Document ID: SEC-2021-0016-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange, LLC
Posted Date: 2021-01-05T05:00Z

[Federal Register Volume 86, Number 2 (Tuesday, January 5, 2021)]
[Notices]
[Pages 335-338]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-29131]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-90810; File No. SR-NYSE-2020-109]

Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Add Commentary .07 to Rule 7.35A To Provide That, for a Temporary 
Period, the Exchange Will Permit DMMs Limited-Entry to the Trading 
Floor or Remote Access to Floor-Based System for Certain Auctions

December 29, 2020.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that on December 28, 2020, New York Stock Exchange LLC (``NYSE'' 
or the ``Exchange'') filed

[[Page 336]]

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.
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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 add Commentary .07 to Rule 7.35A to 
provide that, for a temporary period that begins December 28, 2020, and 
ends on the earlier of a full reopening of the Trading Floor facilities 
to DMMs or after the Exchange closes on April 30, 2021, the Exchange 
would (1) permit a DMM limited entry to the Trading Floor or (2) 
provide a DMM remote access to Floor-based systems, for the purpose of 
effecting a manual Core Open Auction in connection with a corporate 
action that may result in a significant price discovery event or a 
manual Direct Listing Auction. The proposed rule change is available on 
the Exchange's website at www.nyse.com, at the principal office of the 
Exchange, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of those statements may be examined at 
the places specified in Item IV below. The Exchange has prepared 
summaries, set forth in sections A, B, and C below, of the most 
significant parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to add Commentary .07 to Rule 7.35A to 
provide that, for a temporary period that begins December 28, 2020, and 
ends on the earlier of a full reopening of the Trading Floor facilities 
to DMMs or after the Exchange closes on April 30, 2021, the Exchange 
would (1) permit a DMM limited entry to the Trading Floor or (2) 
provide a DMM remote access to Floor-based systems, for the purpose of 
effecting a manual Core Open Auction in connection with a corporate 
action that may result in a significant price discovery event or a 
manual Direct Listing Auction.
Background
    On December 23, 2020, in response to changes in the New York City-
area public health conditions, the CEO of the Exchange made a 
determination under Rule 7.1(c)(3) that DMMs would temporarily return 
to remote operations beginning on Monday, December 28, 2020.\4\ The 
Exchange previously moved to fully electronic trading on a temporary 
basis \5\ and then partially reopened in two phases,\6\ subject to 
safety measures designed to prevent the spread of COVID-19.
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    \4\ See Trader Update, dated December 23, 2020, available here: 
https://www.nyse.com/publicdocs/nyse/notifications/trader-update/DMMs_moving_remote_December_2020.pdf.
    \5\ Beginning March 23, 2020, the Trading Floor facilities 
located at 11 Wall Street in New York City temporarily closed. See 
Press Release, dated March 18, 2020, available here: https://ir.theice.com/press/press-releases/all-categories/2020/03-18-2020-204202110. The Exchange's current rules establish how the Exchange 
will function fully-electronically.
    \6\ On May 23, 2020, the Trading Floor was reopened on a limited 
basis to a subset of Floor brokers. See Securities Exchange Act 
Release No. 88933 (May 22, 2020), 85 FR 32059 (May 28, 2020) (SR-
NYSE-2020-47) (Notice of filing and immediate effectiveness of 
proposed rule change). On June 17, 2020, the Trading Floor was 
reopened to a subset of DMMs. See Securities Exchange Act Release 
No. 89086 (June 17, 2020) (SR-NYSE-2020-52) (Notice of filing and 
immediate effectiveness of proposed rule change).
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    During the prior temporary period when DMMs operated remotely, the 
Exchange added Commentaries .02, .03, .04, and .05 to Rule 7.35A, which 
set forth limited circumstances when a DMM may be permitted limited 
entry to the Trading Floor or provided remote access to Floor-based 
systems for the purpose of effecting a manual IPO Auction, Core Open 
Auction in connection with a listed company's post-IPO public offering, 
or Trading Halt Auction for reopening a security following a regulatory 
halt issued under Section 2 of the Listed Company Manual.\7\ Because 
these Commentaries remain operative,\8\ beginning December 28, 2020, 
the relief described in these Commentaries will be available to DMMs.
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    \7\ See Securities Exchange Act Release Nos. 88488 (March 26, 
2020), 85 FR 18286 (April 1, 2020) (SR-NYSE-2020-23) (amending Rule 
7.35A to add Commentary .02); 88546 (April 2, 2020), 85 FR 19782 
(April 8, 2020) (SR-NYSE-2020-28) (amending Rule 7.35A to add 
Commentary .03); 88705 (April 21, 2020), 85 FR 23413 (April 27, 
2020) (SR-NYSE-2020-35) (amending Rule 7.35A to add Commentary .04); 
and 88950 (May 26, 2020), 85 FR 33252 (June 1, 2020) (SR-NYSE-2020-
48) (amending Rule 7.35A to add Commentary .05).
    \8\ See Securities Exchange Act Release No. 90795 (December 23, 
2020) (SR-NYSE-2020-106) (Notice of filing and immediate 
effectiveness of proposed rule change to extend the temporary period 
for specified Commentaries to Rules 7.35, 7.35A, 7.35B, and 7.35C 
and temporary rule relief in Rule 36.30).
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Proposed Rule Change
    The Exchange proposes to add Commentary .07 to Rule 7.35A to 
provide that, for a temporary period that begins December 28, 2020, and 
ends on the earlier of a full reopening of the Trading Floor facilities 
to DMMs or after the Exchange closes on April 30, 2021, the Exchange 
would (1) permit a DMM limited entry to the Trading Floor or (2) 
provide a DMM remote access to Floor-based systems, for the purpose of 
effecting a manual Core Open Auction in connection with a corporate 
action that may result in a significant price discovery event or a 
manual Direct Listing Auction.
    As noted above, during the prior temporary period while the Trading 
Floor was closed to DMMs, the Exchange permitted limited reentry to the 
Trading Floor for the purposes of effecting an IPO Auction, Core Open 
Auction in connection with a post-IPO offering, and specified Trading 
Halt Auctions. The Exchange has also provided DMMs with remote access 
to NYSE trading systems that are located on the Trading Floor so that a 
DMM can manually effect such Auctions remotely. The Exchange now 
proposes to provide DMMs with limited entry to the Trading Floor or 
remote access to NYSE trading systems so that a DMM may manually effect 
a Core Open Auction in connection with a corporate action that may 
result in a significant price discovery event or a Direct Listing 
Auction.
    To effect this change, the Exchange proposes to add Commentary .07 
to Rule 7.35A to provide that:

    For a temporary period that begins on December 28, 2020 and ends 
on the earlier of a full reopening of the Trading Floor facilities 
to DMMs or after the Exchange closes on April 30, 2021, the Exchange 
will (1) permit a DMM limited entry to the Trading Floor or (2) 
provide a DMM remote access to Floor-based systems, for the purpose 
of effecting a manual Core Open Auction in connection with a 
corporate action that may result in a significant price discovery 
event or a manual Direct Listing Auction.

    After a security is listed, an issuer may undergo a corporate 
action that results in a significant price discovery event for the Core 
Open Auction on the morning of such corporate action. For example, a 
new company may be listing in connection with a carve-out or spin-off 
transaction. In such cases, both the

[[Page 337]]

newly listed company and the existing issuer that is carving out or 
spinning off a new listed company may undergo significant price 
discovery events in their respective Core Open Auctions. Similarly, a 
company emerging from bankruptcy may have a significant price discovery 
event for its Core Open Auction. In addition, upon consumption of a 
business combination, the Core Open Auction for an issuer listed as a 
special purpose acquisition company (``SPAC'') may also result in a 
significant price discovery event.\9\
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    \9\ Section 102.06 of the Listed Company Manual sets forth 
initial listing requirements applicable to a company whose business 
plan is to complete an initial public offering and engage in a 
merger or acquisition with one or more unidentified companies within 
a specified period of time.
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    While a DMM is permitted under Exchange rules to effect Core Open 
Auctions electronically, even when a security is affected by a 
corporate action, DMMs generally manually facilitate Core Open Auctions 
for issuers undergoing corporate actions that may result in a 
significant price discovery event. When a DMM manually effects such 
Core Open Auctions, the DMM is able to publish pre-opening indications 
pursuant to Rule 7.35A(d), which would be in addition to the Auction 
Imbalance Information available for such Core Open Auctions, thus 
promoting transparency in advance of a significant pricing event. In 
addition, when manually effecting such Core Open Auctions, the DMM can 
assess the buy and sell interest and determine when and at what price 
to open the security. The Exchange believes that during the temporary 
period when DMMs are operating remotely, it would promote fair and 
orderly markets to provide DMMs with limited entry to the Trading Floor 
or remote access to Floor-based systems so that DMMs may continue to 
effect such Core Open Auctions manually.
    Separately, because of the importance of the DMM to the Direct 
Listing Auction, the Exchange recently amended Rule 7.35C to provide 
that the Exchange would not facilitate Direct Listing Auctions.\10\ In 
addition, DMMs are not permitted to facilitate a Direct Listing Auction 
electronically.\11\ Accordingly, a DMM must facilitate a Direct Listing 
Auction manually. To enable the Exchange to provide issuers with the 
option to list on the Exchange via a Direct Listing during the 
temporary period when DMMs are operating remotely, the Exchange 
proposes that DMMs be permitted limited entry to the Trading Floor and 
be provided remote access to Floor-based systems for the purpose of 
manually effecting a Direct Listing Auction.
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    \10\ See Securities Exchange Act Release No. 90768 (December 22, 
2020) (SR-NYSE-2019-67) (Order setting aside action by delegated 
authority and approving a proposed rule change).
    \11\ See Rule 7.35C(c)(1)(C).
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    This proposed rule change could be implemented immediately.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Act,\12\ in general, and furthers the objectives of Section 6(b)(5) of 
the Act,\13\ in particular, in that 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, and to 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system.
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    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(5).
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    On December 23, 2020, the CEO made a determination under Rule 
7.1(c)(3) that, beginning December 28, 2020, as a precautionary 
measure, DMM units would return to working remotely.
    The Exchange believes that the proposed rule change would remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system because it would promote fair and orderly Core 
Open Auctions in connection with an issuer undergoing a corporate 
action that may result in a significant price discovery event. The 
Exchange believes that it would promote fair and orderly markets to 
provide the DMM with mechanisms to facilitate such Core Open Auctions 
manually because it would provide flexibility for the DMM of when to 
facilitate such Auctions and at what price. DMMs would also be able to 
publish pre-opening indications in connection with such Core Open 
Auctions, which would promote transparency.
    In addition, because a Direct Listing Auction must be effected 
manually, this proposed rule change would allow for Direct Listing 
Auctions to occur during the period when the Trading Floor is 
temporarily closed to DMMs. Accordingly, this proposed rule change 
would remove impediments to and perfect the mechanism of a free and 
open market and a national market system because the Exchange would be 
able to provide issuers with the option to list on the Exchange via a 
Direct Listing during the temporary period when DMMs are operating 
remotely.
    The Exchange believes that, by clearly stating that this relief 
will be in effect through the earlier of the reopening of the Trading 
Floor facilities or the close of the Exchange on April 30, 2021, market 
participants will have advance notice that a Core Open Auction in 
connection with an issuer undergoing a corporate action that may result 
in a significant price discovery event may be effected manually by the 
DMM during this period, and therefore may not be conducted at 9:30 a.m.

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

    The Exchange does not believe that the proposed rule change would 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. The proposed rule change is 
not designed to address any competitive issues but rather is designed 
to ensure fair and orderly Core Open Auctions in connection with a 
corporate action that may result in a significant pricing event and 
Direct Listing Auctions by providing a DMM with either limited access 
to the Trading Floor or remote access to Floor-based systems for the 
sole purpose of effecting such Auctions manually during a temporary 
period when the Exchange Trading Floor has been closed to DMMs in 
response to social-distancing measures designed to reduce the spread of 
the COVID-19 virus.

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 \14\ and Rule 19b-4(f)(6) thereunder.\15\ 
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; or (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

[[Page 338]]

19(b)(3)(A)(iii) of the Act \16\ and Rule 19b-4(f)(6)(iii) 
thereunder.\17\
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    \14\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \15\ 17 CFR 240.19b-4(f)(6).
    \16\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \17\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change, along 
with a brief description and text of the proposed rule change, at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has complied with this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) \18\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\19\ 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 take effect immediately. The Exchange has stated that, because of 
the rapid changes to the New York City-area public health conditions, 
it made the determination to close the Trading Floor to DMMs with only 
two business days' notice before such closure would take effect. 
However, the Exchange represents that at least three SPACs listed on 
the Exchange are anticipated to complete their business combinations 
during the week of December 28, 2020, and the Core Open Auctions for 
such securities are expected to be significant pricing events. The 
Exchange has asked the Commission to waive the operative delay so that 
the DMM assigned to these securities would be able to effect the Core 
Open Auctions manually. The Commission believes that waiver of the 
operative delay is consistent with the protection of investors and the 
public interest because it will allow the proposed rules to become 
effective in time for DMMs to manually effect Core Open Auctions for 
those securities that are anticipated to have significant price 
discovery events during the week of December 28, 2020. Accordingly, the 
Commission hereby waives the 30-day operative delay and designates the 
proposal operative upon filing.\20\
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    \18\ 17 CFR 240.19b-4(f)(6).
    \19\ 17 CFR 240.19b-4(f)(6)(iii).
    \20\ For purposes only of accelerating the operative date of 
this proposal, the Commission has considered the proposed rule's 
impact on efficiency, competition, and capital formation. 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of such proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings under 
Section 19(b)(2)(B) \21\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \21\ 15 U.S.C. 78s(b)(2)(B).
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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-NYSE-2020-109 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-2020-109. 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-NYSE-2020-109 and should be submitted on 
or before January 26, 2021.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\22\
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    \22\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-29131 Filed 1-4-21; 8:45 am]
BILLING CODE 8011-01-P