Document ID: SEC-2018-1560-0001
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 51020-51022]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-21909]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-84349; File No. SR-NYSE-2018-42]

Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend Rule 7.14, Clearance and Settlement

October 3, 2018.
    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 September 20, 2018, New York Stock Exchange LLC (``NYSE'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I, II, 
and III 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 7.14, Clearance and Settlement, 
to remove language that is inconsistent with the Exchange's Price List. 
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 amend Rule 7.14, Clearance and Settlement, 
to remove language that was inadvertently included when the rule was 
first adopted and that is inconsistent with the Exchange's Price List. 
The Exchange adopted Rule 7.14 as part of a proposed rule change to 
adopt rules for trading UTP securities on Pillar, the Exchange's new 
trading technology platform.\4\ Rule 7.14 was based on similar rules of 
its affiliate, NYSE Arca, Inc. (``NYSE Arca'') Rule 7.14-E and adopted 
by the Exchange without any substantive differences.\5\ Rule 7.14 
applies only to trading in UTP Securities. Paragraph (c) of Rule 7.14 
states that ``[e]ach clearing firm must be admitted to the Exchange as 
a member organization by meeting the qualification requirements set 
forth in Rule 2.'' Paragraph (c) of Rule 7.14 also includes language 
that exempts clearing firms from paying the regular member organization 
fee \6\ where that clearing firm became a member organization for the 
sole purpose of acting as a clearing firm on the Exchange. This 
language was inadvertently included when Rule 7.14 was adopted and is 
inconsistent with the Exchange's Price List, which does not include 
language exempting clearing only member organizations from the fee's 
application.\7\ The Exchange notes that no such exemption exists in the 
Exchange's rule governing the trading of NYSE-listed securities. 
Therefore, the Exchange proposes to remove the following phrase from 
the first sentence of Exchange Rule 7.14(c): ``provided, however, if 
the clearing firm has become a member organization for the sole purpose 
of acting as a clearing firm on the Exchange, such clearing firm need

[[Page 51021]]

not pay the regular member organization fee''.
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    \4\ See Securities Exchange Act Release Nos. 76803; (December 
30, 2015), 81 FR 536 (January 6, 2016) (SR-NYSE-2015-67); and 81225 
(July 27, 2017), 82 FR 36033 (August 2, 2017) (SR-NYSE-2017-35).
    \5\ Id.
    \6\ The ``regular membership organization fee'' referred to in 
Exchange Rule 7.14(c) is referred to as a Trading Licenses fee in 
the Exchange's Price List.
    \7\ In accordance with the Price list, the Exchange charges all 
member organizations a Trading License fee on an annual basis. All 
member organizations with 10 or more trading licenses are charged a 
fee or $50,000 for the first trading license held by the member 
organization unless they qualify for a reduced rate. See the 
Exchange's Price List on pages 33-34 available at https://www.nyse.com/publicdocs/nyse/markets/nyse/NYSE_Price_List.pdf (dated 
September 4, 2018).
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2. Statutory Basis
    The Exchange believes that the proposal is consistent with Section 
6(b) of the Act,\8\ in general, and furthers the objectives of Sections 
6(b)(5) of the Act,\9\ in particular, because it is designed to promote 
just and equitable principles of trade, remove impediments to, and 
perfect the mechanisms 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 rule change would remove 
impediments to, and perfect the mechanisms of, a free and open market 
and a national market system and, in general, protect investors and the 
public interest because it would remove language from Exchange Rule 
7.14(c) that was inadvertently included when the rule was adopted and 
that is inconsistent with the Exchange's Price List. The proposed rule 
change would delete language from Rule 7.14(c) that incorrectly exempts 
clearing only member organizations from the Trading License fee and 
would, therefore, remove an inconsistency between Rule 7.14 and the 
Exchange's Price List. Rule 7.14 applies only to trading in UTP 
Securities. No member organizations currently acts solely as a clearing 
firm for UTP Securities and, therefore, no member organization would be 
affected by the proposed rule change. The proposed rule change should 
avoid potential confusion about the applicability of the Trading 
License fee should a member organization seek to act solely as a 
clearing firm on the Exchange in UTP Securities. Lastly, the Exchange 
notes that no such exemption exists in the Exchange's rule governing 
the trading of NYSE-listed securities. Therefore, the proposed rule 
change would allow for the consistent application of the Trading 
License fee among member organizations that act solely as clearing 
firms in NYSE-listed and UTP securities.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
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    The Exchange also believes that the proposed rule change is 
consistent with Sections 6(b)(4) of the Act \10\ because it provides 
for the equitable allocation of reasonable dues, fees, and other 
charges among its members, issuers and other persons using its 
facilities and does not unfairly discriminate between customers, 
issuers, brokers or dealers. The proposed rule change is equitable, 
reasonable, and not unfairly discriminatory because it would clarify 
the application of the Trading License fee and apply it equally to 
member organizations that act solely as a clearing firm in UTP and 
NYSE-listed securities.
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    \10\ 15 U.S.C. 78f(b)(4).
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    For these reasons, the Exchange believes that the proposal is 
consistent with the Act.

B. Self-Regulatory Organization's Statement on Burden on Competition

    In accordance with Section 6(b)(8) of the Act,\11\ the Exchange 
believes that the proposed rule change would not 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 designed to have a 
competitive impact. It is simply intended to amend the Exchange's rules 
to remove language from Exchange Rule 7.14(c) that was inadvertently 
included when the rule was adopted and that is inconsistent with the 
Exchange's Price List. It is not intended to address any competitive 
issues or to attract additional order flow the Exchange.
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    \11\ 15 U.S.C. 78f(b)(8).
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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 \12\ and Rule 19b-4(f)(6) thereunder.\13\ 
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.
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    \12\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \13\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) \14\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b4(f)(6)(iii),\15\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest.
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    \14\ 17 CFR 240.19b-4(f)(6).
    \15\ 17 CFR 240.19b-4(f)(6)(iii).
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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 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) \16\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \16\ 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

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-NYSE-2018-42 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-2018-42. 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

[[Page 51022]]

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-2018-42, and should be submitted on or before October 31, 2018.
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    \17\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-21909 Filed 10-9-18; 8:45 am]
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