Document ID: SEC-2020-2085-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange LLC
Posted Date: 2020-12-29T05:00Z

[Federal Register Volume 85, Number 249 (Tuesday, December 29, 2020)]
[Notices]
[Pages 85712-85716]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-28664]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-90744; File No. SR-NYSE-2020-102]

Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend Its Price List

December 21, 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 15, 2020, 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 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 amend its Price List to extend the waiver 
of equipment and related service charges and trading license fees for 
NYSE Trading Floor-based member organizations. The Exchange proposes to 
implement the fee changes effective January 1, 2021. 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.

[[Page 85713]]

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 amend its Price List to extend the waiver 
of equipment and related service charges and trading license fees for 
NYSE Trading Floor-based member organizations that have been unable to 
resume their Floor operations to a certain capacity level, as discussed 
below. The Exchange proposes to implement the fee change effective 
January 1, 2021.
    As proposed, the Exchange would waive 50% of the Telephone System 
charges and Service Charges (except for the internet Equipment Monthly 
Hosting Fee) and trading license fees for the billing month of January 
2021 only for member organizations that (1) meet the current 
requirements for these waivers, and (2) are unable to operate at more 
than 50% of their March 2020 on-Floor staffing levels or, for member 
organizations that began Floor operations after March 2020, are unable 
to operate at more than 50% of their Exchange-approved on-Floor 
staffing levels, both excluding part-time Floor brokers.
Background
    Beginning on March 16, 2020, in order to slow the spread of the 
novel coronavirus (``COVID-19'') through social distancing measures, 
significant limitations were placed on large gatherings throughout the 
country. As a result, on March 18, 2020, the Exchange determined that 
beginning March 23, 2020, the physical Trading Floor facilities located 
at 11 Wall Street in New York City would close and that the Exchange 
would move, on a temporary basis, to fully electronic trading.\4\ 
Following the temporary closure of the Trading Floor, the Exchange 
waived certain equipment fees for the booth telephone system on the 
Trading Floor and associated service charges for the months of April 
and May.\5\
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    \4\ See Press Release, dated March 18, 2020, available here: 
https://ir.theice.com/press/press-releases/allcategories/2020/03-18-2020-204202110.
    \5\ See Securities Exchange Act Release No. 88602 (April 8, 
2020), 85 FR 20730 (April 14, 2020) (SR-NYSE-2020-27); Securities 
Exchange Act Release No. 88874 (May 14, 2020), 85 FR 30743 (May 20, 
2020) (SR-NYSE-2020-29). See footnote 11 of the Price List.
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    On May 14, 2020, the Exchange announced that on May 26, 2020 
trading operations on the Trading Floor would resume on a limited basis 
to a subset of Floor brokers, subject to health and safety measures 
designed to prevent the spread of COVID-19.\6\ On June 15, 2020, the 
Exchange announced that on June 17, 2020, the Trading Floor would 
reintroduce a subset of DMMs, also subject to health and safety 
measures designed to prevent the spread of COVID-19.\7\ Following this 
partial reopening of the Trading Floor, the Exchange extended the 
equipment fee waiver for the months of June through December 2020.\8\ 
The Trading Floor continues to operate with reduced headcount and 
additional health and safety precautions.\9\
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    \6\ See Trader Update, dated May 14, 2020, available here: 
https://www.nyse.com/traderupdate/history#110000251588.
    \7\ See Trader Update, dated June 15, 2020, available here: 
https://www.nyse.com/trader-update/history#110000272018.
    \8\ See Securities Exchange Act Release No. 89050 (June 11, 
2020), 85 FR 36637 (June 17, 2020) (SR-NYSE-2020-49); Securities 
Exchange Act Release No. 89324 (July 15, 2020), 85 FR 44129 (July 
21, 2020) (SR-NYSE-2020-59); Securities Exchange Act Release No. 
89754 (September 2, 2020), 85 FR 55550 (September 8, 2020) (SR-NYSE-
2020-71); Securities Exchange Act Release No. 89798 (September 9, 
2020), 85 FR 57263 (September 15, 2020) (SR-NYSE-2020-72); 
Securities Exchange Act Release No. 90161 (October 13, 2020), 85 FR 
66370 (October 19, 2020) (SR-NYSE-2020-81); and Securities Exchange 
Act Release No. 90391 (November 10, 2020), 85 FR 73326 (November 17, 
2020) (SR-NYSE-2020-92).
    \9\ See Trader Update, dated June 15, 2020, available here: 
https://www.nyse.com/trader-update/history#110000272018. DMMs 
continue to support a subset of NYSE-listed securities remotely.
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Proposed Rule Change
    In response to the unprecedented events surrounding the spread of 
COVID-19 in 2020, the Exchange waived certain equipment and related 
service charges and trading license fees for NYSE Trading Floor-based 
member organizations for the months of April through December 2020.
    Specifically, during that period the Exchange waived the Annual 
Telephone Line Charge of $400 per phone number and the $129 fee for a 
single line phone, jack, and data jack. The Exchange also waived 
related service charges, as follows: $161.25 to install single jack 
(voice or data); $107.50 to relocate a jack; $53.75 to remove a jack; 
$107.50 to install voice or data line; $53.75 to disconnect data line; 
$53.75 to change a phone line subscriber; and miscellaneous telephone 
charges billed at $106 per hour in 15 minute increments.\10\ These fees 
were waived for (1) member organizations with at least one trading 
license, a physical Trading Floor presence, and Floor broker executions 
accounting for 40% or more of the member organization's combined 
adding, taking, and auction volumes during March 1 to March 20, 2020, 
or, beginning in August 2020, if not a member organization during March 
1 to March 20, 2020, based on the member organization's combined 
adding, taking, and auction volumes during its first month as a member 
organization on or after May 26, 2020, i.e., the date the Trading Floor 
re-opened on a limited basis, and (2) member organizations with at 
least one trading license that are Designated Market Makers with 30 or 
fewer assigned securities for the billing month of March 2020.
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    \10\ The Service Charges also include an internet Equipment 
Monthly Hosting Fee that the Exchange did not previously waive and 
that the Exchange does not propose to waive for January 2021.
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    In addition, to further reduce costs for member organizations with 
a Trading Floor presence, the Exchange waived the monthly portion of 
all applicable annual fees between April and December 2020, for (1) 
member organizations with at least one trading license, a physical 
Trading Floor presence and Floor broker executions accounting for 40% 
or more of the member organization's combined adding, taking, and 
auction volumes during March 1 to March 20, 2020, or, beginning in 
August 2020, if not a member organization during March 1 to March 20, 
2020, based on the member organization's combined adding, taking, and 
auction volumes during its first month as a member organization on or 
after May 26, 2020, and (2) member organizations with at least one 
trading license that are DMMs with 30 or fewer assigned securities for 
the billing month of March 2020.\11\
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    \11\ See notes 5-8, supra. See footnote 15 of the Price List. 
Beginning in August 2020, member organizations with a physical 
trading Floor presence that became member organizations on or after 
April 1, 2020 became eligible for a one-time credit for the member 
organization's indicated annual trading license fee for the months 
of April through July 2020 if the member organization meets the 
other requirements for the waiver described in footnote 15 of the 
Price List. The Exchange proposes to delete this language from the 
Price List as moot.
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    Because the Trading Floor continues to operate with reduced 
capacity, the Exchange proposes to extend the waiver of these Trading 
Floor-based fees for the billing month of January 2021. As proposed, 
the Exchange would waive 50% of the Annual Telephone Line Charge of 
$400 per phone number; the $129 fee for a single line phone, jack, and 
data jack; the related service charges ($161.25 to install single jack 
(voice or data); $107.50 to relocate a jack; $53.75 to remove a jack; 
$107.50 to install voice or data line; $53.75 to disconnect data line; 
$53.75 to change a phone line subscriber; and miscellaneous telephone 
charges billed

[[Page 85714]]

at $106 per hour in 15 minute increments); and the monthly portion of 
all applicable annual fees only for member organizations that
     meet the current requirements of having at least one 
trading license, a physical trading Floor presence and Floor broker 
executions accounting for 40% or more of the member organization's 
combined adding, taking, and auction volumes during March 1 to March 
20, 2020 or, if not a member organization during March 1 to March 20, 
2020, based on the member organization's combined adding, taking, and 
auction volumes during its first month as a member organization on or 
after May 26, 2020, and
     are unable to operate at more than 50% of their March 2020 
on-Floor staffing levels or, for member organizations that began Floor 
operations after March 2020, are unable to operate at more than 50% of 
their Exchange-approved on-Floor staffing levels, both excluding part-
time Floor brokers known as ``flex brokers'' (hereinafter, ``Qualifying 
Firms'').
    Because the Trading Floor will continue to operate with reduced 
capacity, the Exchange proposes to extend the fee waiver for Qualifying 
Firms for the billing month of January 2021. The Exchange proposes to 
cap the waiver at 50%. The Exchange also proposes to clarify that 
Qualifying Firms would include firms that began Floor operations after 
March 2020 that are unable to operate at more than 50% of their 
Exchange-approved on-Floor staffing levels, both excluding part-time 
Floor brokers. The Exchange does not propose to extend the waiver of 
equipment and related service charges and trading license fees for DMMs 
with at least one trading license and 30 or fewer assigned securities 
for the billing month of March 2020, which expire at the end of 
December 2020.
    The proposed fee change is designed to reduce monthly costs for all 
Qualifying Firms whose operations continue to be disrupted even though 
the Trading Floor has partially reopened. In reducing this monthly 
financial burden, the proposed change would allow Qualifying Firms that 
that are unable to operate at more than 50% of their March 2020 or 
Exchange-approved on-Floor staffing levels to reallocate funds to 
assist with the cost of shifting and maintaining their prior fully-
staffed on-Floor operations to off-Floor and recoup losses resulting 
from the partial reopening. The Exchange believes that all Qualifying 
Firms would benefit from the proposed fee change.
    The proposed changes are not otherwise intended to address other 
issues, and the Exchange is not aware of any significant problems that 
market participants would have in complying with the proposed changes.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\12\ in general, and furthers the 
objectives of Sections 6(b)(4) and (5) of the Act,\13\ in particular, 
because it provides for the equitable allocation of reasonable dues, 
fees, and other charges among its members, issuers and other persons 
using its facilities and does not unfairly discriminate between 
customers, issuers, brokers or dealers.
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    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(4) & (5).
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    The Exchange operates in a highly competitive market. The 
Commission has repeatedly expressed its preference for competition over 
regulatory intervention in determining prices, products, and services 
in the securities markets. In Regulation NMS, the Commission 
highlighted the importance of market forces in determining prices and 
SRO revenues and, also, recognized that current regulation of the 
market system ``has been remarkably successful in promoting market 
competition in its broader forms that are most important to investors 
and listed companies.'' \14\
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    \14\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37495, 37499 (June 29, 2005) (S7-10-04) (Final Rule) 
(``Regulation NMS'').
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    While Regulation NMS has enhanced competition, it has also fostered 
a ``fragmented'' market structure where trading in a single stock can 
occur across multiple trading centers. When multiple trading centers 
compete for order flow in the same stock, the Commission has recognized 
that ``such competition can lead to the fragmentation of order flow in 
that stock.'' \15\ Indeed, equity trading is currently dispersed across 
16 exchanges,\16\ 31 alternative trading systems,\17\ and numerous 
broker-dealer internalizers and wholesalers, all competing for order 
flow. Based on publicly-available information, no single exchange has 
more than 16% market share.\18\ Therefore, no exchange possesses 
significant pricing power in the execution of equity order flow. More 
specifically, the Exchange's market share of trading in Tape A, B and C 
securities combined is less than 12%.
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    \15\ See Securities Exchange Act Release No. 61358, 75 FR 3594, 
3597 (January 21, 2010) (File No. S7-02-10) (Concept Release on 
Equity Market Structure).
    \16\ See Cboe Global Markets, U.S. Equities Market Volume 
Summary, available at http://markets.cboe.com/us/equities/market_share/. See generally https://www.sec.gov/fast-answers/divisionsmarketregmrexchangesshtml.html.
    \17\ See FINRA ATS Transparency Data, available at https://otctransparency.finra.org/otctransparency/AtsIssueData. A list of 
alternative trading systems registered with the Commission is 
available at https://www.sec.gov/foia/docs/atslist.htm.
    \18\ See Cboe Global Markets U.S. Equities Market Volume 
Summary, available at http://markets.cboe.com/us/equities/market_share/.
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The Proposed Change Is Reasonable
    The proposed extension of the waiver of equipment and related 
service fees and the applicable monthly trading license fee for 
Qualified Firms is reasonable in light of the continued partial closure 
of the NYSE Trading Floor as a result of spread of COVID-19. The 
proposed change is reasonable because it would reduce monthly costs for 
all Qualifying Firms whose operations have been disrupted despite the 
fact that the Trading Floor has partially reopened because of the 
social distancing requirements and/or other health concerns related to 
resuming operation on the Trading Floor. In reducing this monthly 
financial burden, the proposed change would allow Qualifying Firms that 
that are unable to operate at more than 50% of their March 2020 or 
Exchange-approved on-Floor staffing levels to reallocate funds to 
assist with the cost of shifting and maintaining their prior fully-
staffed on-Floor operations to off-Floor and recoup losses resulting 
from the partial reopening of the Trading Floor.
The Proposal Is an Equitable Allocation of Fees
    The Exchange believes the proposed extension of the waiver of 
equipment and related service fees and the applicable monthly trading 
license fee for Qualified Members is an equitable allocation of fees. 
The proposed waivers apply to all Trading Floor-based firms meeting 
specific requirements during the specified period that the Trading 
Floor remains partially open. The Exchange believes the proposed rule 
change is an equitable allocation of its fees and credits as it 
continues the previous fee waiver for Qualifying Firms, which affects 
fees charged only to Floor participants and does not apply to 
participants that conduct business off-Floor. The Exchange believes it 
is an equitable allocation of fees and credits to extend the fee waiver 
for Qualifying Firms because such firms have either no more than half 
of their Floor staff (as measured by either the March 2020 or Exchange-
approved) levels, and this reduction in staffing levels on the Trading 
Floor impacts the speed, volume and efficiency with which these

[[Page 85715]]

firms can operate, to their financial detriment.
The Proposal Is Not Unfairly Discriminatory
    The Exchange believes that the proposal is not unfairly 
discriminatory because the proposed continuation of the fee waiver 
would affect all similarly-situated market participants on an equal and 
non-discriminatory basis. The Exchange is not proposing to waive the 
Trading Floor-related fees indefinitely, but rather during the 
specified period during which the Trading Floor is not fully open. The 
Exchange believes that it is reasonable to clarify that firms that 
began Floor operations on the Exchange after March 2020 would be 
included as ``Qualifying Firms'' if such firms are unable to operate at 
more than 50% of their Exchange-approved on-Floor staffing levels 
insofar as such treatment places all firms on a level playing field, 
meet the current requirements for the waiver, and avoids placing 
``newer'' Qualifying Firms at a financial disadvantage. The Exchange 
also believes that the proposed change would add clarity and 
transparency and reduce the potential for confusion in the Fee Schedule 
as relates to the treatment new Floor participants. Moreover, as noted, 
the proposed fee change is designed to ease the financial burden on 
Trading Floor-based member organizations that cannot fully conduct 
Floor operations.
    For the foregoing reasons, the Exchange believes that the proposal 
is consistent with the Act.

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

    In accordance with Section 6(b)(8) of the Act,\19\ the Exchange 
believes that the proposed rule change would not impose any burden on 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act. Instead, as discussed above, the Exchange believes 
that the proposed changes would encourage the continued participation 
of member organizations on the Exchange by providing certainty and fee 
relief during the ongoing pandemic. As a result, the Exchange believes 
that the proposed change furthers the Commission's goal in adopting 
Regulation NMS of fostering integrated competition among orders, which 
promotes ``more efficient pricing of individual stocks for all types of 
orders, large and small.'' \20\
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    \19\ 15 U.S.C. 78f(b)(8).
    \20\ Regulation NMS, 70 FR at 37498-99.
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    Intramarket Competition. The proposed continued waiver of equipment 
and related service fees and the applicable monthly trading license fee 
for Qualified Firms is designed to reduce monthly costs for those Floor 
participants whose operations continue to be impacted by the COVID-19 
pandemic despite the fact that the Trading Floor has partially 
reopened. In reducing this monthly financial burden, the proposed 
change would allow Qualifying Firms that had Floor operations in March 
2020 to reallocate funds to assist with the cost of shifting and 
maintaining their previously on-Floor operations to off-Floor. Absent 
this change, all Qualifying Firms may experience an unintended increase 
in the cost of doing business on the Exchange, given that the Trading 
Floor has only reopened in a limited capacity. The Exchange believes 
that the proposed waiver of fees for Qualifying Firms would not impose 
a disparate burden on competition among market participants on the 
Exchange because off-Floor market participants are not subject to these 
Floor-based fixed fees. In addition, Floor-based firms that are not 
subject to the extent of staffing shortfalls as are Qualifying Firms, 
i.e., firms that have more than 50% of their March 2020, or Exchange-
approved staffing levels on the Trading Floor, do not face the same 
operational level of disruption and potential financial impact during 
the partial reopening of the Trading Floor. As noted, the proposal 
would apply to all similarly situated member organizations on the same 
and equal terms, who would benefit from the changes on the same basis. 
Accordingly, the proposed change would not impose a disparate burden on 
competition among market participants on the Exchange.
    Intermarket Competition. As described above, the Exchange operates 
in a highly competitive market in which market participants can readily 
choose to send their orders to other exchange and off-exchange venues 
if they deem fee levels at those other venues to be more favorable. The 
Exchange believes that the proposed rule change reflects this 
competitive environment because it permits impacted member 
organizations to continue to conduct market-making operations on the 
Exchange and avoid unintended costs of doing business on the Exchange 
while the Trading Floor is not fully open, which could make the 
Exchange a less competitive venue on which to trade as compared to 
other equities markets. In reducing this monthly financial burden, the 
proposed change would allow affected participants to reallocate funds 
to assist with the cost of shifting and maintaining their prior fully-
staffed on-Floor operations to off-Floor. Absent this change, 
Qualifying Firms may experience an unintended increase in the cost of 
doing business on the Exchange, which would make the Exchange a less 
competitive venue on which to trade as compared to other options 
exchanges.

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 foregoing rule change is effective upon filing pursuant to 
Section 19(b)(3)(A) \21\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \22\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \21\ 15 U.S.C. 78s(b)(3)(A).
    \22\ 17 CFR 240.19b-4(f)(2).
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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) \23\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \23\ 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-2020-102 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.

[[Page 85716]]

All submissions should refer to File Number SR-NYSE-2020-102. 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-2020-102 and should be submitted on 
or before January 19, 2021.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\24\
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    \24\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-28664 Filed 12-28-20; 8:45 am]
BILLING CODE 8011-01-P