Document ID: SEC-2020-0803-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Chicago, Inc.
Posted Date: 2020-05-21T04:00Z

[Federal Register Volume 85, Number 99 (Thursday, May 21, 2020)]
[Notices]
[Pages 31014-31016]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-10926]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-88881; File No. SR-NYSECHX-2020-16]

Self-Regulatory Organizations; NYSE Chicago, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Extend 
the Temporary Relief Granted to Institutional Brokers to Report Non-
Tape, Clearing-Only Submissions Into the Exchange's Systems to June 30, 
2020 (or Earlier)

May 15, 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 May 14, 2020, the NYSE Chicago, Inc. (``NYSE Chicago'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``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

[[Page 31015]]

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 extend the temporary relief granted to 
Institutional Brokers to report non-tape, clearing-only submissions 
into the Exchange's systems pursuant to Article 21, Rule 6(a)(3). 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
    Pursuant to a filing submitted by the Exchange,\4\ for a temporary 
period that began on April 20, 2020 and ends on the earlier of the 
reopening of all the options trading floors or after the end of the day 
on May 15, 2020, the Exchange has extended the time within which 
Institutional Brokers \5\ are required to report non-tape, clearing-
only submissions into the Exchange's systems pursuant to Article 21, 
Rule 6(a)(3). The Exchange provided this temporary relief due to 
changes in work flow in the post-trade processing of transactions in 
the cash equity leg of stock-option orders that are a consequence of 
the precautionary measures to prevent the spread of COVID-19 taken by 
options exchanges and their members and by Institutional Brokers.
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    \4\ See Securities Exchange Act Release No. 88714 (April 21, 
2020), 85 FR 23384 (April 27, 2020) (SR-NYSECHX-2020-11) 
(``Temporary Relief Filing'')
    \5\ The term ``Institutional Broker'' is defined in Article 1, 
Rule 1(n) to mean a member of the Exchange who is registered as an 
Institutional Broker pursuant to the provisions of Article 17 and 
has satisfied all Exchange requirements to operate as an 
Institutional Broker on the Exchange. There are currently five 
Institutional Brokers on the Exchange.
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    Given that the majority of the options trading floors continue to 
remain closed,\6\ the Exchange is proposing to extend the relief 
granted in the Temporary Relief Filing until the remaining options 
floors reopen or after the end of the day on June 30, 2020. As 
represented in the Temporary Relief Filing, the proposed rule change 
would have no impact on trade reporting or clearing of trades, as all 
trades would have already been reported to the Consolidated Tape in 
accordance with applicable trade reporting rules of the Trade Reporting 
Facility (``TRF'') and submitted to the Deposit Trust Clearing 
Corporation (``DTCC'') for clearing. The Exchange is not proposing any 
other change to the application of Article 21, Rule 6(a)(3), other than 
to extend the effectiveness of the temporary relief granted in the 
Temporary Relief Filing.
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    \6\ On April 28, 2020, NYSE Arca Options announced the partial 
reopening of its trading floor. See https://www.nyse.com/trader-update/history#110000241246. See also https://www.nyse.com/publicdocs/nyse/markets/arca-options/rule-interpretations/2020/Arca%20RB-20-02%20-%204.28.20%20-%20Final.pdf.
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    Accordingly, the Exchange proposes that until the earlier of the 
reopening of all the options trading floors or after the end of the day 
on June 30, 2020, Institutional Brokers may enter non-tape, clearing-
only submissions into Brokerplex \7\ for non-Exchange transaction by 
8:00 p.m. ET of the day of the trade, rather than within three hours as 
required under the rule. To reflect this change, the Exchange proposes 
amend Commentary .05 to Article 21, Rule 6 that sets forth the proposed 
rule text that would replace Article 21, Rule 6(a)(3) during a 
temporary period that began on April 20, 2020, and ends on the earlier 
of the reopening of all the options trading floors or after the end of 
the day on June 30, 2020. The Exchange believes that this temporary 
relief will permit Institutional Brokers to comply with the reporting 
requirements in Article 21, Rule 6(a) during a period when their staff 
and staff of options floor traders are working from home and completing 
such tasks within three hours is less straightforward and more complex.
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    \7\ Brokerplex is an order entry, management and recordation 
system provided by the Exchange for use by Institutional Brokers. 
See Article 17, Rule 5.
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\8\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\9\ in particular, in that it is designed to promote 
just and equitable principles of trade; 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. 
As a result of uncertainty related to the ongoing spread of the COVID-
19 virus, three major options trading floors temporarily remain closed. 
In addition, social-distancing measures have been implemented 
throughout the country to reduce the spread of COVID-19, resulting in 
staff of options floor traders and Institutional Brokers working from 
home.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
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    The proposed rule change would allow the Exchange to temporarily 
extend the time by which Institutional Brokers would be required to 
report non-tape, clearing-only submissions into the Exchange's systems 
for a given non-Exchange transaction to 8:00 p.m. ET of the day on 
which the execution of such transaction occurred rather than within 
three (3) hours of the execution of such transaction. The Exchange 
believes that this temporary relief is necessary and appropriate in the 
public interest, and is consistent with the protection of investors, 
given the changes to workflow that increase the time it takes for 
Institutional Brokers to obtain complete information about 
counterparties for such trades during a period when options trading 
floors are closed and both options floor traders and Institutional 
Brokers are working from home as precautionary measures to protect the 
health and safety of their employees and to prevent the spread of 
COVID-19. In particular, this proposed rule change would have no impact 
on trade reporting or clearing of trades, as all trades would be 
reported to the Consolidated Tape in accordance with applicable trade 
reporting rules of the TRF and submitted to DTCC for clearing in a 
timely manner.

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 not necessary or appropriate in 
furtherance of the purposes of the Act. The proposed rule change is not 
designed to address any competitive issues but rather to extend the 
time of the temporary relief provided to Institutional Brokers that are 
required to comply with Article 21, Rule 6(a)(3) during a temporary 
period when the options trading floors are closed and staff of options 
floor traders and Institutional Brokers are working from home.

[[Page 31016]]

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 \10\ and Rule 19b-4(f)(6) thereunder.\11\ 
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.\12\
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    \10\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \11\ 17 CFR 240.19b-4(f)(6).
    \12\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires the Exchange to give the Commission written notice of the 
Exchange's 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) \13\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\14\ 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 so that the proposal 
may become operative immediately upon filing. The proposal would extend 
the temporary relief granted by the Exchange to provide additional time 
to institutional brokers to report certain transactions while the 
options trading floors are closed and market participants' staff are 
working from home. The Commission notes that the proposal extends the 
temporary measure designed to respond to current, unprecedented market 
conditions. For these reasons, the Commission believes that waiver of 
the 30-day operative delay is consistent with the protection of 
investors and the public interest. Accordingly, the Commission hereby 
waives the 30-day operative delay and designates the proposal operative 
upon filing.\15\
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    \13\ 17 CFR 240.19b-4(f)(6).
    \14\ 17 CFR 240.19b-4(f)(6)(iii).
    \15\ 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 the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule change should be approved or 
disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-NYSECHX-2020-16 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSECHX-2020-16. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (http://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for website viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549, on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of the filing also will be available for inspection 
and copying at the principal office of the Exchange. All comments 
received will be posted without change. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-NYSECHX-2020-16, and should be submitted 
on or before June 11, 2020.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12) and (59).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-10926 Filed 5-20-20; 8:45 am]
 BILLING CODE 8011-01-P