[Federal Register Volume 86, Number 118 (Wednesday, June 23, 2021)]
[Notices]
[Pages 33001-33005]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-13100]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-92193; File No. SR-NYSE-2020-105]


Self-Regulatory Organizations; New York Stock Exchange LLC; Order 
Approving a Proposed Rule Change, as Modified by Amendment No. 1, To 
Revise Rules 46 and 46A To Permit the Appointment of Trading Officials

June 16, 2021.

I. Introduction

    On December 15, 2020, New York Stock Exchange LLC (``NYSE'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Exchange Act'') \1\ and Rule 19b-4 
thereunder,\2\ a proposed rule change to amend NYSE Rules 46 and 46A, 
and other related rules, to provide for the appointment of Trading 
Officials. The proposed rule change was published for comment in the 
Federal Register on December 30, 2020.\3\
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 90776 (Dec. 22, 
2020), 85 FR 86625 (Dec. 30, 2020) (``Notice'').
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    On February 9, 2020, 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 
approve or disapprove the proposed rule change, extending the date for 
Commission action until March 30, 2021.\4\ On March 25, 2021, the 
Exchange submitted Amendment No. 1 to the proposed rule change.\5\
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    \4\ See Securities Exchange Act Release No. 91084 (Feb. 9, 
2020), 86 FR 9545 (Feb. 16, 2021).
    \5\ Amendment No. 1 is available on the Commission's website at 
https://www.sec.gov/comments/sr-nyse-2020-105/srnyse2020105-8545367-230641.pdf.
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    On March 30, 2021, the Commission published notice of Amendment No. 
1 and instituted proceedings to determine whether to approve or 
disapprove the proposed rule change, as modified by Amendment No. 1.\6\ 
The Commission has received one comment on the proposed rule change.\7\ 
This order approves the proposed rule change, as modified by Amendment 
No. 1.
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    \6\ See Securities Exchange Act Release No. 91442 (Mar. 30, 
2021), 86 FR 17658 (Apr. 5, 2021) (Notice of Filing of Amendment No. 
1 and Order Instituting Proceedings (``OIP'')).
    \7\ See Letter from David De Gregorio, Associate General 
Counsel, New York Stock Exchange to Vanessa Countryman, Secretary, 
Office of the Secretary, Commission (May 10, 2021) (``OIP Response 
Letter'').
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II. Description of the Proposed Rule Change

    The Exchange proposes to eliminate NYSE member \8\ and non-member 
employee Floor Officials \9\ and transition the related duties to the 
newly created position of Trading Official, which would be filled by 
Exchange employees appointed by the NYSE CEO or his or her designee. In 
order to effectuate this proposed rule change, the Exchange would: (1) 
Delete current NYSE Rules 46 and 46A, (2) replace those rules with new 
NYSE Rule 46, which would define Trading Officials and provide for 
their appointment, and (3) make conforming changes to other Exchange 
rules related to the duties and responsibilities of Trading Officials. 
As a result of this proposal, the various seniority-based gradations of 
Floor Official would be eliminated,\10\ and the Floor-related functions 
that are currently delegated by Exchange Rules to member Floor 
Officials and Staff Governors would be performed only by Trading 
Officials. Only Exchange employees, not active Exchange members, would 
be eligible to serve as Trading Officials.
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    \8\ NYSE Rule 2(a) states that the term ``member,'' when 
referring to a natural person, means a natural person associated 
with a member organization who has been approved by the Exchange and 
designated by such member organization to effect transactions on the 
Exchange Trading Floor or any facility thereof.
    \9\ NYSE Rule 46 (Floor Officials--Appointment) and NYSE Rule 
46A (Executive Floor Governors) currently set forth the process for 
the Exchange to appoint active NYSE members as Floor Officials. In 
addition, Rule 46 permits the Exchange to appoint qualified 
employees to as act as Floor Governors.
    \10\ The title ``Floor Official'' includes a broad category of 
titles that include, in order of increasing seniority, Floor 
Officials, Senior Floor Officials, Executive Floor Officials, Floor 
Governors, and Executive Floor Governors. See NYSE Rules 46 and 46A 
(defining Floor Official, Floor Governor, Executive Floor Official, 
Senior Floor Official, and Executive Floor Governor).
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    The Exchange anticipates that the current Staff Governors, who are 
Exchange employees, would be appointed as Trading Officials. According 
to the Exchange, Trading Officials, like current Staff Governors, would 
be appointed based on experience and necessary business and rule 
knowledge that would enable them to participate in and supervise 
various trading situations on the Trading Floor,\11\ and the Exchange 
would train and supervise them.\12\ In addition, Trading Officials, 
like the current Staff Governors, would report to the Head of Equities. 
The Exchange states that this reporting structure is appropriate 
because Trading Officials, like Staff Governors, will supervise trading 
on the Exchange and will not have any regulatory role or 
responsibility.\13\
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    \11\ The 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.''
    \12\ Currently, Floor Officials are appointed by the Board 
annually and must complete a mandatory education program and pass a 
qualifications exam. See NYSE Rules 46 and 46A.
    \13\ Regulatory employees are not permitted to be Staff 
Governors. See NYSE Rule 46.10.
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    The Exchange is also proposing certain technical and conforming 
changes to NYSE Rules 7.35A, 7.35B, 18(d), 37, 47, 75, 91.50, 93(b), 
103.10, 103A, 103B(G), 104, 112(a)(i), 124(e), 128B.10, 308(g), and 
903(d)(ii), which relate to the duties of Trading Officials and Floor 
supervision. Additionally, the Exchange proposes to amend NYSE Listed 
Company Manual Section 202.04.
    <bullet> NYSE Rule 7.35A (DMM-Facilitated Core Open and Trading 
Halt Auctions) sets forth the responsibility of designated market 
makers (``DMMs'') to ensure that registered securities open as close to 
the beginning of Core Trading Hours as possible or reopen at the end of 
the halt or pause.
    [cir] Subsection (a)(4) provides for Floor Official participation 
in the opening and reopening process to provide an impartial 
professional assessment of unusual situations, as well as to provide 
guidance with respect to pricing when a significant disparity in supply 
and demand exists. The rule also contemplates DMM consultations with 
Floor Officials under certain specific circumstances. References to 
Floor Official in NYSE Rule 7.35A(a)(4) and

[[Page 33002]]

(a)(5) would be replaced with Trading Official.
    [cir] NYSE Rule 7.35A(d) governs pre-opening indications. 
Subsection (d)(4) describes the procedures for publishing pre-opening 
indications and specifies when publication of a pre-opening indication 
requires supervision and approval of a Floor Governor. References to 
Floor Governor in NYSE Rule 7.35A(d)(4)(A) and (F)(i) would be replaced 
with references to Trading Official.
    <bullet> NYSE Rule 7.35B (DMM-Facilitated Closing Auctions) 
describes the responsibility of each DMM to ensure that registered 
securities close as soon after the end of Core Trading Hours as 
possible.
    [cir] NYSE Rule 7.35B(a)(1)(C) provides that electronically-entered 
Floor Broker Interest cannot be reduced in size or replaced, except 
that DMMs can accept a full cancellation of electronically-entered 
Floor Broker Interest to correct a Legitimate Error subject to Floor 
Official approval. Floor Official would be replaced with Trading 
Official in NYSE Rule 7.35B(a)(1).\14\
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    \14\ The Exchange has separately proposed to delete NYSE Rule 
7.35B(a)(1)(C).
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    [cir] NYSE Rule 7.35B(d) governs closing imbalances. Subsection 
(d)(1)(A) describes the circumstances in which a DMM may disseminate a 
Regulatory Closing Imbalance with prior Floor Official approval. 
Subsection (d)(2) provides that DMMs may disseminate a Manual Closing 
Imbalance only with prior Floor Official approval beginning one hour 
before the scheduled end of Core Trading Hours up to the Closing 
Auction Imbalance Freeze Time. In both subsections, references to Floor 
Official would be replaced with references to Trading Official.
    [cir] NYSE Rule 7.35B(j) governs temporary rule suspensions. 
Subsection (j)(3) provides that a determination to declare a temporary 
suspension as well as any entry or cancellation of orders or closing of 
a security under subsection (j)(2) must be supervised and approved by 
an Executive Floor Governor and supervised by an Exchange Officer. The 
Exchange proposes that these determinations must be supervised and 
approved by a Trading Official.
    <bullet> NYSE Rule 18(d) (Compensation in Relation to Exchange 
System Failure) sets forth the process for member organizations to seek 
reimbursement for losses resulting from system failures. Subsection (d) 
establishes a Compensation Review Panel consisting of three Floor 
Governors and three Exchange employees to determine the eligibility of 
a claim for payment. Since the proposed elimination of Floor Governors 
would leave Exchange employees as the sole members of the Compensation 
Review Panel, the Exchange proposes to eliminate the Compensation 
Review Panel. The proposed rule would accordingly provide that the 
Exchange will review claims submitted pursuant to the rule and 
determine the eligibility of a claim for payment.
    <bullet> NYSE Rule 37 (Visitors) provides that visitors shall not 
be admitted to the Floor except by permission of an Exchange officer, 
Senior Floor Official, Executive Floor Official, Floor Governor, or 
Executive Floor Governor. The Exchange proposes that admission of 
visitors to the Floor be by permission of the Exchange.
    <bullet> As noted above, NYSE Rules 46 and 46A would be deleted in 
their entirety. The heading of proposed NYSE Rule 46 would be ``Trading 
Officials.''
    <bullet> Under NYSE Rule 47 (Floor Officials--Unusual Situations), 
Floor Officials have the power to supervise and regulate active 
openings and unusual situations that may arise in connection with the 
making of bids, offers, or transactions on the Floor. References to 
Floor Official would be changed to Trading Officials and the heading 
would be changed to ``Unusual Situations on the Floor.'' Current NYSE 
Rule 49 would become NYSE Rule 48.
    <bullet> NYSE Rule 75 (Disputes as to Bids and Offers) mandates 
that disputes arising on bids or offers that are not settled by 
agreement between the interested members shall be settled by a Floor 
Official. The Exchange proposes that disputes arising on bids or offers 
be settled by a Trading Official and would amend the rule text and 
Supplementary Material .10 accordingly. The rule currently provides 
that, if both parties to a dispute involving either a monetary 
difference of $10,000 or more, or a questioned trade, the matter may be 
referred for resolution to a panel of three Floor Governors, Senior 
Floor Officials, or Executive Floor Officials, or any combination 
thereof (``3 Floor Official Panel''), whose decision shall be binding 
on the parties. As an alternative to the 3 Floor Official Panel under 
the current rule, members may proceed to resolve a dispute through 
long-standing arbitration procedures established under the Exchange's 
rules. The Exchange proposes to eliminate the 3 Floor Official Panel. 
Disputes involving either a monetary difference of $10,000 or more, or 
a questioned trade, would thus be resolved exclusively through 
arbitration.
    <bullet> NYSE Rule 91.50 (Taking or Supplying Securities Named in 
Order) provides that if there is a continued pattern of rejection of a 
DMM's principal transactions, a Floor Official may be called upon and 
require the broker to review his actions. Floor Official would be 
changed to Trading Official in NYSE Rule 91.50.
    <bullet> NYSE Rule 93(b) (Trading for Joint Account) provides that 
no member while on the Floor shall initiate the purchase or sale on the 
Exchange of a stock for any account in which the member, the member's 
member organization, or any other member or allied member therein is 
directly or indirectly interested with any person other than such 
member organization or any other member or allied member therein, 
without the prior approval of a Floor Official. The reference to Floor 
Official would be changed to Trading Official.
    <bullet> NYSE Rule 103.10 (Registration and Capital Requirements of 
DMMs and DMM Units) governs the temporary reallocation of securities 
and provides that the Chief Regulatory Officer of the Exchange 
(``CRO''), or his or her designee, and two non-DMM Executive Floor 
Governors (or, if only one or no non-DMM Executive Floor Governors is 
present on the Floor, the most senior non-DMM Floor Governor or 
Governors based on length of consecutive service as a Floor Governor at 
the time of any action covered by this rule), acting by a majority, 
shall have the power to reallocate temporarily any security on an 
emergency basis whenever such reallocation would be in the public 
interest. The Exchange proposes that only the CRO or his or her 
designee would have the power to reallocate temporarily any security on 
an emergency basis. According to the Exchange, the proposed rule 
reflects the current process whereby determinations to temporarily 
reallocate securities in the public interest are determined by the CRO 
and the most senior and experienced members of the Floor community. In 
the absence of those senior Floor member representatives, the Exchange 
states that determinations involving the public interest should be made 
exclusively by the CRO. The Exchange states that, given that 
reallocating securities in the public interest largely raise regulatory 
concerns, such determinations are best left to regulatory staff without 
the involvement of Trading Officials.
    <bullet> NYSE Rule 103A (Member Education) provides for the 
Exchange to develop procedures and standards for qualification and 
performance of members active on the Floor of the Exchange. Currently, 
member Floor Officials are required to complete

[[Page 33003]]

educational modules, while Executive Floor Governors are exempt from 
this requirement. Under the proposal, Trading Officials, like Executive 
Floor Governors, would not be required to complete educational modules, 
and the rule text related to this requirement would be eliminated. The 
Exchange also proposes the non-substantive change of deleting the 
superfluous ``(I)'' at the beginning of the rule.
    <bullet> NYSE Rule 103B(G) (Security Allocation and Reallocation) 
describes the Exchange's allocation freeze policy and provides that, 
following allocation probation, a second six-month period will begin 
during which a DMM unit may apply for new listings, provided that the 
unit demonstrates relevant efforts taken to resolve the circumstances 
that triggered the allocation prohibition. Currently, the determination 
as to whether a unit may apply for new listings is made by Exchange 
regulatory staff in consultation with the Executive Floor Governors, 
the most senior and experienced Floor Officials. The Exchange proposes 
that regulatory staff continue to make these determinations under the 
rule. According to the Exchange, it is not proposing that Regulatory 
staff consult with Trading Officials because Regulatory staff do not 
need the input or involvement of business-side staff to make these 
determinations.
    <bullet> NYSE Rule 104 (Dealings and Responsibilities of DMMs) 
governs dealings and responsibilities of DMMs. Subsection (i) provides 
for temporary DMMs and permits a Floor Governor to authorize a member 
of the Exchange who is not registered as a DMM in an Exchange-listed 
stock or stocks, to act as a temporary DMM under specific 
circumstances. The Exchange proposes that Trading Officials would 
perform this function under the amended rule.
    <bullet> NYSE Rule 112(a)(i) (Orders initiated ``Off the Floor'') 
provides that all orders in stocks for the account of a member 
organization; any member, principal executive, approved person, 
officer, or employee of that organization; or a discretionary account 
serviced by the member or member organization must be sent to the Floor 
through a clearing firm's order room or other facilities regularly used 
for transmission of public customers' orders to the Floor, except for 
orders, among others, when a Floor Official expressly invites a member 
or members to participate in a difficult market situation. The Exchange 
would replace Trading Official for Floor Official in NYSE Rule 
112(a)(i).
    <bullet> NYSE Rule 124(e) (Midday Auction) provides that, when 
there is a significant imbalance in a Midday Auction Stock at the end 
of the Midday Auction Pause, the Midday Auction Pause may be converted 
to an order imbalance halt with the approval of a Floor Governor or two 
Floor Officials. The Exchange proposes that this approval would be 
given by a Trading Official.
    <bullet> NYSE Rule 128B (Publication of Changes, Corrections, 
Cancellations or Omissions and Verification of Transactions) governs 
changes and corrections to the Consolidated Tape.
    [cir] NYSE Rule 128B.10 (Publication on the tape or in the ``sales 
sheet'') provides that publication of a change or a correction in a 
transaction which previously appeared on the tape may be made on the 
tape on the day of the transaction, provided that both buying and 
selling members or member organizations agree to the change in the 
transaction(s) and receive approval from a Floor Governor, Executive 
Floor Official, Senior Floor Official, or Executive Floor Governor. In 
the event such publication is not made on the tape on the day of the 
transaction, it may be published on the tape at least ten minutes prior 
to the opening of business on the following business day or in the 
sales sheet within three business days of the transaction with the 
approval of both the buying and selling members and a Floor Official, 
provided the price of the transaction does not affect the high, low, 
opening, or closing price of the security on the day of the 
transaction. The Exchange proposes that Trading Officials provide the 
approvals required under NYSE Rule 128B.10.
    <bullet> NYSE Rule 128B.13 (Other errors) provides that a 
correction in the amount of a transaction reported erroneously to the 
tape by a party to the transaction may be published on the tape on the 
day of the transaction, on the tape at least ten minutes prior to the 
opening on the following business day, or on the ``sales sheet'' within 
three business days of the transaction with the approval of a Floor 
Governor, Executive Floor Official, Senior Floor Official, or Executive 
Floor Governor. The Exchange proposes that Trading Officials provide 
the approvals required under NYSE Rule 128B.13.
    <bullet> NYSE Rule 308(g) (Acceptability Proceedings) provides that 
any person whose application has been disapproved by an Acceptability 
Committee, or any member of the Board of Directors of the Exchange, any 
member of the Committee for Review (``CFR''), any Executive Floor 
Governor, and the Division of the Exchange initiating the proceedings, 
may require a review by the Board of any determination of an 
Acceptability Committee. The Exchange proposes to delete Executive 
Floor Governors from the rule. The Exchange states that the proposed 
change would not affect the procedural safeguards of the call for 
review process since there would still be interested parties that could 
call a matter for Board review. Specifically, directors and members of 
the CFR, including the person whose application was disapproved, would 
continue to be able to call disapproved membership applications for 
review, thereby, according to the Exchange, ensuring the independence, 
integrity, and fairness of the membership process. The Exchange states 
that Trading Officials, who are not members and have no role in the 
member application process, should not have the ability to call matters 
involving membership applications for review.
    <bullet> NYSE Rule 903(d)(ii) (Off-Hours Transactions) provides 
that a closing price order to buy (sell) a security for the account of 
the DMM registered in such security and approved by a Floor Official, 
coupled with a closing price order to sell (buy) to offset all or part 
of a market-on-close imbalance in the stock prior to the close, shall 
be executed upon entry. The Exchange proposes that a Trading Official 
would provide the required approval under the rule.
    <bullet> NYSE Rule 906 (Impact of Trading Halts on Off-Hours 
Trading) provides that a closing price order to buy (sell) a security 
for the account of the DMM registered in that security and approved by 
a Floor Official, coupled with a closing price order to sell (buy) to 
offset all or part of any market-on-close imbalance in the stock prior 
to the close, shall not be so canceled or precluded from entry as 
result of corporate developments during the Off-Hours Trading Session. 
The Exchange proposes that a Trading Official would provide the 
required approval under the rule.
    <bullet> Finally, NYSE Listed Company Manual Section 202.04 
(Exchange Market Surveillance) provides that a listed issue may be 
placed under special initial margin and capital requirements, which 
indicates a determination by the Exchange's Floor Officials that the 
market in the issue has assumed a speculative tenor and has become 
volatile due to the influence of credit, which, if ignored, may lead to 
unfair and disorderly trading. The reference to Floor Officials would 
be changed to a reference to Trading Officials.

III. NYSE's OIP Response Letter

    On May 10, 2021, the NYSE submitted a response to the questions in

[[Page 33004]]

the Commission's OIP.\15\ Specifically, the Exchange responded to the 
questions in the OIP as to whether: (1) The proposed rule change raised 
issues related to fair representation of member firms in the 
administration of the Exchange's affairs; (2) permitting only Exchange 
employees to be Trading Officials would create or alter conflicts of 
interest, if any, faced by Trading Officials in performing their 
duties; (3) mandatory training of Trading Officials should be required; 
and (4) employees of member firms could have relevant experience or 
knowledge that is important for performing the duties of a Trading 
Official.\16\
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    \15\ See note 7, supra.
    \16\ See OIP, 86 FR at 17633; see also OIP Response Letter, 
supra note 7, at 2-3.
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    The Exchange states that it does not believe that the fair 
representation requirement of Section 6(b)(3) of the Act is implicated 
by this proposed rule change because Section 6(b)(3) of the Act is 
primarily concerned with member participation in the governance of a 
national securities exchange and because the members of the Exchange 
are represented on and participate on the Exchange's Board and its 
committees.\17\ The Exchange further states that it is not required to 
delegate the authority to supervise and regulate certain trading 
activity to its members and that member Floor Officials are a unique 
feature of the Exchange, not replicated on other equities 
exchanges.\18\ Further, the Exchange states that its affiliates, NYSE 
Arca and NYSE American, currently have exchange employees who are 
designated as Trading Officials and who fulfill a role similar to that 
of the proposed NYSE Trading Officials, as well as to that of its 
current Floor Officials.\19\ Accordingly, the Exchange states that it 
does not believe that the elimination of member Floor Officials from 
the delegated responsibilities in the Exchange's marketplace raises any 
fair representation issues or diminishes the fair representation of 
members in the administration of the Exchange's affairs.\20\
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    \17\ See OIP Response Letter, supra note 7, at 3.
    \18\ Id.
    \19\ Id.
    \20\ Id.
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    With respect to potential conflicts of interest, the Exchange 
states that it does not believe that potential conflict of interests 
would either be created or altered by this proposed rule change because 
only Exchange employees would be Trading Officials.\21\ The Exchange 
states that employee-only Trading Officials are not novel and have been 
part of the structure of the options markets for many years.\22\ In 
addition, the Exchange states that, as a practical matter, the current 
Staff Governors, who already perform the functions of Floor Officials, 
would become the new Trading Officials and would be performing the same 
delegated functions in the same fashion under the Exchange's rules as 
they currently do as Floor Officials.\23\ Thus, according to the 
Exchange, although their titles would change, the Staff Governors would 
be performing the same functions and the Exchange's supervisory 
procedures should continue to reasonably ensure that Trading Officials 
exercise the same level of competence and professionalism, including 
making impartial assessments and avoiding actual and apparent conflicts 
of interest.\24\ In addition, the Exchange states that employee-only 
Trading Officials should reduce the potential for conflicts of interest 
because they would not be affiliated with a competing broker-dealer 
business on the Floor.\25\ The Exchange also states that it has sought 
to mitigate potential conflicts of interest by proposing to remove 
Trading Official involvement from certain situations in which Floor 
Officials currently have a role under Exchange rules.\26\ For instance, 
proposed Trading Officials would not be involved in determinations to 
reallocate securities under amended NYSE Rules 103.10 and 103B(G) or in 
resolving matters involving a dispute involving either a monetary 
difference of $10,000 or more or a questioned trade under amended NYSE 
Rule 75.\27\
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    \21\ Id. at 4.
    \22\ Id.
    \23\ Id.
    \24\ Id.
    \25\ Id.
    \26\ Id.
    \27\ Id. at 4-5.
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    With regard to mandatory training for Trading Officials, the 
Exchange states that it is obligated to comply with and enforce its 
rules and securities laws, and that in order to fulfill this obligation 
it has an active employee supervision and training program already in 
place.\28\ Further, the Exchange states that the current mandatory 
training for Floor Officials was developed specifically for Floor 
Officials when they were exclusively Floor members and prior to the 
inclusion of Staff Governors.\29\ The Exchange explains that it 
currently provides its Staff Governors training and updates on rule 
changes and changes in Floor-related trading technology and that the 
same would be done for Trading Officials.\30\ Thus, the Exchange does 
not believe that a separate mandatory educational program for a subset 
of its employees (i.e., Trading Officials) is necessary.\31\
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    \28\ Id. at 5.
    \29\ Id.
    \30\ Id.
    \31\ Id. at 4.
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    Finally, the Exchange acknowledges that members may have relevant 
experience or knowledge that is important for performing the duties of 
a Trading Official.\32\ The Exchange states that it is, in fact, 
because of their relevant experience or knowledge that member employees 
have been hired by the Exchange as Staff Governors, and the Exchange 
expects to continue to benefit from the experience of member employees 
as it hires and trains Trading Officials.\33\ The Exchange states that 
it does not, however, believe that the best way to utilize the 
knowledge and experience of Floor members is to require the retention 
of member Floor Officials in their current form.\34\
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    \32\ Id. at 5.
    \33\ Id.
    \34\ Id.
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IV. Discussion and Commission Findings

    After careful review, the Commission is approving the proposed rule 
change, as modified by Amendment No. 1, for the reasons discussed 
below.\35\ The Commission finds that the proposed rule change, as 
modified, is consistent with the requirements of the Act and the rules 
and regulations thereunder applicable to a national securities 
exchange, including Section 6(b)(3) of the Exchange Act, which 
requires, among other things, that the rules of a national securities 
exchange assure a fair representation of its members in the 
administration of its affairs,\36\ and Section 6(b)(5) of the Exchange 
Act, which requires, among other things, that the rules of an exchange 
be 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 mechanism of a free and open market and a national market 
system, and, in general, to protect investors and the public interest, 
and that they are not designed to permit

[[Page 33005]]

unfair discrimination between customers, issuers, brokers, or 
dealers.\37\
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    \35\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \36\ 15 U.S.C. 78f(b)(3).
    \37\ Id.
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    The Commission finds that, because the proposed rule change will 
not diminish the role that member firms will continue to play in the 
governance of the Exchange, and because having Trading Officials who 
are exclusively Exchange employees would be consistent with the 
Commission-approved rules of other national securities exchanges, the 
proposed rule change is consistent with Section 6(b)(3) of the Act.\38\
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    \38\ Id.
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    The Commission also finds that the proposed rule change is 
consistent with Section 6(b)(5) of the Act. The Commission finds that 
the proposed rule change is reasonably designed to supervise and review 
trading on the Floor while ensuring that qualified Exchange-trained and 
supervised staff continue to perform oversight to the marketplace on a 
day-to-day basis as prescribed by Exchange rules and consistent with 
the Exchange's obligations under the Act. The Commission also finds 
that the proposed rule change reasonably addresses potential conflicts 
of interest faced by Trading Officials by providing for objective 
assessments by professional staff who do not conduct a competing 
broker-dealer business on the Floor and by removing Trading Officials 
from involvement in certain situations, including disputes with a value 
of $10,000 or more. Additionally, the Commission finds that it is 
reasonable for the Exchange to hire, train, and supervise the Trading 
Officials in the manner that has been established for Staff Governors 
since, notwithstanding the change of title, the duties and 
responsibility will remain largely the same. Further, because the 
primary role of the Trading Official will be to supervise trading on 
the Exchange, the Commission also finds it is appropriate for Trading 
Officials to report to NYSE's Head of Equities. For these reasons, the 
Commission finds that the proposed rule change consistent with the 
requirements of Section 6(b)(5) of the Act.\39\
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    \39\ 15 U.S.C. 78f(b)(5).
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    Finally, the Commission finds that the changes to NYSE Rules 7.35A, 
7.35B, 18(d), 37, 47, 75, 91.50, 93(b), 103.10, 103A, 103B(G), 104, 
112(a)(i), 124(e), 128B.10, 308(g), 903(d)(ii), and NYSE Listed Company 
Manual Section 202.04 are of a conforming and technical nature designed 
to remove references to Floor Officials and clarify, as necessary, how 
the scope of the Trading Official's duties differs from that of the 
Floor Official, and that these changes are, therefore, consistent with 
Section 6(b)(5) of the Act.\40\
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    \40\ Id.
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    For the reasons discussed above, the Commission finds that the 
proposed rule change, as modified by Amendment No. 1, is consistent 
with the requirements of the Act and in particular Section 6(b)(3) and 
Section 6(b)(5) because it does not impair the fair representation of 
member firms in the governance of the exchange, and because it is 
reasonably 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, and to remove impediments to and perfect 
the mechanism of a free and open market and a national market system, 
and is not designed to permit unfair discrimination between customers, 
issuers, brokers, or dealers.

V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\41\ that the proposed rule change SR-NYSE-2020-105, as modified by 
Amendment No. 1, is hereby approved.
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    \41\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\42\
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    \42\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-13100 Filed 6-22-21; 8:45 am]
BILLING CODE 8011-01-P