Document ID: SEC-2020-0285-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE American LLC
Posted Date: 2020-02-28T05:00Z

[Federal Register Volume 85, Number 40 (Friday, February 28, 2020)]
[Notices]
[Pages 12035-12037]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-04071]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-88269; File No. SR-NYSEAMER-2020-11]

Self-Regulatory Organizations; NYSE American LLC; Notice of 
Filing and Order Granting Accelerated Approval of a Proposed Rule 
Change for Certain Conforming Changes to Rule 9217

February 24, 2020.
    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 February 11, 2020, 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 and 
approving the proposal on an accelerated basis.
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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 certain conforming changes to Rule 9217 in 
order to more closely align the Exchange's rule with that of its 
affiliates. 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

[[Page 12036]]

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 certain conforming changes to Rule 9217 in 
order to more closely align the Exchange's rule with that of its 
affiliates.
    Rule 9217 sets forth the list of rules under which a member 
organization or covered person may be subject to a fine under a minor 
rule violation plan as described in proposed [sic] Rule 9216(b). The 
Exchange proposes the following amendments to Rule 9217.
    First, the Exchange proposes to add the following paragraph to the 
introduction to Rule 9217:

    Nothing in this Rule shall require the Exchange to impose a fine 
for a violation of any rule under this Minor Rule Plan. If the 
Exchange determines that any violation is not minor in nature, the 
Exchange may, at its discretion, proceed under the Rule 9000 Series 
rather than under this Rule.

    The language is based on the rules of the Exchange's affiliates New 
York Stock Exchange LLC (``NYSE'') and NYSE Arca, Inc. (``NYSE 
Arca'').\4\
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    \4\ See NYSE Rule 9217 & NYSE Arca Rule 10.9217.
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    Second, the Exchange proposes to add subsections (a), (b)(1) and 
(b)(5) of Rule 3110--Equities to the list of rules in Rule 9217 
eligible for disposition pursuant to a fine under Rule 9216(b).
    Rule 3110--Equities is the Exchange's supervision rule for equities 
trading. Rule 3110(a)--Equities governs supervisory systems and 
requires member organizations to establish and maintain a system to 
supervise the activities of each associated person that is reasonably 
designed to achieve compliance with applicable securities laws and 
regulations, and with applicable Exchange rules.
    Subsection (b)(1) governs written procedures and requires member 
organizations to establish, maintain, and enforce written procedures to 
supervise the types of business in which it engages and the activities 
of its associated persons that are reasonably designed to achieve 
compliance with applicable securities laws and regulations, and with 
applicable Exchange rules.
    Subsection (b)(5) requires a member organization's supervisory 
procedures to include procedures to capture, acknowledge, and respond 
to all written (including electronic) customer complaints.
    Rule 3110--Equities is substantially similar to NYSE Rule 3110. 
Subsections (a), (b)(1) and b(5) of NYSE Rule 3110 are each separately 
eligible for a minor rule fine under NYSE Rule 9217.\5\
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    \5\ See NYSE Rules 3110 (Supervision) & 9217.
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    Finally, the Exchange proposes to correct a typographical error in 
Rule 9217(ii)(7)(b), which refers to ensuring compliance with, among 
other things, NYSE Arca Rules. The correct reference should be to the 
NYSE American Rules.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Act,\6\ in general, and furthers the objectives of 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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    Minor rule fines provide a meaningful sanction for minor or 
technical violations of rules. The Exchange believes that the proposed 
rule change will strengthen the Exchange's ability to carry out its 
oversight and enforcement responsibilities in cases where full 
disciplinary proceedings are unwarranted in view of the minor nature of 
the particular violation. Specifically, the proposed rule change is 
designed to prevent fraudulent and manipulative acts and practices 
because it will provide the Exchange the ability to issue a minor rule 
fine for violations of its rules governing supervision requirements in 
situations where either a cautionary action letter or a more formal 
disciplinary action may not be warranted or appropriate.
    In addition, the Exchange believes that adding rules based on the 
rules of its affiliate to the Exchange's minor rule plan would promote 
fairness and consistency in the marketplace by permitting the Exchange 
to issue a minor rule fine for violations of substantially similar 
rules that are eligible for minor rule treatment on the Exchange's 
affiliate, thereby harmonizing minor rule plan fines across affiliated 
exchanges for the same conduct. As noted above, Rule 3110--Equities is 
substantially similar to NYSE Rule 3110. Subsections (a), (b)(1) and 
b(5) of NYSE Rule 3110 are each separately eligible for a minor rule 
fine under NYSE Rule 9217.\8\
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    \8\ See NYSE Rules 3110 (Supervision) & 9217.
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    The Exchange further believes that the proposed amendments to Rule 
9217 are consistent with Section 6(b)(6) of the Act,\9\ which provides 
that members and persons associated with members shall be appropriately 
disciplined for violation of the provisions of the rules of the 
exchange, by expulsion, suspension, limitation of activities, 
functions, and operations, fine, censure, being suspended or barred 
from being associated with a member, or any other fitting sanction. As 
noted, the proposed rule change would provide the Exchange ability to 
sanction minor or technical violations pursuant to the Exchange's 
rules.
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    \9\ 15 U.S.C. 78f(b)(6).
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    Finally, the Exchange also believes that correction of a 
typographical error would remove impediments to and perfect the 
mechanism of a free and open market by ensuring that persons subject to 
the Exchange's jurisdiction, regulators, and the investing public can 
more easily navigate and understand the Exchange's rulebook.

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 change is not 
designed to address any competitive issue but rather to update the 
Exchange's rules to strengthen the Exchange's ability to carry out its 
oversight and enforcement functions and deter potential violative 
conduct.

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. 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.

[[Page 12037]]

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-NYSEAMER-2020-11 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-2020-11. 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-2020-11 and should be submitted 
on or before March 20, 2020.

IV. Commission's Findings and Order Granting Accelerated Approval of 
Proposed Rule Change

    The Commission finds that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder applicable to a national securities exchange.\10\ In 
particular, the Commission finds that the proposed rule change is 
consistent with Section 6(b)(5) of the Act,\11\ which requires that the 
rules of an exchange be designed to promote just and equitable 
principles of trade, to remove impediments and to perfect the mechanism 
of a free and open market and a national market system, and, in 
general, to protect investors and the public interest. The Commission 
also believes that the proposal is consistent with Sections 6(b)(1) and 
6(b)(6) of the Act \12\ which require that the rules of an exchange 
enforce compliance with, and provide appropriate discipline for, 
violations of Commission and Exchange rules. Finally, the Commission 
finds that the proposal is consistent with the public interest, the 
protection of investors, or otherwise in furtherance of the purposes of 
the Act, as required by Rule 19d-1(c)(2) under the Act,\13\ which 
governs minor rule violation plans.
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    \10\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \11\ 15 U.S.C. 78f(b)(5).
    \12\ 15 U.S.C. 78f(b)(1) and 78f(b)(6).
    \13\ 17 CFR 240.19d-1(c)(2).
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    As stated above, the Exchange proposes to add to its list of 
equities rule violations rules that are identical to those of its 
affiliated exchange. The Commission believes that the proposed rule 
provides a reasonable means of addressing violations that do not rise 
to the level of requiring formal disciplinary proceedings, while 
providing greater flexibility in handling certain violations. However, 
the Commission expects, as suggested by the Exchange's proposed 
introduction to its Rule 9217, that the Exchange will continue to 
conduct surveillance with due diligence and make determinations based 
on its findings, on a case-by-case basis, regarding whether a sanction 
under the rule is appropriate, or whether a violation requires formal 
disciplinary action. The Commission further notes that, as before, the 
Exchange must give the Commission prompt notice of any violation with 
sanction over $2,500, in accordance with Securities Exchange Act Rule 
19d-1(c).\14\ Accordingly, the Commission believes the proposal raises 
no novel or significant issues.
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    \14\ See 17 CFR 240.19d-1(c).
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    For the same reasons discussed above, the Commission finds good 
cause, pursuant to Section 19(b)(2) of the Act,\15\ for approving the 
proposed rule change prior to the thirtieth day after the date of 
publication of the notice of the filing thereof in the Federal 
Register. The proposal merely adds rules and language from affiliated 
exchanges. Accordingly, the Commission believes that a full notice-and-
comment period is not necessary before approving the proposal.
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    \15\ 15 U.S.C. 78s(b)(2).
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V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the Act 
\16\ and Rule 19d-1(c)(2) thereunder,\17\ that the proposed rule change 
(SR-NYSEAMER-2020-11) be, and hereby is, approved and declared 
effective on an accelerated basis.
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    \16\ 15 U.S.C. 78s(b)(2).
    \17\ 17 CFR 240.19d-1(c)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-04071 Filed 2-27-20; 8:45 am]
 BILLING CODE 8011-01-P