Document ID: SEC-2021-1505-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange, LLC
Posted Date: 2021-10-28T04:00Z

[Federal Register Volume 86, Number 206 (Thursday, October 28, 2021)]
[Notices]
[Pages 59774-59776]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-23532]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-93416; File No. SR-NYSE-2021-61]

Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend NYSE Rule 7.31

October 25, 2021.
    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 October 13, 2021, 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 Exchange. 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 NYSE Rule 7.31 to establish a 
minimum dollar threshold into its rule for Limit Order Price 
Protection. 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 NYSE Rule 7.31 (Orders and 
Modifiers) to establish a minimum dollar threshold in its rule for 
Limit Order Price Protection.
    Rule 7.31(a)(2)(B) (``Limit Order Price Protection'') describes the 
price protection mechanism for Limit Orders. Currently, the rule 
provides that a Limit Order to buy (sell) will be rejected if it is 
priced at or above (below) a specified percentage away from the 
National Best Offer (National Best Bid) (``NBO'' and ``NBB,'' 
respectively).\4\
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    \4\ For securities with a reference price between $0.00 and 
$25.00, the specified percentage is 10%; for securities with a 
reference price between $25.01 and $50.00, the specified percentage 
is 5%; and for securities with a reference price greater than 
$50.00, the specified percentage is 3%.
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    The Exchange proposes to amend Rule 7.31(a)(2)(B) to introduce a 
minimum dollar threshold of $0.15 into the Limit Order Price Protection 
calculation for lower-priced securities. Accordingly, the proposed rule 
would provide that a Limit Order to buy (sell) would be rejected if it 
was priced at or above (below) the greater of $0.15 or a specified 
percentage away from the NBO (NBB).
    The Exchange believes that the introduction of this minimum dollar 
threshold would enhance the Limit Order Price Protection mechanism for 
securities with a reference price below $1.50 because using the current 
10% multiplier for such securities would result in too narrow of a 
price protection mechanism. Thus, the proposed rule change would 
encourage price continuity, specifically in lower-priced illiquid 
securities.
    This proposed minimum dollar threshold of $0.15 is the same minimum 
dollar threshold that currently exists in the Limit Order Price 
Protection rules of the Exchange's affiliate exchanges NYSE American 
LLC (``NYSE American''), NYSE Arca, Inc. (``NYSE Arca''), NYSE Chicago, 
Inc. (``NYSE Chicago''), and NYSE National, Inc (``NYSE National'').\5\
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    \5\ See NYSE American Rule 7.31E(a)(2)(B); NYSE Arca Rule 7.31-
E(a)(2)(B); NYSE Chicago Rule 7.31(a)(2)(B); and NYSE National Rule 
7.31(a)(2)(B). See also Securities Exchange Act Release Nos. 81943 
(October 25, 2017), 82 FR 50475 (October 31, 2017) (SR-NYSAMER-2017-
25) (adding $0.15 minimum dollar threshold to Limit Order Price 
Protection in NYSE American Rule 7.31E(a)(2)(B)); 82004 (November 2, 
2017), 82 FR 51890 (November 8, 2017) (SR-NYSEArca-2017-126) (adding 
same to NYSE Arca Rule 7.31-E(a)(2)(B)); 87264 (October 9, 2019), 84 
FR 55345 (October 16, 2019) (SR-NYSECHX-2019-08) (regarding NYSE 
Chicago Rule 7.31(a)(2)(B)); 83289 (May 17, 2018), 83 FR 23968 (May 
23, 2018) (SR-NYSENAT-2018-02) (regarding NYSE National Rule 
7.31(a)(2)(B)).

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[[Page 59775]]

Implementation
    The Exchange anticipates implementing the proposed change in 
November 2021 and will announce the timing of such changes by Trader 
Update.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\6\ in general, and with Section 
6(b)(5),\7\ 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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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed change adding a $0.15 
minimum price threshold to Rule 7.31(a)(2)(B) 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 change is based on the Limit Order Price 
Protection rules currently in effect on NYSE American, NYSE Arca, NYSE 
Chicago, and NYSE National, and therefore is not novel.\8\ The Exchange 
further believes that the proposed change would enhance the Exchange's 
Limit Order Price Protection mechanism, which protects from aberrant 
prices, thus improving continuous trading and price discovery. In 
addition, the proposal to enhance Limit Order Price Protection by 
adding a minimum dollar threshold would assist with the maintenance of 
fair and orderly markets because such mechanisms protect investors from 
potentially receiving executions away from the prevailing market prices 
at any given time.
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    \8\ See supra note 4.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange believes that the proposed rule change will 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 
intended to address competitive issues but rather would provide for a 
more effective Limit Order Price Protection mechanism, specifically for 
lower-priced securities.

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) of the Act \9\ and Rule 19b-
4(f)(6) thereunder.\10\
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b 4(f)(6). In addition, Rule 19b 4(f)(6)(iii) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change, along 
with a brief description and 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. 
The Exchange has satisfied this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) \11\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\12\ the Commission 
may 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 to allow the 
Exchange to make the proposed enhancement to its Limit Order Price 
Protection mechanism when the technology associated with this proposed 
change is available, which is anticipated to be less than 30 days from 
the date of this filing.
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    \11\ 17 CFR 240.19b-4(f)(6).
    \12\ 17 CFR 240.19b-4(f)(6)(iii).
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    The Exchange represents that the proposed change would assist with 
the maintenance of fair and orderly markets by protecting investors 
from potentially receiving executions away from the prevailing market 
prices at any given time. And the Commission notes that the proposed 
minimum dollar threshold is the same minimum dollar threshold that 
currently exists in the Limit Order Price Protection rules of the 
Exchange's affiliate exchanges.\13\ The Commission therefore believes 
that waiver of the 30-day operative delay is consistent with the 
protection of investors and the public interest. Accordingly, the 
Commission waives the 30-day operative delay and designates the 
proposal operative upon filing.\14\
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    \13\ See supra note 5 and accompanying text.
    \14\ For purposes only of waiving the 30-day operative delay, 
the Commission has 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 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 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 [email protected]. Please include 
File Number SR-NYSE-2021-61 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-2021-61. 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

[[Page 59776]]

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-2021-61, and should be submitted on or before November 18, 2021.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-23532 Filed 10-27-21; 8:45 am]
BILLING CODE 8011-01-P