Federal Register / Vol. 88, No. 248 / Thursday, December 28, 2023 / Notices 89783 

107See supra note 12. 

108 15 U.S.C. 78s(b)(2). 

109 17 CFR 200.30–3(a)(12). 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4As discussed infra, Professional Customer 

volume is not eligible to be included on a 

Customer-to-Customer Cross submitted pursuant to 

Rule 934NY(a). See Rule 900.2NY (providing in 

relevant part that, for purposes of Rule 934NY 

(Crossing), Professional Customers are treated as 

Broker/Dealers). 

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–CBOE–2023–018 and should be 

submitted on or before January 18, 2024. 

V. Accelerated Approval of 

Amendment No. 3 

The Commission finds good cause to 

approve the proposed rule change, as 

modified by Amendment No. 3, prior to 

the thirtieth day after the date of 

publication of notice of the filing of 

Amendment No. 3 in the Federal 

Register. As noted above, Amendment 

No. 3 makes no substantive changes to 

the proposal. Amendment No. 3 

provides additional analysis and data to 

support certain assertions made by the 

Exchange and provides greater clarity 

to, and justification for, the proposal.107

The additional analysis and information 

in Amendment No. 3 assist the 

Commission in evaluating the 

Exchange’s proposal and in determining 

that it is consistent with the Act. 

Amendment No. 3 also raises no new 

novel issues. Accordingly, the 

Commission finds good cause, pursuant 

to section 19(b)(2) of the Act,108 to 

approve the proposed rule change, as 

modified by Amendment No. 3, on an 

accelerated basis. 

VI. Conclusion 

It is therefore ordered, pursuant to 

section 19(b)(2) of the Act, that 

proposed rule change SR–CBOE–2023– 

018, as modified by Amendment No. 3, 

be, and hereby is, approved on an 

accelerated basis. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.109

Christina Z. Milnor, 

Assistant Secretary. 

[FR Doc. 2023–28608 Filed 12–27–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–99231; File No. SR– 

NYSEAMER–2023–66] 

Self-Regulatory Organizations; NYSE 

American LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Change To Modify Rule 900.3NYP 

December 22, 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 December 

19, 2023, NYSE American LLC (‘‘NYSE 

American’’ 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 self-regulatory 

organization. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to modify 

Rule 900.3NYP (Orders and Modifiers) 

to adopt electronic Customer Cross 

Order and Complex Customer Cross 

Order functionality and to amend Rule 

900.2NY (Definitions) to specify the 

treatment of certain Professional 

Customer interest. The proposed rule 

change is available on the Exchange’s 

website at www.nyse.com, at the 

principal office of the Exchange, and at 

the Commission’s Public Reference 

Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

self-regulatory organization included 

statements concerning the purpose of, 

and basis for, the proposed rule change 

and discussed any comments it received 

on the proposed rule change. The text 

of those statements may be examined at 

the places specified in Item IV below. 

The Exchange has prepared summaries, 

set forth in sections A, B, and C below, 

of the most significant parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to modify 

Rule 900.3NYP (Orders and Modifiers) 

to adopt electronically-entered 

Customer Cross (‘‘C2C’’) Orders and 

Complex Customer Cross (‘‘Complex 

C2C’’) Orders (collectively, ‘‘Customer 

Cross Orders’’). The Exchange also 

proposes to amend the definition of 

Professional Customer (Rule 900.2NY) 

to specify that, for purposes of proposed 

Rule 900.3NYP(g)(2) and Rule 

971.1NYP, Professional Customer 

interest would be treated in the same 

manner as Broker/Dealers (nonCustomers). 

Proposed Rule 900.3NYP(g)(2): 

Customer Cross Orders 

Rule 934NY(a) describes Customer-toCustomer Cross orders on the Trading 

Floor wherein ‘‘[a] Floor Broker who 

holds a Customer order to buy and a 

Customer order to sell the same option 

contract may cross such orders,’’ 

provided that the Floor Broker proceeds 

in the manner set forth in paragraphs 

(1)–(3) of Rule 934NY(a).4 The Exchange 

proposes to adopt rules governing 

electronically-entered Customer Cross 

Orders, which allow ATP Holders to 

conduct this type of crossing transaction 

electronically and without having to 

utilize a Floor Broker. Although the 

proposed Customer Cross Orders are 

conceptually the same as the existing 

Customer-to-Customer Cross, the latter 

order type differs in that it must adhere 


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5See, e.g., Rule 934NY(a)(3)(A) and (C) (each of 

which require that the Customer-to-Customer Cross 

comply with the other Exchange open outcry rules). 

6See Cboe Exchange, Inc. (‘‘Cboe’’) Rules 5.37(f) 

and 5.38(f) (providing the requirements for 

Customer-to-Customer AIM/C–AIM Immediate 

Crosses to bypass Cboe’s Automated Improvement 

Mechanism (AIM)/Complex Automated 

Improvement Mechanism (C–AIM), respectively, 

and immediately execute). 

7See Cboe Rule 5.37(f) and Rule 5.38(f) 

(providing that each side of a ‘‘Customer-toCustomer Immediate Cross,’’ for single-leg and 

complex orders, respectively, must be for the 

account of a ‘‘Priority Customer’’). Cboe defines a 

Priority Customer as ‘‘a person or entity that is a 

Public Customer and is not a Professional.’’ See 

Cboe Rule 1.1. 

8See proposed Rule 900.3NYP(g)(2)(A) 

(providing, in relevant part, that ‘‘[a] C2C Order or 

Complex C2C Order that is not rejected per Rule 

900.3NYP(g)(2)(B) [Execution of C2C Orders] or (C) 

[Execution of Complex C2C Orders], respectively, 

will immediately trade in full at its price’’). 

9Rule 900.2NY defines ‘‘Minimum Price 

Variation’’ or ‘‘MPV’’ as the price variations 

established by the Exchange, which for quoting and 

trading options traded on the Exchange are set forth 

in Rule 960NY. 

10See proposed Rule 900.3NYP(g)(2)(A). See also 

Rule 935NY, Commentary .01. 

11See Cboe Interpretation and Policy .03 to Rules 

5.37 and 5.38 (providing an identical prohibition in 

each Cboe rule—which prohibition is identical to 

Rule 935NY, Commentary .01 and prevents ordersenders from using the customer crossing 

mechanism to increase economic gain without first 

providing an opportunity of eligible interest to trade 

at the transaction price of the cross order). 

12See Cboe Rule 5.37(f) (stating that Customer-toCustomer Immediate Cross comprised of ‘‘Priority 

Customer’’ orders will immediately execute 

provided that the execution (i) is ‘‘at or between the 

BBO and the NBBO’’ and (ii) ‘‘is not at the same 

price as any Priority Customer Order resting on the 

Book.’’). 

13The DBBO provides for the establishment of a 

derived (theoretical) bid or offer for a particular 

complex strategy. See Rule 980NYP(a)(5) (defining 

the DBBO and providing that the bid (offer) price 

used to calculate the DBBO on each leg will be the 

Exchange BB (BO) (if available), bound by the 

maximum allowable Away Market Deviation). The 

Away Market Deviation, as defined in Rule 

980NYP(a)(1), ensures that an ECO does not execute 

too far away from the prevailing market. Rule 

980NYP(a)(5) also provides for the establishment of 

the DBBO in the absence of an Exchange BB (BO), 

or ABB(ABO), or both. 

14See proposed Rule 900.3NYP(g)(2)(C). See also 

Rule 980NYP(a)(5)(B) (providing that, ‘‘[i]f, for a leg 

of a complex strategy, there is neither an Exchange 

BBO nor an ABBO, the Exchange will not allow the 

complex strategy to trade until, for that leg, there 

is either an Exchange BB or BO, or an ABB or ABO, 

on at least one side of the market’’) and (a)(5)(C) 

(providing, in relevant part that, ‘‘[i]f the best bid 

and offer prices (when not based solely on the 

Exchange BBO) for a component leg of the complex 

strategy are locked or crossed, the Exchange will 

not allow an ECO for that strategy to execute against 

another ECO until this condition resolves’’). 

15See proposed Rule 900.3NYP(g)(2)(B). 

16See Cboe Rule 5.38(f)(i) (providing, in relevant 

part, that the transaction price of a Complex 

Customer Cross Order must be ‘‘at or between the 

SBBO [Synthetic Bid or Offer] and may not equal 

either side of the SBBO if the BBO of any 

component of the complex strategy represents a 

Priority Customer’’). Cboe’s concept of the SBBO is 

analogous to the Exchange’s concept of the DBBO. 

See Cboe Rule 5.33. 

17See Cboe Rule 5.38(f)(ii) (providing, in relevant 

part, that the transaction price of a Complex 

Customer Cross Order must be ‘‘at or between the 

best-priced complex orders in the complex 

strategy’’ on Cboe ‘‘and may not equal the price of 

a Priority Customer complex order’’ resting on 

either side of the COB’’). 

18See proposed Rule 980NYP(b)(1) (providing 

that Electronic Complex Orders ‘‘may be entered as 

Limit Orders, Limit Orders designated as Complex 

Only Orders, Complex QCCs, or as Complex 

Customer Cross Orders) (emphasis added). 

to Floor-specific open outcry rules.5 The 

Exchange notes that the proposed 

Customer Cross Order types are 

consistent with customer crossing 

functionality available on another 

options exchange.6

Proposed Rule 900.3NYP(g)(2) would 

describe Customer Cross Orders. 

Proposed Rule 900.3NYP(g)(2)(A) would 

provide that a C2C Order and a Complex 

C2C Order must be comprised of a 

Customer (but not a Professional 

Customer) order to buy and a Customer 

(but not a Professional Customer) order 

to sell at the same price and for the same 

quantity. The proposal to limit eligible 

interest to Customer but not 

Professional Customer interest is 

consistent with the rules of another 

options exchange.7 In addition, as 

proposed, a C2C Order or Complex C2C 

Order that is not rejected on arrival 

would immediately trade in full at its 

limit price.8 Further, proposed Rule 

900.3NYP(g)(2)(A) would provide that 

C2C Orders and Complex C2C Orders 

would not route and may be entered 

with a Minimum Price Variation 

(‘‘MPV’’) of $0.01 regardless of the MPV 

of the options series.9 Finally, the 

proposed Rule would specify that 

Commentary .01 to Rule 935NY would 

apply to Customer Cross Orders, which 

means that ATP Holders may not utilize 

Customer Cross Orders to increase their 

economic gain without first giving other 

trading interest on the Exchange an 

opportunity to participate in the trade or 

to trade at the transaction price when 

the ATP Holder was already bidding or 

offering at that price.10 This proposed 

handling would align with at least one 

other options exchange that offers 

customer crossing orders.11

Proposed Rule 900.3NYP(g)(2)(B) 

provides that a C2C Order that has one 

option leg would be rejected if received 

when the NBBO is crossed or if the C2C 

would trade at a price that (i) is at the 

same price as a displayed Customer 

order on the Consolidated Book and (ii) 

is not at or between the NBBO and the 

Exchange BBO. The Exchange believes 

that the proposal would provide for the 

efficient entry and execution of C2C 

Orders while continuing to protect 

same-priced, displayed Customer 

interest (i.e., by ensuring that the C2C 

Order does not trade ahead of displayed 

Customer interest resting in the 

Consolidated Book). As noted above, the 

proposed C2C Orders would operate in 

a manner that is consistent with the 

handling of single-leg customer cross 

orders on another options exchange.12

Proposed Rule 900.3NYP(g)(2)(C) 

would describe the Exchange’s pricing 

requirements for a Complex C2C Order. 

To validate the price of a Complex C2C 

Order, the Exchange would rely on the 

Derived BBO (‘‘DBBO’’) as described in 

Rule 980NYP(a)(5).13 If the Exchange is 

not able to calculate the DBBO for a 

complex strategy because of one of the 

circumstances described in Rule 

980NYP(a)(5)(B)–(C), the Exchange will 

not execute an order for that strategy 

until the circumstance is resolved.14

Consistent with this handling, the 

Exchange proposes that it would reject 

a Complex C2C Order if the Exchange is 

unable to calculate the DBBO for a leg 

of the Complex C2C Order per Rule 

980NYP(a)(5)(B) or (a)(5)(C).15

In addition, proposed Rule 

900.3NYP(g)(2)(C) provides that no 

option leg of a Complex C2C Order will 

trade at a price worse than the Exchange 

BBO and such order would be rejected 

if it fails to meet the following 

requirements: 

• the transaction price must be at or 

between the DBBO and may not equal 

the DBBO if the DBBO is calculated 

using the Exchange BBO and the 

Exchange BBO of any component of the 

complex strategy on either side of the 

market includes displayed Customer 

interest. If the DBB (DBO) includes a 

displayed Customer interest on the 

Exchange, the transaction price must 

improve the DBB (DBO) by at least one 

cent ($0.01). This proposed requirement 

is consistent with price parameters 

applied to complex customer cross 

orders on another options exchange; 16

and 

• the transaction price must be at or 

between the best-priced Complex 

Orders to buy and sell in the complex 

strategy and may not equal the price of 

a resting Customer Complex Order, 

which proposed requirement is 

consistent with price parameters 

required for complex customer cross 

orders on another options exchange.17

The Exchange also proposes a 

conforming change to Rule 

980NYP(b)(1) to include Complex 

Customer Cross Orders among the type 

of Electronic Complex Orders available 

for trading on the Exchange, which 

change would add clarity, transparency, 

and internal consistency to Exchange 

rules.18


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19See Rule 900.2NY (defining a Professional 

Customer). 

20See supra note 4 (citing Rule 900.2NY, which 

specifies that for purposes Rule 934NY(Crossing) 

Professional Customer interest will be treated in the 

same manner as a Broker/Dealer (or non-Customer) 

interest). See id. (defining Professional Customer). 

21See proposed Rule 900.2NY (including 

proposed Rule 900.3NYP(g)(2) (Customer Cross 

Orders and Complex Customer Cross Orders) among 

the list of Exchange Rule pursuant to which 

Professional Customer interest is treated in the 

same manner as a Broker/Dealer (or non-Customer) 

interest). 

22As noted supra, only ‘‘Priority Customers’’ on 

Cboe may participate in ‘‘Customer-to-Customer 

Immediate Cross.’’ See Cboe Rules 5.37(f) and Rule 

5.38(f). 

23See Rule 900.2NY (defining a Professional 

Customer). 

24See Trader Update, NYSE American Options: 

NYSE Pillar Final Migration Tranche, dated October 

30, 2023, available here: https://www.nyse.com/ 

trader-update/history#110000748137 (announcing 

the last phrase of the Pillar migration). 

25Compare Rule 971.1NY with the Pillar CUBE 

Rule. See also Securities Exchange Act Release No. 

97938 (July 18, 2023), 88 FR 47536 (July 24, 2023) 

(NYSEAmer–2023–35) (adopting Pillar Rule 

971.1NYP (Single-Leg Electronic Cross 

Transactions) on an immediately effective basis). 

26See proposed Rule 900.2NY (providing in 

relevant part, that for purposes of Rule 971.1NYP 

(Single-Leg Electronic Cross Transactions), ‘‘[a] 

Professional Customer will be treated in the same 

manner as a Broker/Dealer (or non-Customer) in 

securities’’) (emphasis added). 

27See Cboe Rule 5.38(e) (providing that ‘‘Priority 

Customer’’ interest executes first with the Agency 

Order submitted to the price improvement auction, 

followed by non-Priority Customer interest). 

28 15 U.S.C. 78f(b). 

29 15 U.S.C. 78f(b)(5). 

Rule 900.2NY: Definitions of Customer 

and Professional Customer 

Rule 900.2NY defines a ‘‘Customer’’ 

as ‘‘an individual or organization that is 

not a Broker/Dealer; when not 

capitalized, ‘customer’ refers to any 

individual or organization whose order 

is being represented, including a 

Broker/Dealer.’’ Rule 900.2NY defines a 

‘‘Professional Customer’’ as ‘‘an 

individual or organization that (i) is not 

a Broker/Dealer in securities, and (ii) 

places more than 390 orders in listed 

options per day on average during a 

calendar month for its own beneficial 

account(s).’’ 19 Included in the 

definition of Professional Customer is a 

list of Exchange Rules, including Rule 

934NY (Crossing), for purposes of which 

Professional Customers are treated in 

the same manner as Broker/Dealers (or 

non-Customers).20 Accordingly, 

Professional Customers are treated as 

Broker/Dealers (or non-Customers) for 

purposes of Crossing Orders executed 

pursuant to Rule 934NY. As such, 

Professional Customer volume is not 

eligible to be executed as part of a 

Customer-to-Customer Cross executed 

on the Trading Floor per Rule 934NY(a). 

The Exchange proposes to amend 

Rule 900.2NY to include proposed Rule 

900.3NYP(g)(2) in the list of Exchange 

Rules pursuant to which Professional 

Customers are treated in the same 

manner as Broker/Dealers (or nonCustomers).21 This proposed handling 

of non-Customer interest for purposes of 

the proposed Customer Cross Orders 

would align with the handling of such 

interest for purposes of Customer-toCustomer Cross Orders executed on the 

Trading Floor per Rule 934NY(a) and 

would therefore promote internal 

consistency in Exchange rules. In 

addition, excluding Professional 

Customer orders from being eligible to 

trade as part of the proposed Customer 

Cross Orders would put the Exchange 

on equal footing with at least one other 

options exchange that likewise 

disallows such Professional interest 

from being executed as part of customer 

cross orders.22

Finally, the Exchange believes this 

proposed change would add clarity, 

transparency, and internal consistency 

to Exchange rules. 

Professional Customers in the Customer 

Best Execution (‘‘CUBE’’) Auctions 

As noted above, Rule 900.2NY defines 

‘‘Professional Customer’’ as ‘‘an 

individual or organization that (i) is not 

a Broker/Dealer in securities, and (ii) 

places more than 390 orders in listed 

options per day on average during a 

calendar month for its own beneficial 

account(s).’’ 23 Included in the 

definition of Professional Customer is a 

list of Exchange Rules pursuant to 

which Professional Customers are 

treated in the same manner as Broker/ 

Dealers (or non-Customers). Among the 

rules on this list is Rule 971.1NY, which 

means that for purposes of single-leg 

CUBE Auctions, Professional Customer 

interest is treated as Broker/Dealer (nonCustomer) interest.24 The Exchange 

recently migrated to the Pillar trading 

platform and Rule 971.1NY no longer 

applies to CUBE Auctions; instead, 

CUBE Auctions on Pillar are governed 

by Rule 971.1NYP (‘‘the Pillar CUBE 

Rule’’).25

The Exchange proposes to amend 

Rule 900.2NY to treat Professional 

Customer interest submitted to CUBE 

Auctions pursuant to the Pillar CUBE 

Rule in the same manner as such 

interest was handled when submitted to 

CUBE Auctions pursuant to Rule 

971.1NY.26 The Exchange believes that 

this proposal would ensure consistent 

handling of Professional Customer 

interest in the CUBE Auction prior to 

and after the Exchange’s migration to 

Pillar and would continue to afford 

Customer interest priority over nonCustomer interest for purposes of the 

Exchange’s price improvement auction. 

The Exchange notes that at least one 

other options exchange likewise treats 

Professional Customer interest as 

Broker/Dealer (non-Customer) interest 

for purposes of their price improvement 

auction.27

Implementation 

Because of the technology changes 

associated with this proposed rule 

change, the Exchange will announce the 

implementation date by Trader Update, 

which, subject to effectiveness of this 

proposed rule change, is anticipated to 

be in the first quarter of 2024. 

2. Statutory Basis 

The proposed rule change is 

consistent with Section 6(b) of the 

Securities Exchange Act of 1934,28 in 

general, and furthers the objectives of 

Section 6(b)(5),29 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 

facilitating transactions in securities, to 

remove impediments to, and perfect the 

mechanism of, a free and open market 

and a national market system and, in 

general, to protect investors and the 

public interest. 

The Exchange believes that the 

proposed Customer Cross Orders (for 

single-leg and complex interest) would 

remove impediments to and perfect the 

mechanism of a free and open market 

and a national market system because 

the proposed rules would allow market 

participants to electronically trade these 

types of crossing orders on the 

Exchange. The proposed functionality 

would benefit investors and the public 

interest because it would enhance and 

automate each order entry firms’ ability 

to submit two-sided Customer orders— 

i.e., Customer Cross Orders (both singleleg and complex). As such, the proposed 

rule change would provide market 

participants with an efficient means of 

executing their Customer orders. In 

addition, the proposed Customer Cross 

Orders would remove impediments to 

and perfect the mechanism of a free and 

open market and a national market 

system because market participants 

would be given an additional way to 

execute single-leg and Complex Orders 

on the Exchange. As noted herein, at 

least one other competing options 

exchange—Cboe—offers substantially 

similar customer crossing orders for 

single-leg and complex trading 


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30See Cboe Rules 5.37(f) and 5.38(f) (describing 

the analogous requirements for Cboe’s single-leg 

and Complex Customer-to-Customer Immediate 

Crosses, respectively). 

31See Cboe Rule 5.37(f) (describing the analogous 

requirements for Cboe’s single-leg Customer-toCustomer Immediate Cross). 

32See Cboe Rule 5.38(f) (describing the analogous 

requirements for Cboe’s Complex Customer-toCustomer Immediate Cross). 

33See Cboe Rule 5.37(e)–(f) and 5.38(e)–(f) 

(regarding the handling of Priority Customer 

interest for purposes of priority and allocation in 

Cboe’s C–AIM Auction and for inclusion on 

customer crossing orders). 

34See Cboe Rules 5.37(f) and 5.38(f) (describing 

the analogous requirements for Cboe’s single-leg 

and Complex Customer-to-Customer Immediate 

Crosses, respectively.) 

35See id. 

36See Cboe Rule 5.37(e)–(f) and 5.38(e)–(f) 

(regarding the handling of Priority Customer 

interest for purposes of priority and allocation in 

Cboe’s C–AIM Auction). 

interest.30 With this proposal, market 

participants would likewise have an 

additional venue on which to execute 

two-sided Customer orders 

electronically—i.e., Customer Cross 

Orders. As such, the proposed order 

types may attract additional Customer 

order flow (both two-sided and singlesided) to the Exchange, which may, in 

turn, result in greater liquidity available 

for trading on the Exchange. 

Regarding the proposed single-leg 

C2C Order type, the Exchange believes 

that the adoption of this order type 

would provide for the efficient entry 

and execution of C2C Orders while 

continuing to protect same-priced, 

displayed Customer interest (i.e., by 

ensuring that the C2C Order does not 

trade ahead of displayed Customer 

interest resting in the Consolidated 

Book). Further, as noted herein, the 

proposed order type is not new or novel 

because each C2C Order would operate 

in a manner that is consistent with 

single-leg customer cross orders that are 

available on another options 

exchange.31

The proposed Complex C2C Order 

would protect investors and the public 

interest by assuring that these orders 

comply with the existing priority and 

allocation rules applicable to the 

processing and execution of Complex 

Orders per Rule 980NYP. In particular, 

the proposed Complex C2C Orders 

would continue to protect same-priced, 

displayed Customer interest and would 

ensure that Complex C2C Orders do not 

trade ahead of such displayed Customer 

interest, whether in the leg markets or 

as Customer Complex Orders. The 

Exchange believes the proposed 

Complex C2C Orders would promote 

just and equitable principles of trade 

because (as discussed herein) the 

proposed orders—which are not new or 

novel—would operate in a manner that 

is consistent with complex customer 

cross orders that are available on 

another options exchange.32

Finally, the proposed change to the 

definition of Professional Customer to 

make clear that Professional Customers 

are treated as Broker/Dealers (or nonCustomers) for purposes of the proposed 

Customer Crosses Orders and Single-Leg 

Electronic Cross Transactions, per Rule 

971.1NYP would remove impediments 

to and perfect the mechanism of a free 

and open market and a national market 

system and would protect investors and 

the public interest because such changes 

would ensure consistent handling of 

Professional Customer interest in the 

CUBE Auction prior to and after the 

Exchange’s migration to Pillar and 

would align Exchange rules with the 

rules of another options exchange that 

likewise differentiates the treatment of 

Professional Customer interest from 

Customer interest for purposes of 

customer crossing orders and for price 

improvement auctions, where 

Customers (but not Professional 

Customers) are afforded first priority to 

trade in the auction.33

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. Specifically, 

the Exchange’s proposal to adopt a new 

electronically-entered crossing order 

type (i.e., the Customer Cross Order) 

would not impose any burden on 

competition not necessary or 

appropriate in furtherance of the 

purposes of the Act. The Exchange 

believes that the proposed change 

would not impose a burden on 

intramarket competition because the 

proposed order types would provide all 

market participants on the Exchange 

with the option of utilizing another 

means of executing two-side Customer 

interest—both single-leg and Complex 

Orders on the Exchange. The proposed 

change would also benefit investors by 

providing another venue (i.e., in 

addition to Cboe) on which Customer 

Cross Orders may be submitted 

electronically. 

The Exchange believes that the 

proposed change would enhance intermarket competition by enabling the 

Exchange to compete for this type of 

order flow with at least one other 

options exchange that has similar rules 

and functionalities in place (i.e., 

Cboe).34 The Exchange believes that 

adopting Customer Cross Orders would 

promote competition as it would afford 

market participants another venue on 

which to execute two-sided Customer 

orders for single-leg and complex 

trading interest. Further, the Exchange 

anticipates that this proposal will create 

new opportunities for the Exchange to 

attract new business to the Exchange. As 

such, the Exchange believes that this 

proposal does not create an undue 

burden on intermarket competition. 

Rather, the Exchange believes that the 

proposed rule would bolster intermarket 

competition by promoting fair 

competition among individual markets. 

The Exchange does not believe the 

proposed amendment to the definition 

of Professional Customer to include 

proposed Rule 900.3NYP(g)(2) among 

the rules pursuant to which Professional 

Customer interest is treated as Broker/ 

Dealer (non-Customer) interest would 

impose any undue burden on 

intramarket or intermarket competition 

as all market participants on the 

Exchange would be subject to the 

updated definition. In addition, the 

proposal to limit the availability of 

Customer Cross Orders to interest 

submitted on behalf of Customers would 

align the Exchange with at least one 

other options exchange that had 

adopted a similar limitation.35

Similarly, the proposal to treat 

Professional Customer interest as 

Broker/Dealer (non-Customer) interest 

for purposes of the Pillar CUBE Rule 

would not impose any undue burden on 

intramarket or intermarket competition 

as use of the CUBE Auction, per the 

Pillar CUBE Rule, is optional. For those 

market participants that choose to 

utilize CUBE Auctions on Pillar (per 

Pillar Rule 971.1NYP), the proposed 

definition applies equally to all 

similarly-situated investors. In addition, 

all investors that opt to use the CUBE 

Auction would be subject to the same 

(amended) definition—which is 

consistent with the definition that 

applied to pre-Pillar Rule 971.1NY—and 

would also align the Exchange with at 

least one other options exchange that 

likewise affords priority in price 

improvement auctions to ‘‘Priority 

Customers’’ but not to Professional 

Customers.36

In addition, the proposed conforming 

change to include Complex Customer 

Cross Orders among the list of available 

Electronic Complex Orders set forth in 

Rule 980NYP(b)(1) would not impose an 

undue burden on intramarket or 

intermarket competition but would 

instead add clarity, transparency, and 


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Federal Register / Vol. 88, No. 248 / Thursday, December 28, 2023 / Notices 89787 

37See proposed Rule 980NYP(b)(1) (providing 

that Electronic Complex Orders (ECOs) ‘‘may be 

entered as Limit Orders, Limit Orders designated as 

Complex Only Orders, Complex QCCs, or as 

Complex Customer Cross Orders) (emphasis added). 

38 15 U.S.C. 78s(b)(3)(A). 

39 17 CFR 240.19b–4(f)(6). 

40 In addition, Rule 19b–4(f)(6) requires a selfregulatory organization to give the Commission 

written notice of its intent to file the proposed rule 

change at least five business days prior to the date 

of filing of the proposed rule change, or such 

shorter time as designated by the Commission. The 

Exchange has satisfied this requirement. 

41 17 CFR 240.19b–4(f)(6)(iii). 

42See proposed Exchange Rule 

900.3NYP(g)(2)(A). Proposed Exchange Rule 

900.3NYP(g)(2)(B) provides, among other things, 

that a C2C Order will be rejected if it would trade 

at a price that is (i) at the same price as displayed 

Customer interest on the Consolidated Book; or (ii) 

not at or between the NBBO and the Exchange BBO. 

Proposed Exchange Rule 900.3NYP(g)(2)(C) 

provides, among other things, that no option leg of 

a Complex C2C Order will trade at a price that is 

worse than the Exchange BBO and that the 

transaction price must be at or between the DBBO 

and may not equal the DBBO if the DBBO is 

calculated using the Exchange BBO and the 

Exchange BBO for any component of the complex 

strategy on either side of the market includes 

displayed Customer interest. 

43See Cboe Rules 5.37(f) and 5.38(f). 

44See id. As discussed above, Professional 

Customers also are treated as Broker/Dealers (or 

non-Customers) for purposes of the Customer-toCustomer Cross orders traded on the Exchange’s 

floor pursuant to Exchange Rule 934NY(a). 

45For purposes only of waiving the 30-day 

operative delay, the Commission has also 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

15 U.S.C. 78c(f). 

internal consistency to Exchange 

rules.37

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 

Pursuant to Section 19(b)(3)(A) of the 

Act 38 and Rule 19b–4(f)(6) 39

thereunder, the Exchange has 

designated this proposal as one that 

effects a change that: (i) does not 

significantly affect the protection of 

investors or the public interest; (ii) does 

not impose any significant burden on 

competition; and (iii) by its terms, does 

not become operative for 30 days after 

the date of the filing, or such shorter 

time as the Commission may designate 

if consistent with the protection of 

investors and the public interest.40

A proposed rule change filed 

pursuant to Rule 19b–4(f)(6) under the 

Act normally does not become operative 

for 30 days after the date of its filing. 

However, Rule 19b–4(f)(6)(iii) 41 permits 

the Commission to designate a shorter 

time if such action is consistent with the 

protection of investors and the public 

interest. The Exchange has asked the 

Commission to waive the 30-day 

operative delay so that the proposal may 

become operative immediately upon 

filing. Exchange Rule 934NY(a) 

currently provides for the trading of 

Customer-to-Customer Cross orders on 

the floor of the Exchange. The Exchange 

proposes to adopt Exchange Rule 

900.3NYP(g)(2) to provide for the 

electronic trading of C2C and Complex 

C2C Orders. The proposed C2C and 

Complex C2C Orders, which must be 

comprised of a Customer (but not a 

Professional Customer) order to buy and 

a Customer (but not a Professional 

Customer) order to sell at the same price 

and for the same quantity, will trade 

immediately in full at their limit prices, 

provided that they satisfy the 

requirements in proposed Exchange 

Rule 900.3NYP(g)(2)(B) or (C), as 

applicable.42 The Exchange states that 

the proposed C2C and Complex C2C 

Orders would allow the Exchange to 

make available to market participants 

without delay an additional and more 

efficient means of executing Customer 

orders on the Exchange, and an 

additional venue for electronically 

trading two-sided Customer single-leg 

and complex orders. 

As discussed above, the proposed C2C 

and Complex C2C Orders are consistent 

with the customer-to-customer 

immediate cross and complex customerto-customer immediate cross 

functionality available on another 

options exchange and do not raise new 

or novel regulatory issues.43 Waiver of 

the operative delay will allow the 

Exchange to immediately provide 

market participants with an additional 

venue for electronically trading singleleg and complex customer cross orders. 

The proposal to amend Exchange Rule 

900.2NY to add proposed Exchange 

Rule 900.3NYP(g)(2) to the list of 

Exchange rules pursuant to which 

Professional Customers are treated as 

Broker/Dealers (or non-Customers) will 

help to align the Exchange’s rules with 

the rules of at least one other options 

exchange that limits its customer cross 

functionality to Priority Customer 

orders.44 In addition, the definition of 

Professional Customer in Exchange Rule 

900.2NY currently includes the CUBE 

Auction provided in Exchange Rule 

971.1NY. The proposal to add the CUBE 

Auction in Exchange Rule 971.1NYP to 

the definition of Professional Customer 

will provide for consistent treatment of 

Professional Customer orders in the 

CUBE Auctions prior to and after the 

Exchange’s migration to the Pillar 

trading platform. The proposal to add 

Complex Customer Cross Orders to 

Exchange Rule 980NYP(b)(1) will help 

to ensure that Exchange Rule 

980NYP(b)(1) provides a complete and 

accurate list of the ECOs available on 

the Exchange. For these reasons, the 

Commission hereby waives the 

operative delay and designates the 

proposal operative upon filing.45

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. 

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– 

NYSEAMER–2023–66 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–NYSEAMER–2023–66. 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 


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89788 Federal Register / Vol. 88, No. 248 / Thursday, December 28, 2023 / Notices 

46 17 CFR 200.30–3(a)(12), (59). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 98665 

(Sept. 29, 2023), 88 FR 68811 (Oct. 4, 2023) (SR– 

NYSE–2023–09) (‘‘NAC Proposal’’). Comments 

received on the NAC Proposal are available at 

https://www.sec.gov/comments/sr-nyse-2023-09/ 

srnyse202309.htm. 

4 15 U.S.C. 78s(b)(2). 

5See Securities Exchange Act Release No. 98879 

(Nov. 7, 2023), 88 FR 78075 (Nov. 14, 2023). The 

Commission designated January 2, 2024, as the date 

by which the Commission shall approve or 

disapprove, or institute proceedings to determine 

whether to disapprove, the proposed rule change. 

6 15 U.S.C. 78s(b)(2)(B). 

7See, NAC Proposal, supra note 3, for a complete 

description of the proposal as originally filed. 

8See, NAC Proposal, supra note 3 at 68811–18. 

9The Exchange states that for purposes of its 

proposal, the term ‘‘ecosystem’’ refers to specific 

entities (structures, functions, and components of 

the natural world) that produce ecosystem services. 

The Exchange also states that these and other 

benefits derived from ecosystems are called 

ecosystem services, and in aggregate, economists 

estimate their value at more than US$100 trillion 

dollars per year, and that examples of ecosystem 

services include clean air, water supply, flood 

protection, productive soils for agriculture, climate 

stability, and habitat for wildlife, among others. See 

id. 

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–NYSEAMER–2023–66 and should 

be submitted on or before January 18, 

2024. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.46

Christina Z. Milnor, 

Assistant Secretary. 

[FR Doc. 2023–28704 Filed 12–27–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–99225; File No. SR–NYSE– 

2023–09] 

Self-Regulatory Organizations; New 

York Stock Exchange LLC; Order 

Instituting Proceedings To Determine 

Whether To Approve or Disapprove a 

Proposed Rule Change To Amend the 

NYSE Listed Company Manual To 

Adopt Listing Standards for Natural 

Asset Companies 

December 21, 2023. 

I. Introduction 

On September 27, 2023, New York 

Stock Exchange LLC (the ‘‘Exchange’’ or 

‘‘NYSE’’) filed with the Securities and 

Exchange Commission (‘‘Commission’’), 

pursuant to section 19(b)(1) of the 

Securities Exchange Act of 1934 

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

proposed rule change to amend the 

NYSE Listed Company Manual 

(‘‘Manual’’) to adopt a new listing 

standard for the listing of Natural Asset 

Companies (‘‘NAC’’). The proposed rule 

change was published for comment in 

the Federal Register on October 4, 

2023.3 On November 7, 2023, pursuant 

to section 19(b)(2) of the Act,4 the 

Commission designated a longer period 

within which to approve the proposed 

rule change, disapprove the proposed 

rule change, or institute proceedings to 

determine whether to disapprove the 

proposed rule change.5

This order institutes proceedings 

pursuant to section 19(b)(2)(B) of the 

Act 6 to determine whether to approve 

or disapprove the proposed rule change. 

II. Description of the Proposed Rule 

Change 7

All statements in this Section II 

regarding the proposed rule change are 

taken from the description provided by 

the Exchange in the NAC Proposal.8

A. The NAC Proposal 

The Exchange proposes to adopt a 

new subsection of Section 102 of the 

Manual (to be designated Section 

102.09) to permit the listing of common 

equity securities of NACs. The Exchange 

proposes that, for purposes of proposed 

Section 102.09 of the Manual, a NAC is 

a corporation whose primary purpose is 

to actively manage, maintain, restore (as 

applicable), and grow the value of 

natural assets and their production of 

ecosystem services.9 As proposed, 

where doing so is consistent with the 

company’s primary purpose, the NAC 

would seek to conduct sustainable 

revenue-generating operations. As 

proposed, sustainable operations are 

those activities that do not cause any 

material adverse impact on the 

condition of the natural assets under a 

NAC’s control and that seek to replenish 

the natural resources being used. As 

proposed, NACs could also engage in 

other activities that support community 

well-being, provided such activities are 

sustainable. 

The Exchange states that its proposal 

is intended to end the overconsumption 

of and underinvestment in nature, 

which requires bringing natural assets 

into the mainstream, and that NACs are 

a new concept pioneered by Intrinsic 

Exchange Group Inc. (‘‘IEG’’). According 

to the Exchange, IEG is a private 

company structured as a corporation 

organized under the laws of the State of 

Delaware that advises public sector and 

private landowners on the creation of 

NAC structures and strategies. 

The Exchange proposes that NACs 

would be corporations that hold the 

rights to the ecological performance 

produced by natural or working areas, 

such as national reserves or large-scale 

farmlands, and have the authority to 

manage the areas for conservation, 

restoration, or sustainable management. 

The Exchange states that these rights 

could be licensed like other rights, 

including ‘‘run with the land’’ rights 

such as mineral rights, water rights, or 

air rights, and that NACs would be 

expected to license these rights from 

sovereign nations or private 

landowners. 

Under the proposed amendments to 

the Manual, capital raised through an 

NYSE-listed NAC’s initial public 

offering or follow-on offerings must be 

used to implement the conservation, 

restoration, or sustainable management 

plans articulated in its prospectus, fund 

its ongoing operations, or otherwise 

fulfill its purpose to maximize 

ecological performance (i.e., the value of 

natural assets and the production of 

ecosystem services). As proposed, while 

the core purpose of a NAC would be to 

maximize ecological performance, a 

NAC would also be required to seek to 

conduct sustainable revenue-generating 

operations (e.g., eco-tourism in a natural 

landscape or production of regenerative 

food crops in a working landscape) 

provided that such operations are 

consistent with the NAC’s charter, do 

not cause any material adverse impact 

on the condition of the natural assets 

under the NAC’s control, and seek to 

replenish the natural resources being 

used. Under the proposal, all NACs 

would be prohibited from directly or 

indirectly conducting unsustainable 

activities, such as mining, that lead to 

the degradation of the ecosystems it is 

trying to protect. In conducting its 

revenue-generating operations, a NAC 

could monetize ecosystem services that 

have markets (e.g., through the sale of 

carbon credits). All revenues and 

expenses would be reported in the 

financial statements of the NAC 

prepared under generally accepted 

accounting principles (‘‘GAAP’’) and 

filed with the SEC as part of the NAC’s 

required annual report on Form 10–K, 

20–F or 40–F, as applicable. As 


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