Federal Register / Vol. 85, No. 244 / Friday, December 18, 2020 / Notices 82539 

26 17 CFR 200.30–3(a)(57). 

1 15 U.S.C. 78s(b)(1). 

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4The ownership of shares in street name means 

that a shareholder, or ‘‘beneficial owner,’’ has 

purchased shares through a broker-dealer or bank, 

also known as a ‘‘nominee.’’ In contrast to direct 

ownership, where shares are directly registered in 

the name of the shareholder, shares held in street 

name are registered in the name of the nominee, or 

in the nominee name of a depository, such as the 

Depository Trust Company. For more detail 

regarding share ownership, see Securities Exchange 

Act Release No. 62495 (July 14, 2010), 75 FR 42982 

(July 22, 2010) (Concept Release on the U.S. Proxy 

System) (‘‘Proxy Concept Release’’). 

5 17 CFR 240.14b–1; 17 CFR 240.14b–2. 6See, for example, FINRA Rule 2251. 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–CboeBZX–2020–070 and 

should be submitted by January 8, 2021. 

Rebuttal comments should be submitted 

by January 22, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.26

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2020–27840 Filed 12–17–20; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–90653; File No. SR–NYSE– 

2020–98] 

Self-Regulatory Organizations; New 

York Stock Exchange LLC; Notice of 

Filing of Proposed Rule Change To 

Amend Its Rules To Prohibit Member 

Organizations From Seeking 

Reimbursement, in Certain 

Circumstances, From Issuers for 

Forwarding Proxy and Other Materials 

to Beneficial Owners 

December 14, 2020. 

Pursuant to Section 19(b)(1) 1 of the 

Securities Exchange Act of 1934 (the 

‘‘Act’’) 2 and Rule 19b–4 thereunder,3

notice is hereby given that, on 

November 30, 2020, 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. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend its 

rules to prohibit member organizations 

from seeking reimbursement from 

issuers for forwarding proxy and other 

materials to beneficial owners who 

received shares from their broker at no 

cost or at a price substantially less than 

the market price in connection with a 

promotion by the broker. The proposed 

rule change is available on the 

Exchange’s website at www.nyse.com, 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 Rule 451 requires NYSE 

member organizations that hold 

securities for beneficial owners in street 

name to solicit proxies from, and deliver 

proxy and issuer communication 

materials to, beneficial owners on behalf 

of issuers.4 For this service, issuers 

reimburse NYSE member organizations 

for out-of-pocket, reasonable clerical, 

postage and other expenses incurred for 

a particular distribution. This 

reimbursement structure stems from 

SEC Rules 14b–1 and 14b–2 under the 

Act,5 which impose obligations on 

companies and nominees to ensure that 

beneficial owners receive proxy 

materials and are given the opportunity 

to vote. These rules require companies 

to send their proxy materials to 

nominees, i.e., broker-dealers or banks 

that hold securities in street name, for 

forwarding to beneficial owners and to 

pay nominees for reasonable expenses, 

both direct and indirect, incurred in 

providing proxy information to 

beneficial owners. Similarly, Rule 465 

requires member organizations to 

forward issuer communications to 

beneficial owners on behalf of issuers 

subject to receipt of reimbursement of 

expenses. 

Recently, brokers providing retail 

brokerage services have developed a 

practice in which customers are given 

securities without charge as a 

commercial incentive (for example, 

upon opening a new account or 

referring a new customer to the broker). 

Typically, these incentives involve the 

transfer of a small number of shares to 

benefiting customers and result in the 

customer having a position in the 

company whose shares they receive that 

has a very small dollar value. Rule 451 

does not distinguish between these 

beneficial owners and beneficial owners 

that have paid for their shares, so 

brokers are required to solicit proxies 

from these accounts and are entitled to 

reimbursement of their expenses under 

Rules 451 and 465, as well as pursuant 

to the applicable rules of any other 

national securities exchange or national 

securities association of which the 

NYSE member organization is a 

member.6 As a consequence, issuers are 

billed under Exchange rules and the 

rules of other SROs for the 

reimbursement of expenses the broker 

incurs in making distributions to these 

beneficial owners who have very small 

positions, which they acquired from 

their broker without any payment by the 

customer. In certain cases, the issuer 

can experience a significant increase in 

its distribution reimbursement expenses 

solely due to its shares being included 

in these broker promotional schemes. 

While the distribution of shares in 

these broker promotions may result in a 

significant increase in the number of 

beneficial owners of an issuer’s stock, 

the generally very small size of each of 

these positions means that they usually 

represent a very small percentage of the 

voting power. As such, the costs the 

issuer incurs in reimbursing the broker 

for distributing proxies to these 

accounts is very disproportionate to the 

maximum potential vote such shares 

represent. By contrast, the broker using 

such a scheme chooses to engage in it 

because it believes that it will result in 

a commercial benefit to the broker. 

Consequently, the Exchange believes 

that it is more appropriate for the broker 

to bear these proxy distribution costs. 

Accordingly, the Exchange proposes 

new Rule 451A, which would provide 

that, notwithstanding the applicable 

provisions of Rules 451 or 465 or what 

may be permitted by the rules of any 

other national securities exchange or 

national securities association of which 

a member organization is also a 


khammond on DSKJM1Z7X2PROD with NOTICES
82540 Federal Register / Vol. 85, No. 244 / Friday, December 18, 2020 / Notices 

7 15 U.S.C. 78f(b). 

8 15 U.S.C. 78f(b)(4). 

9 15 U.S.C. 78f(b)(5). 10 17 CFR 240.14b–1; 17 CFR 240.14b–2. 

member, no member shall seek to be 

reimbursed for expenses incurred in 

connection with the distribution of 

proxies or other materials on behalf of 

issuers to the beneficial owners of 

shares or units of an issuer’s securities 

in a nominee account if those shares or 

units were transferred to the account 

holder by the member organization at no 

cost or at a price substantially less than 

the market price. 

As proposed, Rule 451A would not 

limit a broker’s right to reimbursement 

for distributions to any beneficial owner 

if any part of that beneficial owner’s 

position in an issuer’s securities was 

received by any means other than a 

transfer without charge or at a price 

substantially less than the market price 

from the broker. Rules 451 and 465 

would continue to apply to all 

distributions, so the broker would 

continue to be fully obligated to solicit 

votes from, and make other distributions 

on behalf of issuers to, all beneficial 

owners notwithstanding the limitations 

on reimbursement of expenses imposed 

by Rule 451A. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Securities Exchange Act of 1934 

(the ‘‘Act’’) generally.7 Section 6(b)(4) 8

requires that exchange rules provide for 

the equitable allocation of reasonable 

dues, fees, and other charges among its 

members and issuers and other persons 

using the facilities of an exchange. 

Section 6(b)(5) 9 requires, among other 

things, that exchange rules are 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 the public interest 

and the interests of investors, promote 

just and equitable principles of trade 

and that they are not designed to permit 

unfair discrimination between issuers, 

brokers or dealers. 

The Exchange believes that the 

proposal is consistent with Sections 

6(b)(4) and 6(b)(5) of the Act as it would 

only limit the reimbursement of 

distribution expenses in circumstances 

where a broker distributes the shares to 

its customers as part of a voluntary 

promotional strategy by the broker from 

which it derives a commercial benefit. 

The Exchange notes that the recipients 

of shares without charge or at a price 

substantially less than the market price 

from the broker as part of such schemes 

typically will not be given any choice as 

to which shares they receive and are 

therefore not making any investment 

decision. As the broker typically has 

sole control over the allocation of these 

shares to its customers and derives a 

commercial benefit from doing so, the 

Exchange believes that the proposal is 

not unfairly discriminatory and does not 

represent an inequitable allocation of 

the costs of the distribution of proxy 

and other issuer materials. The 

Exchange also notes that brokers will 

continue to be required to distribute 

proxy and other materials on behalf of 

issuers notwithstanding the fact that 

brokers will not be entitled to any 

reimbursement of expenses and believes 

that the proposal is therefore consistent 

with Rules 14b–1 and 14b–2 under the 

Act,10 which impose obligations on 

companies and nominees to ensure that 

beneficial owners receive proxy 

materials and are given the opportunity 

to vote. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change would impose 

any burden on competition not 

necessary or appropriate in furtherance 

of the purposes of the Act. The 

proposed limitation on distribution 

expense reimbursement would apply to 

any broker that adopts a commercial 

strategy of distributing shares to account 

holders free of charge or at a substantial 

discount to the market price. Brokers 

that adopt this strategy do so because 

they believe that they derive a 

commercial and competitive advantage 

from doing so. As such, the Exchange 

believes that any burden on competition 

associated with this proposal is 

appropriate in light of the fact that 

brokers will only be subject to any such 

burden as a consequence of voluntarily 

adopting a strategy that they believe is 

beneficial for their business. There 

would be no effect on the competition 

among issuers resulting from the 

proposed rule change, as all issuers 

would benefit from the proposed 

restriction in the same manner if their 

shares have been distributed without 

charge as part of such a commercial 

arrangement. 

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 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 

• Use the Commission’s internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

NYSE–2020–98 on the subject line. 

Paper Comments 

• 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–2020–98. 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 (http://www.sec.gov/ 

rules/sro.shtml). 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 


khammond on DSKJM1Z7X2PROD with NOTICES
Federal Register / Vol. 85, No. 244 / Friday, December 18, 2020 / Notices 82541 

11 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3The following are current Select Symbols within 

Options 7, Section 2: ASHR, DIA, DXJ, EEM, EFA, 

EWJ, EWT, EWW, EWY, EWZ, FAS, FAZ, FXE, FXI, 

FXP, GDX, GLD, HYG, IWM, IYR, KRE, OIH, QID, 

QLD, QQQ, RSX, SDS, SKF, SLV, SRS, SSO, TBT, 

TLT, TNA, TZA, UNG, URE, USO, UUP, UVXY, 

UYG, VXX, XHB, XLB, XLE, XLF, XLI, XLK, XLP, 

XLU, XLV, XLY, XME, XOP, XRT. 

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 

10:00 a.m. and 3:00 p.m. Copies of the 

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–NYSE–2020–98 and should 

be submitted on or before January 8, 

2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.11

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2020–27836 Filed 12–17–20; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–90655; File No. SR–BX– 

2020–037] 

Self-Regulatory Organizations; Nasdaq 

BX, Inc.; Notice of Filing of Proposed 

Rule Change To Amend BX Options 7, 

Section 2 and Section 3 

December 14, 2020. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on December 

1, 2020, Nasdaq BX, Inc. (‘‘BX’’ or 

‘‘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 Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend BX 

Options 7, Section 2, ‘‘BX Options 

Market—Fees and Rebates,’’ and 

Options 7, Section 3, ‘‘BX Options 

Market—Ports and other Services.’’ 

The text of the proposed rule change 

is available on the Exchange’s website at 

https://listingcenter.nasdaq.com/ 

rulebook/bx/rules, 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 

Exchange 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 these 

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 aspects 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 to amend 

BX’s Pricing Schedule at Options 7, 

Section 2, ‘‘BX Options Market—Fees 

and Rebates,’’ and Options 7, Section 3, 

‘‘BX Options Market—Ports and other 

Services.’’ Each change will be 

described in detail below. 

Options 7, Section 2 

The Exchange proposes to remove the 

options tier schedules applicable to 

Select Symbols 3 and SPY pricing. With 

this proposal, all pricing within Options 

7, Section 2 would be subject to either 

the Penny Symbol or Non-Penny 

Symbol pricing tier schedules. 

Today, the Exchange assesses fees and 

rebates for Penny Symbols and NonPenny Symbols, excluding Select 

Symbols and SPY. Today, both Select 

Symbols and options overlying ‘‘SPY’’ 

are subject to alternative pricing as 

detailed below. 

Today, the Exchange assesses fees and 

pays rebates for Penny and Non-Penny 

Symbols in accordance with the below 

table and corresponding Penny and 

Non-Penny tier schedules. 

FEES AND REBATES

[per executed contract] 

Customer BX options 

market maker 

Noncustomer 1 Firm 

Penny Symbols (Excluding Options in Select Symbols): 

Rebate to Add Liquidity ............................................................................ # 2 $0.10 N/A N/A 

Fee to Add Liquidity ................................................................................. # 3 0.39 $0.45 $0.45 

Rebate to Remove Liquidity ..................................................................... # N/A N/A N/A 

Fee to Remove Liquidity ........................................................................... N/A # 0.46 0.46 

Non-Penny Symbols: 

Rebate to Add Liquidity ............................................................................ * N/A N/A N/A 

Fee to Add Liquidity ................................................................................. * 5 0.50/0.95 0.98 0.98 

Rebate to Remove Liquidity ..................................................................... * N/A N/A N/A 

Fee to Remove Liquidity ........................................................................... N/A * 0.89 0.89 


khammond on DSKJM1Z7X2PROD with NOTICES