Document ID: SEC-2019-1829-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange LLC
Posted Date: 2019-12-06T05:00Z

[Federal Register Volume 84, Number 235 (Friday, December 6, 2019)]
[Notices]
[Pages 66953-66955]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-26305]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-87645; File No. SR-NYSE-2019-65]

Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend Rule 71

December 2, 2019.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that on November 18, 2019, New York Stock Exchange LLC (``NYSE'' 
or the ``Exchange'') filed with the Securities and Exchange Commission 
(the ``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 71 to remove the preamble that 
such rule is not applicable to trading on the Pillar trading platform. 
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 71 (Precedence of Highest Bid 
and Lowest Offer) to remove the preamble that such rule is not 
applicable to trading on the Pillar trading platform.
    Rule 71 is applicable only to manual trading on the Trading Floor 
\4\ and governs bids and offers verbally represented by Floor brokers 
at the point of sale. Paragraph (a) of that rule provides that all bids 
made and accepted, and all offers made and accepted, in accordance with 
Exchange Rules shall be binding. Accordingly, if a Floor broker bids or 
offers at the point of sale and another member accepts that bid or 
offer, the original bid or offer is binding. With respect to the close 
of trading, because bids and offers represented orally by a Floor 
broker must be represented at the point of sale by the end of Core 
Trading Hours,\5\ in accordance with Exchange rules, the last 
representation of verbal interest by the end of Core Trading Hours is 
binding on a Floor broker and cannot be modified or cancelled after the 
end of Core Trading Hours.\6\
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    \4\ ``Trading Floor'' is defined as the restricted-access 
physical areas designated by the Exchange for the trading of 
securities. See Rule 6A.
    \5\ See Rule 7.34(a)(2)(B).
    \6\ Rule 7.35B(a)(1)(C) provides an exception to this 
requirement because, subject to Floor Official approval, 
electronically-entered Floor Broker Interest can be cancelled in 
full to correct a Legitimate Error.
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    In 2017, in anticipation of the transition to the Pillar trading 
platform, the Exchange amended Rule 71 to include a preamble that it 
was not applicable to trading UTP Securities \7\

[[Page 66954]]

on the Pillar trading platform.\8\ At that time, it was contemplated 
that UTP Securities would not be eligible for Floor-based trading. 
Accordingly, it was appropriate at that time that a rule governing 
Floor-based trading conduct would not be applicable to trading on 
Pillar. The Exchange did not amend the preamble to Rule 71 when UTP 
Securities began trading on Pillar, which included Floor-based crossing 
transactions.\9\
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    \7\ The term ``UTP Securities'' means a security that is listed 
on a national securities exchange other than the Exchange and that 
trades on the Exchange pursuant to unlisted trading privileges.
    \8\ See Securities Exchange Act Release No. 81225 (July 27, 
2017), 82 FR 26033 (August 2, 2017) (SR-NYSE-2017-35) (Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change).
    \9\ See Securities Exchange Act Release No. 82945 (March 26, 
2018), 83 FR 13553, 13555 (March 29, 2018) (SR-NYSE-2017-36) 
(Approval Order).
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    In preparation for the transition of Exchange-listed securities to 
the Pillar trading platform, the Exchange amended the preambles to 
specified rules to provide that such rules were not applicable to 
trading on the Pillar trading platform.\10\ In other words, the 
preamble is applicable to both UTP Securities and Exchange-listed 
securities. The Exchange inadvertently included Rule 71 in this filing, 
and that preamble now provides that the rule is not applicable to 
trading on the Pillar trading platform, which includes Exchange-listed 
securities.
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    \10\ See Securities Exchange Act Release No. 85962 (May 29, 
2019), 84 FR 26188 (June 5, 2019) (SR-NYSE-2019-05) (Approval 
Order).
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    Because on the Pillar trading platform, Exchange-listed securities 
continue to be eligible for manual trading on the Trading Floor and UTP 
Securities are eligible for crossing transactions, the Exchange 
proposes to amend Rule 71 to delete the preamble in its entirety. The 
Exchange believes that deleting the preamble will promote transparency 
in Exchange rules that the rules governing manual trading on the 
Trading Floor have not changed even with the transition to the Pillar 
trading platform.
    To further promote transparency, the Exchange proposes to amend 
Rule 71 to specify that the bids and offers referenced in that Rule 
that are binding are ``verbal'' bids and offers. Orders entered 
electronically on the Exchange are governed by Rule 7P under the Pillar 
platform rules. The Exchange believes that this proposed amendment will 
promote transparency and clarity in Exchange rules that Rule 71 
addresses manual trading only, and is not applicable to the electronic 
entry of orders.
2. Statutory Basis
    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),\12\ 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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    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that deleting the preamble to Rule 71 would 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system because manual trading continues on 
the Exchange, even after the transition to the Pillar trading platform, 
and Rule 71 governs such trading. Removing the preamble would therefore 
promote clarity and transparency in Exchange rules that the rules 
governing manual trading on the Trading Floor have not changed with the 
transition to the Pillar trading platform. The Exchange further 
believes that amending the rule to add the term ``verbal'' before 
``bids'' and ``offers'' would remove impediments to and perfect the 
mechanism of a free and open market and a national market system 
because it would promote clarity and transparency in Exchange rules 
that Rule 71 concerns only manual trading, and is not applicable to the 
electronic entry of orders.

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 Exchange believes that 
the proposed rule change is not designed to address any competitive 
issues. Rather, the proposed rule change is designed to promote clarity 
and transparency that with the transition to the Pillar trading 
platform, the rules governing manual trading have not changed. 
Accordingly, the proposed rule change removes a preamble that was 
inadvertently included for securities that continue to be eligible for 
manual trading.

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 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) of the Act \13\ and Rule 19b-4(f)(6) thereunder.\14\
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    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written 
notice of its intent to file the proposed rule change, along with a 
brief description and the 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.
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    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \15\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \16\ permits the 
Commission to 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. According to 
the Exchange, waiver of the operative delay would clarify, without 
undue delay, that Rule 71 continues to be applicable to Floor-based 
trading. The Commission believes the waiver of the operative delay is 
consistent with the protection of investors and the public interest. 
Therefore, the Commission hereby waives the operative delay and 
designates the proposal operative upon filing.\17\
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    \15\ 17 CFR 240.19b-4(f)(6).
    \16\ 17 CFR 240.19b-4(f)(6)(iii).
    \17\ 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 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

[[Page 66955]]

the purposes of the Act. If the Commission takes such action, the 
Commission shall institute proceedings to determine whether the 
proposed rule change 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-2019-65 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-2019-65. 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-2019-65 and should be submitted on 
or before December 27, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-26305 Filed 12-5-19; 8:45 am]
 BILLING CODE 8011-01-P