Document ID: SEC-2022-0408-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange, LLC
Posted Date: 2022-03-24T04:00Z

[Federal Register Volume 87, Number 57 (Thursday, March 24, 2022)]
[Notices]
[Pages 16773-16775]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-06188]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-94467; File No. SR-NYSE-2022-13]

Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Order Granting Accelerated Approval of a Proposed 
Rule Change for Certain Amendments to the Preamble to Rule 9217

March 18, 2022.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on March 4, 2022, New York Stock Exchange LLC (``NYSE'' or the 
``Exchange'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I and II 
below, which Items have been prepared by the Exchange. The Commission 
is publishing this notice to solicit comments on the proposed rule 
change from interested persons and approving the proposal on an 
accelerated basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 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 amendments to the preamble to Rule 
9217. 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 III 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 amendments to the preamble to Rule 
9217.

[[Page 16774]]

    The preamble to current Rule 9217 consists of two paragraphs. The 
first provides that any member organization of covered person \3\ may 
be subject to a fine under Rule 9216(b) with respect to any rules 
listed therein and that the fine amounts and fine levels set forth 
therein shall apply to the fines imposed. The second paragraph provides 
that nothing in the rule requires the Exchange to impose a fine for a 
violation of any rule under the Minor Rule Plan and that 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 Rule 9217.
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    \3\ Rule 9120(g) defines covered person to mean a member, 
principal executive, approved person, registered or non-registered 
employee of a member organization, or other person (excluding a 
member organization) subject to the jurisdiction of the Exchange.
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    The Exchange proposes to add two additional paragraphs to the 
preamble based on the preamble to the version of Rule 9217 adopted by 
the Exchange's affiliate NYSE Arca, Inc. (``NYSE Arca'') and to reorder 
the paragraphs as subsections (a) through (d), as follows.
    The current first paragraph of the preamble to Rule 9217 would 
become new subsection (a). The text would be unchanged except that the 
Exchange would add ``, not to exceed $5,000,'' after fine to clarify 
that a minor rule fine on the Exchange cannot exceed $5,000.\4\
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    \4\ See Securities Exchange Act Release No. 87212 (October 3, 
2019), 84 FR 54193 (October 9, 2019) (SR-NYSE-2019-44) (Order) 
(increasing the maximum fine for minor rule violations to $5,000 in 
order to align the Exchange's minor rule plan more closely with that 
of its affiliates).
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    The Exchange would add a new subsection (b) that would provide that 
Regulatory Staff designated by the Exchange shall have the authority to 
impose a fine pursuant to this Rule. Proposed Rule 9217(b) is identical 
to NYSE Arca Rule 10.9217(b).
    The Exchange would also add the following text as new subsection 
(c) to Rule 9217:

    Any person or organization found in violation of a minor rule is 
not required to report such violation on SEC Form BD or Form U-4 if 
the sanction imposed consists of a fine not exceeding $2,500 and the 
sanctioned person or organization has not sought an adjudication, 
including a hearing, or otherwise exhausted the administrative 
remedies available with respect to the matter. Any fine imposed in 
excess of $2,500 is subject to current rather than quarterly 
reporting to the Commission pursuant to Rule 19d-1 under the Act.

    Proposed subsection (c) is identical to NYSE Arca Rule 10.9217(c).
    Finally, the current second paragraph of the preamble to Rule 9217 
would become new subsection (d). The text of proposed Rule 9217(d) 
would be unchanged.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Act,\5\ in general, and furthers the objectives of Section 6(b)(5),\6\ 
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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    \5\ 15 U.S.C. 78f(b).
    \6\ 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 when the conduct at issue does not 
warrant stronger, immediately reportable disciplinary sanctions. The 
inclusion of a rule in Rule 9217 does not minimize the importance of 
compliance with the rule, nor does it preclude the Exchange from 
choosing to pursue violations of eligible rules through formal 
disciplinary action if the nature of the violations or prior 
disciplinary history warrants more significant sanctions. The option to 
impose a minor rule sanction gives the Exchange additional flexibility 
to administer its enforcement program in the most effective and 
efficient manner while still fully meeting the Exchange's remedial 
objectives in addressing violative conduct.
    The Exchange believes that harmonizing the preamble to Rule 9217 
with that of its affiliates would remove impediments to and perfect the 
mechanism of a free and open market and a national market system by a 
providing greater harmonization between Exchange rules and those of its 
affiliates in connection with minor rule fines, thereby fostering 
cooperation and coordination with persons engaged in facilitating 
transactions in securities and will remove impediments to and perfect 
the mechanism of a free and open market and a national market system. 
Moreover, by adopting the same applicable minor rule standards for 
violations of those standards as its affiliates, the Exchange would 
promote regulatory consistency.

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 align the 
Exchange's rule setting forth violations eligible for a minor rule fine 
more closely with that of its affiliates.

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. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-NYSE-2022-13 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSE-2022-13. 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

[[Page 16775]]

received will be posted without change. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-NYSE-2022-13 and should be submitted on 
or before April 14, 2022.

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.\7\ In 
particular, the Commission finds that the proposed rule change is 
consistent with Section 6(b)(5) of the Act,\8\ 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 \9\ 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,\10\ which 
governs minor rule violation plans.
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    \7\ 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).
    \8\ 15 U.S.C. 78f(b)(5).
    \9\ 15 U.S.C. 78f(b)(1) and 78f(b)(6).
    \10\ 17 CFR 240.19d-1(c)(2).
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    As stated above, the Exchange proposes certain amendments to the 
preamble of Rule 9217. Specifically, the Exchange proposes to add two 
additional paragraphs to the preamble based on the preamble of NYSE 
Arca, its affiliate exchange, add clarifying language regarding the 
maximum fine amount for violations appropriate for disposition under 
Rule 9216(b), and reorder the paragraphs to the preamble of Rule 9217. 
The Commission believes that Rule 9217 is an effective way to 
discipline a member for a minor violation of a rule. The Commission 
finds that the Exchange's proposal to amend the preamble is consistent 
with the Act because it may help the Exchange's ability to better carry 
out its oversight and enforcement responsibilities. The Commission also 
believes that the Exchange's proposal to add clarifying language 
regarding the maximum fine amount for violations appropriate for 
disposition under Rule 9216(b) and to reorder the paragraphs in the 
preamble is consistent with the Act because such changes will add 
clarity and accuracy to the Exchange's rules.
    In approving the propose rule change, the Commission in no way 
minimizes the importance of compliance with the Exchange's rules and 
all other rules subject to fines under Rule 9217. The Commission 
believes that a violation of any self-regulatory organization's rules, 
as well as Commission rules, is a serious matter. However, Rules 
9216(b) and 9217 provide a reasonable means of addressing rule 
violations that may not rise to the level of requiring formal 
disciplinary proceedings, while providing greater flexibility in 
handling certain violations. The Commission expects that the Exchange 
will continue to conduct surveillance with due diligence and make a 
determination based on its findings, on a case-by-case basis, whether a 
fine of more or less than the recommended amount is appropriate for a 
violation under Rule 9217 or whether a violation requires formal 
disciplinary action.
    For the same reasons discussed above, the Commission finds good 
cause, pursuant to Section 19(b)(2) of the Act,\11\ 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 will assist the Exchange in preventing 
fraudulent and manipulative practices by allowing the Exchange to 
adequately enforce compliance with, and provide appropriate discipline 
for, violations of Exchange rules. Accordingly, the Commission believes 
that a full notice-and-comment period is not necessary before approving 
the proposal.
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    \11\ 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 
\12\ and Rule 19d-1(c)(2) thereunder,\13\ that the proposed rule change 
(SR-NYSE-2022-13) be, and hereby is, approved on an accelerated basis.
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    \12\ 15 U.S.C. 78s(b)(2).
    \13\ 17 CFR 240.19d-1(c)(2).
    \14\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-06188 Filed 3-23-22; 8:45 am]
BILLING CODE 8011-01-P