Document ID: SEC-2022-1175-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE American, LLC
Posted Date: 2022-09-07T04:00Z

[Federal Register Volume 87, Number 172 (Wednesday, September 7, 2022)]
[Notices]
[Pages 54720-54727]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-19226]

=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-95646; File No. SR-NYSEAMER-2022-36]

Self-Regulatory Organizations; NYSE American, LLC.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Adopt New 
Rules 997NY, 997.1NY, 997.2NY and 997.3NY and Delete Paragraph (d) to 
Rule 957NY

August 31, 2022.
    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 August 23, 2022, NYSE American, LLC (``NYSE American'' 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.
---------------------------------------------------------------------------

    \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 new Rules 997NY, 997.1NY, 997.2NY 
and 997.3NY regarding certain position transfers, including off-floor 
transfers. The Exchange also proposes to delete paragraph (d) to Rule 
957NY (Reporting Duties). 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 purpose of this rule change is to adopt new Rules 997NY, 
997.1NY, 997.2NY, and 997.3NY regarding certain position transfers, 
including off-floor transfers as described herein. The proposed rules 
are substantively identical to rules on other options exchanges and 
would align the Exchange's rules with that of its competitors.\4\ This 
proposal would benefit investors by reducing the administrative burden 
of determining whether their transfers comply with multiple sets of 
options exchange rules. In addition, the Exchange proposes to delete 
paragraph (d) to Rule 957NY (Reporting Duties) for reason set forth 
below.
---------------------------------------------------------------------------

    \4\ See, e.g., Cboe Options Exchange, Inc. (``Cboe'') Rule 5.12 
(Transactions Off the Exchange); Cboe Rule 6.7 (Off-Floor Transfer 
of Positions); Cboe Rule 6.8 (Off-Floor RWA Transfers); and NYSE 
Arca Rule 6.78A-O (In-Kind Exchange of Options Positions and ETF 
Shares and UIT Units) and Cboe Rule 6.9 (same).
---------------------------------------------------------------------------

Proposed Rule 997NY: Transactions Off the Exchange
    Rules 19c-1 and 19c-3 under the Securities Exchange Act of 1934 
(the ``Act'') describe rule provisions that each national securities 
change must include in its Rules regarding the ability of members to 
engage in transactions off an exchange. While the Exchange's rules, 
stated policies, and practices are consistent with these provisions of 
the Act, the Exchange Rules do not currently include these provisions. 
Therefore, the proposed rule change adopts these provisions in new Rule 
997NY, ``Transactions Off the Exchange,'' in accordance with Rules 19c-
1 and 19c-3 under the Act. Proposed Rule 997NY is also substantively 
identical to the off-floor transactions rule of another options 
exchange and thus would align Exchange rules with those of its 
competitors.\5\
---------------------------------------------------------------------------

    \5\ See Cboe Rule 5.12 (Transactions Off the Exchange).
---------------------------------------------------------------------------

    Proposed Rule 997NY(a) provides that except as otherwise provided 
by this proposed Rule, no ATP Holder \6\ acting as principal or agent 
may effect transactions in any class of option contracts listed on the 
Exchange for a premium in excess of $1.00 other than (1) on the 
Exchange, (2) on another exchange on which such option contracts are 
listed and traded, or (3) in the over-the-counter market if the stock 
underlying the option class, or in the case of an index option, if all 
the component stocks of an index underlying the option class, was a 
National Market System security under SEC Rule 600 at the time the 
Exchange commenced trading in that option class, unless that ATP Holder 
has first attempted to execute the transaction on the floor of the 
Exchange and has reasonably ascertained that it may be executed at a 
better price off the floor.
---------------------------------------------------------------------------

    \6\ An ``ATP Holder'' is a natural person, sole proprietorship, 
partnership, corporation, limited liability company or other 
organization, in good standing, that has been issued an ATP 
[American Trading Permit] by the Exchange. See Rule 900.2NY(5).
---------------------------------------------------------------------------

    Proposed Rule 997NY(b) provides that, notwithstanding the 
provisions of paragraph (a) of this proposed Rule, an ATP Holder acting 
as agent may execute a customer's order off the Exchange floor with any 
other person (except when such ATP Holder also is acting as agent for 
such other person in such transaction) for the purchase or sale of an 
option contract listed on the Exchange.
    Proposed Rule 997NY(c) provides that for each transaction in which 
an ATP Holder acting as principal or agent executes any purchase or 
sale of an option contract listed on the Exchange other than on the 
Exchange or on another exchange on which such option contracts are 
listed and traded, a record

[[Page 54721]]

of such transaction shall be maintained by such ATP Holder and shall be 
available for inspection by the Exchange for a period of one year. Such 
record shall include the circumstances under which the transaction was 
executed in conformity with this Rule.
    Proposed Rule 997NY(d) provides that no rule, stated policy, or 
practice of the Exchange may prohibit or condition, or be construed to 
prohibit or condition, or otherwise limit, directly or indirectly, the 
ability of any ATP Holder acting as agent to effect any transaction 
otherwise than on the Exchange with another person (except when such 
ATP Holder also is acting as agent for such other person in such 
transaction) in any equity security listed on the Exchange or to which 
unlisted trading privileges on the Exchange have been extended.
    Proposed Rule 997NY(e) provides that no rule, stated policy, or 
practice of the Exchange may prohibit or condition, or be construed to 
prohibit, condition, or otherwise limit, directly or indirectly, the 
ability of any ATP Holder to effect any transaction otherwise than on 
the Exchange in any reported security listed and registered on the 
Exchange or as to which unlisted trading privileges on the Exchange 
have been extended (other than a put option or call option issued by 
Options Clearing Corporates or OCC) which is not a covered security.\7\
---------------------------------------------------------------------------

    \7\ The ``Options Clearing Corporation'' or ``OCC'' refers to 
The Options Clearing Corporation, a subsidiary of the Participating 
Exchanges. See Rule 900.2NY(55). The term ``Participating 
Exchanges'' refers to any national securities exchange that has 
qualified for participation in the OCC pursuant to the provisions of 
the Rules of the Options Clearing Corporation. See Rule 900.2NY(61).
---------------------------------------------------------------------------

Proposed Rule 997.1NY: Off-Floor Transfer of Positions
    The Exchange proposes to adopt new Rule 997.1NY titled ``Off-Floor 
Transfer of Positions,'' to provide a process by which ATP Holders may 
transfer option positions between accounts, individuals, or entities in 
limited circumstances without first exposing the order on the Exchange. 
This rule would also permit off-floor transfers upon the occurrence of 
significant, non-recurring events. Proposed Rule 997.1NY is 
substantively identical to the rules of other option exchanges 
regarding permissible off-floor transfers of options positions and 
would align Exchange rules with those of its competitors.\8\
---------------------------------------------------------------------------

    \8\ See Cboe Rule 6.7 (Off-Floor Transfer of Positions). See 
also Nasdaq ISE LLC (``ISE'') Options 6, Section 5 (Transfer of 
Positions); Miami Options Exchange (``MIAX'') Rule 1326 (Transfer of 
Positions). As noted below, regarding the ``presidential'' 
exemption, Cboe Rule 6.7(f) does not explicitly include the Chief 
Executive Officer, which reference is included in ISE Options 6, 
Section 5(f); MIAX Rule 1326(f).
---------------------------------------------------------------------------

    Proposed Rule 997.1NY(a) provides that, notwithstanding proposed 
Rule 997NY (described above), existing positions in options listed on 
the Exchange of an ATP Holder, or non-ATP Holder, that are to be 
transferred on, from, or to the books of a Clearing Member \9\ may be 
transferred off the Exchange (an ``off-floor transfer'') if the off-
floor transfer involves one or more of the following events:
---------------------------------------------------------------------------

    \9\ A ``Clearing Member'' refers to an ATP Holder that has been 
admitted to membership in the OCC pursuant to the provisions of the 
Rules of the OCC. See Rule 900.2NY(11).
---------------------------------------------------------------------------

     an adjustment or transfer in connection with the 
correction of a bona fide error in the recording of a transaction or 
the transferring of a position to another account, provided that the 
original trade documentation confirms the error;
     the transfer of positions from one account to another 
account where no change in ownership is involved (i.e., accounts of the 
same Person (as defined in Rule 15)),\10\ provided the accounts are not 
in separate aggregation units or otherwise subject to information 
barrier or account segregation requirements;
---------------------------------------------------------------------------

    \10\ A ``Person'' refers to a natural person, corporation, 
partnership, association, joint stock company, trust, fund, or any 
organized group of persons whether incorporated or not. See Rule 15. 
The proposed transfers may only occur between the same individual or 
legal entity.
---------------------------------------------------------------------------

     the consolidation of accounts where no change in ownership 
is involved;
     a merger, acquisition, consolidation, or similar non-
recurring transaction for a Person;
     the dissolution of a joint account in which the remaining 
ATP Holder assumes the positions of the joint account;
     the dissolution of a corporation or partnership in which a 
former nominee of the corporation or partnership assumes the positions;
     positions transferred as part of an ATP Holder's capital 
contribution to a new joint account, partnership, or corporation;
     the donation of positions to a not-for-profit corporation;
     the transfer of positions to a minor under the Uniform 
Gifts to Minors Act; or
     the transfer of positions through operation of law from 
death, bankruptcy, or otherwise.
    The proposed rule change makes clear that the transferred positions 
must be on, from, or to the books of a Clearing Member. The proposed 
rule change states that existing positions of an ATP Holder or a non-
ATP Holder may be subject to an off-floor transfer, except under 
specified circumstances in which a transfer may only be effected for 
positions of an ATP Holder.\11\ The Exchange notes off-floor transfers 
of positions in Exchange listed options may also be subject to 
applicable laws, rules, and regulations, including rules of other self-
regulatory organizations.\12\ Except as explicitly provided in proposed 
Rule 997.1NY, the proposed rule change is not intended to exempt off-
floor position transfers from any other applicable rules or 
regulations, and proposed paragraph (h) to Rule 997.1NY makes this 
clear.
---------------------------------------------------------------------------

    \11\ See proposed Rule 997.1NY(a)(5) and (7).
    \12\ See proposed Rule 997.1NY(h).
---------------------------------------------------------------------------

    Proposed Rule 997.1NY(b) provides that no position may net against 
another position (``netting''), and no position transfer may result in 
preferential margin or haircut treatment, unless otherwise permitted by 
proposed paragraph (f) (described below). Netting occurs when long 
positions and short positions in the same series ``offset'' against 
each other, leaving no position, or a reduced position. For example, if 
an ATP Holder wanted to transfer 100 long calls to another account that 
contained short calls of the same options series as well as other 
positions, even if the off-floor transfer is permitted pursuant to one 
of the permissible events listed in proposed Rule 997.1NY(a)(1)-(10), 
the ATP Holder could not transfer the offsetting series, as they would 
net against each other and close the positions.
    Proposed Rule 997.1NY(c) provides that the transfer price, to the 
extent it is consistent with applicable laws, rules, and regulations, 
including rules of other self-regulatory organizations, and tax and 
accounting rules and regulations, at which an off-floor transfer may be 
effected is either: (1) the original trade prices of the positions that 
appear on the books of the trading Clearing Member, in which case the 
records of the off-floor transfer must indicate the original trade 
dates for the positions; provided, transfers to correct bona fide 
errors pursuant to proposed subparagraph (a)(1) must be transferred at 
the correct original trade prices; (2) mark-to-market prices of the 
positions at the close of trading on the transfer date; (3) mark-to-
market prices of the positions at the close of trading on the trade 
date prior to the transfer date; \13\ or (4) the then-current market 
price of the positions at the time the transfer is effected. Proposed 
Rule 997.1NY(c) provides market participants that effect off-floor 
transfers with flexibility to

[[Page 54722]]

select a transfer price based on the circumstances of the transfer and 
their business. However, for corrections of bona fide errors, because 
those transfers are necessary to correct processing errors that 
occurred at the time of the transaction, those off-floor transfers 
would occur at the original transaction price, as the purpose of the 
transfer is to create the originally intended result of the 
transaction.
---------------------------------------------------------------------------

    \13\ For example, for a transfer that occurs on a Tuesday, the 
transfer price may be based on the closing market price on Monday.
---------------------------------------------------------------------------

    Proposed Rule 997.1NY(d) requires an ATP Holder and its Clearing 
Member(s) (to the extent the ATP Holder is not self-clearing) to submit 
to the Exchange, in a manner determined by the Exchange, written notice 
prior to effecting an off-floor transfer from or to the account(s) of 
an ATP Holder(s).\14\ Per proposed Rule 997.1NY(d)(1), the proposed 
notice must indicate: the Exchange-listed options positions to be 
transferred; the nature of the transaction; the enumerated provision(s) 
under proposed Rule 997.1NY(a) pursuant to which the positions are 
being transferred; the name of the counterparty(ies); the anticipated 
transfer date; the method for determining the transfer price; and any 
other information requested by the Exchange. The proposed notice is 
designed to ensure that the Exchange is made aware of all transfers so 
that the Exchange can monitor and review such transfers (including the 
records that must be retained pursuant to proposed Rule 997.1NY(e) 
(described below) to determine whether they are effected in accordance 
with the Exchange rules. Additionally, the Exchange believes that 
requiring notice from the ATP Holder(s) and its Clearing Member(s) 
would ensure that both parties are in agreement with respect to the 
terms of the transfer. In light of the notice requirement contained in 
proposed Rule 997.1NY(d), the Exchange proposes to make a conforming 
change by deleting paragraph (d) to Rule 957NY, which similarly 
requires ATP Holders to report to the Exchange any off-floor 
transactions, and to hold paragraph (d) as Reserved.\15\
---------------------------------------------------------------------------

    \14\ This notice provision applies only to transfers involving 
an ATP Holder's positions and not to positions of non-ATP Holders, 
as the latter parties are not subject to Exchange rules. In 
addition, no notice would be required to effect transfers to correct 
bona fide errors pursuant to proposed subparagraph (a)(1) or 
transfers of positions from one account to another where no change 
in ownership is involved pursuant to proposed paragraph (a)(2) of 
Rule 997.1NY.
    \15\ See Rule 957.NY(d) (providing that ``[f]or each transaction 
in which an ATP Holder participates off-board (off a participating 
Exchange) in any option pertaining to an underlying security which 
is currently approved for Exchange options transactions, such ATP 
Holder shall report the transaction to the Exchange in a form and 
manner prescribed by the Exchange. (With the identity of 
participants removed, such transaction may be made public by the 
Exchange.)'').
---------------------------------------------------------------------------

    Per proposed Rule 997.1NY(d)(2), however, receipt of prior notice 
of an off-floor transfer would not constitute a determination by the 
Exchange that such transfer was effected or reported in conformity with 
the requirements of proposed Rule 997.1NY. As such, notwithstanding 
submission of written notice to the Exchange, ATP Holder and Clearing 
Members that effect off-floor transfers that do not conform to the 
requirements of the proposed Rule would be subject to appropriate 
disciplinary action in accordance with the Exchange rules.
    Similarly, proposed Rule 997.1NY(e) requires that each party to an 
off-floor transfer generate and retain records of the information 
provided in the written notice to the Exchange (pursuant to proposed 
subparagraph (d)(1)), as well as information regarding the actual 
Exchange-listed options that are ultimately transferred, the actual 
transfer date, and the actual transfer price (and the original trade 
dates, if applicable), and any other information the Exchange may 
request the ATP Holder or Clearing Member to provide.
    Proposed 997.1NY(f) provides exemptions to the prohibition against 
off-floor transfers, as approved by the Exchange's President or Chief 
Executive Officer (or his or her designee(s)).\16\ Specifically, this 
provision is in addition to the exemptions (to Rule 997NY) set forth in 
proposed Rule 997.1NY(a)(1)-(10). The Exchange proposes that the 
Exchange President or Chief Executive Officer (or his or her 
designee(s)) may grant an exemption from the requirement of this 
proposed Rule, on his or her own motion or upon application of the ATP 
Holder (with respect to the ATP Holder's positions) or a Clearing 
Member (with respect to positions carried and cleared by the Clearing 
Members). The President, the Chief Executive Officer, or his or her 
designee(s), may permit an off-floor transfer if necessary or 
appropriate for the maintenance of a fair and orderly market and the 
protection of investors and is in the public interest, including due to 
unusual or extraordinary circumstances. For example, an exemption may 
be granted if the market value of the Person's positions would be 
compromised by having to comply with the requirement to trade on the 
Exchange pursuant to the normal auction process or when, in the 
judgment of the President, the Chief Executive Officer, or his or her 
designee(s), market conditions make trading on the Exchange 
impractical.
---------------------------------------------------------------------------

    \16\ See ISE Options 6, Section 5(f); MIAX Rule 1326(f). The 
Exchange notes that, unlike the rules of ISE and MIAX, which refer 
to ``senior level designees,'' the Exchange proposes to instead 
reference ``designees,'' which omits the potentially ambiguous 
``senior'' qualifier. The Exchange believes this distinction does 
not alter the or impede the authority granted in the proposed 
provision and is consistent with other Exchange rules that provide 
for delegated authority. See, e.g., Rule 975NY(k)(3)(A) (proving 
that the appeals panel to review Obvious Errors or Catastrophic 
Errors be comprised, in part of, the Exchange Chief Regulatory 
Officer (``CRO''), or a designee of the CRO).
---------------------------------------------------------------------------

    The Exchange proposes to state that the off-floor transfer 
procedure set forth in Rule 997.1NY is intended to facilitate non-
routine, nonrecurring movements of positions, except for transfers 
between accounts of the same Person pursuant to proposed subparagraph 
(a)(2), and is not to be used repeatedly or routinely in circumvention 
of the normal auction market process.\17\
---------------------------------------------------------------------------

    \17\ See proposed Rule 997.1NY(g).
---------------------------------------------------------------------------

    Lastly, proposed paragraph (h) provides that the off-floor transfer 
procedure set forth in proposed Rule 997.1NY is only applicable to 
positions in options listed on the Exchange; that off-floor transfers 
of positions in Exchange-listed options may also be subject to 
applicable laws, rules, and regulations, including rules of other self-
regulatory organizations; and that off-floor transfers of non-Exchange 
listed options and other financial instruments are not governed by this 
proposed Rule 997.1NY.
Proposed Rule 997.2NY: Off-Floor RWA Transfers
    The Exchange proposes to adopt Rule 997.2NY titled ``Off-Floor RWA 
Transfers,'' to facilitate the reduction of risk-weighted assets 
(``RWA'') attributable to open options positions. This proposal is 
substantively identical to rules on other options exchanges and would 
align the Exchanges rules with that of its competitors.\18\
---------------------------------------------------------------------------

    \18\ See, e.g., Cboe Rule 6.8 (Off-Floor RWA Transfers); ISE 
Options 6, Section 6 (Off-Exchange RWA Transfers).
---------------------------------------------------------------------------

    SEC Rule 15c3-1 (Net Capital Requirements for Brokers or Dealers) 
(``Net Capital Rules'') requires registered broker-dealers, unless 
otherwise excepted, to maintain certain specified minimum levels of 
capital.\19\ The Net Capital Rules are designed to protect securities 
customers, counterparties, and creditors by requiring that broker-
dealers have sufficient liquid resources on hand, at all times, to meet 
their financial obligations. Notably, hedged positions, including 
offsetting futures and options contract positions, result in

[[Page 54723]]

certain net capital requirement reductions under the Net Capital 
Rules.\20\
---------------------------------------------------------------------------

    \19\ 17 CFR 240.15c3-1.
    \20\ In addition, the Net Capital Rules permit various offsets 
under which a percentage of an option position's gain at any one 
valuation point is allowed to offset another position's loss at the 
same valuation point (e.g., vertical spreads).
---------------------------------------------------------------------------

    Subject to certain exceptions, Clearing Members are subject to the 
Net Capital Rules.\21\ However, a subset of Clearing Members are 
subsidiaries of U.S. bank holding companies, which, due to their 
affiliations with their parent U.S.-bank holding companies, must comply 
with additional bank regulatory capital requirements pursuant to 
rulemaking required under the Dodd-Frank Wall Street Reform and 
Consumer Protection Act.\22\ Pursuant to this mandate, the Board of 
Governors of the Federal Reserve System, the Office of the Comptroller 
of the Currency, and the Federal Deposit Insurance Corporation have 
approved a regulatory capital framework for subsidiaries of U.S. bank 
holding company clearing firms.\23\ Generally, these rules, among other 
things, impose higher minimum capital and higher asset risk weights 
than were previously mandated for Clearing Members that are 
subsidiaries of U.S. bank holding companies under the Net Capital 
Rules. Furthermore, the new rules do not fully permit deductions for 
hedged securities or offsetting options positions.\24\ Rather, capital 
charges under these standards are, in large part, based on the 
aggregate notional value of short positions regardless of offsets. As a 
result, in general, Clearing Members that are subsidiaries of U.S. bank 
holding companies must hold substantially more bank regulatory capital 
than would otherwise be required under the Net Capital Rules.
---------------------------------------------------------------------------

    \21\ In the event federal regulators modify bank capital 
requirements in the future, the Exchange will reevaluate the 
proposed rule change at that time to determine whether any 
corresponding changes to the proposed rule are appropriate.
    \22\ H.R. 4173 (amending section 3(a) of the Act) (15 U.S.C. 
78c(a))).
    \23\ 12 CFR 50; 79 FR 61440 (Liquidity Coverage Ratio: Liquidity 
Risk Measurement Standards).
    \24\ Many options strategies, including relatively simple 
strategies often used by retail customers and more sophisticated 
strategies used by broker-dealers, are risk limited strategies or 
options spread strategies that employ offsets or hedges to achieve 
certain investment outcomes. Such strategies typically involve the 
purchase and sale of multiple options (and may be coupled with 
purchases or sales of the underlying securities), executed 
simultaneously as part of the same strategy. In many cases, the 
potential market exposure of these strategies is limited and 
defined.
---------------------------------------------------------------------------

    The Exchange is concerned with the ability of Market Makers to 
provide liquidity in their appointed classes. The Exchange believes 
that permitting market participants to efficiently transfer existing 
options positions through an off-floor transfer process would likely 
have a beneficial effect on continued liquidity in the options market 
without adversely affecting market quality. Liquidity in the listed 
options market is critically important. The Exchange believes that the 
proposed rule change provides market participants with an efficient 
mechanism to transfer their open options positions from one clearing 
account to another clearing account and thereby increase liquidity in 
the listed options market. The Exchange currently has no mechanism that 
firms may use to transfer positions between clearing accounts without 
having to effect a transaction with another party and close a position.
    Proposed Rule 997.2NY provides that, notwithstanding Rule 997NY 
(described above), existing positions in options listed on the Exchange 
of an ATP Holder or non-ATP Holder (including an affiliate of an ATP 
Holder) may be transferred on, from, or to the books of a Clearing 
Member off the Exchange if the transfer establishes a net reduction of 
RWA attributable to those options positions (an ``RWA Transfer''). 
Proposed paragraph (a) to Rule 997.2NY provides examples of two 
transfers that would be deemed to establish a net reduction of RWA, and 
thus qualify as a permissible RWA Transfer:
     A transfer of options positions from Clearing Member A to 
Clearing Member B that net (offset) with positions held at Clearing 
Member B, and thus closes all or part of those positions (as 
demonstrated in the example below); \25\ and
---------------------------------------------------------------------------

    \25\ This transfer would establish a net reduction of RWA 
attributable to the transferring Person, because there would be 
fewer open positions and thus fewer assets subject to Net Capital 
Rules.
---------------------------------------------------------------------------

     A transfer of options positions from a bank-affiliated 
Clearing Member to a non-bank-affiliated Clearing Member.\26\
---------------------------------------------------------------------------

    \26\ This transfer would establish a net reduction of RWA 
attributable to the transferring Person, because the non-bank-
affiliated Clearing Member would not be subject to Net Capital 
Rules, as described above.
---------------------------------------------------------------------------

    These transfers would not result in a change in ownership, as they 
must occur between accounts of the same ``Person,'' as defined in Rule 
15, per proposed Rule 997.2NY(e).\27\ In other words, RWA Transfers may 
only occur between the same individual or legal entity. These are 
merely transfers from one clearing account to another, both of which 
are attributable to the same individual or legal entity. A market 
participant effecting an RWA Transfer is analogous to an individual 
transferring funds from a checking account to a savings account, or 
from an account at one bank to an account at another bank--the money 
still belongs to the same person, who is just holding it in a different 
account for personal financial reasons.
---------------------------------------------------------------------------

    \27\ See supra note 10 (defining Person).
---------------------------------------------------------------------------

    For example, Market Maker A clears transactions on the Exchange 
into an account it has with Clearing Member X, which is affiliated with 
a U.S-bank holding company. Market Maker A opens a clearing account 
with Clearing Member Y, which is not affiliated with a U.S.-bank 
holding company. Clearing Member X has informed Market Maker A that its 
open positions may not exceed a certain amount at the end of a calendar 
month, or it will be subject to restrictions on new positions it may 
open the following month. On August 28, Market Maker A reviews the open 
positions in its Clearing Member X clearing account and determines it 
must reduce its open positions to satisfy Clearing Member X's 
requirements by the end of August. It determines that transferring out 
1,000 short calls in class ABC will sufficiently reduce the RWA capital 
requirements in the account with Clearing Member X to avoid additional 
position limits in September. Market Maker A wants to retain the 
positions in accordance with its risk profile. Pursuant to the proposed 
rule change, on August 31, Market Maker A transfers 1,000 short calls 
in class ABC to its clearing account with Clearing Member Y. As a 
result, Market Maker A can continue to provide the same level of 
liquidity in class ABC during September as it did in previous months.
    An ATP Holder must ``give up'' a Clearing Member for each 
transaction it effects on the Exchange, which identifies the Clearing 
Member through which the transaction will clear.\28\ An ATP Holder that 
has the ability to change the give up for a transaction within a 
specified period of time.\29\ Additionally, an ATP Holder may change 
the Clearing Member for a specific transaction.\30\ The transfer of

[[Page 54724]]

positions from an account with one clearing firm to the account of 
another clearing firm pursuant to the proposed rule change has a 
similar result as changing a give up or CMTA, as it results in a 
position that resulted from a transaction moving from the account of 
one clearing firm to another, just at a different time and in a 
different manner.\31\
---------------------------------------------------------------------------

    \28\ See Rule 961 (Authorizing Give Up of a Clearing Member) 
(providing process for an ATP Holder (other than a Market Maker) to 
indicate each of its transactions any OCC number of a Clearing 
Member through which a transaction will be cleared (i.e., the give 
up), subject to the criteria set forth in the rule).
    \29\ See Rule 961(g)(1) (providing that, ``[i]f the ATP Holder 
has the ability through an Exchange system to do so, the ATP Holder 
may change the give up on the trade to another Clearing Member for 
whom they are an Authorized ATP Holder or to its Guarantor.''; which 
ability ``will end at the Trade Date Cutoff Time.'').
    \30\ The Clearing Member Trade Assignment (``CMTA'') process at 
OCC facilitates the transfer of option trades/positions from one OCC 
clearing member to another in an automated fashion. Changing a CMTA 
for a specific transaction would allocate the trade to a different 
OCC clearing member than the one initially identified on the trade.
    \31\ The transferred positions will continue to be subject to 
OCC rules, as they will continue to be held in an account of an OCC 
member.
---------------------------------------------------------------------------

    In the above example, if Market Maker A had initially given up 
Clearing Member Y rather than Clearing Member X on the transactions 
that resulted in the 1,000 long calls in class ABC, or had changed the 
give-up or CMTA to Clearing Member Y pursuant to Rule 961 the ultimate 
result would have been the same. There are a variety of reasons why 
firms give up or CMTA transactions to certain clearing firms (and not 
to non-bank affiliate clearing firms) at the time of a transaction, and 
the proposed rule change provides firms with a mechanism to achieve the 
same result at a later time.
    Proposed paragraph (b) to Rule 997.2NY provides that RWA Transfers 
may occur on a routine, recurring basis. As noted in the example above, 
clearing firms may impose restrictions on the amount of open positions. 
Permitting transfers on a routine, recurring basis will provide market 
participants with the flexibility to comply with these restrictions 
when necessary to avoid position limits on future options activity. 
Additionally, proposed paragraph (f) to Rule 997.2NY provides that no 
prior written notice to the Exchange is required for RWA Transfers. 
Because of the potential routine basis on which RWA Transfers may 
occur, and because of the need for flexibility to comply with the 
restrictions described above, the Exchange believes such requirement 
may interfere with the ability of ATP Holders to comply with any 
Clearing Member restrictions describe above, and may be burdensome to 
provide notice for these routine transfers.
    Proposed Rule 997.2NY(c) provides that RWA Transfers may result in 
the netting of positions. Netting occurs when long positions and short 
positions in the same series ``offset'' against each other, leaving no 
or a reduced position. For example, if there were 100 long calls in one 
account, and 100 short calls of the same option series were added to 
that account, the positions would offset, leaving no open positions. 
Firms may maintain different clearing accounts for a variety of 
reasons, such as the structure of their businesses, the manner in which 
they trade, their risk management procedures, and for capital purposes. 
While there are times when a firm may not want to close out open 
positions to reduce RWA, there are other times when a firm may 
determine it is appropriate to close out positions to accomplish a 
reduction in RWA.
    In the example above, suppose after making the RWA Transfer 
described above, Market Maker A effects a transaction on September 25 
that results in 1,000 long calls in class ABC, which clears into its 
account with Clearing Member X. If Market Maker A had not effected its 
RWA Transfer in August, the 1,000 long calls would have offset against 
the 1,000 short calls, eliminating both positions and thus any RWA 
capital requirements associated with them. At the end of August, Market 
Maker A did not want to close out the 1,000 short calls when it made 
its RWA Transfer. However, given changed circumstances in September, 
Market Maker A has determined it no longer wants to hold those 
positions. The proposed rule change would permit Market Maker A to 
effect an RWA Transfer of the 1,000 short calls from its account with 
Clearing Member Y to its account with Clearing Member X (or vice 
versa), which results in elimination of those positions (and a 
reduction in RWA associated with them). As noted above, such netting 
would have occurred if Market Maker A cleared the September transaction 
directly into its account with Clearing Member Y, or had not effected 
an RWA Transfer in August. Netting provides market participants with 
appropriate flexibility to conduct their businesses as they see fit 
while having the ability to reduce RWA capital requirements when 
necessary.
    Proposed Rule 997.2NY(d) provides that RWA Transfers may not result 
in preferential margin or haircut treatment. Finally, per proposed Rule 
997.2NY(g), RWA Transfers may only be effected for options listed on 
the Exchange, as transfers of non-Exchange listed options and other 
financial instruments are not governed by proposed Rule 997.2NY, and 
will be subject to applicable laws, rules, and regulations, including 
rules of other self-regulatory organizations (including OCC).\32\
---------------------------------------------------------------------------

    \32\ All RWA Transfers will be subject to all recordkeeping 
requirements applicable to ATP Holders and Clearing Members under 
the Act, such as Rule 17a-3 and 17a-4.
---------------------------------------------------------------------------

Proposed Rule 997.3NY: In-Kind Exchange of Options Positions and ETF 
Shares and UIT Units
    The Exchange proposes to adopt Rule 997.3NY regarding in-kind 
exchanges of options positions and exchange-traded fund (``Fund'') 
shares and unit investment trust (``UIT'') interests. As discussed 
further below, the ability to effect ``in kind'' transfers is a key 
component of the operational structure of a Fund and a UIT. Currently, 
in general, Funds and UITs can effect in-kind transfers with respect to 
equity securities and fixed-income securities. The in-kind process is 
the means by which assets may be added to or removed from Funds and 
UITs. The proposed rule change is substantively identical to rules on 
other options exchanges and would align the Exchanges rules with that 
of its competitors.\33\
---------------------------------------------------------------------------

    \33\ See NYSE Arca Rule 6.78A-O and Cboe Options Rule 6.9 
(except that the Cboe rule does not include a notice provision 
related to the transfers that is contained in Rule 6.78A-O(b) and 
proposed Rule 997.2NY(b)). See also Securities and Exchange Act 
Release No. 90552 (December 2, 2020), 85 FR 79049 (December 8, 2020) 
(SR-NYSEArca-2020-102) (immediately effective filing to adopt Rule 
6.78A-O to allow in-kind exchange of options positions and ETF 
Shares and UIT Units).
---------------------------------------------------------------------------

    Proposed Rule 997.3NY would add a circumstance under which off-
floor transfers of options positions would be permitted to occur, in 
addition to the circumstances in proposed Rules 997.1NY and 997.2NY. 
Specifically, Rule 997.3NY would allow positions in options listed on 
the Exchange to be transferred off the Exchange by an ATP Holder in 
connection with transactions (a) to purchase or redeem ``creation 
units'' of Fund Shares between an ``authorized participant'' \34\ and 
the issuer \35\ of such Fund Shares \36\ or (b) to create or redeem 
units of a UIT between

[[Page 54725]]

a broker-dealer and the issuer \37\ of such UIT units, which transfers 
would occur at the price used to calculate the net asset value 
(``NAV'') of such Fund Shares or UIT units, respectively. Allowing the 
Exchange to permit off-floor transfers of options positions in 
connection with the creation and redemption process would enable the 
Exchange to compete with other options exchanges that allow such 
transfers.
---------------------------------------------------------------------------

    \34\ The Exchange is proposing that, for purposes of proposed 
Rule 997.3NY, the term ``authorized participant'' would be defined 
as an entity that has a written agreement with the issuer of Fund 
Shares or one of its service providers, which allows the authorized 
participant to place orders for the purchase and redemption of 
creation units (i.e., specified numbers of Fund Shares). See 
proposed Rule 997.3NY(a)(1). While an authorized participant may be 
an ATP Holder and directly effect transactions in options on the 
Exchange, an authorized participant that is not an ATP Holder may 
effect transactions in options on the Exchange through an ATP Holder 
on its behalf.
    \35\ The Exchange proposes that, for purposes of proposed Rule 
997.3NY, any issuer of Fund Shares would be registered with the 
Commission as an open-end management investment company under the 
Investment Company Act of 1940 (the ``1940 Act''). See proposed Rule 
997.3NY(a)(2).
    \36\ A Fund Share is a share or other security traded on a 
national securities exchange and defined as an NMS stock, as set 
forth in in Rule 600(b)(47) of Regulation NMS, which includes open-
end management investment companies registered with the Commission. 
See Rule 915, Commentary .06.
    \37\ The Exchange proposes that, for purposes of proposed Rule 
997.3NY, any issuer of UIT units would be a trust registered with 
the Commission as a unit investment trust under the 1940 Act. See 
proposed Rule 997.3NY(a)(3).
---------------------------------------------------------------------------

    However, the Exchange believes it is appropriate to include in 
proposed Rule 997.3NY(b) the requirement that ATP Holders that engage 
in such transfers ``must, upon request of the Exchange, provide to the 
Exchange information relating to the transfers in a form and manner 
prescribed by the Exchange.'' The Exchange notes that this proposed 
provision is identical to the notice provision in NYSE Arca Rule 6.78A-
O(b), and, like that provision, would help ensure that ATP Holders keep 
accurate books and records relating to such transfers for review by the 
Exchange, which is to the benefit of all market participants.
    The Exchange's proposal mirrors other exchange rules in that 
applies solely in the context of transfers of options positions 
effected in connection with transactions to purchase or redeem creation 
units of Fund Shares between Funds and authorized participants,\38\ and 
units of UITs between UITs and sponsors. Other than the transfers 
covered by the proposed rule, transactions involving options, whether 
held by a Fund or an authorized participant, or a UIT or a sponsor 
would be fully subject to all applicable Exchange trading rules.
---------------------------------------------------------------------------

    \38\ See supra note 34. The term ``authorized participant'' is 
specific and narrowly defined. As noted in the Investment Company 
Act Release No. 33140 (June 28, 2018), 83 FR 37332 (July 31, 2018) 
(the ``Proposed ETF Rule Release''), the requirement that only 
authorized participants of a Fund may purchase creation units from 
(or sell creation units to) a Fund ``is designed to preserve an 
orderly creation unit issuance and redemption process between 
[Funds] and authorized participants.'' Furthermore, an ``orderly 
creation unit issuance and redemption process is of central 
importance to the arbitrage mechanism.'' See Proposed ETF Rule 
Release at 83 FR 37348.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\39\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\40\ 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 regulating, clearing, settling, 
processing information with respect to, and 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 and because it is not 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers. As a general matter, the proposed rules are 
substantively identical to rules on other options exchanges and would 
align the Exchanges rules with that of its competitors. As such, this 
proposal would benefit investors by reducing the administrative burden 
of determining whether their off-floor transfers comply with multiple 
sets of options exchange rules.
---------------------------------------------------------------------------

    \39\ 15 U.S.C. 78f(b).
    \40\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

Proposed Rule 997NY: Transactions Off the Exchange
    In particular, the Exchange believes proposed Rule 997NY is 
consistent with the Act, because it adopts provisions in the Rules 
specifically required by Rules 19c-1 and 19c-3 under the Act, setting 
forth the Exchange's general prohibition against off-floor transfers. 
The proposed rule change will add transparency to the Exchange rules, 
which would benefit investors. In addition, as noted herein, proposed 
Rule 997NY is substantively identical to the rules of at least one 
other options exchange and would therefore allow the Exchange to 
compete on equal footing.
Proposed Rule 997.1NY: Off-Floor Transfer of Positions
    The Exchange believes that permitting off-floor transfers in very 
limited circumstances would allow ATP Holders to accomplish certain 
goals efficiently. Proposed Rule 997.1NY is also substantively 
identical to the rules of other options exchanges and, consistent with 
those rules, the proposed rule permits non-recurring off-floor 
transfers in situations involving dissolutions of entities or accounts, 
for purposes of donations, mergers or by operation of law. As noted 
above for example, an ATP Holder that is undergoing a structural change 
and a one-time movement of positions may require a transfer of 
positions or an ATP Holder that is leaving a firm that will no longer 
be in business may require a transfer of positions to another firm. 
Also, an ATP Holder may require a transfer of positions to make a 
capital contribution. The above-referenced circumstances are non-
recurring situations where the transferor continues to maintain some 
ownership interest or manage the positions transferred. By contrast, 
repeated or routine transfers between entities or accounts--even if 
there is no change in beneficial ownership as a result of the 
transfer--is inconsistent with the purposes for which the proposed rule 
will be adopted. Accordingly, such activity would not be permitted 
under the proposed rule. The proposed rule change would provide market 
participants that experience these limited, non-recurring events with 
an efficient and effective means to transfer positions in these 
situations. The Exchange believes the proposed rule change regarding 
permissible transfer prices would provide market participants with 
flexibility to determine the price appropriate for their business, 
which maintain cost bases in accordance with normal accounting 
practices and removes impediments to a free and open market.
    The proposed rule change which requires notice and maintenance of 
records would ensure the Exchange is able to review off-floor transfers 
for compliance with the Exchange rules, which prevents fraudulent and 
manipulative acts and practices. The requirement to retain records is 
consistent with the requirements of Rule 17a-3 and 17a-4 under the Act.
    Similar to the rules of other options exchanges, the Exchange would 
permit a presidential exemption.\41\ The Exchange believes that this 
exemption is consistent with the Act because the Exchange's Chief 
Executive Officer or President (or his or her designee(s)) would 
consider an exemption in very limited circumstances (i.e., to 
facilitate non-routine, nonrecurring movements of positions not 
designed to circumvent the normal auction market process). Proposed 
Rule 997.1NY(f) specifically provides that the Exchange's Chief 
Executive Officer or President (or his or her designee(s)) may in his 
or her judgment allow an off-floor transfer if it is necessary or 
appropriate for the maintenance of a fair and orderly market and the 
protection of investors and is in the public interest, including due to 
unusual or extraordinary circumstances such as the market value of the 
Person's positions will be comprised by having to comply with the 
requirement to trade on the Exchange pursuant to the normal auction 
process or, when in the judgment of the President, Chief Executive 
Officer, or his or her designee(s), market conditions

[[Page 54726]]

make trading on the Exchange impractical. These standards within 
paragraph (f) of the proposed rule are intended to provide guidance 
concerning the use of this exemption to the benefit of investors and 
the investing public for the maintenance of a fair and orderly market 
and the protection of investors and is in the public interest.
---------------------------------------------------------------------------

    \41\ See ISE Options 6, Section 5(f); MIAX Rule 1326(f). See 
also Cboe Rule 6.8(f).
---------------------------------------------------------------------------

    Finally, the Exchange believes the conforming change to delete 
paragraph (d) to Rule 957NY in light of the comparable notice 
requirement in proposed Rule 997.1NY(d) would reduce redundancy, add 
clarity, transparency and internal consistent to Exchange rules.
Proposed Rule 997.2NY: Off-Floor RWA Transfers
    The Exchange believes proposed Rule 997.2NY to permit RWA 
Transfers, which is substantially the same as the rules of other 
options markets, would remove impediments to and perfect the mechanism 
of a free and open market and a national market system by providing 
liquidity in the listed options market. The Exchange believes providing 
market participants with an efficient process to reduce RWA capital 
requirements attributable to open positions in clearing accounts with 
U.S. bank-affiliated clearing firms may contribute to additional 
liquidity in the listed options market, which, in general, protects 
investors and the public interest.
    The proposal to permit RWA Transfers to occur on a routine, 
recurring basis and result in netting, also provides market 
participants with sufficient flexibility to reduce RWA capital 
requirements at times necessary to comply with requirements imposed on 
them by clearing firms. This would permit market participants to 
respond to then-current market conditions, including volatility and 
increased volume, by reducing the RWA capital requirements associated 
with any new positions they may open while those conditions exist. 
Given the additional capital that may become available to market 
participants as a result of the RWA Transfers, market participants 
would be able to continue to provide liquidity to the market, even 
during periods of increased volume and volatility, which liquidity 
ultimately benefits investors. It is not possible for market 
participants to predict what market conditions will exist at a specific 
time, and when volatility will occur. The proposed rule change to 
permit routine, recurring RWA Transfers (without any required prior 
written notice) would provide market participants with the ability to 
respond to these conditions whenever they occur. Permitting such 
transfers on a routine, recurring basis will provide market 
participants with the flexibility to comply with applicable 
restrictions when necessary to avoid position limits on future options 
activity. In addition, with respect to netting, as discussed above, 
firms may maintain different clearing accounts for a variety of 
reasons, such as the structure of their businesses, the manner in which 
they trade, their risk management procedures, and for capital purposes. 
Netting may otherwise occur with respect to a firm's positions if it 
structured its clearing accounts differently, such as by using a 
universal account. Therefore, the proposed rule change will permit 
netting while allowing firms to continue to maintain different clearing 
accounts in a manner consistent with their businesses.
    The Exchange recognizes the numerous benefits of executing options 
transactions on exchanges, including price transparency, potential 
price improvement, and a clearing guarantee. However, the Exchange 
believes it is appropriate to permit RWA Transfers to occur off the 
Exchange, as these benefits are inapplicable to RWA Transfers, which 
are narrow in scope and intended to achieve a limited beneficial 
purpose. RWA Transfers are not intended to be a competitive trading 
tool. There is no need for price discovery or improvement, as the 
purpose of the transfer is to reduce RWA asset capital requirements 
attributable to a market participants' positions. Unlike trades on an 
exchange, the price at which an RWA Transfers occurs is immaterial--the 
resulting reduction in RWA is the critical part of the transfer. RWA 
Transfers will result in no change in ownership, and thus they do not 
constitute trades with a counterparty (and thus eliminating the need 
for a counterparty guarantee). The transactions that resulted in the 
open positions to be transferred as an RWA Transfer were already 
guaranteed by a Clearing Member, and the positions will continue to be 
subject to OCC rules, as they will continue to be held in an account 
with a Clearing Member. The narrow scope of the proposed rule change 
and the limited, beneficial purpose of RWA Transfers make allowing RWA 
Transfers to occur off the floor appropriate and important to support 
the provision of liquidity in the listed options market.
    The proposed rule change does not unfairly discriminate against 
market participants, as all ATP Holders and non-ATP Holders with open 
positions in options listed on the Exchange may use the proposed off-
floor transfer process to reduce the RWA capital requirements of 
Clearing Members. Finally, this proposed rule change would align 
Exchange rules with those of other options exchanges, thereby allowing 
the Exchange to compete on equal footing.
Proposed Rule 997.3NY: In-Kind Exchange of Options Positions and ETF 
Shares and UIT Units
    The Exchange believes proposed Rule 997.3NY to permit off-floor 
transfers in connection with the in-kind Fund and UIT creation and 
redemption process would promote just and equitable principles of trade 
as it would permit Funds and UITs that invest in options traded on the 
Exchange to utilize the in-kind creation and redemption process that is 
available for Funds and UITs that invest in equities and fixed-income 
securities.
    The Exchange believes it is appropriate to require ATP Holders that 
engage in off-floor transfers as provided in proposed Rule 997.3NY(b) 
to keep records of such transactions such that this information could 
be shared with the Exchange upon request. The Exchange believes this 
provision, which is identical to NYSE Arca Rule 6.78A-O(b), would 
prevent fraudulent and manipulative acts and practices, to promote just 
and equitable principles of trade because the provision would help 
ensure that ATP Holders keep accurate books and records relating to 
such transfers for review by the Exchange, which is to the benefit of 
all market participants. Finally, this proposed rule change would align 
Exchange rules with those of other options exchanges, thereby allowing 
the Exchange to compete on equal footing.

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

    The Exchange believes that the proposal would not impose any burden 
on competition that is not necessary or appropriate in furtherance of 
the purposes of Section 6(b)(8) of the Act.\42\ The proposed rules are 
not intended to be competitive trading tools, but rather to set forth 
the general prohibition against off-floor transactions and to 
facilitate certain off-floor transactions in limited circumstances that 
meet the enumerated criteria.
---------------------------------------------------------------------------

    \42\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------

    The Exchange does not believe the proposed rule change regarding 
off-floor position transfers set forth in the proposed rules would 
impose an undue burden on intra-market competition as

[[Page 54727]]

the transfer procedure(s) may be utilized by any ATP Holder and the 
rule would apply uniformly to all ATP Holders. Use of each off-floor 
transfer procedure is voluntary and all ATP Holders may use each such 
procedure to transfer positions as long as the criteria in the proposed 
rule are satisfied.
    The Exchange does not believe the proposed rule change will impose 
an undue burden on inter-market competition. As indicated above, it is 
intended to provide an additional clearly delineated and limited 
circumstance in which options positions can be transferred off an 
exchange (as well as to set forth the general prohibition against such 
transfers). Additionally, as discussed above, the proposed rule change 
is substantively identical to the rules of other options exchanges and 
would allow the Exchange to compete on equal footing. Moreover, the 
Exchange believes having similar rules related to off-floor position 
transfers to those of other options exchanges will reduce the 
administrative burden on market participants of determining whether 
their transfers comply with multiple sets of rules.

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 \43\ and Rule 19b-4(f)(6) thereunder.\44\ 
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.\45\
---------------------------------------------------------------------------

    \43\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \44\ 17 CFR 240.19b-4(f)(6).
    \45\ 15 U.S.C. 78s(b)(3)(A)(iii). 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 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 
Commission notes that the Exchange satisfied this requirement.
---------------------------------------------------------------------------

    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) of the Act \46\ to determine whether the proposed 
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \46\ 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 [email protected]. Please include 
File Number SR-NYSEAMER-2022-36 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-NYSEAMER-2022-36. 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-NYSEAMER-2022-36 and should be submitted 
on or before September 28, 2022.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\47\
---------------------------------------------------------------------------

    \47\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-19226 Filed 9-6-22; 8:45 am]
BILLING CODE 8011-01-P