no Consolidated
Last Sale Price.
Rule 7.35A(e)(3) specifies how the Imbalance Reference Price would
be determined and provides that the
[[Page 41151]]
Imbalance Reference Price for the Auction Imbalance Information would
be the Consolidated Last Sale Price unless a pre-opening indication has
been published, in which case the Imbalance Reference Price would be:
<bullet> the pre-opening indication bid price if the Consolidated
Last Sale Price is lower than the bid price of the pre-opening
indication;
<bullet> the pre-opening indication offer price if the Consolidated
Last Sale Price is higher than the offer price of the pre-opening
indication; or
<bullet> the Consolidated Last Sale Price if it is at or between
the pre-opening indication bid and offer price.\9\
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\9\ See Rules 7.35A(d)(3)(A)-(C).
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Rule 7.35C provides for how the Exchange would facilitate an
Auction if a DMM cannot facilitate the opening or closing of trading.
Rule 7.35C(b) sets forth definitions applicable to Rule 7.35C. Rule
7.35C(b)(1) defines the term ``Auction Reference Price,'' which is used
by the Exchange for purposes of calculating the Indicative Match Price
and Auction Collars. For Exchange-facilitated Auctions, the Exchange
determines an Auction Price based on the Indicative Match Price for a
security, which is bound by Auction Collars.\10\
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\10\ See Rule 7.35C(b)(2).
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Rule 7.35C(b)(1) specifies the Auction Reference Price used for
determining Auction Collars for Exchange-facilitated Core Open
Auctions. Currently, the Auction Reference Price for the Core Open
Auction is the midpoint of the Auction NBBO or, if the Auction NBBO is
locked, the locked price. If there is no Auction NBBO, it would be the
Official Closing Price from the prior trading day. The Auction
Reference Price for the Trading Halt Auction is, except as provided for
in Rule 7.35C(e)(1), the Imbalance Reference Price as determined under
Rule 7.35A(e)(3). The Auction Reference Price for the Closing Auction
is the Imbalance Reference Price as determined under Rule 7.35B(e)(3).
Finally, the Auction Reference Price for IPO Auctions would be a price
determined under Rule 1.1(u)(1)(F).\11\
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\11\ The current Rule refers to Rule 1.1(s)(1)(F). The Exchange
proposes to correct the reference.
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Proposed Rule Change
The Exchange proposes to refine the reference price calculations it
utilizes for Core Open and Trading Halt Auctions and replace the
Consolidated Last Sale Price as the current benchmark. To reflect the
enhanced calculations and effectuate these changes, the Exchange
proposes new definitions of ``Opening Reference Price'' and a ``Trading
Halt Reference Price'' for Rule 7.35A that would likely reflect a more
recent valuation information for a security to assess various aspects
of the auction process on the Exchange, including how to measure
whether the opening or reopening would be at a price disparity.
Similarly, the Exchange proposes that the Opening Reference Price would
be used to calculate the Auction Reference Price for Core Open Auctions
during Exchange-facilitated auctions pursuant to Rule 7.35C.
As proposed, ``Opening Reference Price'' would mean
<bullet> the price of the last consolidated trade of at least one
round lot of that trading day or,
<bullet> if there were no such trades, the midpoint of the Auction
NBBO or,
<bullet> if the Auction NBBO is locked, the locked price, or
<bullet> if there is no Auction NBBO, for the initial calculation,
the prior trading day's Official Closing Price; for each subsequent
calculation, the most recent Opening Reference Price.
Opening Reference Price calculations would be based on an
evaluation of the period since the last calculation of the Opening
Reference Price and exclude trades on Trade Reporting Facilities
(``TRF'') during the Early Trading Session (``ETS'') or Late Trading
Session (``LTS''), which may not reflect the actual market in a
security.
In addition, ``Trading Halt Reference Price'' would mean the price
of the last consolidated trade of at least one round-lot of that
trading day and, if none, the prior trading day's Official Closing
Price. Trading Halt Reference Price calculations would similarly
exclude TRF trades during the ETS or LTS.
The Exchange would replace Consolidated Last Sale with Opening
Reference Price for an opening and Trading Halt Reference Price for a
reopening, as applicable, in Rule 7.35A(a), governing DMM and Floor
broker responsibilities, and Rule 7.35A(a)(4)(B), governing
circumstances where a DMM should consult a Trading Official, both of
which address assessments of whether an Auction Price would be at a
price disparity.
Similarly, the Exchange would replace Opening Reference Price for
an Opening or Trading Halt Reference Price for a reopening, as
applicable, in Rule 7.35A(c)(1)(F)-(G), governing the conditions under
which a DMM may not effect a Core Open or Trading Halt Auction
electronically. In the condition set forth in Rule 7.35A(c)(1)(H), the
Exchange would replace Consolidated Last Sale with Trading Halt
Reference Price.
For the Indication Reference Price for pre-opening indications
governed by Rule 7.35A(d), the Exchange would replace last Official
Closing Price on the Exchange with Opening Reference Price in Rule
7.35A(d)(2)(A)(i). The Exchange would also delete the clause ``adjusted
as applicable based on the publicly disclosed terms of a corporate
action'' following last Official Closing Price as unnecessary.\12\
Further, the Opening Reference Price would replace ``closing price of
the security underlying the ADR in the primary foreign market for such
security when the trading day of the primary foreign market concludes
after trading on the Exchange for the previous day has ended'' as one
of the ways to determine the Indication Reference Price for ADRs in
Rule 7.35A(d)(2)(B)(i).
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\12\ The Exchange notes that the definition of the Official
Closing Price in Rule 1.1(u)(6) provides that such a price may be
adjusted to reflect corporate actions or a correction to a closing
price, as disseminated by the primary listing market for the
security.
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Finally, the Indication Reference Price for reopening a security
following a halt under Rule 7.35A(d)(2)(C) would be Trading Halt
Reference Price, replacing Exchange Last Sale Price.
For the Imbalance Reference Price under Rule 7.35A(e), the Exchange
proposes not to disseminate Auction Imbalance Information for the Core
Open Auction if there is no Opening Reference Price and for a Trading
Halt Auction if there is no Trading Halt Reference Price, replacing
Consolidated Last Sale Price.
The determination of the Imbalance Reference Price for the Core
Open Auction under Rule 7.35A(e)(3) would be the Opening Reference
Price unless a pre-opening indication has been published, in which case
the Imbalance Reference Price would be the Opening Reference Price
bounded by the pre-opening indication prices. For a Trading Halt
Auction, the Imbalance Reference Price for the Auction Imbalance
Information would be the Trading Halt Reference Price unless a pre-
opening indication has been published, in which case the Imbalance
Reference Price will be the Trading Halt Reference Price bounded by the
pre-opening indication prices.
Finally, the Exchange proposes to replace the existing text for the
Auction Reference Price for Core Open Auction with ``Opening Reference
Price as determined under Rule 7.35A(a).''
Because of the technology changes associated with the proposed
changes, the Exchange proposes to announce the implementation date of
these changes by Trader Update. Subject to approval of this proposed
rule change, the Exchange
[[Page 41152]]
anticipates that such changes will be implemented before the end of the
fourth quarter of 2025.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\13\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\14\ in that 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 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.
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\13\ 15 U.S.C. 78f(b).
\14\ 15 U.S.C. 78f(b)(5).
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The proposed changes to Rule 7.35A and Rule 7.35C to reflect an
enhanced calculation of the reference price for opening and trading
halt auctions conducted by DMMs or the Exchange would more accurately
reflect price movements in a dynamic market environment, thereby
promoting transparency and removing impediments to and perfecting the
mechanisms of a free and open market and a national market system. As
noted above, the Exchange would replace the static measures of
Consolidated Last Sale Price or Official Closing Price from the prior
trading day as the reference price for openings and reopenings in favor
of a dynamic formula that would consider more recent trading activity
of the impacted security in addition to the most recent closing
activity. The proposed Opening Reference Price and Trading Halt
Reference Price would be used to determine whether there is a price
disparity and whether to publish a pre-opening indication for
securities that have limited publicly-available pricing information
available. The Exchange believes the proposed enhancements would better
reflect more recent trading activity on another exchange, and such
price may reflect a more recent valuation for a security with which to
assess whether an Auction Price would be at a price disparity and
whether a security should be indicated, to the benefit of investors and
the maintenance of a fair and orderly market consistent with the
protection of investors and the public interest under Section 6(b)(5)
of the Act.\15\
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\15\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that using the proposed dynamic calculations
for various reference prices for openings and reopenings would remove
impediments to and perfect the mechanism of a free and open market
because, as described in detail above, such prices would be based on
the most recent valuation for purposes of assessing price movement
leading into an Auction. For example, use of the term Opening Reference
Price would incorporate the last eligible consolidated trade of at
least one round lot or, if there were no such trades, the midpoint of
the Auction NBBO or, if the Auction NBBO is locked, the locked price,
or if there is no Auction NBBO, for the initial calculation, the prior
trading day's Official Closing Price, while for each subsequent
calculation, the most recent Opening Reference Price, for purposes of
providing guidance to the DMM and determining the reference price for
opening or reopening a security. The proposed rule change would
therefore promote the fair and orderly operation of Core Open and
Trading Halt Auctions by allowing securities to open or reopen at
prices that are consistent with the most updated available buy and sell
interest in a given security, which would also allow more buy and sell
interest to participate in such Auction.
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 is
not intended to address competitive issues but rather is concerned
solely with enhancing the quality of the reference prices the Exchange
utilizes for Core Open and Trading Halt Auctions. The proposed rule
change does not implicate any intermarket competition concerns because
it relates to how a DMM or the Exchange would facilitate Auctions in
Exchange-listed securities.
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#87f5f2ebe2aae4e8eaeae2e9f3f4c7f4e2e4a9e0e8f1"><span class="__cf_email__" data-cfemail="2f5d5a434a024c4042424a415b5c6f5c4a4c01484059">[email protected]</span></a>. Please include
file number SR-NYSE-2025-28 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-2025-28. 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 filing 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-2025-28 and should be submitted on
or before September 12, 2025.
[[Page 41153]]
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-16071 Filed 8-21-25; 8:45 am]
BILLING CODE 8011-01-P
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