[Federal Register Volume 89, Number 42 (Friday, March 1, 2024)]
[Notices]
[Pages 15239-15242]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-04299]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-99606; File No. SR-NYSEARCA-2024-16]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend NYSE Arca 
Rule 1.1

February 26, 2024.
    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 February 14, 2024, NYSE Arca, Inc. (``NYSE

[[Page 15240]]

Arca'' 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Rule 1.1 (Definitions) to adopt a 
category of Market Makers called Floor Market Makers and to make other 
conforming changes. 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 purpose of this filing is to amend Exchange Rule 1.1 
(Definitions) to adopt a category of Market Makers called Floor Market 
Makers and to make other conforming changes. The Exchange notes that 
the proposed category of Floor Market Makers is substantively identical 
to the category of Floor Market Makers on at least one other options 
exchange, including on the Exchange's affiliated SRO, NYSE American LLC 
(``NYSE American'').\4\
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    \4\ See NYSE American Rules 900.2NY (Definitions) (defining a 
``Floor Market Maker'' as ``a registered Market Maker who makes 
transactions as a dealer-specialist while on the Floor of the 
Exchange'').
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    The Exchange proposes to adopt a category of Market Maker called a 
Floor Market Maker, which would be substantively identical to the 
category of Floor Market Maker on NYSE American. In this regard, the 
Exchange proposes to add a definition of Floor Market Maker that would 
provide that a Floor Market Maker is ``a registered Market Maker who 
makes transactions as a dealer-specialist while on the Floor of the 
Exchange.'' Consistent with this proposal, the Exchange also proposes 
to amend Rules 6.32-O (Market Maker Defined) to make clear that Floor 
Market Makers are included in the definition of Market Maker, unless 
otherwise specified or unless context requires otherwise.\5\ As such, 
Floor Market Makers are required to satisfy the myriad of obligations 
imposed on Market Makers including registration requirements per Rule 
6.33-O (Registration of Market Makers), minimum trading requirements 
for option issues in appointment per Rule 6.35-O (Appointment of Market 
Makers), minimum continuous quoting requirements per Rules 6.37-O 
(Obligations of Market Maker) and 6.37AP-O (Market Maker Quotations), 
among others.\6\ In particular, at least 75% of the trading activity of 
each Market Maker, including Floor Market Makers, must be in option 
issues in its appointed issues (the ``minimum 75% trading 
requirement'').\7\ However, relevant to the proposed category of Floor 
Market Maker, trades executed on the Trading Floor are counted toward 
the minimum 75% trading requirement, regardless of whether the trades 
are in option issues in the Market Maker's appointment.\8\
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    \5\ Compare proposed Rule 6.32-O (providing, in relevant part, 
that ``[a] Market Maker on the Exchange will be a Market Maker, 
Floor Market Maker, or a Lead Market Maker'' and that ``[u]nless 
specified, or unless the context requires otherwise, the term Market 
Maker refers to Market Makers, Floor Market Makers, and Lead Market 
Makers'') (emphasis added) with NYSE American Rule 920NY (providing, 
in relevant part, that ``[a] Market Maker on the Exchange will be 
either a Remote Market Maker, a Floor Market Maker, a Specialist or 
an e-Specialist'' and that ``[u]nless specified, or unless the 
context requires otherwise, the term Market Maker refers to Remote 
Market Makers, Floor Market Makers, Specialists and e-
Specialists'').
    \6\ Floor Market Makers likewise must comply with the other 
requirements specific to Market Makers, including Rules 6.34-O 
(Trading by OTP Holders and OTP Firms on the Floor), 6.34A-O (Market 
Maker Authorized Traders--OX), 6.35-O (Appointment of Market 
Makers), 6.36-O (Letters of Guarantee), 6.37B-O (Market Maker 
Orders), and 6.39-O (Securities Accounts and Orders of Market 
Makers).
    \7\ See Rule 6.35-O(i) (Appointment of Market Makers), Trading 
Requirements).
    \8\ See Commentary .01 to Rule 6.35-O (providing that trades 
effected on the Trading Floor to accommodate cross trades executed 
pursuant to Rule 6.47-O (i.e., taking the other side of a 
``crossing'' order) will ``count toward the Market Maker's 75% 
requirement, regardless of whether the trades are in issues within 
or without the Market Maker's appointment'').
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    The primary role of Market Makers is to provide liquidity. The 
Exchange does not limit the number of participants who may act as 
Market Makers and would likewise not limit the number of Market Makers 
acting as Floor Market Makers. The proposed category of Floor Market 
Makers would have a specific focus on providing liquidity for orders 
submitted for execution on the Floor of the Exchange through open 
outcry. The Exchange believes that the nature of open outcry 
transactions lends itself better to larger-sized transactions than the 
liquidity that is typically available electronically and the proposed 
installation of Floor Market Makers would encourage greater 
participation in, and increased liquidity for, such large trades. The 
Exchange therefore believes that all market participants stand to 
benefit from any increased opportunities for order execution resulting 
from the infusion of liquidity on the Trading Floor.
    The Exchange has submitted a separate fee filing that will make 
Market Makers acting as Floor Market Makers eligible for beneficial fee 
treatment, provided the Floor Market Maker satisfies certain criteria, 
as is the case on NYSE American.\9\
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    \9\ See SR-NYSEArca-2024-12 (providing for discounted rates on 
monthly OTP fees to Floor Market Makers that satisfy certain 
criteria). The Exchange notes that the description of Floor Market 
Makers set forth SR-NYSEArca-2024-12 is identical to the description 
proposed herein and the proposed minimum 75% Manual trading 
requirement aligns with Commentary .01 to Rule 6.35-O, as described 
herein. See NYSE American Fee Schedule, Section III.A. (Monthly ATP 
Fees) and Section III.A., n. 1 (describing discounted rates 
available to Floor Market Makers that meet specific criteria, which 
rates/criteria are identical to those proposed herein).
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2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Securities Exchange Act of 1934,\10\ in general, and furthers the 
objectives of Section 6(b)(5),\11\ 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.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes the proposal to adopt a new category of 
Market Makers called Floor Market Maker and to subject Floor Market 
Makers to the same requirements as non-Floor Market

[[Page 15241]]

Makers will remove impediments to and perfect the mechanism of a free 
and open market and a national market system, and, in general, protect 
investors and the public interest, by creating a subset of Market 
Makers that will have a presence on the Trading Floor with a focus on 
providing liquidity for the execution of open outcry orders The 
Exchange notes that Floor Market Makers would have an incentive to 
execute orders in all options issues in open outcry because all such 
trades would count towards the 75% minimum trading requirement (per 
Commentary .01 to Rule 6.35-O). As noted herein, the Exchange would not 
limit the number of Market Makers acting as Floor Market Makers. The 
Exchange believes that the nature of open outcry transactions lends 
itself better to larger-sized transactions than the liquidity that is 
generally available electronically and the proposed installation of 
Floor Market Makers would encourage greater participation in such large 
trades. Therefore, the proposal will benefit all market participants 
trading on the Exchange, especially those seeking liquidity for large-
sized and complex orders. Moreover, the Exchange believes that the 
proposal would benefit investors, the national market system, and the 
Exchange by increasing competition for order flow and executions, which 
would improve price discovery.
    The Exchange notes that, as proposed, Floor Market Makers would be 
subject to the same requirements and obligations as non-Floor Market 
Makers. That said, Floor Market Makers, by virtue of their presence on 
the Trading Floor, would be better positioned to execute trading 
interest in open outcry, which would increase liquidity on the Trading 
Floor to the benefit of all market participants. Because the proposed 
category of Floor Market Makers are subject to the same obligations as 
non-Floor Market Makers, the Exchange notes that it would not need to 
undertake any additional procedures or create additional surveillances 
to regulate its Floor Market Makers together with non-Floor Market 
Makers.
    As noted herein, the proposal to have Floor Market Makers is not 
new or novel as Floor Market Makers exist pursuant to the rules of 
Exchange's affiliated options SRO, NYSE American.\12\ As such, this 
proposal does not raise any issues not previously considered by the 
Exchange.
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    \12\ See NYSE American Rule 900.2NY (Definitions) (defining a 
``Floor Market Maker'' as ``a registered Market Maker who makes 
transactions as a dealer-specialist while on the Floor of the 
Exchange''). See also BOX Options LLC (``BOX'') Rule 8510 (defining 
a ``Floor Market Maker'' as ``an Options Participant of the Exchange 
located on the Trading Floor who has received permission from the 
Exchange to trade in options for his own account'').
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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. Instead, the Exchange 
believes that the proposed change would continue to encourage 
competition because it would apply to all similarly-situated Market 
Makers. The Exchange believes the proposed change would not unduly 
burden market participants trading on the Exchange but would instead 
allow (and encourage) market making firms that do not already have a 
presence on the Trading Floor to install a Floor Market Maker. The 
Exchange believes that all market participants stand to benefit from 
this proposal because Floor Market Makers focused on open outcry 
transactions would encourage increased liquidity and quote competition 
on the Exchange. The Exchange notes that it operates in a highly 
competitive market in which market participants can readily favor 
competing venues. In such an environment, the Exchange must continually 
review, and consider adjusting, its rules to remain competitive with 
other exchanges. For the reasons described above, the Exchange believes 
that the proposed rule change reflects this competitive environment.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \13\ and Rule 19b-4(f)(6) thereunder.\14\ 
Because the proposed rule change does not: (i) significantly affect the 
protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative prior to 
30 days from the date on which it was filed, or such shorter time as 
the Commission may designate, if consistent with the protection of 
investors and the public interest, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.\15\
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    \13\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \14\ 17 CFR 240.19b-4(f)(6).
    \15\ Id. In addition, Rule 19b-4(f)(6)(iii) requires a self-
regulatory organization to give the Commission written notice of its 
intent to file the proposed rule change, along with a brief 
description and text of the proposed rule change, at least five 
business days prior to the date of filing of the proposed rule 
change, or such shorter time as designated by the Commission. The 
Exchange has satisfied this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) \16\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b4(f)(6)(iii),\17\ the Commission 
may 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. The Exchange states that 
waiver of the operative would be consistent with the protection of 
investors and the public interest because it would enable the Exchange 
to allow a subset of Market Makers to have a presence on the Trading 
Floor with a specific focus on providing liquidity for the execution of 
open outcry orders without delay. The Exchange further states that it 
believes the presence of Floor Market Makers may result in increased 
liquidity for open outcry interest, which would benefit investors and 
the public interest and should therefore be implemented without delay. 
Finally, the Exchange notes that its affiliate Exchange (NYSE American) 
has a substantially identical rule and therefore the proposed rule 
change does not raise any new novel regulatory issues. For the 
foregoing reasons, the Commission does not believe that the proposal 
raises any new or novel regulatory issues, and may provide market 
participants with an additional opportunities to interact with 
liquidity on the Trading Floor. Accordingly, the Commission hereby 
waives the 30-day operative delay and designates the proposed rule 
change operative upon filing.\18\
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    \16\ 17 CFR 240.19b-4(f)(6).
    \17\ 17 CFR 240.19b-4(f)(6)(iii).
    \18\ For 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).
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    At any time within 60 days of the filing of such proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such

[[Page 15242]]

action is necessary or appropriate in the public interest, for the 
protection of investors, or otherwise in furtherance of the purposes of 
the Act. If the Commission takes such action, the Commission shall 
institute proceedings under Section 19(b)(2)(B) \19\ of the Act to 
determine whether the proposed rule change should be approved or 
disapproved.
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    \19\ 15 U.S.C. 78s(b)(2)(B).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

    <bullet> Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
    <bullet> Send an email to <a href="/cdn-cgi/l/email-protection#99ebecf5fcb4faf6f4f4fcf7edead9eafcfab7fef6ef"><span class="__cf_email__" data-cfemail="6b191e070e46080406060e051f182b180e08450c041d">[email protected]</span></a>. Please include 
file number SR-NYSEARCA-2024-16 on the subject line.

Paper Comments

    <bullet> Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to file number SR-NYSEARCA-2024-16. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (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-NYSEARCA-2024-16 and should 
be submitted on or before March 22, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\20\
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    \20\ 17 CFR 200.30-3(a)(12), (59).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-04299 Filed 2-29-24; 8:45 am]
BILLING CODE 8011-01-P


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