Federal Register / Vol. 88, No. 217 / Monday, November 13, 2023 / Notices 77625 

1 15 U.S.C. 80a–1 et seq. 

2 15 U.S.C. 80a–6(c). 

3 17 CFR 270.0–2. 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

Notice is hereby given that pursuant 

to the Paperwork Reduction Act of 1995 

(44 U.S.C. 3501–3520), the Securities 

and Exchange Commission (the 

‘‘Commission’’) has submitted to the 

Office of Management and Budget a 

request for extension of the previously 

approved collection of information 

discussed below. 

Several sections of the Investment 

Company Act of 1940 (‘‘Act’’ or 

‘‘Investment Company Act’’) 1 give the 

Securities and Exchange Commission 

(‘‘Commission’’) the authority to issue 

orders granting exemptions from the 

Act’s provisions. The section that grants 

broadest authority is section 6(c), which 

provides the Commission with authority 

to conditionally or unconditionally 

exempt persons, securities or 

transactions from any provision of the 

Investment Company Act, or the rules or 

regulations thereunder, if and to the 

extent that such exemption is necessary 

or appropriate in the public interest and 

consistent with the protection of 

investors and the purposes fairly 

intended by the policy and provisions of 

the Act.2 Congress enacted section 6(c) 

to give the Commission the flexibility to 

address unforeseen or changed 

circumstances in the investment 

company industry. Rule 0–2 under the 

Investment Company Act,3 entitled 

‘‘General Requirements of Papers and 

Applications,’’ prescribes general 

instructions for filing an application 

seeking exemptive relief with the 

Commission. 

Rule 0–2(c)(1) requires that every 

application for an order for which a 

form is not specifically prescribed and 

which is executed by a corporation, 

partnership or other company and filed 

with the Commission contain a 

statement of the applicable provisions of 

the articles of incorporation, bylaws or 

similar documents, relating to the right 

of the person signing and filing such 

application to take such action on behalf 

of the applicant, and a statement that all 

such requirements have been complied 

with and that the person signing and 

filing the application is fully authorized 

to do so. If such authorization is 

dependent on resolutions of 

stockholders, directors, or other bodies, 

such resolutions must be attached as an 

exhibit to or quoted in the application. 

Any amendment to the application must 

contain a similar statement as to the 

applicability of the original statement of 

authorization. When any application or 

amendment is signed by an agent or 

attorney, rule 0–2(c)(1) requires that the 

power of attorney evidencing his 

authority to sign shall state the basis for 

the agent’s authority and shall be filed 

with the Commission. Every application 

subject to rule 0–2 must be verified by 

the person executing the application by 

executing an instrument in substantially 

the form specified in the rule. Each 

application subject to rule 0–2 must 

state the reasons why the applicant is 

deemed to be entitled to the action 

requested, the name and address of each 

applicant, and the name and address of 

any person to whom any questions 

regarding the application should be 

directed. Electronic filing of all 

applications for orders under the 

Investment Company Act is mandatory. 

Each application subject to rule 0–2 is 

a one-time request and the rule itself 

does not impose any ongoing 

obligations or burdens on the part of an 

applicant. 

Based on historical filing data and 

estimates of the annual number of 

filings, the staff estimates that the 

Commission will receive roughly 112 

applications for an exemptive order per 

year, and that each such applications 

will take an average of 20.25 hours of inhouse attorney time as well as total 

external costs of $92,000. 

These estimates of average costs are 

made solely for the purposes of the 

Paperwork Reduction Act. The estimate 

is not derived from a comprehensive or 

even a representative survey or study of 

the costs of Commission rules. 

This collection of information is 

necessary to obtain a benefit and will 

not be kept confidential. An agency may 

not conduct or sponsor, and a person is 

not required to respond to, a collection 

of information unless it displays a 

currently valid OMB control number. 

The public may view background 

documentation for this information 

collection at the following website: 

www.reginfo.gov. Find this particular 

information collection by selecting 

‘‘Currently under 30-day Review—Open 

for Public Comments’’ or by using the 

search function. Written comments and 

recommendations for the proposed 

information collection should be sent 

within 30 days of publication of this 

notice by December 13, 2023 to (i) 

MBX.OMB.OIRA.SEC_desk_officer@

omb.eop.gov and (ii) David Bottom, 

Director/Chief Information Officer, 

Securities and Exchange Commission, c/ 

o John Pezzullo, 100 F Street NE, 

Washington, DC 20549, or by sending an 

email to: PRA_Mailbox@sec.gov. 

Dated: November 7, 2023. 

Christina Z. Milnor, 

Assistant Secretary. 

[FR Doc. 2023–24953 Filed 11–9–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–98869; File No. SR–NYSE– 

2023–36] 

Self-Regulatory Organizations; New 

York Stock Exchange LLC; Notice of 

Filing of Proposed Enhancements to 

Its Designated Market Maker Program 

November 6, 2023. 

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 October 

23, 2023, 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 selfregulatory 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 

enhancements to its Designated Market 

Maker (‘‘DMM’’) program by (1) 

amending Rule 7.35B(d)(2) (DMMFacilitated Closing Auctions); Rule 36 

(Access to and Communication with 

Floor); Rule 76 (‘‘Crossing’’ Orders); 

Rule 98 (Operation of a DMM Unit); 

Rule 103 (Registration and Capital 

Requirements of DMMs and DMM 

Units); Rule 103B (Security Allocation 

and Reallocation); and Rule 104 

(Dealings and Responsibilities of 

DMMs); (2) deleting Rule 104A 

(DMMs—General) and Rule 106A 

(Taking Book or Order of Another 

Member); and (3) adopting a new Rule 

104B establishing the DMM Unit 

Introductory Program in Exchange 

Traded Products (‘‘ETPs’’). 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. 


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4The term ‘‘Designated Market Maker’’ or 

‘‘DMM’’ means an individual member, officer, 

partner, employee or associated person of a DMM 

unit who is approved by the Exchange to act in the 

capacity of a DMM. See Rule 1.1(e). The term 

‘‘DMM unit’’ means a member organization or unit 

within a member organization that has met the 

requirements of Rules 98 and 104. See Rule 98(b)(1) 

(defining DMM unit). 

5The term ‘‘Trading Floor’’ is defined in Rule 6A 

to mean the restricted-access physical areas 

designated by the Exchange for the trading of 

securities, commonly known as the ‘‘Main Room’’ 

and the ‘‘Buttonwood Room.’’ 

6For instance, the Exchange disseminates Closing 

Auction Imbalance Information beginning ten 

minutes before the scheduled end of Core Trading 

Hours, which provides updated imbalance 

information and indicative closing prices. In 2019, 

in connection with the transition to the Pillar 

trading platform, the Exchange amended its rules to 

provide that Floor Broker Interest (i.e., interest 

verbalized in the trading crowd by a Floor broker) 

would be included in Closing Auction Imbalance 

Information. Beginning in 2020, the Exchange 

temporarily suspended the availability of Floor 

Broker Interest to be eligible to participate in the 

Closing Auction, as defined in Rule 7.35. In 2021, 

the Exchange permanently excluded Floor Broker 

Interest from the Closing Auction and required all 

Floor brokers to enter orders for the Closing 

Auction electronically during Core Trading Hours. 

See Securities Exchange Act Release No. 92480 

(July 23, 2021), 86 FR 40886 (July 29, 2021) (SR– 

NYSE–2020–95). Because of the absence of Floor 

Broker Interest in the Closing Auction, any 

remaining information advantage that DMMs might 

have had with respect to orders from Floor 

brokers—even after such interest was included in 

the Closing Auction Imbalance Information—was 

eliminated. Recently, the Exchange made further 

changes to the Closing Auction, including adding 

price parameters within which the DMM must 

select a Closing Auction Price, in order to make the 

Closing Auction more transparent and 

deterministic. See Securities Exchange Act Release 

No. 95691 (September 7, 2022), 87 FR 56099 

(September 13, 2022) (SR–NYSE–2022–32). 7See Rules 104(a)(2) & (3). For instance, in order 

to facilitate the close, the Exchange makes available 

to DMMs at the point of sale aggregate order 

information about all orders eligible to participate 

in the Closing Auction, including the full quantity 

of Reserve Orders and MOC and LOC Order 

quantities, at each price point. In addition, the 

Exchange makes such aggregate order information 

available to DMM unit algorithms in connection 

with the electronic message sent to a DMM unit 

algorithm to close an assigned security 

electronically, which is sent shortly after the end of 

Core Trading Hours. The information available at 

each price point is not available in the Auction 

Imbalance Information. However, such information 

is used to calculate the Continuous Book Clearing 

Price, which is disseminated via Auction Imbalance 

Information. 

8See Rule 1.1(d) (definition of ‘‘Core Trading 

Hours’’). DMMs would be provided access to 

aggregate order information on an as needed basis 

to facilitate a reopening. See the discussion of 

proposed Rule 104(a)(2), infra. 

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 

enhancements to its DMM program by 

(1) amending Rule 7.35B(d)(2) (DMMFacilitated Closing Auctions); Rule 36 

(Access to and Communication with 

Floor); Rule 76 (‘‘Crossing’’ Orders); 

Rule 98 (Operation of a DMM Unit); 

Rule 103 (Registration and Capital 

Requirements of DMMs and DMM 

Units); Rule 103B (Security Allocation 

and Reallocation); and Rule 104 

(Dealings and Responsibilities of 

DMMs); (2) deleting Rule 104A 

(DMMs—General) and Rule 106A 

(Taking Book or Order of Another 

Member); and (3) adopting a new Rule 

104B establishing the DMM Unit 

Introductory Program in ETPs. 

As described more fully below, the 

proposal represents the most 

comprehensive enhancement of the 

DMM program since its introduction in 

2008. The lynchpin of the proposed 

changes would be the removal of the 

availability of the remaining non-public 

information available to individual 

DMMs and DMM units 4 on the Trading 

Floor 5 intraday. Since 2008, the 

increasingly automated logic for 

executions has severely circumscribed 

the amount of non-public information 

available to DMMs, and the Exchange 

has significantly enhanced the 

transparency of its marketplace over 

that same period.6 Nonetheless, given 

their unique role to facilitate openings, 

reopenings, and the close of trading, 

DMMs at the point of sale continue to 

have display-only access to aggregate 

buying and buying/selling interest that 

is eligible to participate in the Opening 

Auction and the Closing Auction at each 

price point, respectively.7 Moreover, 

pursuant to Rule 104(e)(iii), Floor 

brokers may request that a DMM 

provide them with the information that 

is available to the DMM at the post, 

including such aggregate buying and 

selling interest for the Closing Auction. 

The Exchange proposes to eliminate 

DMMs’ access to aggregate order 

information during Core Trading Hours 

with one limited exception during 

trading halts,8 as well as the related 

ability for DMMs to share this 

information with other market 

participants on the Trading Floor. DMM 

access to aggregate order information 

will henceforth be only as needed and 

before the open, in connection with the 

reopening of a security following a 

trading halt, and following the end of 

Core Trading Hours to facilitate the 

Closing Auction. In addition, the 

Exchange proposes amendments to Rule 

76 to entirely eliminate DMM 

involvement in Floor broker cross 

transactions on the Trading Floor. 

Currently, Floor brokers must announce 

these transactions at the DMM unit 

post/panel where the security trades, 

and the assigned DMM acknowledges 

the Floor broker announcement in 

Exchange systems. As proposed, the 

Exchange would announce and 

acknowledge Floor broker cross 

transactions, thereby eliminating Floor 

broker interactions with individual 

DMMs at the post/panel in connection 

with these transactions. 

The Exchange believes these changes 

would in turn justify elimination of 

certain historical restrictions governing 

DMM unit operations and 

communications from the Trading 

Floor, including use of cellular and 

wireless phones, as well as the 

prohibition on ‘‘Aggressing 

Transactions’’ in the final ten minutes of 

the trading day, thereby reducing the 

burdens associated with operating a 

DMM unit on the Exchange. Indeed, the 

proposal is designed to permit DMM 

units to operate more like other market 

makers while retaining the DMM unit’s 

unique duties and responsibilities to the 

marketplace, none of which would 

change as part of the proposal. In an 

effort to attract more DMM units to the 

Trading Floor, the Exchange also 

proposes an introductory program for 

non-DMM Market Makers and 

Supplemental Liquidity Providers 

(‘‘SLPs’’) that would provide a 12-month 

ramp-up period for new entrants to 

become fully operational Trading Floorbased DMM units. 

The numerous obligations currently 

imposed on DMM units and DMMs by 

Exchange rules, and Rule 104 in 

particular, would in no way be 

diminished or otherwise altered by the 

proposal. Similarly, the proposal does 

not increase or otherwise alter the 

benefits of being an Exchange DMM 

unit. The proposal is designed rather to 

modernize the restrictions on DMMs 

and DMM units that flow from the 

potential availability of non-public 

order information on the Trading Floor; 

the Exchange believes that once the 

remaining sources of potential nonpublic order information are removed, 

these historical restrictions on DMM 


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Federal Register / Vol. 88, No. 217 / Monday, November 13, 2023 / Notices 77627 

9See, e.g., Securities Exchange Act Release No. 

53539 (March 22, 2006), 71 FR 16353 (March 31, 

2006) (SR–NYSE–2004–05) (Order Approving 

Proposed Rule Change and Amendment Nos. 1, 2, 

3, and 5 Thereto and Notice of Filing and Order 

Granting Accelerated Approval to Amendment Nos. 

6, 7, and 8 to the Proposed Rule Change to Establish 

the Hybrid Market). Under the Hybrid Market, 

Exchange systems assumed the function of 

matching and executing electronically-entered 

orders. 

10See, e.g., Securities Exchange Act Release No. 

58845 (October 24, 2008), 73 FR 64379, 64380–81 

(October 29, 2008) (SR–NYSE–2008–46) (Notice of 

Filing of Amendment Nos. 2 and 3 and Order 

Granting Accelerated Approval to a Proposed Rule 

Change, as Modified by Amendment Nos. 1, 2, and 

3, To Create a New NYSE Market Model, With 

Certain Components To Operate as a One-Year 

Pilot, That Would Alter NYSE’s Priority and Parity 

Rules, Phase Out Specialists by Creating a 

Designated Market Maker, and Provide Market 

Participants With Additional Abilities To Post 

Hidden Liquidity) (‘‘Release No. 58845’’). Member 

organizations wanting to operate a DMM unit must 

file a written application and be approved prior to 

operating a DMM unit. See Rule 103(b)(i). As noted 

below, submission and approval of a DMM unit’s 

written policies and procedures addressing the 

requirements of Rule 98 is also a prerequisite to 

operating a DMM unit on the Exchange. DMMs are 

required to be a member of the Exchange and pass 

a prescribed examination. See id. at (c)(i). 

11The negative obligation as set forth in Rule 

11b–1 under the Act required that a specialist’s 

dealings be restricted, so far as practicable, to those 

reasonably necessary to permit the specialist to 

maintain a fair and orderly market. See 17 CFR 

240.11b–1(a)(2)(iii). 

12See, e.g., Release No. 58845, 73 FR at 64381. 

13Rule 7.35A sets forth additional specific 

responsibilities of DMMs with respect to Core Open 

Auctions and Trading Halt Auctions. Rule 7.35B 

sets forth additional responsibilities of DMMs with 

respect to Closing Auctions. The Exchange is not 

proposing changes to those rules. 

14 DMM unit algorithms, however, are not 

provided aggregated buying and selling interest for 

the Closing Auction until after the end of Core 

Trading Hours. 

units and DMMs are no longer 

necessary. The proposal accordingly 

does not alter or disrupt the balance 

between the benefits and obligations of 

being an Exchange DMM unit and is 

instead intended to make the DMM 

business more competitive. Indeed, the 

Exchange believes that the cumulative 

effect of the proposal would be to lower 

entry barriers to the DMM unit business 

on the Exchange and stimulate greater 

competition among existing DMM units 

and potential new entrants, to the 

benefit of the investing public, issuers 

and the marketplace. 

Background 

In 2008, in connection with the 

Exchange’s transformation of its market 

structure begun in 2006,9 the Exchange 

phased out the specialist system and 

replaced specialists with DMMs, who 

are employees of DMM units.10

DMMs were conceived as a new type 

of market maker for a primarily 

electronic trading environment that had 

the ability, and the affirmative 

obligation, to contribute liquidity in a 

security by trading competitively for the 

DMM unit’s dealer account. DMMs were 

designed to function in a manner 

substantially different from the manner 

in which specialists had previously 

functioned on the Exchange. In 

particular, DMMs no longer received 

copies of orders entered in Exchange 

systems prior to the orders’ publication 

to all market participants. Similarly, the 

Exchange eliminated the negative 

obligation 11 to yield trading for a DMM 

unit’s proprietary account in order to 

allow public orders to be executed 

against each other. In addition, DMMs 

ceased to serve as the responsible 

broker-dealer for orders on NYSE’s 

book.12

Although DMM units were not acting 

as responsible broker-dealers for orders 

on the NYSE’s book, individual DMMs 

retained affirmative obligations with 

respect to the quality of the markets in 

their assigned securities as set forth in 

Rule 104, described more fully below. In 

addition, DMM units were required to 

maintain adequate minimum capital 

based on their registered securities, and 

to use their capital to engage in a course 

of dealings for their own accounts to 

assist in the maintenance, so far as 

practicable, of a fair and orderly market. 

Transactions on the Exchange by a 

DMM for the DMM unit’s account are 

expected to be effected in a reasonable 

and orderly manner in relation to the 

condition of the general market and the 

market in a particular stock. Further, 

DMMs are required to maintain a bid or 

offer at the National Best Bid or 

National Best Offer (‘‘inside’’) for 

securities in which the DMM unit is 

registered for a certain percentage of the 

trading day based on the average daily 

volume of the security. DMMs are also 

required to facilitate transactions in 

their assigned securities during 

openings and reopenings as well as at 

the close of trading as required by 

Exchange rules,13 including the 

obligation to supply liquidity as needed. 

Currently, DMM and DMM unit 

algorithms have access to aggregate 

order information in order to comply 

with these requirements.14

These DMM obligations are 

accompanied by a variety of restrictions 

related to communications from the 

Trading Floor contained in Rule 36 and 

DMM trading and information flow 

contained in Rule 98. These rules, as 

well as the requirements of Rule 104, 

the main rule setting forth the 

obligations of Exchange DMM units and 

DMMs, and the related requirements 

embodied in the allocation process set 

forth in Rule 103B, are described below. 

Rule 36 

Rule 36 governs the establishment of 

telephone or electronic communications 

connections between the Floor and 

other specified locations, which 

requires Exchange approval. The 

requirements applicable to DMM units 

and DMMs are set forth in 

Supplementary Material .30 (DMM Unit 

Post Wires) and Supplementary Material 

.31 (DMM Electronically Transmitted 

Written Communications) to Rule 36. 

Rule 36.30 governs the establishment 

of telephone or electronic 

communications between the DMM 

units on the Trading Floor with certain 

specified off-Floor locations. 

First, Rule 36.30 provides that, with 

Exchange approval, a DMM unit may 

maintain a telephone line at its stock 

trading post location to the off-Floor 

offices of the DMM unit, the DMM 

unit’s clearing firm, or to persons 

providing non-trading related services. 

The rule further provides that such 

telephone connection cannot be used for 

the purpose of transmitting to the Floor 

orders for the purchase or sale of 

securities. Rule 36.30 permits a DMM 

unit to maintain a telephone line at its 

trading post location to communicate 

with DMM unit personnel working in 

locations other than the off-Floor offices 

of the DMM unit, provided that the 

telephone numbers of such persons are 

provided to the Exchange in advance. 

Second, Rule 36.30 provides that a 

DMM unit may also maintain wired or 

wireless devices that have been 

registered with the Exchange, such as 

computer terminals or laptops, to 

communicate only with the system 

employing the algorithms and with 

individual algorithms and that will 

enable the DMM unit to activate or 

deactivate the system employing the 

algorithms or an individual algorithm or 

change such system’s pre-set 

parameters. 

In addition, Rule 36.30 provides that 

a DMM unit registered in an Investment 

Company Unit (as defined in Rule 

5.2(j)(3)), or a Trust Issued Receipt (the 

‘‘receipt’’) as that term is defined in 

Rule 8.200, may use a telephone 

connection or order entry terminal at 

the DMM unit’s post to enter a 

proprietary order in the Investment 

Company Unit or receipt in another 

market center, in a Component Security 

of such an Investment Company Unit or 

receipt, or in an options or futures 

contract related to such Investment 

Company Unit or receipt, and may use 

the post telephone to obtain market 

information with respect to such 

Investment Company Units, receipts, 

options, futures, or Component 


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15Examples of Permitted Communications 

Devices include email and instant messaging via a 

desktop or laptop computer. 

16Current Rule 36.31 incorrectly refers to Rule 

104(l)(1). As discussed below, the Exchange 

proposes to delete Rule 36.31 in its entirety. 

17Rule 36.60 (Telephone Listings) provides that 

a member or member organization may not permit 

a non-member to list the telephone number of a line 

terminating in a switchboard of the member or 

member organization in any type of telephone 

directory under the name of the non-member. As 

discussed below, the Exchange proposes to delete 

this rule in its entirety as obsolete. 

18 If Exchange systems do not receive the ‘‘print’’ 

message from the Floor broker within the allotted 

time period, the ability to execute the orders and 

print to the Consolidated Tape will expire and the 

cross instructions will be canceled. 

19See Securities Exchange Act Release Nos. 

72534 (July 3, 2014), 79 FR 39019 (July 9, 2014) 

(SR–NYSE–2014–12) (Order Approving Proposed 

Rule Change Amending Rule 98 To Adopt a 

Principles-based Approach To Prohibit the Misuse 

of Material Nonpublic Information and Make 

Conforming Changes to Other Exchange Rules). 

Securities. If the order in the 

Component Security of the Investment 

Company Unit or receipt is to be 

executed on the Exchange, the order 

must be entered and executed in 

compliance with Exchange Rule 112.20 

and SEC Rule 11a2–2(T), and must be 

entered only for the purpose of hedging 

a position in the Investment Company 

Unit or receipt. 

Rule 36.30 requires DMM units to 

create and maintain records of all 

messages generated by the unit’s wired 

or wireless devices to communicate 

with the system employing the unit’s 

algorithms in compliance with Rule 440 

(Books and Records) and SEC Rules 

17a–3 and 17a–4 and to maintain such 

records in the format prescribed by the 

Exchange. 

Rule 36.31 permits DMM units to 

install and maintain certain written 

electronic communications 

applications. Specifically, Rule 36.31(a) 

permits a DMM unit, subject to 

Exchange approval and the conditions 

set forth in Rule 36.31, to install and 

maintain a wired or wireless device 

capable of sending and receiving written 

communications electronically through 

an Exchange-approved connection (a 

‘‘Permitted Communications Device’’).15

Under Rule 36.31(b), DMM units can 

connect Floor-based personnel via a 

Permitted Communications Device to 

persons with whom they are otherwise 

permitted to communicate pursuant to 

Rules 36.30 and 98, i.e., certain 

personnel in the off-Floor offices of the 

DMM unit, the DMM unit’s clearing 

operations, and persons who are 

permitted to provide non-trading related 

services to the DMM unit under Rule 98. 

Once connected, on-Floor and off-Floor 

personnel are permitted to use the 

Permitted Communications Device for 

two-way written electronic 

communications as permitted by Rules 

36.30 and 98. To facilitate the DMM 

unit’s obligation to maintain regular 

communications with listed issuers, 

Rule 36.31(b) also permits Floor-based 

DMM personnel to utilize Permitted 

Communications Devices for written 

electronic communications with the 

listed issuer representative designated 

under Rule 104(g)(1).16

Rule 36.31(c) requires that a DMM’s 

member organization maintain records 

of all written communications sent from 

or to the DMM via the Permitted 

Communications Device in accordance 

with Rule 440 and SEC Rule 17a-4(b)(4) 

and in such format as may be prescribed 

by the Exchange. 

Finally, Rule 36.31(d) provides that a 

DMM’s member organization must 

establish policies and procedures 

reasonably designed to ensure that use 

of the Permitted Communications 

Device is consistent with all SEC rules 

and Exchange rules, policies, and 

procedures.17

Rule 76 

Rule 76 governs the execution of 

‘‘cross’’ or ‘‘crossing’’ orders by Floor 

brokers. Rule 76 applies only to manual 

transactions executed on the Trading 

Floor and provides that when a member 

has an order to buy and an order to sell 

the same security that can be crossed at 

the same price, the member is required 

to clearly announce to the trading 

Crowd the proposed cross by offering 

the security at a price that is higher than 

his or her bid by a minimum variation 

permitted in the security before crossing 

the orders. 

To assist Floor brokers in monitoring 

the price of protected quotations and 

ensuring compliance with Rule 611 of 

Reg NMS, Rule 76.10 permits Floor 

brokers to enter a cross transaction into 

their hand-held devices (‘‘HHD’’) at a 

limit price consistent with customer 

instructions and as determined by the 

Floor broker. The Floor broker cannot, 

however, use this functionality with 

respect to a cross involving a principal 

order to buy and a principal order to sell 

submitted by the same broker-dealer. 

Following entry of the orders into the 

HHD, a quote minder function within 

Exchange systems monitors protected 

quotations to determine when the limit 

prices assigned to the buy and sell 

orders are such that the orders may be 

executed consistent with Rule 611. 

When the protected quotation permits a 

Rule 611-compliant print (i.e., the 

desired crossing price is at or between 

the protected bid and offer), quote 

minder delivers an alert message 

indicating that the orders may be 

crossed; captures within Exchange 

systems a time-stamped quote that 

includes the time the alert is sent to the 

Floor broker and the protected bid and 

offer at that time; starts a 20-second 

timer; and enables a ‘‘print’’ key 

function in the HHD allowing the Floor 

broker to cross the orders and print the 

trade through Exchange systems to the 

Consolidated Tape within that 20- 

second time period.18

Floor brokers utilize the 20-second 

period to comply with Rule 76’s 

requirement that a Floor broker ‘‘clear’’ 

the trading Crowd before executing a 

cross transaction, which is 

accomplished by the broker verbally 

announcing the cross trade at the post/ 

panel of the DMM unit for the subject 

security. If there is other Floor broker 

and/or DMM interest in response to the 

verbal announcement of the cross trade, 

the Floor broker must trade with such 

interest on behalf of the applicable 

customer order(s). If the original terms 

of a cross transaction cannot be met for 

any reason, for example, if the crowd 

trades with a portion of either the bid 

or offer and the Floor broker cannot 

otherwise complete the proposed cross 

transaction in the size or price as 

entered, the originally-entered proposed 

cross transaction is cancelled. If the 

proposed cross trade is not broken up, 

the Floor broker may proceed to execute 

the trade by selecting the ‘‘print’’ key in 

the HHD prior to the expiration of the 

20-second timer, which also transmits a 

message to Exchange systems to print 

the transaction to the Consolidated 

Tape. The completed transaction is then 

printed to the Consolidated Tape at that 

price. The DMM confirms the Floor 

broker announcement as required by 

Rule 76 in Exchange systems. 

Rule 98 

Rule 98 governs the operation of 

DMM units and incorporates various 

organizational structures for operating a 

DMM unit and restrictions on DMM 

trading. 

Rule 98 contains narrowly tailored 

restrictions to address the fact that 

DMMs, while on the Trading Floor, may 

have access to certain Floor-based nonpublic information and requires DMM 

units to maintain procedures and 

controls to prevent the misuse of 

material, non-public information that 

are effective and appropriate for that 

member organization. Current Rule 98 

generally reflects a principles-based 

approach to prohibit the misuse of 

material nonpublic information by a 

member organization that operates a 

DMM unit.19


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20See Rule 98(b)(1) (defining DMM unit). 21Rule 98(c)(2) provides examples of conduct 

that would constitute the misuse of material, nonpublic information, including, but not limited to: 

(1) trading in any securities issued by a corporation, 

or in any related product, while in possession of 

material-non-public information concerning the 

issuer; or (2) trading in a security or related 

product, while in possession of material non-public 

information concerning imminent transactions in 

the security or related product; or (3) disclosing to 

another person or entity any material, non-public 

information involving a corporation whose shares 

are publicly traded or an imminent transaction in 

an underlying security or related product for the 

purpose of facilitating the possible misuse of such 

material, non-public information. See Rule 

98(c)(2)(A)–(C). 

22Rule 98(b)(4) defines ‘‘Floor-based non-public 

order’’ as any order, whether expressed 

electronically or verbally, or any information 

regarding a reasonably imminent non-public 

transaction or series of transactions entered or 

intended for entry or execution on the Exchange 

and which is not publicly available on a real-time 

basis via an Exchange-provided datafeed, such as 

NYSE OpenBook® or otherwise not publicly 

available. Non-public orders include order 

information at the opening, re-openings, the close, 

and order information in Exchange systems that is 

not available via NYSE OpenBook®. 

23See Rule 98(f)(3). 

24Rule 103, which governs registration and 

capital requirements of DMMs and DMM units, 

provides that as a condition of a member 

organization’s registration as a DMM unit in one or 

more securities, the Exchange may at any time 

require such DMM unit to act as an odd-lot dealer 

in such securities as provided under the rules of the 

Exchange. See Rule 103(d). As discussed below, the 

Exchange proposes to delete Rule 103(d) as 

obsolete. 

25Rule 103B(VI)(A)(1) also sets out an abbreviated 

DMM allocation process for listing companies that 

are a spin-off of or a company related to a listed 

company or one that lists a Related Security as 

defined in Rule 103B(VI)(A)(2). 

26See Rule 103B(III)(A)(1). 

27See Rule 103B(III)(A)(2)(b). 

28See Rule 103B(III)(C). 

Specifically, under Rule 98(c)(2), a 

member organization seeking approval 

to operate a ‘‘DMM unit,’’ which means 

a trading unit within a member 

organization approved pursuant to Rule 

103 (Registration and Capital 

Requirements of DMMs and DMM 

Units) to act as a DMM unit,20 pursuant 

to Rule 98 must maintain and enforce 

written policies and procedures 

reasonably designed, taking into 

consideration the nature of such 

member organization’s business, (1) to 

prevent the misuse of material, nonpublic information by such member 

organization or persons associated with 

such member organization, and (2) to 

ensure compliance with applicable 

federal laws and regulations and with 

Exchange rules.21 Further, Rule 

98(c)(3)(A) provides that a member 

organization shall protect against the 

misuse of ‘‘Floor-based non-public order 

information’’ 22 and that only the 

Trading Floor-based employees of the 

DMM unit and individuals responsible 

for the direct supervision of the DMM 

unit’s Floor-based operations may have 

access (as permitted pursuant to Rule 

104) to Floor-based non-public order 

information. 

Rule 98(c)(3)(B) specifies the 

restrictions applicable to employees of 

the DMM unit while on the Trading 

Floor. Rule 98(c)(3)(C) also provides that 

a Floor-based employee of a DMM unit 

who moves to a location off the Trading 

Floor, or any person who provides risk 

management oversight or supervision of 

the Floor-based operations of the DMM 

unit and becomes aware of Floor-based 

non-public order information, shall not 

(1) make such information available to 

customers, (2) make such information 

available to individuals or systems 

responsible for making trading decisions 

in DMM securities in away markets or 

related products, or (3) use any such 

information in connection with making 

trading decisions in DMM securities in 

away markets or related products. The 

rule covers an individual that leaves the 

Floor, as well as a manager providing 

oversight or supervision of the Floorbased operations of the DMM unit. 

Submission and approval of a DMM 

unit’s written policies and procedures 

addressing the requirements of Rule 98 

is a prerequisite to operating a DMM 

unit on the Trading Floor. 

Rule 98(e) sets forth the procedures a 

DMM unit must follow in the event the 

DMM unit receives from the member 

organization or approved person nonpublic information about a security 

allocated to the DMM unit. 

Rule 98(f) describes certain reporting 

obligations for, among others, DMM 

units, including the requirement that a 

DMM unit promptly report to the 

Exchange any failure to maintain the 

confidentiality of Floor-based nonpublic order information, as required by 

Rule 98(c).23

Finally, Rule 98(g) provides that any 

failure by the DMM unit to maintain 

confidentiality of Floor-based nonpublic order information or any breach 

of any internal controls established to 

protect such information, may result in 

the imposition of appropriate regulatory 

sanctions, including a withdrawal of the 

registration of one or more securities of 

the DMM unit or the withdrawal of the 

approval to operate a DMM unit. 

Submission and approval of a DMM 

unit’s written policies and procedures 

addressing the requirements of Rule 98 

is a prerequisite to operating a DMM 

unit on the Trading Floor. 

Rule 103B 24

Rule 103B(III) sets out the procedures 

under which DMM units are assigned to 

securities listed on the Exchange: an 

issuer may either select a DMM unit 

after interviewing all DMM units 

eligible to participate in the allocation 

process (Rule 103B(III)(A)), or delegate 

the authority for selecting its DMM unit 

to the Exchange (Rule 103B(III)(B)).25

If the issuer proceeds under the first 

option, the listing company must select 

all DMM units to be interviewed from 

the pool of DMM units eligible to 

participate in the allocation process.26 A 

DMM unit’s eligibility to participate in 

the allocation process is based on 

objective criteria and determined at the 

time the interview is scheduled. 

Within five business days after the 

issuer selects the DMM units to be 

interviewed, the issuer meets with 

representatives of each of the DMM 

units. At least one representative of the 

listing company must be a senior official 

of the rank of Corporate Secretary or 

above of that company. Additionally, no 

more than three representatives of each 

DMM unit may participate in the 

meeting, each of whom must be an 

employee of the DMM unit, and one of 

whom must be the individual DMM 

who is proposed to trade the company’s 

security, unless that DMM is 

unavailable to appear, in which case a 

telephone interview is permitted.27

Once a DMM unit is selected, the 

individual DMM assigned to the 

security through the Rule 103B process 

must remain the assigned DMM for at 

least one year from the date that the 

issuer begins trading on the Exchange. 

The DMM unit may designate a different 

individual DMM within the year by 

notifying the Exchange of the change 

and setting forth the reasons for the 

change with the consent and approval of 

the issuer.28

Rule 103B(VI)(H) sets forth the 

allocation sunset policy, which provides 

that allocation decisions remain 

effective for initial public offerings that 

list on the Exchange within eighteen 

months of such decision and that, in 

situations where the proposed 

individual DMM is no longer with the 

selected DMM unit, the company may 

choose to stay with the selected DMM 

unit or be referred to allocation and may 

interview a replacement individual 

DMM prior to making that decision. 

Rule 104 

Rule 104 sets forth the obligations of 

DMMs and DMM units. Under Rule 

104(a), DMMs registered in one or more 

securities traded on the Exchange are 

required to engage in a course of 

dealings for their own account to assist 


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29See Rule 104(a)(1). Specifically, for securities 

that are not ETPs and that have a consolidated 

average daily volume of less than one million 

shares per calendar month, a DMM unit must 

maintain a bid or an offer at the NBBO for at least 

15% of the trading day. For securities that are not 

ETPs with a consolidated average daily volume 

equal to or greater than one million shares, a DMM 

unit must maintain a bid or an offer at the NBBO 

for at least 10% or more of the trading day. Finally, 

for ETPs, a DMM unit must maintain a bid or an 

offer at the NBBO for at least 25% of the trading 

day. Reserve or other hidden orders entered by the 

DMM would not be included in the inside quote 

calculations. See id. at (a)(1)(A). 

30See id. at (a)(2)–(3). Rule 104(e) further 

provides that DMM units must provide contra-side 

liquidity as needed for the execution of odd-lot 

quantities eligible to be executed as part of the 

opening, reopening, and closing transactions but 

that remain unpaired after the DMM has paired all 

other eligible round lot sized interest. 31See id. DMMs utilize access to aggregate order 

information in order to be able to publish a nonmandatory manual closing imbalance beginning one 

hour before the scheduled end of Core Trading 

Hours up to the Closing Auction Imbalance Freeze 

Time under Rule 7.35B(d)(2). Since the Exchange is 

eliminating access to such aggregate order 

information intraday, it would be unavailable to 

DMMs at the close, and the Exchange accordingly 

proposes to delete Rule 7.35B(d)(2) and the clause 

‘‘and if published, Manual Closing Imbalance’’ in 

Rule 7.35B(e)(1)(B). 

32A DMM reaches across the market when the 

DMM buys from the NYSE offer or sells to the NYSE 

bid. 

33The phrase ‘‘the position of the DMM unit’’ in 

Rule 104(d)(1)(B) means the DMM unit’s inventory 

of securities exclusive of pending, unexecuted 

orders and has the same meaning as ‘‘net position 

information in DMM securities’’ in Rule 98(c)(5). 

See Rule 104(d)(1)(B)(i). Current Rule 104(d)(1)(B)(i) 

incorrectly refers to subsection (g)(1)(B), which the 

Exchange proposes to correct. 34See Rule 104(e)(i)(A)–(D). 

in the maintenance of a fair and orderly 

market insofar as reasonably practicable. 

Rule 104(a)(1) enumerates the specific 

responsibilities and duties of a DMM, 

including: (1) maintenance of a 

continuous two-sided quote, which 

mandates that each DMM maintain a bid 

or an offer at the National Best Bid 

(‘‘NBB’’) and National Best Offer 

(‘‘NBO’’) (together, the ‘‘NBBO’’) for a 

certain percentage of the trading day,29

and (2) the facilitation of, among other 

things, openings, re-openings, and the 

close of trading for the DMM’s assigned 

securities, all of which may include 

supplying liquidity as needed.30 The 

Exchange provides access to aggregate 

order information in order for DMMs 

and DMM units to comply with the 

requirement to facilitate openings, 

reopenings, and the close of trading.31

Rule 104(c) imposes an affirmative 

obligation on DMMs to maintain, insofar 

as reasonably practicable, a fair and 

orderly market on the Exchange in 

assigned securities, including 

maintaining price continuity with 

reasonable depth and trading for the 

DMM’s own account when lack of price 

continuity, lack of depth, or disparity 

between supply and demand exists or is 

reasonably to be anticipated. 

Rule 104(d) governs transactions by 

DMMs and provides that transactions on 

the Exchange by a DMM for the DMM’s 

account must be effected in a reasonable 

and orderly manner in relation to the 

condition of the general market and the 

market in the particular security. 

Rule 104(d)(1)(A) defines a DMM unit 

transaction that is a purchase (sale) that 

reaches across the market 32 to trade as 

the contra-side to the Exchange 

published offer (bid), and is priced 

above (below) the last differently-priced 

trade on the Exchange and above 

(below) the last differently-priced 

published offer (bid) on the Exchange as 

an ‘‘Aggressing Transaction.’’ Rule 

104(d)(1)(B) prohibits Aggressing 

Transactions during the last ten minutes 

prior to the scheduled close of trading 

that would result in a new high (low) 

price for a security on the Exchange for 

the day at the time of the DMM’s 

transaction, unless such transaction 

would match another market’s better bid 

or offer price, bring the price of that 

security into parity with an underlying 

or related security or asset, or would 

liquidate or decrease the position of the 

DMM unit 33 (‘‘Prohibited 

Transactions’’). 

Rule 104(d)(2) provides that the DMM 

unit’s obligation to maintain a fair and 

orderly market may require re-entry on 

the opposite side of the market after 

effecting one or more transactions and 

that such re-entry should be 

commensurate with the size of the 

transaction(s) and the immediate and 

anticipated needs of the market, with 

two provisos: 

• First, following an Aggressing 

Transaction, other than an Aggressing 

Transaction involving an ETP, the DMM 

unit must re-enter the opposite side of 

the market at or before the applicable 

Price Participation Point (‘‘PPP’’) for 

that security commensurate with the 

size of the Aggressing Transaction. 

• Second, following an Aggressing 

Transaction, other than an Aggressing 

Transaction involving an ETP, that (1) is 

10,000 shares or more or has a market 

value of $200,000 or more and (2) 

exceeds 50% of the published offer (bid) 

size, the DMM unit must immediately 

re-enter the opposite side of the market 

at or before the applicable PPP for that 

security commensurate with the size of 

the Aggressing Transaction. 

Rule 104(e) describes the Trading 

Floor functions of DMMs. Specifically, 

Rule 104(e)(i) codifies the following 

DMM Trading Floor functions: 

• maintaining order among Floor 

brokers manually trading at the DMM’s 

assigned panel; 

• bringing Floor brokers together to 

facilitate trading, which may include 

the DMM as a buyer or seller; 

• assisting a Floor broker with respect 

to an order by providing information 

regarding the status of a Floor broker’s 

orders, helping to resolve errors or 

questioned trades, adjusting errors, and 

cancelling or inputting Floor broker 

agency interest on behalf of a Floor 

broker; and 

• researching the status of orders or 

questioned trades on his or her own 

initiative or at the request of the 

Exchange or a Floor broker when a Floor 

broker’s handheld device is not 

operational, when there is activity 

indicating that a potentially erroneous 

order was entered or a potentially 

erroneous trade was executed, or when 

there otherwise is an indication that 

improper activity may be occurring.34

Rule 104(e)(ii) provides that the 

Exchange may make systems available 

to a DMM at the DMM unit post that 

display aggregate buying and selling 

interest and post-trade information 

about securities in which the DMM is 

registered. Rule 104(e)(ii) prohibits a 

DMM from using any information 

provided by Exchange systems pursuant 

to subparagraph (ii) in a manner that 

would violate Exchange rules or federal 

securities laws or regulations. 

Rule 104(e)(iii) permits DMMs to 

provide market information available to 

the DMM at the post as described in 

subparagraph (e)(ii) to respond to Floor 

broker inquiries in the normal course of 

business, or visitors to the Trading Floor 

for the purpose of demonstrating 

methods of trading, provided that a 

Floor broker may not submit an inquiry 

pursuant to Rule 104(e)(iii) by electronic 

means and the DMM may not use 

electronic means to transmit market 

information to a Floor broker in 

response to a Floor broker’s inquiry 

pursuant to subparagraph (e)(iii). 

Rule 104(f) governs temporary DMMs 

and provides that, in the event of an 

emergency, such as the absence of the 

DMM, or when the volume of business 

in a particular stock or stocks is so great 

that it cannot be handled by the 

assigned DMMs without assistance, a 

Trading Official may authorize a 

member of the Exchange who is not 

registered as a DMM in such stock or 

stocks, to act as a temporary DMM for 

that day only. 

Finally, Rule 104(g) sets forth the 

obligation of DMMs to communicate 

with their listed issuers. Pursuant to 

Rule 104(g)(1), on at least a quarterly 

basis, each DMM unit must 

communicate with one or more senior 


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35Rule 104A contains various DMM trade and 

data reporting requirements carried over from the 

specialist era, all of which the Exchange proposes 

to delete as duplicative of Exchange and SEC books 

and recordkeeping requirements. Rule 106A 

provides that when a member temporarily takes the 

book of a DMM or an order from another member, 

he or she shall, while he or she is in possession of 

that book or order and for the remainder of the day, 

stand in the same relationship to the book or order 

as the DMM or other member. The Exchange 

proposes to delete Rule 106A as obsolete. 

36See Rule 2(b)(i) (defining a member 

organization as a registered broker or dealer); Rule 

300(a) (providing that trading licenses are issued to 

member organizations). 

37See, e.g., Rule 0(b) (‘‘The Exchange’s Rules 

shall apply to all member organizations and persons 

associated with a member organization. Persons 

associated with a member organization shall have 

the same duties and obligations as a member 

organization under these Rules’’). 

officials of each issuer of listed 

securities in whose securities DMMs 

associated with the DMM unit are 

registered, with the exception of ADRs. 

Rule 104(g)(2) provides that the periodic 

communication requirement can be met 

by either in-person meetings, telephone 

calls, or written communications. Rule 

104(g)(2)(B) prohibits an employee of a 

DMM unit from communicating with a 

listed issuer contact from the Trading 

Floor via telephone, but states that such 

an employee may, while on the Trading 

Floor, use written electronic 

communications to communicate with a 

listed issuer contact from the Trading 

Floor, subject to Rule 36.31.35

Proposed Rule Changes 

The Exchange proposes to amend 

Rule 104 to eliminate DMM access to 

aggregate order information intraday 

with one limited exception for 

reopenings and limit the DMMs’ ability 

to utilize and disseminate this 

information when it is provided by the 

Exchange. Henceforth, DMM access to 

aggregate order information to facilitate 

the Closing Auction would be only as 

needed and outside Core Trading Hours. 

In addition, the Exchange proposes 

amendments to Rule 76 that would 

permit the Exchange to announce 

manual cross transactions, thereby 

removing any involvement by 

individual DMMs in these transactions. 

Based on these changes to Rules 104 

and 76, the Exchange believes it would 

be appropriate to remove the restrictions 

on a DMM unit’s communications from 

the Trading Floor in Rule 36 and the 

specific Rule 98 restrictions arising from 

the presence of Floor-based non-public 

order information. The Exchange notes 

that DMM units and DMMs would 

remain subject to the Rule 98 

prohibitions against disadvantaging 

customers or other market participants 

by improperly capitalizing on material, 

non-public information from any 

source. DMM unit operations together 

with upstairs customer-facing and other 

operations would continue to need to 

protect customer information consistent 

with existing obligations that also apply 

to equity market makers registered on 

other exchanges. 

In addition, the Exchange proposes to 

redefine an Aggressing Transaction in 

Rule 104 as a purchase (sale) that 

reaches across the market to trade as the 

contra-side of the Exchange published 

bid (offer) priced above (below) the last 

consolidated trade. As discussed below, 

given that the majority of volume in 

Exchange listed securities is effectuated 

away from the Exchange, utilizing the 

last consolidated trade as the 

benchmark for DMM transactions that 

reach across the market would provide 

a more meaningful measure of the 

market for the underlying security and 

the aggressiveness of the DMM 

transaction. The Exchange would make 

DMM re-entry on the opposite side of 

the market at or before the applicable 

PPP for that security more deterministic 

by requiring re-entry to be at the same 

size as the Aggressing Transaction. The 

Exchange also proposes to eliminate the 

prohibition on DMMs engaging in 

Aggressing Transactions during the last 

ten minutes prior to the scheduled close 

of trading. 

The Exchange has long maintained 

that, in today’s marketplace, primarily 

electronic DMM market-making activity 

is not materially different from marketmaking on other exchanges. The 

Exchange believes that the proposed 

changes provide a framework for DMM 

units to operate more like other market 

makers while retaining the DMM’s 

unique responsibilities to the 

marketplace and continuing to guard 

against the misuse of material, nonpublic information. As part of this effort 

to reduce barriers to entry for member 

organizations interested in operating a 

DMM unit on the Trading Floor, the 

Exchange proposes an introductory 

program that would permit eligible 

member organizations to make markets 

in ETPs remotely as DMM units for an 

initial 12-month ramp up period before 

transitioning to become fully 

operational Floor-based DMM units. 

The Exchange believes this initiative 

would attract new DMM units to the 

Exchange and enhance competition 

among existing and prospective DMM 

units. 

Rule 104 

Rule 104 forms the cornerstone of 

DMM and DMM unit responsibilities 

and obligations when trading assigned 

listed securities. The Exchange proposes 

to shift the focus of the rule in places 

from the performance of individual 

DMMs assessed by reference to 

qualitative criteria to the DMM unit’s 

performance to be assessed by a 

combination of qualitative measures and 

fee-based incentives. This shift would 

also be reflected in the elimination in 

Rule 103B of the requirement that 

issuers interview the individual DMM 

proposed to trade their security as part 

of the allocation process and the 

requirement that the same individual 

DMM trade the new listing for one year 

from the date the issuer begins trading 

on the Exchange. The Exchange would 

also make technical and clarifying 

changes to Rule 104. 

The Exchange believes that the 

proposed change would modernize Rule 

104 by removing the rule’s emphasis on 

the individual Floor-based market 

maker. The Exchange believes that this 

is a vestige of the specialist system, 

where the conduct and skill of the 

individual trader assigned to a listed 

security were paramount considerations 

in a manual trading environment. In a 

marketplace dominated by electronic 

trading, Rule 104 should instead focus 

on the obligations and responsibilities 

of the DMM unit, which as the license 

holder is the responsible brokerdealer.36 The proposed change is not 

intended to dilute any of the standards 

applicable to individual DMMs and 

other persons associated with the DMM 

unit, as these persons would continue to 

have the same duties and obligations as 

a member organization under the 

Exchange’s rules.37

To effectuate these changes in Rule 

104, the Exchange proposes to add 

‘‘DMM unit’’ and/or replace ‘‘DMM’’ 

with ‘‘DMM unit’’ in several places in 

the rule, as follows: 

• The title of the rule would be 

changed to ‘‘Dealings and 

Responsibilities of DMMs and DMM 

Units.’’ 

• The first sentence of Rule 104(a) 

would obligate DMM units to engage in 

a course of dealings for their own 

account to assist in the maintenance of 

a fair and orderly market insofar as 

reasonably practicable, and the last 

sentence of Rule 104(a) would refer to 

the responsibilities and duties of a 

DMM unit. 

• The first sentence of Rule 

104(a)(1)(B) would set forth the 

applicable pricing obligations during 

the trading day that a DMM unit must 

adhere to, and the Exchange also 

proposes conforming changes in Rule 

104(a)(1)(B)(i) governing bid and offer 

quotations and in the last sentence of 

the rule. 


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38As a practical matter, all information available 

only to the DMM prior to the opening would also 

be included in the opening imbalance feed. 

39As previously noted, the information available 

at each price point is unavailable in the Auction 

Imbalance Information, although this information is 

used to calculate the Continuous Book Clearing 

Price, which is disseminated via Auction Imbalance 

Information. DMM unit algorithms are not currently 

provided access to such non-public information 

until the beginning of Core Trading Hours for the 

open and until after the end of Core Trading Hours 

for the close, and only in connection with 

messaging for the DMM to electronically facilitate 

the close of trading, and the Exchange proposes this 

would continue. As a practical matter, the 

information currently available to DMMs would be 

restricted as proposed. See also note 6, supra. 

• Rule 104(a)(2) would set forth the 

obligation to facilitate transactions in 

DMM unit assigned securities during 

openings and reopenings as required by 

Exchange rules. 

• Rule 104(a)(3) would set forth the 

DMM unit’s obligation to facilitate 

transactions in their assigned securities 

during the close of trading. 

• The heading to Rule 104(d) would 

be changed to ‘‘Transactions by DMM 

Units’’ with one conforming change in 

Rule 104(d)(1) and one in Rule 

104(d)(1)(B). 

The Exchange proposes the following 

additional changes to Rule 104. 

Rule 104(a) 

The Exchange proposes to transpose 

the current qualitative criteria for 

assessing maintenance of a fair and 

orderly market from current Rules 

104(c)(2) and (c)(3) to Rule 104(a) with 

the following clarifying changes: 

• The Exchange proposes to replace 

‘‘implies’’ with ‘‘means’’ and 

‘‘disparity’’ with ‘‘imbalance’’ in the 

first sentence of the text transposed 

from Rule 104(c)(2). As proposed, the 

sentence would read ‘‘The maintenance 

of a fair and orderly market means the 

maintenance of price continuity with 

reasonable depth, to the extent possible 

consistent with the ability of 

participants to use permitted DMM 

order types, and the minimizing of the 

effects of temporary imbalances between 

supply and demand.’’ 

• In the second sentence of the text 

transposed from Rule 104(c)(2), the 

Exchange would replace ‘‘it is 

commonly desirable that’’ with 

‘‘should.’’ As proposed, the sentence 

would read ‘‘In connection with the 

maintenance of a fair and orderly 

market, DMM units should engage to a 

reasonable degree under existing 

circumstances in dealings for the DMM 

unit’s own account when lack of price 

continuity, lack of depth, or disparity 

between supply and demand exists or is 

reasonably to be anticipated.’’ 

• In the second full paragraph of 

proposed Rule 104(a), the Exchange 

would add ‘‘minimum’’ before ‘‘Depth 

Guidelines’’ in the first sentence of text 

transposed from Rule 104(c)(3). Further, 

the Exchange would add the following 

clause to the end of the third sentence 

of the second full paragraph: ‘‘provided, 

however, compliance with the suggested 

minimum Depth Guidelines does not by 

itself establish maintenance of a fair and 

orderly market.’’ 

As proposed, Rule 104(a) would 

reflect the responsibility of the DMM 

unit for the overall quality of markets in 

its registered securities, which would 

include the activities of its employee 

DMMs. 

The Exchange would add a 

subheading to Rule 104(a)(1)(A) titled 

‘‘Two-Sided Obligation’’ to mirror the 

subheading in Rule 104(a)(1)(B). 

In Rule 104(a)(1)(B)(i) governing bid 

and offer quotations, the Exchange 

would replace a reference to paragraph 

(1)(A) of the rule with the defined term 

Two-Sided Obligation. 

As noted, Rule 104(a)(2) sets forth the 

obligation to facilitate transactions in 

assigned securities during openings and 

reopenings, including the obligation to 

supply liquidity as needed, and Rule 

104(a)(3) sets forth the obligation to 

facilitate the close of trading. Both rules 

provide that DMM and DMM unit 

algorithms will have access to aggregate 

order information in order to comply 

with the respective requirements. 

The Exchange proposes to eliminate 

intraday DMM and DMM unit access to 

aggregate order information with one 

limited exception for reopenings.38 As 

proposed, in order to facilitate openings 

and reopenings pursuant to Rule 

104(a)(2), DMMs and DMM units would 

only have access to non-public aggregate 

order information as needed and only 

(1) before the open or until a security 

opens for trading, or (2) while trading is 

halted and only until a security is 

reopened for trading. In order to 

facilitate the close of trading, as 

proposed, DMMs and DMM units would 

only have access to non-public aggregate 

order information as needed and only 

after the end of Core Trading Hours.39

A new proposed Rule 104(a)(4) would 

transpose current Rule 104(e)(ii) and 

replace ‘‘aggregated buying and selling 

interest’’ with ‘‘aggregate order 

information.’’ The Exchange would also 

add specifically with respect to 

aggregate order information that, except 

as provided in proposed Rule 104(a)(5) 

described below, such information may 

only be used by DMMs and DMM units 

to satisfy the responsibilities and duties 

set forth in Rule 104(a)(1)–(3), and may 

only be disseminated to employees of 

DMM units, and the individuals 

responsible for direct supervision of 

DMM units. 

In addition, the Exchange proposes a 

new Rule 104(a)(5) based on current 

Rule 104(e)(iii) that would permit the 

DMM to provide the information 

described in proposed Rule 104(a)(4) in 

response to an inquiry from a Floor 

broker, provided that aggregate order 

information can only be provided in 

response to an inquiry before the open 

or until a security opens for trading, or 

while trading is halted and only until a 

security is reopened for trading. The 

Exchange further proposes to retain the 

current requirements that Floor broker 

inquiries be made by electronic means 

and that the DMM use electronic means 

to transmit market information to a 

Floor broker in response to a Floor 

broker’s inquiry pursuant to this 

subparagraph (5). 

Rule 104(c) 

Rule 104(c) sets forth the functions of 

DMMs. In addition to transposing the 

text of Rule 104(c)(2) and (c)(3) to Rule 

104(a) without change (other than the 

non-substantive clarifying changes 

described above), the Exchange 

proposes to add ‘‘and DMM units’’ 

following DMM in current Rule 

104(c)(4) (proposed to be renumbered as 

(c)(2)) to clarify that both DMMs and 

DMM units are designated as market 

makers on the Exchange for all purposes 

under the Securities Exchange Act of 

1934 and the rules and regulations 

thereunder. 

In addition, the Exchange would 

delete Rule 104(c)(5) in its entirety as 

obsolete. Rule 104(c)(5) was added in 

anticipation of the listing of ETPs on the 

Trading Floor in order to provide the 

Exchange with adequate time to 

calculate the appropriate Depth 

Guidelines for ETPs based on actual 

trading data. The first ETP listed in 

November 2022 and appropriate Depth 

Guidelines were implemented that same 

year, rendering Rule 104(c)(5) obsolete. 

Rule 104(d) 

Rule 104(d)(1)(A) defines an 

Aggressing Transaction as a DMM unit 

transaction that (1) is a purchase (sale) 

that reaches across the market to trade 

as the contra-side to the Exchange 

published offer (bid), and (2) is priced 

above (below) the last differently-priced 

trade on the Exchange and above 

(below) the last differently-priced 

published offer (bid) on the Exchange. 

Pursuant to Rule 104(d)(B), a DMM 

transaction in the last ten minutes of 

trading is prohibited if it is an 

Aggressing Transaction, i.e., reaches 

across the market, and, as a result, 


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40 In 2018, the Exchange replaced four types of 

DMM transactions based on the DMM’s position 

(Neutral, Non-conditional, Conditional and 

Prohibited) with a single, enhanced DMM unit 

transaction called an ‘‘Aggressing Transaction’’ that 

retained specific re-entry requirements and was 

prohibited during the last ten minutes of trading if 

the transaction resulted in a new Exchange high or 

low price of the day, with exceptions for matching 

another market’s better bid or offer, bringing the 

price of that security into parity with an underlying 

or related security or asset, or liquidating or 

decreasing the DMM unit’s position. See Securities 

Exchange Act Release No. 54860 (December 1, 

2006), 71 FR 71221, 71229 (December 8, 2006) (SR– 

NYSE–2006–76). 

41See note 6, supra. 

42See Securities Exchange Act Release No. 92480 

(July 23, 2021), 86 FR 40885 (July 29, 2021) (SR– 

NYSE–2020–95) (Notice of Filing of Amendment 

No. 2 and Order Granting Accelerated Approval of 

Proposed Rule Change, as Modified by Amendment 

No. 2, To Make Permanent Commentaries to Rule 

7.35A and Commentaries to Rule 7.35B and To 

Make Related Changes to Rules 7.32, 7.35C, 46B, 

and 47). 

43For instance, a DMM unit engaging in a 500 

share Aggressing Transaction would be required to 

re-enter on the opposite side at or before the PPP 

in the same quantity. To effectuate this change, 

‘‘commensurate with’’ the size of the Aggressing 

Transaction in Rule 104(d)(2)(A) would be changed 

to ‘‘in the same size’’ as the Aggressing Transaction. 

Given this proposed bright line re-entry 

requirement, the Exchange would delete the 

heading to Rule 104(d)(3), the last sentence of 

current Rule 104(d)(3)(A), and all of Rule 

104(d)(3)(B). The first sentence of current Rule 

104(d)(3)(A) describing the issuance of PPP 

Guidelines by the Exchange would become new 

Rule 104(d)(2)(C). 

creates a new Exchange high or low, 

unless the transaction would match 

another market’s better bid or offer 

price, bring the price of that security 

into parity with an underlying or related 

security or asset, or would liquidate or 

decrease the position of the DMM unit. 

First, the Exchange proposes to 

modify the second leg of the definition 

of Aggressing Transaction. As proposed, 

an Aggressing Transaction would be (1) 

a purchase (sale) that reaches across the 

market to trade as the contra-side to the 

Exchange published offer (bid) that (2) 

is priced above (below) the last 

consolidated sale. The Exchange 

believes that the last consolidated trade 

is a more meaningful benchmark of the 

market for the underlying security since 

most intraday trading in Exchange listed 

securities occurs away from the NYSE. 

Assessing whether a trade that reaches 

across the market by reference to 

whether that transaction aggressively 

moves the price above (below) the last 

consolidated trade rather than above 

(below) the last trade on the Exchange 

and above (below) the last differentlypriced published bid or offer on the 

Exchange could thus result in 

identifying a greater number of 

potentially disruptive DMM unit 

transactions. Moreover, these 

transactions would remain subject to the 

DMM unit re-entry obligations on the 

opposite side of the market set forth in 

Rule 104(d)(2) and which this proposal 

does not seek to change. 

Second, the Exchange proposes to 

delete Rule 104(d)(B) to eliminate 

Prohibited Transactions. 

Prohibited Transactions originated as 

a rule intended to prevent Exchange 

specialists from setting a price in the 

final ten minutes of trading to advantage 

the specialist’s proprietary position in a 

security.40

As noted, over the years, the 

increasingly automated logic for 

executions has severely circumscribed 

the amount of non-public information 

that is only available to DMMs, and the 

Exchange has significantly enhanced the 

transparency of its marketplace.41 Any 

information advantage that DMMs may 

have had with respect to orders from 

Floor brokers—even after such interest 

was included in the Closing Auction 

Imbalance Information—was eliminated 

in 2020 once Floor brokers could no 

longer represent verbal interest intended 

for the Closing Auction and were 

required to enter orders for the Closing 

Auction electronically during Core 

Trading Hours.42 Moreover, DMM unit 

algorithms only have access to the same 

data feeds that are available to the 

public and, with the proposed 

elimination of the additional non-public 

information available to Floor-based 

DMMs, DMMs would have no 

informational advantage, however 

slight, in the Closing Auction. Like all 

other market participants, DMMs would 

only be able to see the imbalance but 

not the orders that are moving the 

imbalance in a given direction, and 

would have absolutely no information 

regarding the identity of the participants 

in the Closing Auction. Significantly, 

DMMs are now also constrained in 

pricing the Closing Auction. Pursuant to 

Rule 7.35B(g)(2), the Auction Price that 

the DMM is responsible for determining 

must be at or between the last-published 

Imbalance Reference Price and the lastpublished non-zero Continuous Book 

Clearing Price. 

Elimination of the availability of 

aggregate order information to DMMs 

marks the culmination of the Exchange’s 

efforts to remove any suggestion of 

informational asymmetry going into the 

Closing Auction. As a result of the 

proposal, there would be no question 

that DMMs would be on the same 

informational footing as all other market 

participants at this crucial point in the 

trading day and would, like them, be 

trading without access to non-public 

information that individual DMMs 

could use to potentially disadvantage 

other market participants or condition 

the market. DMMs engaging in 

Aggressing Transactions in the final 10 

minutes of the trading day would 

moreover be at the risk of the market 

and would remain subject to the 

requirement to re-enter on the opposite 

side of the market at or before the 

applicable PPP for the security, 

including immediate re-entry at or 

before the applicable PPP if the DMM 

transaction is of block size or greater. 

The re-entry requirement is designed to 

dampen the volatility that can ensue 

from a DMM quoting aggressively in 

their assigned securities throughout the 

trading day. The proposal would retain 

the re-entry requirement following an 

Aggressing Transaction and make it 

stronger and more deterministic by 

requiring the DMM unit to re-enter on 

the opposite side in the same size as the 

Aggressing Transaction.43 The Exchange 

believes the re-entry requirement 

represents a significant differentiator 

between DMMs and other market 

makers who do not have similar 

stabilizing re-entry requirements. 

There may be a variety of reasons 

related to the DMM unit’s obligations to 

the marketplace for a DMM unit to 

quote aggressively in assigned securities 

at the close. For instance, a DMM may 

want to add to an existing proprietary 

position in anticipation of having to add 

liquidity on the other side during the 

Closing Auction—in other words, in 

anticipation of facilitating the close. If 

Prohibited Transactions are retained, a 

DMM would continue to be prohibited 

from engaging in this type of desirable 

activity in the final 10 minutes of the 

trading day if adding to the DMM unit’s 

position results in a new high or low 

price on the Exchange. Indeed, such a 

restriction could in fact negatively 

impact the amount of liquidity available 

to investors on the Exchange in 

securities in which the DMM unit has 

a position. The Exchange accordingly 

believes that, in light of the proposal, 

restricting DMM unit trading going into 

the Closing Auction no longer serves 

any meaningful regulatory or other 

purpose and that there would thus no 

longer be any reason to treat DMM units 

differently from other similarly situated 

market makers at the end of the trading 

day. 

The Exchange currently employs a 

suite of surveillances for trading by 

DMM units and other market 

participants intraday and in and around 

the close of trading and actively 

examines trading patterns for potential 

violations, including appropriate reentry on the opposite side of the 

Aggressing Transaction. The Exchange 


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44As noted, the Exchange supplies DMMs with 

suggested Depth Guidelines for each security in 

which a DMM is registered, and DMMs are 

expected to quote and trade with reference to the 

Depth Guidelines. See Rule 7.35A. 

believes that its rules are reasonably 

designed to prevent DMMs from 

inappropriately influencing or 

manipulating the close. These rules 

would not change as a result of the 

proposal and would continue to require 

an evaluation of DMM unit trading 

activity, and in particular transactions 

for the DMM unit’s own account, from 

the standpoint of the affirmative and 

other obligations to the marketplace, 

including the responsibility to ensure 

that openings and reopenings are fair 

and orderly, reflecting a professional 

assessment of market conditions at the 

time, and appropriate consideration of 

the balance of supply and demand as 

reflected by orders represented in the 

market.44

For all the foregoing reasons, the 

Exchange believes that deletion of Rule 

104(d)(B) would eliminate restrictions 

on DMM units that are no longer 

necessary given the evolution of trading 

on the Exchange, thereby promoting 

additional liquidity for investors around 

the close of trading. 

Rules 104(e) and (f) 

The Exchange proposes to delete 

Rules 104(e) (Trading Floor Functions of 

DMMs) and (f) (Temporary DMMs). 

Rule 104(e) as noted sets forth certain 

permitted DMM Trading Floor 

functions, including maintaining order 

among Floor brokers manually trading 

at the DMM’s assigned panel (Rule 

104(e)(i)(A)); bringing Floor brokers 

together to facilitate trading, which may 

include the DMM as a buyer or seller 

(Rule 104(e)(i)(B)); assisting Floor 

brokers by providing information 

regarding the status of a Floor broker’s 

orders, helping to resolve errors or 

questioned trades, adjusting errors, and 

cancelling or inputting Floor broker 

agency interest on behalf of a Floor 

broker (Rule 104(e)(i)(C)); and 

researching the status of orders or 

questioned trades on the DMM’s own 

initiative or at the request of the 

Exchange or a Floor broker under 

various circumstances. Each of these 

historical functions is less important in 

today’s marketplace and, to the extent 

necessary, can be performed by 

Exchange staff rather than by DMMs. In 

addition, as set forth in Rule 104(e)(ii), 

the Exchange makes available to DMMs 

aggregated buying and selling interest 

and post-trade information in the 

securities in which the DMM is 

registered in order to facilitate these 

Trading Floor functions. As discussed 

above, the Exchange proposes a new 

Rule 104(a)(4) to retain the substance of 

current Rule 104(e)(ii) and a new Rule 

104(a)(5) to permit DMMs to provide 

aggregate order information only in 

connection with a Floor broker inquiry 

before the open or until a security opens 

for trading, or while trading is halted 

and only until a security is reopened for 

trading, in connection with the 

facilitation of the opening or reopening 

of a security. The current restrictions on 

electronic submission of an inquiry and 

electronic transmission of market 

information in response to the inquiry 

would also be retained. 

The Exchange would delete Rule 

104(f) governing temporary DMMs as 

obsolete. The rule has rarely been 

invoked. Moreover, the Exchange’s rules 

provide for relief DMMs, which would 

be available during the trading day to 

ensure no interruption of the continuity 

of DMM service to the market. 

Rule 104(g) 

As noted, Rule 104(g) sets forth the 

obligation of DMMs to communicate 

with their listed issuers. In view of the 

proposed changes to Rule 36 discussed 

below, permitting communications with 

any individual, including employees 

from listed issuers, from the Trading 

Floor, consistent with Rule 98, the 

Exchange proposes conforming changes 

to Rule 104(g)(2)(B), which currently 

prohibits communications with a listed 

issuer contact from the Trading Floor 

via telephone and limiting 

communication from the Trading Floor 

to written electronic communications. 

As proposed, Rule 104(g)(2)(B) would 

permit employees of a DMM unit to 

communicate with a listed issuer 

contact from the Trading Floor via 

telephone or written electronic 

communications, consistent with Rule 

36.30 and Rule 98. Current Rule 

104(g)(2)(A) requires that employees of 

a DMM unit comply with the 

requirements of Rule 98 with respect to 

the information that may be shared with 

the listed issuer contact during the 

required communications, which would 

include communications from the 

Trading Floor. Rule 36.30 as proposed 

also requires DMM units to establish 

policies and procedures reasonably 

designed to ensure that use of 

telephones and alternative 

communication devices, as well as 

permitted communications devices, are 

consistent with all SEC rules and 

Exchange rules. Taken together, these 

restrictions would require DMM units to 

reasonably ensure that communications 

with listed issuer contacts from the 

Trading Floor are restricted to 

information that is permitted by the 

federal securities laws and Exchange 

rules. 

Rule 104(g) would become new Rule 

104(e) and the numbering would be 

removed from proposed Rule 104(e)(2). 

Rule 76 

The Exchange proposes to modernize 

the way Floor brokers execute cross 

transactions on the Trading Floor. 

Rather than perpetuating the current 

practice of a Floor broker verbally 

announcing the cross trade at the post/ 

panel of the DMM unit for the subject 

security and having the DMM 

acknowledge the Floor broker 

announcement, the Exchange proposes 

to undertake these functions, thereby 

eliminating any interaction between a 

Floor broker and a DMM during cross 

transactions. The proposed change is 

consistent with and complements the 

elimination of the remaining intraday 

DMM Trading Floor functions set forth 

in Rule 104, described above. 

As proposed, Floor brokers entering a 

cross transaction into Exchange systems 

would activate a 20-second timer as 

occurs today, with the difference that 

once the 20-second period starts, the 

Exchange would announce the proposed 

cross transaction in place of the current 

verbal announcement at the DMM unit 

post/panel. The Exchange believes that 

the proposal would thereby remove any 

potential for individual DMMs to 

interact with Floor brokers in 

connection with these transactions. 

In today’s marketplace, cross 

transactions are negotiated upstairs by 

customers seeking a primary market 

print or customers who do not wish to 

have their orders handled by brokerdealers that also trade as principal. As 

a practical matter, cross transactions are 

no longer arranged at the point of sale 

by Floor brokers interacting with other 

brokers and the DMM in a physical 

trading crowd. In the current 

environment, verbally announcing a 

proposed cross transaction at a post/ 

panel means announcing it to the DMM 

and any other Floor brokers that happen 

to be nearby. As proposed, the Exchange 

would announce the cross transaction to 

all Floor-based participants. If there is 

interest in response to the Exchange 

announcement of the cross trade, the 

Floor Broker would still be required to 

trade with such interest on behalf of the 

applicable customer order(s), as is the 

case today. Similarly, if the original 

terms of the proposed cross transaction 

cannot be met because other Floor-based 

members trade with a portion of either 

the proposed bid or offer and the Floor 

Broker cannot complete the proposed 

cross transaction in the size or price 

entered into Exchange systems, the 


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45The Exchange also proposes clarifying changes 

to replace ‘‘member’’ and ‘‘he or she’’ with ‘‘Floor 

broker’’ or ‘‘the Floor broker’s’’ in the first sentence 

of the rule. 46Rule 70.30 defines ‘‘Crowd’’ as the ‘‘rooms on 

the Exchange Floor that contain active posts/panels 

where Floor brokers are able to conduct business 

constitute the Crowd. A Floor broker will be 

considered to be in the Crowd if he or she is 

physically present in one of these rooms.’’ 

47 In the heading, the Exchange would also add 

a missing space between .30 and DMM and to 

delete ‘‘Post Wires—’’. 

48See Rule 36.31 (restricting DMM units from 

using a Permitted Communications Device to 

communicate with a listed issuer representative 

between 9:15 a.m. Eastern Time until the security 

opens and beginning 15 minutes before the 

scheduled closing time for a security until the 

security is closed). 

49The Exchange’s affiliates, NYSE Arca and 

NYSE American, operate physical options trading 

floors in San Francisco and New York, respectively. 

NYSE American Rule 902NY (Admission and 

Conduct on the Options Trading Floor), governing 

phone use on the NYSE Amex Options Trading 

Floor, was adopted in 2009 and modeled on NYSE 

Arca Rule 6.2(h) (Admission to and Conduct on the 

Options Trading Floor). Both exchanges allow 

Floor-based permit holders and their employees to 

use personal phones on the options trading floors 

subject to certain restrictions. 

originally-entered proposed cross 

transaction would be cancelled, as is 

also the case today. 

To effectuate the proposed rule 

changes, the Exchange would delete 

‘‘trading’’ before ‘‘Crowd’’ in the second 

sentence of Rule 76.45 The proposed 

change would have the effect of 

removing the restriction on announcing 

a proposed cross transaction at the post/ 

panel where the security to be crossed 

is traded. The same change would be 

made in the next to last sentence in Rule 

76.10. It should be noted that an 

Exchange announcement of a proposed 

cross transaction to the Crowd would be 

consistent with Rule 70.30.46

The Exchange proposes further 

conforming changes to delete ‘‘from 

their wireless hand-held devices 

(’HHD’)’’ from the first sentence of 

subsection (a) of Supplementary 

Material .10 and the three other 

references to ‘‘HHD’’ therein. One 

reference to HHD would be replaced by 

‘‘Floor broker.’’ The other reference is 

part of the phrase ‘‘using the ‘print’ key 

function in the HHD’’ that would be 

deleted. The Exchange also proposes to 

simplify the rule by replacing references 

to ‘‘quote minder’’ with ‘‘Exchange 

systems.’’ 

Finally, the Exchange proposes to 

delete the preamble to Rule 76 

providing that ‘‘Supplementary Material 

.10 to this Rule is not applicable to 

trading UTP Securities on the Pillar 

trading platform.’’ Currently, Floor 

brokers can effect proposed cross 

transactions in both Exchange listed and 

UTP securities pursuant to Rule 76, 

although the Cross Function described 

in current Rule 76.10 is unavailable for 

cross transactions in UTP Securities 

because UTP Securities are not assigned 

to a trading post/panel with a DMM. 

Given the proposed elimination of 

verbal announcements at the point of 

sale for Exchange-listed securities, the 

Cross Function could also be utilized for 

UTP securities. As proposed, Floor 

brokers executing cross transactions 

under Rule 76.10 would follow the same 

procedures for Exchange-listed and UTP 

securities, with the Exchange 

announcing cross transactions in both 

cases. 

The remaining aspects of the Crossing 

Function described in Rule 76.10 would 

remain unchanged. 

Rule 36 

The Exchange proposes to combine 

current Rule 36.30 governing 

installation and use of telephones at 

DMM unit posts on the Trading Floor 

and current Rule 36.31 governing use of 

wired or wireless devices such as 

computer terminals or laptops into a 

single, revised proposed Rule 36.30 

titled ‘‘DMM Unit Telephones and 

Permitted Communications Devices.’’ 47

The proposed changes would 

modernize DMM communications from 

the Trading Floor by permitting DMM 

units to use any telephone registered 

with the Exchange, including cellular or 

wireless telephones, and by permitting 

wired or wireless devices, currently 

limited to communications only with 

the system employing the algorithms 

and with individual algorithms, to also 

communicate with persons off the 

Trading Floor. Together with the 

proposed changes to Rule 104(g) 

governing communications with listed 

issuers discussed above, the proposed 

changes would enable DMMs to 

communicate from the Trading Floor 

with any person off the Trading Floor, 

including individuals at listed issuers, 

consistent with reasonable recordkeeping and supervision requirements 

and the Rule 98 requirements to 

maintain confidentiality of non-public 

information about securities allocated to 

the DMM unit. Current restrictions on 

communications with listed issuers 

during specific time periods would no 

longer be necessary and would not be 

carried forward.48

The proposed changes are based in 

part on Rule 36.21 governing use of 

cellular and wireless phones by 

Exchange Floor brokers, which were in 

turn based on the rules governing use of 

cellular phones on the options trading 

floors of the Exchange’s affiliates NYSE 

Arca, Inc. (‘‘NYSE Arca’’), and NYSE 

American LLC (‘‘NYSE American’’), and 

include similar proposed safeguards on 

the use of such devices tailored for 

DMMs.49

To effect these changes, the Exchange 

would delete the current text of Rule 

36.30 (DMM Unit Post Wires) and Rule 

36.31 (DMM Electronically Transmitted 

Written Communications) in their 

entirety. The proposed combined Rule 

36.30 would contain separate sections 

(a) and (b) governing ‘‘Telephones’’ and 

‘‘Other Permitted Communications 

Devices,’’ respectively. 

Proposed Rule 36.30(a) governing 

‘‘Telephones’’ would have four 

subsections. 

Proposed subsection (a)(1) would 

govern registration and provide that 

DMM units must register, prior to use, 

any new telephone, including cellular 

or wireless phones, to be used on the 

Trading Floor by submitting a request in 

writing to the Exchange in an acceptable 

format. In addition, proposed Rule 

36.30(a) would provide that no DMM 

unit may employ any alternative 

communication device (other than 

telephones as described herein) on the 

Trading Floor without prior Exchange 

approval. 

Proposed subsection (a)(2) would 

govern functionality and provide that 

when using a registered telephone or 

alternative communication device on 

the Trading Floor, a DMM may engage 

in direct voice communication to an offFloor location with any individual with 

whom telephone communications are 

permitted under Rule 98. Similarly, 

consistent with the restriction in current 

Rule 36.30, proposed Rule 36.30(b) 

would provide that registered 

telephones or alternative 

communication devices used by DMMs 

on the Trading Floor would not be used 

for the purpose of transmitting orders 

for the purchase or sale of securities to 

a DMM or the DMM unit. 

Proposed subsection (a)(3) would set 

forth the DMM unit’s recordkeeping 

requirement for telephones registered 

for use on the Trading Floor. As 

proposed, DMM units would be 

required to maintain records of the use 

of telephones and all other approved 

alternative communication devices, 

including logs of calls placed, in 

compliance with Rule 440 and SEC 

Rules 17a–3 and 17a–4. The Exchange 

would reserve the right to periodically 

inspect such records pursuant to Rule 

8210, which governs provision of 

information and testimony as well as 

inspection and copying of books. The 

Exchange proposes to use the same 

record retention language for telephones 

currently applicable to Permitted 

Communications Devices. 


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50See Rule 36.21; see generally NYSE American 

Rule 902NY(i) and NYSE Arca Rule 6.2(h). 

51Rule 9558 relates to summary proceedings for 

actions authorized by section 6(d)(3) of the Act. 

52See Securities Exchange Act Release No. 23768 

(Nov. 3, 1986), 51 FR 41183 (Nov. 13, 1986) (SR– 

NYSE–85–25). 

53See discussion of proposed revisions to Rule 

104, supra. 

Finally, proposed subsection (a)(4) 

would require that DMM units to 

establish policies and procedures 

reasonably designed to ensure that use 

of telephones and alternative 

communication devices is consistent 

with all SEC rules and Exchange rules. 

Proposed Rule 36.30(b) governing 

‘‘Permitted Communications Devices’’ 

would also have four subsections. Rule 

36.30(b) would adopt a similar structure 

to proposed Rule 36.30(a) and 

incorporate aspects of current Rules 

36.30 and .31 as described below. 

Proposed subsection (b)(1) would 

govern registration and provide that 

DMM units would have to register, prior 

to use, any other wired or wireless 

devices such as computer terminals or 

laptops used to communicate with (1) 

persons off the Trading Floor, or (2) the 

system employing the DMM unit’s 

algorithms or with individual 

algorithms that enable the DMM unit to 

activate or deactivate the system 

employing the algorithms or an 

individual algorithm or change such 

system’s pre-set parameters, which the 

proposed rule would together define as 

a ‘‘Permitted Communications Device.’’ 

Proposed subsection (b)(2) would 

govern functionality and provide that a 

Permitted Communications Device may 

be used only for communications 

between individuals or systems located 

at the DMM unit on the Trading Floor 

and individuals or systems with whom 

communications are permitted under 

Rule 98. 

Proposed subsection (b)(3) would set 

forth record-keeping requirements and 

provide that DMM units must maintain 

records of the use of Permitted 

Communications Devices, including all 

communications sent to or from 

Permitted Communication Devices, in 

compliance with Rule 440 and SEC 

Rules 17a–3 and 17a–4. The proposed 

rule would further provide that such 

records would need to be maintained in 

a format prescribed by the Exchange. 

Both of these requirements can be found 

in the current rules. Proposed Rule 

36.30(b)(3) would add the proviso that 

the Exchange reserves the right to 

periodically inspect such records 

pursuant to Rule 8210, consistent with 

proposed Rule 36.30(a)(3). 

Proposed subsection (b)(4) would 

provide that DMM units must establish 

policies and procedures reasonably 

designed to ensure that the use of 

Permitted Communications Devices are 

consistent with all SEC rules and 

Exchange rules. 

Proposed Rule 36.30(c) would be 

titled ‘‘General’’ and would incorporate 

the limitations in current Rule 36.21 

and the rules of the Exchange’s options 

affiliates 50 that the Exchange may deny, 

limit, or revoke registration of any 

device used on the Trading Floor 

whenever it determines, in accordance 

with the procedures set forth in Rule 

9558,51 that use of such device is 

inconsistent with the public interest, the 

protection of investors, or just and 

equitable principles of trade, or such 

device has been or is being used to 

facilitate any violation of the Act, as 

amended. 

In addition, the Exchange proposes to 

delete current Rule 36.30 prohibiting a 

non-member to list the telephone 

number of a line terminating in a 

switchboard of the member or member 

organization in any type of telephone 

directory under the name of the nonmember as obsolete. Similarly, the 

Exchange would not retain text in 

current Rule 36.30 permitting DMMs to 

use a telephone connection or order 

entry terminal at the DMM unit’s post 

to enter a proprietary order in an 

Investment Company Unit (as defined in 

Rule 5.2(j)(3)) or a Trust Issued Receipt 

(as defined in Rule 8.200) in another 

market center in either a component 

security of an Investment Company Unit 

or Trust Issued Receipt, or in an options 

or futures contract related to such 

securities, as obsolete. 

Rule 98 

Rule 98 was adopted in 1986, at a 

time when specialist firms, which had 

been independent member-owned 

entities, increasingly became affiliates of 

larger member organizations. Given the 

specialists’ position in the marketplace, 

Rule 98 required an organizational 

separation between a specialist and its 

affiliates in order to eliminate or control 

conflicts of interest between the 

business activities of affiliates of the 

specialist and the specialist’s 

responsibilities to the market and to 

customer orders that the specialist 

represented as agent.52 As noted above, 

in 2008, the Exchange adopted a more 

flexible, principles-based approach to 

Rule 98 that, among other things, 

allowed DMM operations to be 

integrated into better-capitalized 

member organizations; permitted a 

DMM unit to share non-trading-related 

services with its parent member 

organization or approved persons; and 

provided flexibility to member 

organizations and their approved 

persons in conducting risk management 

of DMM operations. 

The Exchange now proposes revisions 

to Rule 98 to provide a framework for 

DMM unit operations on the Trading 

Floor once DMMs would only be 

provided access to aggregate order 

information in order to facilitate 

openings and reopenings as needed and 

only (1) before the open or until a 

security opens for trading, or (2) while 

trading is halted and only until a 

security is reopened for trading, and to 

facilitate the closing of trading on an asneeded basis and only outside Core 

Trading Hours.53 Importantly, the 

proposed changes to Rule 98 would in 

no way diminish the DMM unit’s 

obligation to maintain confidentiality 

and enforce written policies and 

procedures to prevent the misuse of 

material, non-public information by 

DMM units and their employees, as well 

as to ensure compliance with applicable 

federal laws and regulations and 

Exchange rules, or the obligation of 

individual DMMs to refrain from trading 

in DMM securities on the basis of 

material, non-public information. 

To effectuate these changes, the 

Exchange would make the following 

changes to Rule 98: 

• The definition of ‘‘Floor-based nonpublic order’’ in Rule 98(b)(4) would be 

deleted. The Exchange believes that the 

concept of Floor-based non-public order 

information would become obsolete 

with the proposed changes to Rules 76 

and 104. The current definitions in 

(b)(5) through (b)(7) would be 

renumbered. 

• Current Rule 98(c)(2) would be 

broken into two parts. New Rule 98(c)(2) 

would consist of the first sentence of the 

current rule describing the requirements 

for member organizations seeking 

approval to operate a DMM unit 

pursuant to Rule 98. New Rule 98(c)(3) 

would consist of the remainder of 

current Rule 98(c)(2) with the following 

text added as the first sentence: 

‘‘Member organizations operating a 

DMM unit and DMMs shall not misuse 

material, non-public information.’’ The 

Exchange believes the proposed change 

would strengthen the Exchange’s ability 

to address potential misuses of nonpublic information from any source 

under the revised rule set. 

• Current Rule 98(c)(3)(A) providing 

that a DMM unit shall protect against 

the misuse of Floor-based non-public 

order information and that only Floorbased employees of the DMM unit and 

individuals responsible for the direct 

supervision of the DMM unit’s FloorVerDate Sep<11>2014 17:12 Nov 09, 2023 Jkt 262001 PO 00000 Frm 00088 Fmt 4703 Sfmt 4703 E:\FR\FM\13NON1.SGM 13NON1

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54The prohibition relates to customer order 

information, so the Exchange would add ‘‘order’’ to 

the rule text. See Securities Exchange Act Release 

No. 71837 (Apr. 1, 2014), 79 FR 19146 (Apr. 7, 

2014) (SR–NYSE–2014–12). 

55See Rule 103B(III)(C). The DMM unit may 

designate a different individual DMM within the 

year by notifying the Exchange of the change and 

setting forth the reasons for the change with the 

consent and approval of the issuer. 

56As noted, the Exchange proposes to delete Rule 

104A as obsolete. See note 35, supra. Current Rule 

104B prohibiting DMMs (to be changed to DMM 

units) from charging commissions for trades in 

registered securities would become new Rule 104A. 

57See Securities Exchange Act Release No. 92480 

(July 23, 2021), 86 FR 40885 (July 29, 2021) (SR– 

NYSE–2020–95) (Notice of Filing of Amendment 

No. 2 and Order Granting Accelerated Approval of 

Proposed Rule Change, as Modified by Amendment 

No. 2, To Make Permanent Commentaries to Rule 

7.35A and Commentaries to Rule 7.35B and To 

Make Related Changes to Rules 7.32, 7.35C, 46B, 

and 47). 

based operations may have access to 

Floor-based non-public order 

information would be deleted. Current 

Rule 98(c)(3)(B) would become new 

Rule 98(c)(4)(A). 

• Current Rule 98(c)(3)(B)(iii) 

prohibiting, except as provided for in 

Rule 36.30, communications by 

employees of a DMM unit with 

individuals or systems responsible for 

making trading decisions for related 

products or for away-market trading in 

their assigned DMM securities, would 

be amended to only permit those 

communications consistent with Rule 

98. As noted, this change would be 

consistent with the proposed changes to 

Rule 36.30. 

• Current Rule 98(c)(3)(B)(iv) 

prohibiting employees of a DMM unit 

from having access to customer 

information or the DMM unit’s position 

in related products would be revised to 

limit the prohibition to customer order 

information only.54 The reference to the 

DMM unit’s position in related products 

would be removed consistent with the 

proposed changes to current Rule 

98(c)(3)(B)(iii) described above. 

• The Exchange would delete current 

98(c)(3)(C) specifically addressing Floorbased employees of a DMM unit that 

move to a location off the Trading Floor 

or any person providing risk 

management oversight or supervision of 

the Floor-based operations of the DMM 

unit that becomes aware of Floor-based 

non-public order information as no 

longer necessary given the elimination 

of the general availability of such 

information to DMM units. 

• The Exchange would similarly 

delete current 98(c)(3)(D) providing that 

a DMM unit may make available to a 

Floor broker associated or affiliated with 

an approved person or member 

organization any information that the 

DMM would be permitted to provide 

under Exchange rules to an unaffiliated 

Floor broker. 

• The Exchange would delete current 

Rule 98(c)(5) requiring member 

organizations to provide the Exchange 

with net position information in DMM 

securities by the DMM unit and any 

independent trading unit of which it is 

part based on the elimination of 

Prohibited Transactions. The Exchange 

utilizes this data to assess Prohibited 

Transactions, which would be deleted 

as discussed above. Rules 98(c)(6) and 

(7) would be renumbered accordingly. 

• The Exchange would amend Rule 

98(e)(1) describing steps to be taken in 

the event a DMM unit receives nonpublic information about a security that 

is allocated to the DMM unit to delete 

the phrase ‘‘from the member 

organization or approved person.’’ The 

proposed change does not privilege 

Floor-based non-public information and 

reflects that non-public information can 

be received from any source. In 

addition, the Exchange would make 

clear that the non-public information 

referenced therein excludes aggregate 

order information provided by the 

Exchange as set forth in Rule 104(a)(2) 

and (3). 

• Subsection (3) of Rule 98(f) 

governing reporting obligations would 

be amended to delete the reference to 

‘‘Floor-based’’ non-public order 

information. As amended, Rule 98(f)(3) 

would require a DMM unit to promptly 

report to the Exchange any failure to 

maintain the confidentiality of nonpublic information. 

• Rule 98(f)(4) would become new 

Rule 98(f)(3) and the phrase ‘‘Floorbased non-public order information’’ in 

that subsection would be replaced with 

‘‘non-public information.’’ 

• Finally, the Exchange proposes to 

similarly replace ‘‘Floor-based nonpublic order information’’ with ‘‘nonpublic information’’ in Rule 98(g). 

Rule 103B 

Rule 103B(III) mandates that when an 

issuer selects a DMM unit by interview, 

the individual DMM who is proposed to 

trade the company’s security must 

participate in the interview. Further, 

once a DMM unit is selected, Rule 103B 

mandates that the individual DMM 

assigned to the security must remain the 

assigned DMM for at least one year from 

the date that the issuer begins trading on 

the Exchange.55

The Exchange proposes to remove the 

requirement that listed issuers must 

interview the individual DMM who is 

proposed to trade the company’s 

security and the related requirement 

that the individual DMM assigned a 

proposed security must remain the 

assigned DMM for one year from the 

date that the issuer begins trading on the 

Exchange, also known as the ‘‘DMM 

one-year obligation.’’ Conforming 

changes would be made to Rule 

103B(VI)(H) to delete the contingency 

where the proposed individual DMM is 

no longer with the selected DMM unit. 

In addition to providing the DMM 

unit with greater flexibility in 

determining who should participate in 

the interview process, the proposed 

changes to Rule 103B would 

deemphasize the importance of the 

individual DMM in the issuer allocation 

process. The Exchange believes that 

listed issuers will not be disadvantaged 

by the proposal and in fact would 

benefit from the ability to develop 

broader relationships with a DMM unit 

by not limiting trading in its listed 

security to a single individual for any 

length of time. 

DMM Unit Introductory Program in 

ETPs 

The Exchange proposes a new Rule 

104B56 governing its DMM Unit 

Introductory Program in ETPs (the 

‘‘Program’’).57

As set forth in proposed Rule 104B(a), 

the Program would be open to all 

member organizations in good standing 

registered as a non-DMM Market Maker 

or an SLP on the Exchange. The 

Program is limited to ETPs and is 

designed to provide eligible member 

organizations with a 12-month ramp up 

period to becoming fully operational, 

Trading Floor-based DMM units, which 

the Exchange believes would encourage 

competition among existing DMM units 

and potential new entrants to the benefit 

of investors. 

Proposed Rule 104B(b) would set 

forth the Program qualifications. As 

proposed, eligible member organizations 

must meet the registration and capital 

requirements set forth in Rule 103 and 

have: 

• adequate technology to support all 

electronic DMM obligations through the 

systems and facilities of the Exchange 

during the initial 12-month period; 

• MPIDs that identify to the Exchange 

trading activity in assigned DMM 

securities; 

• adequate trading infrastructure to 

support DMM unit trading activity, 

which includes support and 

administrative staff to maintain 

operational efficiencies in the Program; 

and 

• a disciplinary history that is 

consistent with just and equitable 

business practices. 

In addition, proposed Rule 104B(b) 

would provide that individuals to be 


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58Rule 35.20 requires each DMM unit to have (1) 

at least one employee approved by the Exchange for 

admittance to the Floor for every Post space 

assigned to the unit, and (2) an adequate number 

of additional approved employees to provide proper 

service during the trading day. 

59Rule 107B(k) specifies the process for SLPs to 

appeal non-regulatory Exchange penalties. 

60 15 U.S.C. 78f(b). 

61 15 U.S.C. 78f(b)(5). 

registered as DMMs are required to be 

members of the Exchange and pass the 

qualifying examination for DMMs. 

Applications for this examination 

should be submitted to the Exchange. 

Proposed Rule 104B(c) would govern 

the application process for the Program. 

As proposed, eligible member 

organizations would be required to 

submit a Rule 103 application to the 

Exchange with all supporting 

documentation in order to participate in 

the Program. Based on the application, 

the Exchange would determine whether 

an applicant was qualified for the 

Program based on proposed Rule 

104B(b) and would notify the applicant 

of its eligibility decision in writing. In 

the event an application is disapproved, 

the proposed rule would provide that an 

applicant may re-apply for the Program 

at least three calendar months following 

notification by the Exchange of 

disapproval. Finally, proposed Rule 

104B(c) would provide that once 

approved for the Program, the DMM 

unit along with their DMMs would 

subject to the obligations as set forth in 

proposed Rule 104B(e) of this Rule 

during the 12-month duration of the 

Program discussed below. 

Proposed Rule 104B(d) would govern 

voluntary withdrawal from the Program. 

As proposed, at any time during the 12- 

month duration of the Program, a DMM 

unit would be able to withdraw by 

giving notice to the Exchange in writing. 

Such withdrawal would become 

effective when the ETPs assigned to the 

withdrawing DMM unit are reassigned 

by the Exchange, which as proposed 

would be done as soon as practicable 

but no later than 30 days from the date 

the Exchange receives a withdrawal 

notice. As further proposed, in the event 

the reassignment takes longer than the 

30-day period, the withdrawing DMM 

unit would have no obligations under 

the proposed rule and would not be 

held responsible for any matters 

concerning previously assigned ETPs 

upon termination of the 30-day period. 

Rule 104B(d) mirrors the voluntary 

withdrawal provisions for SLPs in 

current Rule 107B(e). 

Proposed Rule 104B(e) would govern 

the obligations of DMM units and their 

DMMs. As proposed, during the 12- 

month Program period, DMM units and 

their DMMs would be subject to the 

duties and responsibilities set forth in 

Rules 104 and 98. Further, DMMs 

operating in the Program would be 

permitted to conduct business for the 

DMM unit such as entering orders and 

quotations for the account of the DMM 

unit during the Program. Finally, DMMs 

would be permitted to conduct business 

only on behalf of the DMM unit with 

which the DMM is associated. 

In addition, the proposed rule would 

provide that during the 12-month 

Program period, DMM units would not 

be required to comply with the 

requirements of Rule 35.20 58 regarding 

personnel available to DMM units on 

the Trading Floor; would be ineligible to 

compete for new listings pursuant to 

Rule 103B; and would be eligible for 

DMM unit pricing incentives set forth in 

the Exchange’s Price List unless 

specifically provided therein. 

Finally, proposed Rule 104B(f) would 

set forth the additional requirement that 

all DMM units in the Program must 

transition to fully operational DMM 

units on the Trading Floor and meet all 

Exchange requirements for DMM units 

within the 12-month period. As 

proposed, DMM units failing to fully 

transition as provided herein would 

forfeit all ETP symbols and would be 

ineligible to re-apply for the Program or 

become DMM units for a 12-month 

period. Finally, the proposed rule 

would provide that member 

organizations disputing Exchange 

determinations under this Rule would 

be required to follow the appeal 

procedures set forth in Rule 107B(k).59

* * * * * 

The Exchange believes that the 

proposal would enhance and modernize 

DMM unit operations from the Trading 

Floor and remove barriers to entry into 

the DMM unit business without diluting 

DMM unit obligations and 

responsibilities. The result would 

enhance and encourage competition 

among current and prospective DMM 

units, to the benefit of investors and 

issuers. 

For all of the foregoing reasons, the 

Exchange believes that the proposed 

rule change is consistent with the Act. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

section 6(b) of the Act,60 in general, and 

furthers the objectives of section 6(b)(5) 

of the Act,61 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 

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. 

Rule 104 

The Exchange believes that the 

proposed changes to Rule 104 that 

would eliminate DMM access to 

aggregate order information intraday 

with one exception for reopenings and 

the traditional DMM Trading Floorbased functions involving information 

sharing with other Floor-based market 

participants would remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system by 

permitting DMM units to function more 

like other proprietary market makers. 

The proposed changes would continue 

to provide DMMs with tools to comply 

with their obligations to supply 

liquidity as needed to facilitate 

openings, reopening and the close of 

trading, while eliminating the potential 

that DMMs on the Trading Floor could 

utilize non-public information to 

disadvantage other market participants 

and public customers, particularly 

during the Closing Auction. Further, 

restricting DMM access to aggregate 

order information to an as needed basis 

and while trading is halted and only 

until the security is reopened would not 

be inconsistent with the public interest 

and the protection of investors because 

DMM units would still have the 

obligation under Rule 98 to maintain the 

confidentiality of non-public order 

information made available to a DMM 

for the purpose of facilitating an 

intraday reopening and to appropriately 

supervise a DMM’s access to and use of 

such information. The proposed 

changes to Rule 104 restricting use and 

dissemination of aggregate order 

information are also designed to prevent 

fraudulent and manipulative acts and 

practices and would promote the public 

interest and the protection of investors. 

The Exchange believes that redefining 

Aggressing Transactions in Rule 104 as 

transactions that reach across the market 

priced above (below) the last 

consolidated trade would remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system by 

focusing on transactions that reach 

across the market above or below a price 

that bears a reasonable relationship to 


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62See note 37, supra. 63 15 U.S.C. 78f(b)(5). 

the overall market for the security, given 

that most of the volume in Exchange 

listed securities occurs away from the 

Exchange. The Exchange believes that 

the proposal would not be inconsistent 

with the public interest and the 

protection of investors. As noted, the 

proposal would not eliminate the 

requirement that all DMM transactions 

be effected in a reasonable and orderly 

manner in relation to the condition of 

the general market and the market in the 

particular stock. Further, DMM 

Aggressing Transactions would 

continue to uniquely require re-entry on 

the opposite side of the market at or 

before the applicable PPP for the 

security as warranted, including 

immediate re-entry if the DMM 

transaction aggressively taking liquidity 

is of block size or greater. The Exchange 

believes that requiring re-entry to be in 

the same size as the Aggressing 

Transaction would strengthen the reentry requirement by making it more 

deterministic, thereby supporting 

maintenance of a fair and orderly 

market and removing impediments to 

and perfect the mechanism of a free and 

open market and a national market 

system. 

In addition, the Exchange believes 

that eliminating Rule 104(d)(1)(B) 

prohibiting Aggressing Transactions in 

the final ten minutes of trading would 

remove impediments to and perfect the 

mechanism of a free and open market 

and a national market system by 

permitting DMM units to enter trades 

going into the close without restriction, 

which the Exchange believes would 

benefit the marketplace by adding 

liquidity to the Closing Auction. 

Further, eliminating Prohibited 

Transactions would not be inconsistent 

with the public interest and the 

protection of investors because DMMs, 

as proprietary traders without the ability 

to direct or influence trading or control 

the quote, would have no informational 

advantage going into the close and must 

select a closing price between the lastpublished Imbalance Reference Price 

and the last-published non-zero 

Continuous Book Clearing Price. The 

Exchange believes that eliminating 

Prohibited Transactions would not be 

inconsistent with the public interest and 

the protection of investors because 

DMM trading decisions going into the 

close would continue to be evaluated 

from the perspective of their obligations 

to the marketplace, including the 

obligation to arrange a fair and orderly 

close and selection of a price in the 

required range, as set forth in Exchange 

rules. Moreover, during the last ten 

minutes of trading, DMM units would 

still have an obligation to re-enter the 

market if their trading both reaches 

across the market and increases or 

establishes a position, which would 

dampen volatility and ensure that DMM 

transactions bear a reasonable 

relationship to overall market 

conditions. Indeed, as noted above, the 

Exchange would strengthen re-entry for 

Aggressing Transactions by requiring reentry on the opposite side at or before 

the applicable PPP provided by the 

Exchange in the same size as the 

Aggressing Transaction. 

The numerous obligations currently 

imposed on DMM units by Rule 104 

would in no way be altered or 

diminished by the proposal. The 

Exchange does not believe that the 

balance of benefits and obligations 

under Rule 104 would be impacted by 

the proposed rule change. DMM units 

would be subject to strengthened reentry requirements when engaging in 

Aggressing Transactions at or before the 

applicable PPP for that security by 

having to re-enter on the opposite side 

in the same size as the transaction, and 

the requirement that all DMM unit 

transactions be effected in a reasonable 

and orderly manner in relation to the 

condition of the general market and the 

market in the particular stock would not 

be altered by the proposal. These 

safeguards would continue to 

reasonably ensure that DMM unit 

transactions bear a reasonable 

relationship to overall market 

conditions. For the same reasons, the 

proposal would not alter or disrupt the 

balance between the benefits and 

obligations of being an Exchange DMM 

unit. 

The Exchange believes that the 

replacing DMM unit for DMM in Rule 

104 would remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 

system by emphasizing the 

responsibility of the DMM unit for 

trading in assigned Exchange listed 

securities, thereby adding additional 

clarity and transparency to the 

Exchange’s rules. The proposal would 

not be inconsistent with the public 

interest and the protection of investors 

because the proposal does not absolve 

individual DMMs from the obligation to 

comply with Exchange rules or 

diminish the potential penalties for 

individual DMMs that fail to do so.62

Rule 36 

The Exchange believes that permitting 

DMMs to use properly registered and 

approved telephones and any other 

alternative communication device as 

well as any wired or wireless devices 

such as computer terminals or laptops 

(defined in the proposed rule as 

‘‘Permitted Communications Devices’’) 

to communicate with persons off the 

Trading Floor, subject to the 

confidentiality requirements of Rule 98, 

are designed to prevent fraudulent and 

manipulative acts and practices and 

would be consistent with the public 

interest and the protection of investors 

because the Exchange would eliminate 

intraday DMM access to the remaining 

non-public information available to 

them on the Trading Floor, as reflected 

in the propose changes to Rule 104. 

Further, in those situations where a 

DMM would be provided access to 

aggregate order information while 

trading is halted and only until the 

security is reopened, DMM units would 

still have the obligation under Rule 98 

to maintain the confidentiality of the 

non-public order information made 

available to a DMM for the purpose of 

facilitating an intraday reopening and 

appropriately supervise a DMM’s use of 

the telephone in that circumstance. 

In addition, the Exchange would 

retain certain safeguards surrounding 

the use of such devices that are 

proposed for inclusion in amended Rule 

36. The proposed safeguards would 

include the requirement that DMM units 

register all devices to be used on the 

Trading Floor with the Exchange and 

the specific recordkeeping requirement 

proposed for both telephones and 

Permitted Communications Devices that 

would require DMM units to maintain 

records of the use of telephones and all 

other approved alternative 

communication devices, including logs 

of calls placed, as well as the use of 

Permitted Communications Devices, 

including all messages generated by the 

unit’s wired or wireless devices to 

communicate with the system 

employing the unit’s algorithms, in 

compliance with Rule 440 and SEC 

Rules 17a–3 and 17a–4. Further, DMM 

units would be required to establish 

policies and procedures reasonably 

designed to ensure that use of 

telephones is consistent with all SEC 

rules and Exchange rules. The Exchange 

accordingly believes that these proposed 

safeguards establish an appropriate 

regulatory framework for supervising 

and monitoring mandated DMM 

communications with listed issuers 

consistent with the objectives of section 

6(b)(5) of the Act.63 The Exchange also 

believes that the proposed amendments 

to Rule 36 support the mechanism of 

free and open markets by continuing to 

provide a means for increased and more 


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64 15 U.S.C. 78f(b)(5). 

65See 15 U.S.C. 78o(g) and Rule 98(c)(2). 

66See Rule 5320. 

efficient communication by DMMs to 

and from the Trading Floor, including 

in furtherance of their rule-based 

obligation to regularly contact their 

assigned listed issuers. 

Rule 76 

The Exchange believes that the 

proposed changes to Rule 76 would 

remove impediments to and perfect the 

mechanism of a free and open market 

and a national market system by 

streamlining and modernizing the 

process for executing cross transactions 

on the Trading Floor. As noted, the 

requirement that a Floor broker 

announce a cross transaction at the 

point of sale is to ‘‘clear’’ the trading 

Crowd before executing a cross 

transaction. While the requirement 

made sense when Floor brokers that 

might be interested in participating in a 

cross transaction still needed to stand at 

a post/panel throughout the trading day, 

the requirement makes less sense in the 

current electronic trading environment. 

The Exchange believes that having the 

Exchange announce proposed cross 

transactions would make the process 

more efficient by not limiting the 

announcement to one physical location 

on the Trading Floor. An Exchange 

announcement would also allow 

additional members of the Trading Floor 

community to learn about a pending 

cross transaction and potentially 

participate, to the benefit of the 

marketplace and investors. Moreover, 

eliminating the DMM’s role in 

acknowledging the Floor broker 

announcement would remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system by further 

permitting DMM units to function more 

like other proprietary market makers. As 

noted above, this change is also 

consistent with the proposed removal of 

the traditional DMM Trading Floorbased functions set forth in Rule 104. 

The Exchange accordingly believes that 

the proposed changes to Rule 76 would 

promote just and equitable principles of 

trade consistent with section 6(b)(5) of 

the Act.64

The Exchange believes the proposal 

also benefits investor protection and 

public interest goals by eliminating 

interaction between the Floor broker 

and the individual DMM assigned to the 

subject security in the manual cross 

transaction process on the Trading 

Floor. The Exchange believes that the 

proposal would eliminate any 

information asymmetry that may exist 

when a DMM learns about a cross 

transaction before the trade is executed 

and printed. Although the Exchange 

believes any existing informational 

advantages are slight and the window 

for the DMM to act exceedingly small, 

the Exchange believes the proposal 

would protect investors and the public 

interest by adding additional 

protections against the misuse of nonpublic information. Similarly, having 

the Exchange supervise and 

acknowledge the announcement of the 

proposed cross transaction promotes 

investor protection and the public 

interest. The Exchange believes that the 

proposal is thus designed to prevent 

fraudulent and manipulative acts and 

practices. Finally, having the Exchange 

announce cross transactions under Rule 

76 and eliminating the need to 

announce at the point of sale would 

permit extending the Cross Function in 

Rule 76.10 to UTP securities, which 

would remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 

system by applying the same 

streamlined process to all cross 

transactions on the Trading Floor. 

Rule 98 

The Exchange believes that the 

proposed changes to Rule 98 deleting 

references to Floor-based non-public 

order information and to specific 

requirements regarding maintenance of 

the confidentiality of such information 

that the Exchange would no longer 

provide to DMMs would remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system by 

simplifying information barrier 

restrictions applicable to DMM units 

operating on the Trading Floor 

consistent with the principles-based 

approach to protect against the misuse 

of material non-public information, 

including specifically prohibiting 

trading based on material non-public 

information from any source, and will 

protect investors and the public interest 

by reinforcing protections against the 

misuse of material non-public 

information and deleting rules that may 

no longer meet this goal. 

The Exchange believes that the 

proposed rule change would remove 

impediments to and perfect the 

mechanism of a free and open market by 

permitting a member organization 

operating a DMM unit to maintain and 

enforce policies and procedures to, 

among other things, prohibit the misuse 

of material non-public information and 

eliminating restrictions on how a 

member organization structures its 

DMM unit operations. The proposed 

amendments maintain the existing Rule 

98 restrictions that are specific to DMM 

units and DMMs but also maintain the 

information barrier requirements 

between the DMM unit and non-DMM 

unit areas of a member organization. 

Member organizations operating DMM 

units will continue to be subject to 

federal and Exchange requirements for 

protecting material non-public order 

information 65 and protecting customer 

orders that are the consistent with the 

existing rules governing broker dealers 

that operate as equity market makers on 

other registered exchanges.66 Moreover, 

member organizations operating a DMM 

unit and DMMs would be specifically 

enjoined in proposed Rule 98(c)(3) from 

misusing material, non-public 

information, consistent with the 

protection of investors and the public 

interest. 

The Exchange notes that Rule 98 will 

still require that member organizations 

maintain and enforce policies and 

procedures reasonably designed to 

ensure compliance with applicable 

federal securities laws and regulations 

and with Exchange rules. The Exchange 

notes that such written policies and 

procedures will continue to be subject 

to oversight by the Exchange and 

therefore the elimination of prescribed 

restrictions should not reduce the 

effectiveness of the Exchange rules to 

protect against the misuse of material 

non-public information. 

The Exchange therefore believes that 

the proposed rule change will maintain 

the existing protection of investors and 

the public interest that is currently set 

forth in Rule 98, while at the same time 

removing impediments to and 

perfecting a free and open market by 

removing those restrictions related to 

Floor-based non-public information that 

the Exchange is eliminating and 

restricting. 

New Rule 104B 

The Exchange believes the proposal to 

establish a new DMM Unit Incentive 

Program in ETPs open to non-DMM 

Market Makers and SLPs would remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system by 

encouraging member organizations that 

are already quoting and trading on the 

Exchange to become fully operational 

Floor-based DMMs following the rampup period. The Exchange believes that 

increasing the number of Floor-based 

DMM units would increase competition 

among existing and prospective DMM 

units, which would enhance price 

discovery, liquidity, competitive quotes, 

and price improvement on the 


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Federal Register / Vol. 88, No. 217 / Monday, November 13, 2023 / Notices 77641 

67 15 U.S.C. 78o–3(b)(8). 

Exchange, to the benefit of investors. 

Moreover, the Exchange believes that 

providing for a DMM unit on the NYSE 

in ETPs would remove impediments to 

and perfect the mechanism of a free and 

open market and a national market 

system by allowing existing market 

makers and liquidity providers to 

leverage existing market-making 

strategies on the Exchange and provide 

all member organizations that choose to 

participate with enhanced opportunities 

to qualify for the various proposed 

credits to be set forth in the Exchange’s 

Price List through increased quoting and 

liquidity-providing activity. 

The Exchange believes the proposal 

also benefits investor protection and 

public interest goals by providing for a 

new category of market participant that 

would contribute to displayed liquidity, 

price discovery, and market quality on 

the Exchange in ETPs. The proposed 

DMM units are not intended to supplant 

existing non-DMM Market Makers or 

SLP market participants or their roles on 

the Exchange, and would instead 

represent an additional source of 

displayed liquidity on the Exchange 

during the ramp-up period (and beyond 

such period, to the extent DMM units 

thereafter transition to become fully 

integrated Floor-based DMM units) that 

would enhance the range and diversity 

of market making activity on the 

Exchange during that time, thus 

promoting competition and market 

quality on the Exchange to the benefit 

of all market participants. 

The Exchange believes that proposed 

Rule 104B would also remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system by setting 

forth qualification and registration 

requirements and processes for both 

member organizations individual 

employees. Specifically, the proposed 

rule would require member 

organizations to meet the registration 

and capital requirements set forth in 

Rule 103, file a DMM application, and 

have adequate technology to support all 

electronic DMM obligations through the 

systems and facilities of the Exchange 

during the initial 12-month period; 

MPIDs that identify to the Exchange 

trading activity in assigned DMM 

securities; adequate trading 

infrastructure to support DMM unit 

trading activity, which includes support 

and administrative staff to maintain 

operational efficiencies in the Program; 

and a disciplinary history that is 

consistent with just and equitable 

business practices. Individuals that 

would function as DMMs for the DMM 

units must also be members of the 

Exchange and pass the DMM qualifying 

examination. The Exchange believes 

that proposed Rule 104B would thus 

protect investors and the public interest 

by ensuring that prospective DMMs and 

DMM units are subject to uniform, 

objective requirements for eligibility. 

Moreover, the proposed rule change 

would also promote investor protection 

and the public interest by requiring that 

eligible member organizations and 

DMMs be subject to the same 

registration requirements as regular 

DMM units and DMMs, including the 

requirement that eligible member 

organizations file a DMM application 

and individual DMMs take the DMM 

examination. 

The proposed rule change would also 

promote just and equitable principles of 

trade by subjecting prospective DMMs 

and DMM units to the same duties and 

responsibilities set forth in Rules 104 

and 98 as fully-operational, Trading 

Floor-based DMM units and DMMs. 

Establishing the same regulatory 

requirements for DMM units and DMMs 

would ensure the consistency and 

quality of the Exchange’s marketplace 

and is also designed to prevent 

fraudulent and manipulative acts and 

practices and promote just and equitable 

principles of trade by requiring 

Exchange registration and approval. 

Finally, the Exchange believes that 

proposed Rule 104B would enhance 

investor protection and the public 

interest by enumerating the specific 

process a DMM unit must follow to 

withdraw during the 12-month duration 

of the program and the reassignment of 

assigned securities during that time. The 

proposed process would ensure orderly 

transitioning of ETPs that were assigned 

to a DMM unit that withdraws and 

uninterrupted trading of the security on 

the Exchange. 

The Exchange believes that the 

proposal promotes just and equitable 

principles of trade by providing an 

exemption to member organizations that 

meet the qualifications for the program 

from the requirements of Rule 35.20 

regarding the presence of personnel 

available to DMM units on the Trading 

Floor. As proposed, the program is 

designed to provide time for member 

organizations to become fully 

operational Trading Floor-based DMM 

units. The exemption is for a 12-month 

period, following which proposed Rule 

104(g) requires DMM units to transition 

to fully operational DMM units on the 

Trading Floor and meet all Exchange 

requirements for DMM units, including 

having adequate personnel on the 

Trading Floor. For similar reasons, the 

Exchange believes that it would not be 

inconsistent with just and equitable 

principles of trade to provide that DMM 

units would be ineligible to compete for 

new listings pursuant to Rule 103B. As 

proposed, the program is limited to 

ETPs and DMM units would only be 

expected to support electronic DMM 

obligations during the ramp-up period. 

Finally, the Exchange believes that 

the proposal promotes just and 

equitable principles of trade by 

providing that member organizations 

aggrieved by an Exchange determination 

under the proposed rule can utilize the 

approved procedures set forth in Rule 

107B(k) for SLPs to appeal nonregulatory actions and penalties by the 

Exchange. The Exchange believes 

adopting the same appeals procedures 

as those approved for SLPs would 

reduce duplication and ensure 

consistent treatment for member 

organizations aggrieved by nonregulatory Exchange actions. For these 

reasons, the Exchange also believes that 

the proposed rule change is consistent 

with section 15A(b)(8) 67 of the Act, 

which requires, among other things, that 

Exchange rules provide a fair procedure 

for prohibition or limitation with 

respect to access to services offered by 

the Exchange. 

Non-Substantive Amendments 

The Exchange believes that the 

proposed changes to eliminate obsolete 

rule text, in Rules 36.30, 104(c)(5), 

104(d)(B), 104(e), 104(f), 104A, and 

106A would increase the clarity and 

transparency of the Exchange’s rules 

and remove impediments to and perfect 

the mechanism of a free and open 

market by ensuring that persons subject 

to the Exchange’s jurisdiction, 

regulators, and the investing public 

could more easily navigate and 

understand the Exchange rules. The 

Exchange further believes that the 

proposed amendments would not be 

inconsistent with the public interest and 

the protection of investors because 

investors will not be harmed and in fact 

would benefit from increased 

transparency and clarity, thereby 

reducing potential confusion. 

For the foregoing reasons, the 

Exchange believes that the proposal is 

consistent with the Act. 

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 

Exchange believes that the proposal 

would lower entry barriers to the DMM 

unit business on the Exchange and 


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77642 Federal Register / Vol. 88, No. 217 / Monday, November 13, 2023 / Notices 

68 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

thereby stimulate greater competition 

among existing DMM units and 

potential new entrants, to the benefit the 

investing public, issuers, and the 

marketplace. In addition, to the extent 

that the proposal would lead to 

additional member organizations 

becoming fully-operational DMM units, 

the Exchange believes the proposal 

would expand and diversify the pool of 

Exchange DMMs. The Exchange also 

believes that the proposed changes 

would continue to foster competition 

and optimal performance among DMM 

units, thereby enhancing the quality of 

the services DMMs provide to issuers 

and promoting intermarket competition, 

particularly for issuers in connection 

with their determination of which 

exchange to select as a primary listing 

exchange. The Exchange does not 

believe that the proposed rule change 

would impose any burden on intramarket competition that is not necessary 

or appropriate in furtherance of the 

purposes of the Act. The proposal is 

designed to address the DMM unit’s 

operations on the Trading Floor, access 

to non-public information, and unique 

role in facilitating trading on the 

Exchange without diminishing the 

balance of benefits and obligations, or 

altering or diminishing the numerous 

obligations currently imposed by 

Exchange rules, on DMM units. 

Finally, the Exchange believes that 

member organizations eligible for the 

Program may be able to deploy their 

existing market-making strategies on the 

Exchange and qualify for credits offered 

by the Exchange based on increased 

quoting and liquidity-providing activity. 

The Exchange therefore believes that the 

proposed rule change would promote 

competition by encouraging additional 

displayed liquidity, facilitating price 

discovery, and increasing the range and 

diversity of market making activity on 

the Exchange. Further, the Exchange 

does not believe that the proposed rule 

would impose any burden on intramarket competition because adding a 

new, temporary market participant 

would allow eligible member 

organizations an opportunity to access 

the benefits available to fullyoperational DMM units when trading 

ETPs electronically for a brief ramp up 

period, subject to the same registration 

and regulatory obligations as those 

DMM units. 

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 

• Use the Commission’s internet 

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

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include file number SR– 

NYSE–2023–36 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–2023–36. 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 (https://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 

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–2023–36 and should be 

submitted on or before December 4, 

2023. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.68

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2023–24868 Filed 11–9–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–98865; File No. SR–ISE– 

2023–23] 

Self-Regulatory Organizations; Nasdaq 

ISE, LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend the Pricing 

Schedule at Options 7 To Specify 

Pricing Related to Unrelated Market or 

Marketable Interest 

November 6, 2023. 

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 October 

23, 2023, Nasdaq ISE, LLC (‘‘ISE’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I and II 

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 its 

Pricing Schedule at Options 7 to specify 

pricing related to unrelated market or 

marketable interest. 

The text of the proposed rule change 

is available on the Exchange’s website at 

https://listingcenter.nasdaq.com/ 

rulebook/ise/rules, at the principal 

office of the Exchange, and at the 

Commission’s Public Reference Room. 


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