Document ID: SEC-2019-0293-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Chicago, Inc.
Posted Date: 2019-03-18T04:00Z

[Federal Register Volume 84, Number 52 (Monday, March 18, 2019)]
[Notices]
[Pages 9854-9856]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-04949]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-85297; File No. SR-NYSECHX-2019-03]

Self-Regulatory Organizations; NYSE Chicago, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Adopt 
Rules To Establish a Rule Numbering Framework in Connection With the 
Migration of the Exchange to the NYSE Pillar Platform

March 12, 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 March 6, 2019, the NYSE Chicago, Inc. (the ``NYSE 
Chicago'' or the ``Exchange'') filed with the Securities and Exchange 
Commission (the ``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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to adopt rules to establish a rule numbering 
framework in connection with the migration of the Exchange to the NYSE 
Pillar 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 adopt rules to establish a rule numbering 
framework in connection with the migration of the Exchange to the NYSE 
Pillar platform (``Pillar''). The Exchange proposes to establish this 
framework in order to facilitate the amendment of its rule book as the 
Exchange migrates to Pillar.
    In July 2018, the Exchange and its direct parent company were 
acquired by NYSE Group, Inc. (``Transaction'').\4\ As a result of the 
Transaction, the Exchange became part of a corporate family including 
five separate registered national securities exchanges.\5\ Following 
the Transaction, the Exchange continued to operate as a separate self-
regulatory organization and with rules, membership rosters and listings 
distinct from the rules, membership rosters and listings of the other 
NYSE Exchanges.
---------------------------------------------------------------------------

    \4\ See Exchange Act Release No. 83635 (July 13, 2018), 83 FR 
34182 (July 19, 2018) (SR-CHX-2018-004); see also Exchange Act 
Release No. 83303 (May 22, 2018), 83 FR 24517 (May 29, 2018) (SR-
CHX-2018-004).
    \5\ The Exchange has four registered national securities 
exchange affiliates: New York Stock Exchange LLC (``NYSE''), NYSE 
Arca, Inc. (``NYSE Arca''), NYSE National, Inc. (``NYSE National'') 
and NYSE American LLC (``NYSE American'') (collectively, the 
Exchange, NYSE, NYSE Arca, NYSE National, and NYSE American, the 
``NYSE Exchanges'').
---------------------------------------------------------------------------

    In connection with the Transaction, the Exchange anticipates 
migrating trading of equities to Pillar, which is an integrated trading 
technology platform designed to use a single specification for 
connecting to the equities and options markets operated by the NYSE 
Exchanges, in the second half of 2019. To that end, the Exchange 
proposes to adopt the rule numbering framework of the rules governing 
the NYSE National equities market, which are based on the rule 
numbering framework of the NYSE Arca equities market.\6\ The Exchange 
believes that if it and its affiliates are operating on the same 
trading platform, using the same rule numbering scheme across all 
markets using the Pillar platform would make it easier for members, the 
public and the Commission to navigate the rules of each exchange. The 
Exchange therefore proposes to adopt a framework of rule numbering that 
is based on the current rules governing the NYSE National equities 
market: NYSE National Rules 0 through 13.
---------------------------------------------------------------------------

    \6\ See Securities Exchange Act Release No. 81782 (September 30, 
2017), 82 FR 46586 (October 5, 2018) (SR-NYSENat-2017-04). NYSE and 
NYSE American also filed rule changes to use this rule framework for 
their equities Pillar rules. See Securities Exchange Act Release 
Nos. 76803 (December 30, 2015), 81 FR 536 (January 6, 2016) (SR-
NYSE-2015-67) (Notice of filing and immediate effectiveness of 
proposed rule change) and 79242 (November 5, 2016), 81 FR 79081 
(November 10, 2016) (SR-NYSEMKT-2016-97) (Notice of filing and 
immediate effectiveness of proposed rule change).
---------------------------------------------------------------------------

    As proposed, this framework would use the current rule numbering 
scheme of the rules governing the NYSE National equities market, and 
would consist of the following proposed rules:

RULE 0 REGULATION OF THE EXCHANGE AND PARTICIPANTS
RULE 1 DEFINITIONS
RULE 2 TRADING PERMITS
RULE 3 ORGANIZATION AND ADMINISTRATION
RULE 4 RESERVED
RULE 5 TRADING ON UNLISTED TRADING PRIVILEGES
RULE 6 ORDER AUDIT TRAIL
RULE 7 EQUITIES TRADING
RULE 8 RESERVED
RULE 9 RESERVED
RULE 10 DISCIPLINARY PROCEEDINGS, OTHER HEARINGS AND APPEALS
RULE 11 BUSINESS CONDUCT
RULE 12 ARBITRATION
RULE 13 LIABILITY OF DIRECTORS AND EXCHANGE

    The Exchange proposes to establish this framework in order to 
facilitate the amendment of its rule book.

[[Page 9855]]

Additionally, and as described in greater detail below, the Exchange 
proposes to (i) relocate rules relating to compliance with National 
Market System Plan Governing the Consolidated Audit Trail (the ``CAT 
NMS Plan''),\7\ which are currently set forth in Article 23, Rules 1 
through 12 (the ``Compliance Rules''), to proposed Rules 6.6800 through 
6.6895, without any substantive changes to the current rules other than 
updating cross references to reflect the proposed renumbered Compliance 
Rules; and (ii) relocate rules relating to potential disputes related 
to CAT Fees charged to Industry Members (``Fee Dispute Rule''), which 
are currently set forth in Article 23, Rule 13, to proposed Rule 
6.6900, without any substantive changes to the current rules other than 
updating a cross reference to reflect the proposed renumbered Fee 
Dispute Rule. None of these are novel rules and are simply renumbered 
Exchange rules (the Compliance Rules and Fee Dispute Rule).
---------------------------------------------------------------------------

    \7\ The CAT NMS Plan is designed to create, implement and 
maintain a consolidated audit trail (``CAT'') that would capture 
customer and order event information for orders in NMS Securities 
and OTC Equity Securities, across all markets, from the time of 
order inception through routing, cancellation, modification, or 
execution in a single consolidated data source. Each Participant of 
the Plan is required to enforce compliance by its Industry Members, 
as applicable, with the provisions of the Plan, by adopting a 
Compliance Rule applicable to their Industry Members.
---------------------------------------------------------------------------

Proposed Rule 6.6800 Series (Compliance Rules)
    As noted above, the Exchange proposes to renumber its existing 
Compliance Rules relating to the CAT NMS Plan under Rule 6 without any 
substantive changes other than updating cross references to reflect the 
proposed renumbered Compliance Rules. The Compliance Rules require 
Industry Members to comply with the provisions of the CAT NMS Plan.\8\ 
The Compliance Rules include twelve rules covering the following areas: 
(1) Definitions; (2) clock synchronization; (3) Industry Member data 
reporting; (4) customer information reporting; (5) Industry Member 
information reporting; (6) time stamps; (7) clock synchronization rule 
violations; (8) connectivity and data transmission; (9) development and 
testing; (10) recordkeeping; (11) timely, accurate and complete data; 
and (12) compliance dates.
---------------------------------------------------------------------------

    \8\ Unless otherwise specified, capitalized terms used are 
defined as set forth herein, the CAT Compliance Rule Series or in 
the CAT NMS Plan.
---------------------------------------------------------------------------

    In moving the Compliance Rules to Rule 6, the Exchange proposes to 
renumber Article 23, Rules 1 through 12, as proposed Rules 6.6800 
through 6.6895, which is based in part on the NYSE National rule 
numbering for its Compliance Rules, but not make any substantive 
changes to those rules. The proposed sub-numbering for the Compliance 
Rules (i.e., 6800-6895) mirrors the rule-numbering framework for the 
CAT NMS Plan Compliance Rules on FINRA, NYSE, and NYSE National and 
includes a sub-section rule heading of ``Rule 6.6800 Consolidated Audit 
Trail Compliance Rule.''
Proposed Rule 6.6900 (Consolidated Audit Trail--Fee Dispute Resolution)
    As noted above, the Exchange proposes to renumber its existing Fee 
Dispute Rule relating to the CAT NMS Plan under Rule 6 without any 
substantive changes other than updating a cross reference to reflect 
the proposed renumbered Fee Dispute Rule.\9\ In moving the Fee Dispute 
Rule to Rule 6, the Exchange proposes to renumber Article 23, Rule 13, 
as proposed Rule 6.6900, which is based on the NYSE National rule 
numbering for its Fee Dispute Rule. Proposed Rule 6.6900 establishes 
the procedures for resolving potential disputes related to CAT Fees 
charged to Industry Members. Section 11.5 of the CAT NMS Plan requires 
participants to that plan to adopt rules requiring that disputes with 
respect to fees charged to Industry Members pursuant to the CAT NMS 
Plan be determined by the Operating Committee or Subcommittee. Section 
11.5 of the CAT NMS Plan also states that decisions by the Operating 
Committee or Subcommittee on such matters will be binding on Industry 
Members, without prejudice to the right of any Industry Member to seek 
redress from the SEC pursuant to SEC Rule 608 or in any other 
appropriate forum. The Commission has approved industry-wide rules that 
set forth such fee dispute procedures.\10\
---------------------------------------------------------------------------

    \9\ See Securities Exchange Act Release No. 81616 (September 14, 
2017), 82 FR 44010 (September 20, 2017) (SR-CHX-2017-11; SR-FINRA-
2017-20) (Order Approving Proposed Rule Changes to Adopt a CAT Fee 
Dispute Resolution Process).
    \10\ See Securities Exchange Act Release No. 81500 (August 30, 
2017), 82 FR 42143 (September 6, 2017) (SR-BatsBYX-2017-13; SR-
BatsBZX-2017-39; SR-BatsEDGA-2017-14; SR-BatsEDGX-2017-24; SR-BOX-
2017-19; SR-CBOE-2017-043; SR-IEX-2017-21; SR-ISE-2017-52; SR-MRX-
2017-08; SR-MIAX-2017-24; SR-NASDAQ-2017-059; SR-BX-2017-029; SR-
GEMX-2017-059; SR-PHLX-2017-47; SR-NYSE-2017-24; SR-NYSEArca-2017-
60; SR-NYSEMKT-2017-31) (Order Approving Proposed Rule Changes to 
Adopt a CAT Fee Dispute Resolution Process).
---------------------------------------------------------------------------

    Proposed Rule 6.6900 sets forth the Exchange's procedures to 
resolve disputes initiated by an Industry Member with respect to CAT 
fees and is based on NYSE National Rule 6.6900 specifically, and the 
rules of other exchanges generally, without any substantive 
differences. The proposed sub-numbering for the Fee Dispute Rule (i.e., 
6900) mirrors the rule-numbering framework for the CAT NMS Plan Fee 
Dispute Rule on FINRA, NYSE, and NYSE National.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Securities Exchange Act of 1934 (the ``Act''),\11\ in general, and 
furthers the objectives of Section 6(b)(1),\12\ in particular, in that 
it enables the Exchange to be so organized as to have the capacity to 
be able to carry out the purposes of the Exchange Act and to comply, 
and to enforce compliance by its members and persons associated with 
its members, with the provisions of the Exchange Act, the rules and 
regulations thereunder, and the rules of the Exchange.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(1).
---------------------------------------------------------------------------

    Specifically, the proposed rule change to adopt a rule numbering 
framework is a non-substantive change that does not impact trading on 
the Exchange. The Exchange believes that the proposed rule change would 
enable the Exchange to continue to be so organized as to have the 
capacity to carry out the purposes of the Exchange Act and comply and 
enforce compliance with the provisions of the Exchange Act by its 
members and persons associated with its members, because adopting a 
common framework of rule numbers for the equity markets that operate on 
the Pillar trading platform will better allow members, regulators, and 
the public to navigate the Exchange's rulebook and better understand 
how equity trading is conducted on the Exchange.

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 designed to address any competitive issue but rather to adopt a new 
rule numbering framework to support the Exchange's amendment of its 
rule book as the Exchange migrate to the Pillar trading platform. The 
Exchange believes that the proposed rule change would promote 
consistency and transparency on both the Exchange and its affiliates, 
the NYSE Exchanges, thus making the Exchange's rules easier to 
navigate.

[[Page 9856]]

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 \13\ and Rule 19b-4(f)(6) thereunder.\14\ 
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.
---------------------------------------------------------------------------

    \13\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \14\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    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) \15\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \15\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

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-NYSECHX-2019-03 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-NYSECHX-2019-03. 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-NYSECHX-2019-03 and should be submitted 
on or before April 8, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
---------------------------------------------------------------------------

    \16\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-04949 Filed 3-15-19; 8:45 am]
 BILLING CODE 8011-01-P