Document ID: SEC-2020-0588-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange, LLC
Posted Date: 2020-04-15T04:00Z

[Federal Register Volume 85, Number 73 (Wednesday, April 15, 2020)]
[Notices]
[Pages 21035-21037]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-07903]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-88613; File No. SR-NYSE-2020-33]

Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
for Certain Changes and Corrections to the NYSE Rule 9000 Series

April 9, 2020.
    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 April 7, 2020, New York Stock Exchange LLC (``NYSE'' or the 
``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 certain changes and corrections to the NYSE 
Rule 9000 Series (Code of Procedure). 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 certain changes and corrections to the NYSE 
Rule 9000 Series (Code of Procedure), as follows.
Proposed Rule Change
    In 2013, the Commission approved the Exchange's adoption of the 
Rule 8000 (Investigations and Sanctions) and Rule 9000 Series relating 
to investigation, discipline, sanction, and other procedural rules 
modeled on the rules of the Financial Industry Regulatory Authority, 
Inc. (``FINRA'').\4\ The Exchange's affiliates NYSE American LLC 
(``NYSE American''), NYSE National, Inc. (``NYSE National''), and NYSE 
Arca, Inc. (``NYSE Arca'') have since each adopted versions of the Rule 
8000 and Rule 9000 Series.\5\ The Exchange proposes certain changes in 
order to further harmonize its disciplinary rules with the disciplinary 
rules of its affiliates as well as to correct inconsistencies in the 
Rule 9000 Series.
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    \4\ See Securities Exchange Act Release No. 69045 (March 5, 
2013), 78 FR 15394 (March 11, 2013) (SR-NYSE-2013-02).
    \5\ In 2016, NYSE American adopted its Rule 8000 and Rule 9000 
Series based on the NYSE and FINRA Rule 8000 and Rule 9000 Series. 
See Securities Exchange Act Release Nos. 77241 (February 26, 2016), 
81 FR 11311 (March 3, 2016) (SR-NYSEMKT-2016-30). In 2018, the 
Commission approved NYSE National's adoption of the NYSE National 
Rule 10.8000 and Rule 10.9000 Series based on the NYSE American and 
FINRA Rule 8000 and Rule 9000 Series. See Securities Exchange Act 
Release No. 83289 (May 17, 2018), 83 FR 23968 (May 23, 2018) (SR-
NYSENat-2018-02). In 2019, NYSE Arca adopted the NYSE Arca Rule 
10.8000 and 10.9000 Series based on the NYSE American Rule 8000 and 
Rule 9000 Series. See Securities Exchange Act Release No. 85639 
(April 12, 2019), 84 FR 16346 (April 18, 2019) (SR-NYSEArca-2019-15) 
(``Release No. 85639'').
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    First, Rule 9110 (Application) sets forth the types of proceedings 
to which the Rule 9000 Series applies and provides that, in performing 
the functions under the Rule 9000 Series, the Chief Regulatory Officer 
(``CRO'') and Regulatory Staff shall function independently of the 
commercial interests of the Exchange and the commercial interests of 
the member organizations. In order to strengthen and further safeguard 
the regulatory independence of the Exchange's CRO and Regulatory Staff, 
the Exchange proposes to add the following sentence to the end of the 
subsection:

    No member of the Board of Directors or non-Regulatory Staff may 
interfere with or attempt to influence the process or resolution of 
any pending investigation or disciplinary proceeding.

    The proposed sentence is based on the version of Rule 9110(a) 
adopted by the Exchange's affiliates NYSE Arca and NYSE National, which 
contains an identical sentence.\6\
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    \6\ See NYSE Arca Rule 10.9110(a); NYSE National Rule 
10.9110(a).
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    Second, Rule 9120 (Definitions) sets forth the definitions 
applicable to the Rule 9000 Series. Under the definition of 
``Interested Staff'' in Rule 9120(t)(B)(iii), the Exchange would add an 
``s'' in parentheses after ``supervise'' to conform to NYSE Arca Rule 
10.9120(t)(B)(iii).
    Third, Rule 9268 (Decision of Hearing Panel or Extended Hearing 
Panel) sets forth the timing and contents of a decision of a Hearing 
Panel or Extended Hearing Panel and the procedures for a dissenting 
opinion, service of the decision, and requests for review. Subsection 
(e)(2) provides that a majority decision with respect to an Exchange 
member that is an affiliate of the Exchange shall constitute final 
disciplinary action of the Exchange for purposes of SEC Rule 19d-
1(c)(1) and may not be reviewed pursuant to Rule 9310, which governs 
review by the Exchange's Board of Directors.
    In order to conform Rule 9268(e)(2) with the changes proposed to 
Rule 9310(a) discussed below, and in order to further harmonize the 
Exchange's disciplinary rules with its affiliates, the Exchange 
proposes to delete the phrase ``an Exchange member that is'' before 
``an affiliate of the Exchange'' and add the phrase ``as such term is 
defined in Rule 12b-2 under the Exchange Act'' after ``an affiliate of 
the Exchange.''
    The proposed change would conform Rule 9268(e)(2) with NYSE Arca 
Rule 10.9268(e)(2), which contains the phrase ``an affiliate of the 
Exchange as such term is defined in Rule 12b-2 under the Exchange 
Act.'' Utilizing the definition of affiliate set forth in in Rule 12b-2 
under the Exchange Act would not diminish the current scope or 
application of the Rule since the proposed definition of affiliate 
would continue to encompass member and member organizations. Moreover, 
the proposed change would add clarity and transparency to the 
Exchange's rules by using a definition of affiliate in the

[[Page 21036]]

federal securities laws that encompasses both members and member 
organizations, thereby avoiding potential confusion since Rule 
9268(e)(2) currently uses ``member.''
    Fourth, Rule 9310 governs review by the Exchange's board of 
directors. The Exchange proposes the following changes to Rule 9310.
    In the first sentence of Rule 9310(a)(1)(A), the Exchange proposes 
to replace ``neither Party'' with ``none of the aforementioned 
persons.'' The proposed change is based on the version of Rule 
9310(a)(1)(A) adopted by the Exchange's affiliates, which prohibits the 
persons set forth in the rule, and not just Parties, from requesting 
review by the affiliate's board of directors of a decision concerning 
an affiliate of that exchange.\7\ The proposed change would thereby 
further ensure that decisions concerning an Exchange affiliate are 
final and cannot be appealed to the Exchange Board of Directors.
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    \7\ See NYSE American Rule 9310(a)(1)(A); NYSE Arca Rule 10. 
9310(a)(1)(A); & NYSE National Rule 10.9310(a)(1)(A).
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    Similar to the changes discussed above to Rule 9268(e)(2), the 
Exchange would delete references to an Exchange member or member 
organization and instead refer to an affiliate of the Exchange as that 
term is defined in Rule 12b-2 under the Exchange Act in Rules 
9310(a)(1)(A), 9310(a)(1)(B)(i) and 9310(a)(1)(B)(ii).
    The proposed changes would harmonize Rule 9310 with NYSE Arca Rule 
9310, which contains the phrase ``an affiliate of the Exchange as such 
term is defined in Rule 12b-2 under the Exchange Act,'' and with the 
proposed changes to Rule 9268 discussed above, which would use the same 
terms. Further, utilizing the definition of affiliate set forth in in 
Rule 12b-2 under the Exchange Act would not diminish the current scope 
or application of the rule since the proposed definition of affiliate 
would continue to encompass member and member organizations. Finally, 
by harmonizing Rule 9310 with Rule 9268, the proposal would add clarity 
and transparency to the Exchange's rules and further ensure that final 
determinations involving Exchange affiliates cannot be appealed to its 
Board of Directors.
    Fifth, Rule 9560 (Expedited Client Suspension Proceeding) sets 
forth procedures for expedited suspension hearings. The Exchange 
proposes the following changes to Rule 9560.
    The Exchange proposes to delete ``Client'' in the Rule 9560's 
heading. The word does not appear in the Rule 9560 heading adopted by 
any of the Exchange's affiliates.\8\ The proposed change would work no 
substantive change to Rule 9560, which would otherwise remain 
unchanged.
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    \8\ See NYSE American Rule 9560; NYSE Arca Rule 10.9560; & NYSE 
National Rule 10.9560.
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    The Exchange proposes to add ``or Panelist'' after ``Hearing 
Officer'' in three places in subsection (b)(2) and in two places in 
subsection (c)(1) of Rule 9560. The proposed change would conform the 
Exchange's rule with the analogous NYSE Arca and NYSE National 
provisions.\9\ The proposed change to provide for the potential 
disqualification of Panelists in addition to Hearing Officers would 
contribute to fairer procedures consistent with Section 6(b)(7) of the 
Act.\10\
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    \9\ See NYSE Arca Rule 10.9560(b)(2) & (c)(1) & NYSE National 
Rule 10.9560(b)(2) & (c)(1). See Release No. 85639, 84 FR at 16372, 
n. 69 (noting that the NYSE would submit a rule filing to harmonize 
Rule 9560 with NYSE Arca Rule 10.9560 providing for the recusal of 
both Hearing Officers and Panelists in expedited suspension 
hearings).
    \10\ 15 U.S.C. 78f(b)(7).
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    In Rule 9560(b)(2), the Exchange proposes two changes that would 
conform to the rules of the Exchange's affiliate NYSE Arca. First, the 
Exchange would delete the ``(a)'' following the reference to Rule 9233. 
The reference to subsection (a) does not appear in NYSE Arca Rule 
10.9560(b)(2). The Exchange also believes that the correct reference 
should be to the entire rule. Second, the Exchange proposes to add a 
reference to Rule 9234, which governs recusal and disqualification of 
Panelists, following the reference to Rule 9233. The proposed change 
would reflect the addition of Panelists to Rule 9560 and conform to 
NYSE Arca Rule 10.9560(b)(2), which also refers to NYSE Arca Rule 
10.9234.
    Finally, the Exchange proposes to replace ``Chairman of the Hearing 
Panel'' with ``Hearing Officer'' in subsections (c)(1), (c)(2), (d)(1) 
and (e) of Rule 9560.
    Rule 9560 was adopted in 2017 based on Cboe BZX Exchange, Inc. 
(``Cboe BZX'') Rule 8.17 and The Nasdaq Stock Market LLC (``Nasdaq'') 
Rule 9400 in order for the Exchange to have consistent rules for 
issuing cease and desist orders on an expedited basis to halt certain 
disruptive and manipulative quoting and trading activity.\11\ Both the 
Cboe BZX and Nasdaq rule use the phrase ``Chairman of the Hearing 
Panel'' in subsections (c)(1), (c)(2), (d)(1) and (e), which the 
Exchange adopted without change. ``Chairman of the Hearing Panel'' is 
not defined in the Exchange's rules and is only used in Rule 9560. Rule 
9120(r) defines ``Hearing Officer'' as ``an employee of FINRA who is an 
attorney and who is appointed by the Chief Hearing Officer to act in an 
adjudicative role and fulfill various adjudicative responsibilities and 
duties described in the Rule 9200 Series regarding disciplinary 
proceedings, the Rule 9550 Series regarding expedited proceedings, and 
the Rule 9800 Series regarding temporary cease and desist proceedings 
brought against member organizations and covered persons.'' The 
Exchange believes that the correct reference in Rules 9560(c)(1), 
(c)(2), (d)(1) and (e) should be ``Hearing Officer.'' \12\
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    \11\ See Securities Exchange Act Release Nos. 80807 (May 30, 
2017), 82 FR 25856 (June 5, 2017) (SR-NYSE-2017-21); see generally 
Cboe BZX Rules 12.15 & 8.17 & Nasdaq Rule 2170 & 9400.
    \12\ The Exchange proposes to make similar changes to NYSE Arca 
Rules 10.9560(c)(1), (c)(2), (d)(1) and (e) that refer to ``Chief 
Hearing Officer'' and that should refer instead to ``Hearing 
Officer.''
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2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Securities Exchange Act of 1934 (the ``Act''),\13\ in general, and 
furthers the objectives of Section 6(b)(5),\14\ 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. In addition, 
the Exchange believes that the proposed rule changes further the 
objectives of Section 6(b)(7) of the Act,\15\ in particular, in that 
these changes provide for fair procedures for the disciplining of 
members and persons associated with members, the denial of membership 
to any person seeking membership therein, the barring of any person 
from becoming associated with a member thereof, and the prohibition or 
limitation by the Exchange of any person with respect to access to 
services offered by the Exchange or a member thereof.
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    \13\ 15 U.S.C. 78f(b).
    \14\ 15 U.S.C. 78f(b)(5).
    \15\ 15 U.S.C. 78f(b)(7).
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    The Exchange believes that the proposed rule change would 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 because the proposed changes would add clarity, 
transparency and consistency to the Exchange's disciplinary rules. The 
Exchange believes that market participants would

[[Page 21037]]

benefit from the increased clarity, thereby reducing potential 
confusion. Similarly, the Exchange believes that the proposed changes 
would also make the Exchange's disciplinary rules more consistent with 
the rules of its affiliates, thereby ensuring that persons subject to 
the Exchange's jurisdiction, regulators, and the investing public can 
more easily navigate and understand the Exchange's rules. Further, the 
Exchange believes that the proposed changes are designed to provide a 
fair procedure for the disciplining of members and persons associated 
with members, the denial of membership to any person seeking membership 
therein, the barring of any person from becoming associated with a 
member thereof, and the prohibition or limitation by the Exchange of 
any person with respect to access to services offered by the Exchange 
or a member thereof, thereby furthering the objectives of Section 
6(b)(7) of the Act.\16\ Specifically, the Exchange believes that adding 
text to Rule 9110 to strengthen and further safeguard the regulatory 
independence of the Exchange's CRO and Regulatory Staff and providing 
for the recusal of Panelists in addition to Hearing Officers in 
expedited proceedings under Rule 9560 would continue to provide fair 
procedures for the suspending and disciplining of members and 
associated persons consistent with and in furtherance of the objectives 
of the objectives of Section 6(b)(7) of the Act.\17\
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    \16\ Id.
    \17\ Id.
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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. The proposed rule change is 
not intended to address competitive issues but rather is concerned 
solely with amending the Exchange's disciplinary rules to further 
harmonize those rules with the disciplinary rules of its affiliates and 
to correct inconsistencies.

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

    Because the foregoing 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 for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \18\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\19\
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    \18\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \19\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory 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.
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    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. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule should be approved or disapproved.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-NYSE-2020-33 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSE-2020-33. 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 (http://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 10:00 a.m. and 
3:00 p.m. Copies of the filing also will be available for inspection 
and copying at the principal office of the Exchange. All comments 
received will be posted without change. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-NYSE-2020-33 and should be submitted on 
or before May 6, 2020.

    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).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-07903 Filed 4-14-20; 8:45 am]
 BILLING CODE 8011-01-P