Document ID: SEC-2018-1568-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange, LLC
Posted Date: 2018-10-10T04:00Z

[Federal Register Volume 83, Number 196 (Wednesday, October 10, 2018)]
[Notices]
[Pages 50980-50981]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-21907]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-84351; File No. SR-NYSE-2018-30]

Self-Regulatory Organizations; New York Stock Exchange LLC; Order 
Approving a Proposed Rule Change To Provide for the Listing of Exchange 
Traded Products With No Component NMS Stock Listed on the Exchange, 
Delete Obsolete Listing Rules for Exchange Traded Products and Amend 
Rules Regarding Unlisted Trading Privileges

October 3, 2018.

I. Introduction

    On June 15, 2018, the New York Stock Exchange LLC (``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 provide for the listing of exchange traded 
products (``ETPs'') that do not have any component NMS Stock \3\ listed 
on the Exchange, delete obsolete listing rules for ETPs, and amend 
rules regarding unlisted trading privileges (``UTP''). The proposed 
rule change was published for comment in the Federal Register on July 
6, 2018.\4\ On July 24, 2018, the Exchange submitted partial Amendment 
No. 1 to the proposed rule change. On August 16, 2018, the Commission 
extended the time 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.\5\ On August 23, 2018, the Exchange submitted Amendment No. 2 
to the proposed rule change.\6\ The Commission received no comment 
letters on the proposal. This order approves the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ NMS Stock is defined in Rule 600 of Regulation NMS, 17 CFR 
242.600(b)(47).
    \4\ See Securities Exchange Act Release No. 83560 (June 29, 
2018), 83 FR 31585 (``Notice'').
    \5\ See Securities Exchange Act Release No. 83860, 83 FR 42534 
(August 22, 2018).
    \6\ Amendment No. 2 replaced and superseded the original filing, 
as modified by partial Amendment No. 1, in its entirety. In 
Amendment No. 2, the Exchange: (i) Provided background information 
regarding its Pillar platform and clarified that it would not be 
listing ETPs on its Pillar platform at this time but that it would 
announce via trader update when it plans to do so; (ii) designated 
as ``Reserve'' certain sections of the Listed Company Manual which 
rules are being deleted by this proposal; (iii) represented that the 
Commission approved Exchange listing rules that are substantially 
identical to those on NYSE Arca, Inc. (``NYSE Arca'') for certain 
ETPs; and (iv) made technical changes to the rule text and proposal. 
Because Amendment No. 2 does not materially alter the substance of 
the proposed rule change or raise unique or novel regulatory issues 
under the Act, it is not subject to notice and comment. Amendment 
No. 2 is available at: https://www.sec.gov/comments/sr-nyse-2018-30/nyse201830-4274809-173136.pdf.
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II. Description of the Proposed Rule Change

    As described in more detail in the Notice,\7\ the Exchange proposes 
to: (1) Provide for the listing of certain ETPs, provided that an ETP 
meets the applicable requirements of NYSE Rules 5P and 8P and does not 
have any component NMS Stock that is listed on the Exchange or is based 
on, or represents an interest in, an underlying index or reference 
asset that includes an NMS Stock listed on the Exchange; \8\ (2) delete 
a sentence in NYSE Rule 5.1(a)(1) that is no longer relevant given the 
Exchange's addition of Section 303A to the Listed Company Manual,\9\ 
which requires all NYSE-listed companies, including any ETPs listed on 
the Exchange, to comply with Section 303A of the Listed Company Manual; 
(3) delete certain listing rules that would be superseded by the ETP 
listing and trading requirements proposed in NYSE Rules 5P and 8P; (4) 
delete all references in NYSE Rules 5P and 8P that imply

[[Page 50981]]

that the initial and continued listing standards contained in those 
rules may apply to the trading pursuant to UTP of such ETPs, and make 
related changes; and (5) amend NYSE Rule 5.1(a)(2) relating to ETPs 
trading pursuant to UTP to delete the requirement that the Exchange 
file with the Commission a Form 19b-4(e) with respect to each ETP it 
trades by UTP, and to make clear that the Exchange would halt trading 
in an ETP trading pursuant to UTP as provided for in NYSE Rule 7.18.
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    \7\ See Notice, supra note 4.
    \8\ The Exchange represents that its proposed rules for the 
qualification, listing, and trading of these products are 
substantially identical (other than certain non-substantive and 
technical amendments) as the rules of NYSE Arca and the Exchange's 
other affiliates, including NYSE American LLC (``NYSE American'').
    \9\ Section 303A implements the requirements of Rules 10A-3 and 
10C-1 under the Act.
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III. Discussion and Commission Findings

    After careful review, the Commission finds that the proposed rule 
change, as amended, is consistent with the requirements of the Act and 
the rules and regulations thereunder applicable to a national 
securities exchange.\10\ In particular, the Commission finds that the 
proposed rule change is consistent with Section 6(b) of the Act,\11\ in 
general, and furthers the objectives of Section 6(b)(5) of the Act,\12\ 
in particular, in that it is designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade, 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\ 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).
    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(5).
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    The Commission believes that the Exchange's proposed listing 
standards for ETPs \13\ do not raise any novel issues, as they are 
consistent with the rules of other national securities exchanges. The 
proposed rules for the qualification, listing, and trading of ETPs are 
substantially identical (other than certain non-substantive and 
technical changes) to the rules of NYSE Arca and NYSE American. 
Moreover, the Exchange's proposal to make clear that the initial and 
continued listing standards in Rules 5P and 8P do not apply to the 
trading pursuant to UTP of such ETPs conforms NYSE's rules to the 
corresponding provisions of the rules of NYSE National, Inc. (``NYSE 
National'').\14\
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    \13\ The proposed listing standards of Rules 5P and 8P: (1) 
Provide for the listing of certain ETPs, provided that an ETP meets 
the applicable requirements of NYSE Rules 5P and 8P and does not 
have any component NMS Stock that is listed on the Exchange or is 
based on, or represents an interest in, an underlying index or 
reference asset that includes an NMS Stock listed on the Exchange; 
(2) delete a sentence in NYSE Rule 5.1(a)(1) that is no longer 
relevant given the Exchange's addition of Section 303A to the Listed 
Company Manual; and (3) delete all references in NYSE Rules 5P and 
8P that imply that the initial and continued listing standards 
contained in those rules may apply to the trading pursuant to UTP of 
such ETPs.
    \14\ In addition, the Commission believes that the proposed 
changes to NYSE Rule 5.1(a)(2) would further harmonize the 
Exchange's rules applicable to ETPs traded on a UTP basis with the 
rules of NYSE National.
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    Additionally, the Commission believes that the deletion of listing 
rules that would be superseded by the proposed rule change, the 
proposed amendments to NYSE Rules 5.1(a), and technical conforming 
changes are appropriate and consistent with Section 6(b)(5) of the Act. 
These changes would eliminate language that is no longer relevant and 
modify the Exchange rules to be more precise, thereby leading to 
greater clarity for Exchange members, regulators, investors, and the 
general public.
    In approving the proposed rule change, the Commission also relies 
upon the Exchange's representation that: (1) Listed ETPs would be 
subject to the existing trading surveillances administered by the 
Exchange for ETPs trading UTP, as well as cross-market surveillances 
administered by the Financial Industry Regulatory Authority (``FINRA'') 
on behalf of the Exchange, and (2) the initial and continued listing 
reviews of ETPs listed on the Exchange will be conducted in the same 
manner as they are on NYSE's affiliated exchange, NYSE Arca.\15\ 
Further, the Exchange or FINRA, on behalf of the Exchange, or both, 
will communicate as needed regarding trading in ETPs, as well as 
certain other securities and financial instruments underlying such 
ETPs, with other markets and other entities that are members of the 
Intermarket Surveillance Group (``ISG''). The Exchange or FINRA, on 
behalf of the Exchange, or both, may obtain trading information 
regarding trading in ETPs and financial instruments from such markets 
and other entities. In addition, the Exchange may obtain information 
regarding trading in ETPs, as well as certain other securities and 
financial instruments underlying such ETPs from markets and other 
entities that are members of ISG or with which the Exchange has in 
place a comprehensive surveillance sharing agreement.\16\
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    \15\ See Notice, supra note 4, at 31587-31588.
    \16\ See id. at 31587.
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    The Commission therefore finds that the proposed rule change, as 
modified by Amendment No. 2, is consistent with, and furthers the 
objectives of, Section 6(b)(5) of the Act.\17\
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    \17\ 15 U.S.C. 78f(b)(5).
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IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\18\ that the proposed rule change (SR-NYSE-2018-30), as modified 
by Amendment No. 2, be, and hereby is, approved.
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    \18\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
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    \19\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-21907 Filed 10-9-18; 8:45 am]
 BILLING CODE 8011-01-P