Document ID: SEC-2022-1104-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange, LLC
Posted Date: 2022-08-16T04:00Z

[Federal Register Volume 87, Number 157 (Tuesday, August 16, 2022)]
[Notices]
[Pages 50366-50368]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-17533]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-95466; File No. SR-NYSE-2022-34]

Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend and Update Rule 35

August 10, 2022.
    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 July 28, 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 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 and update Rule 35 (Floor Employees 
To Be Registered) to remove certain provisions that are obsolete and no 
longer necessary. 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 purpose of this filing is to amend and update Rule 35, which 
governs the requirements for admittance to the Floor of the Exchange, 
to remove certain provisions that are obsolete and no longer 
necessary.\4\ In addition, the Exchange proposes to re-number the 
remaining paragraphs of Rule 35 to conform with the proposed deletions, 
which are described below.
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    \4\ Rule 35 provides, in relevant part that ``[n]o employee of a 
member or member organization shall be admitted to the Floor unless 
he is registered with, qualified by and approved by the Exchange, 
and upon compliance of both the employer and employee with such 
requirements as the Exchange may determine.''
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    Rule 35.10 and 35.30 govern the issuance of ``Floor tickets'' and 
``Employee Floor Tickets''--each of which may be ``Regular'' or 
``Special''--to Floor employees as a prerequisite to enter the trading 
Floor. A Regular ticket would ``admit holders to the telephone booths 
around the perimeter of the stock trading Floor, and the area behind 
the stock trading posts'' and ``are issued only to employees of members 
or member organizations that are assigned telephone or post spaces.'' 
\5\ Special tickets are issued ``only for the purpose of assisting or 
relieving a Floor employee of the same member or member organization.'' 
\6\ The Exchange no longer issues Floor tickets but instead requires 
Trading Floor Badges for admittance to the Floor, which requirement was 
codified in Exchange rules earlier this year. Specifically, paragraph 
(d) to Rule 37 (Admission and Conduct on the Trading Floor), provides 
that:
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    \5\ See Rule 37(d). See also Securities Exchange Act Release No. 
94217 (February 10, 2022), 87 FR 8901 (February 10, 2022) (SR-NYSE-
2021-73) (``Rule 37 Approval Order''). The Exchange notes that Rule 
37 is administered by the Exchange's regulatory staff.
    \6\ See Rule 35.10.

    Admission to the Floor will be by Exchange-issued badge only. 
Exchange-issued badges must be appropriately displayed, with the 
photo visible, at all times while on the Floor. Use of an Exchange-
issued badge belonging to another member or Floor employee to enter 
or exit the Floor is prohibited. Authorized persons seeking 
admission to the Floor without a badge must show proper 
identification and obtain a temporary badge from the Security 
Office. Visitor's badges are not acceptable identification cards for 
Floor employees.\7\
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    \7\ See Rule 35.30.

    Further, Rule 303(a) provides that members who execute orders on 
the Floor must be provided with an identification badge and must wear 
the same while on the Floor, and that every member's badge must contain 
his or her name and a number and the name of his or her member 
organization.\8\
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    \8\ See Rule 303(a).
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Rule 35.10 and 35.30
    In light of the Trading Floor badge requirements set forth in Rule 
37(d) and Rule 303(a), and the fact that the Exchange no longer issues 
nor relies upon Floor tickets for admission to the Floor, the Exchange 
proposes to delete Rule 35.10 and 35.30 as obsolete.
    Rule 35.20 sets forth ``Regulations pertaining to Floor 
employees.'' The regulations set forth include requirements that:
     all Floor employees be at their booths or posts on the 
Floor one-half hour prior to the opening of business or such earlier 
time as directed by the Exchange;
     all members or member organizations with a telephone space 
on the Floor, have at least one Floor employee at such space for 
fifteen minutes (or as determined by the Exchange) following the later 
of the close of the market each day or until all reports due said 
member or member organization have been received;

[[Page 50367]]

     Floor employees may not be upon or to cross the trading 
area of the Floor ten minutes preceding the market opening and five 
minutes following the market, other than as specified in the Exchange's 
Floor Conduct and Safety Guidelines'';
     Floor employees who, because of illness or injury, are 
relieved from duty by the medical clinic located in the Exchange 
building, must report to that clinic before returning to duty and that 
any such Floor employees that is absent for more than two days, without 
having previously reported to the Exchange's medical clinic, must 
likewise report to that clinic before returning to duty;
     Floor employees are to be instructed that they must keep a 
day's supply of stationery on hand, and that arrangements should be 
made for this stationery to be delivered to the Exchange either after 
the close by the employer's messengers or one-half hour prior to the 
opening of business by the Floor employees; and
     Floor employees may not make bids or offers nor may any 
employee interfere with any order during its transmission.\9\
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    \9\ See Rule 35.20.
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    Of the foregoing requirements, the Exchange proposes to delete as 
obsolete all but the last requirement (i.e., that Floor employees not 
make bids or offers nor interfere with order transmission), which it 
proposes to re-number at Rule 35.10.\10\ During continuous trading, 
Floor Brokers must verbally announce crossing transactions at the point 
of sale prior to such transactions printing to the tape. To avoid 
interference with the announcement and consummation of such interest, 
the Exchange believes it is appropriate to retain the prohibition 
against Floor employees making bids/offers or otherwise interfering 
with order transmission.\11\
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    \10\ See proposed Rule 35.10.
    \11\ See proposed Rule 35.10.
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    As set forth below, advancements in technology related to trading 
on the Exchange and electronic communications have rendered nearly all 
of the remaining Rule 35.20 requirements as obsolete and no longer 
necessary.
    First, because of technical enhancements that allow the Exchange to 
process, disseminate, and publish trading information in ``real-time'', 
the requirements that Floor employees (including those with telephones 
on the Floor) report to and remain at their booths/posts at specified 
times before the open and after the close of trading are no longer 
necessary.\12\ These technical advancements have alleviated the need 
for the physical presence of Floor employees by the times specified in 
the current provisions. As such, the Exchange proposes to delete such 
provisions.
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    \12\ See, e.g., Rule 7.35A (DMM-Facilitated Core Open and 
Trading Halt Auctions) and Rule 7.35B (DMM-Facilitated Closing 
Auctions) and Rule 7.35C (Exchange-Facilitated Auctions) (providing, 
in relevant part, that certain Auction Imbalance Information would 
be disseminated and published by the Exchange).
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    The Exchange likewise proposes to delete the prohibition against 
Floor employees being in (upon) or crossing through the trading area of 
the Floor for specified times before and after the close of trading. 
The purpose of this prohibition was to restrict movement on the trading 
Floor at the opening or closing of trading to prevent anyone from 
blocking access to point of sale or interfering order executions. 
Because of advancements in technology that allow for fewer Floor 
personnel to be physically on the Floor during the open and close of 
trading, the Exchange proposes to delete this provision as no longer 
necessary. With respect to reference to the Floor Conduct and Safety 
Guidelines (``Guidelines''), which historically regulated the behavior 
and conduct of members and was administered by Floor Officials, the 
NYSE eliminated the role and function of Floor Officials and recently 
adopted a new Rule 37, setting forth standards of dress and conduct for 
the Floor. For the foregoing reason, the Exchange proposes to delete 
this provision as obsolete and no longer necessary.
    In addition, due to communication enhancements, the Exchange 
proposes to delete as obsolete the requirement that Floor employees 
keep a certain amount of stationary on hand. Communication is no longer 
limited to written correspondence on physical stationary and Floor 
employees have the ability to communicate through others means (such as 
the cell phone, email and internet) at any time. Thus, the Exchange 
proposes to delete this provision as obsolete and no longer necessary.
    Finally, the Exchange no longer operates an on-site medical clinic 
and therefore the requirement that Floor employees be cleared by the 
Exchange clinic before returning to the Floor after an illness-related 
absence is obsolete and no longer necessary.
    Consistent with the foregoing, the Exchange proposes to re-number 
the balance of Rule 35 as Rule 35.20-Rule 35.60.\13\
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    \13\ See proposed Rule 35.20-Rule 35.60.
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2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Act,\14\ in general, and furthers the objectives of Section 
6(b)(5),\15\ 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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    \14\ 15 U.S.C. 78f(b).
    \15\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposal to delete certain 
provisions of Rule 35, which have been determined to be obsolete and 
unnecessary, would add clarity, transparency and internal consistency 
to Exchange rules making them easier to navigate and comprehend. 
Further, the Exchange believes that the proposed revisions are 
consistent with the Act as no regulatory purposes are currently served 
by the aforementioned obsolete (and in some cases anachronistic) 
requirements. The Exchange believes that market participants would 
benefit from the increased clarity, thereby reducing potential 
confusion and ensuring that persons subject to the Exchange's 
jurisdiction, regulators, and the investing public can more easily 
navigate and understand the Exchange's rules.
    Finally, the proposed non-substantive conforming changes (to 
renumber the remaining provisions of Rule 35) would remove impediments 
to and perfect the mechanism of a free and open market and a national 
market system and, in general, protect investors and the public 
interest because the proposed non-substantive changes would add 
clarity, transparency and consistency to the Exchange's rules.

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 rule change is 
not intended to address competitive issues but is rather concerned with 
deleting obsolete references that and making non-substantive conforming 
changes to the Exchange rules. Since the proposal does not 
substantively modify system functionality or processes on the

[[Page 50368]]

Exchange, the proposed changes will not impose any burden on 
competition.

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

    Because the foregoing 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 for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \16\ and Rule 19b-
4(f)(6) \17\ thereunder.
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    \16\ 15 U.S.C. 78s(b)(3)(A).
    \17\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file 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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    The Exchange has asked the Commission to waive the 30-day operative 
delay.\18\ The Commission finds that waiving the 30-day operative delay 
is consistent with the protection of investors and the public interest 
because waiver of the operative delay will reduce the potential for 
confusion related to how to comply with aspects of Rule 35 rules that 
are now obsolete or impracticable. The Exchange requested the operative 
delay in order to update the text of Rule 35 to be consistent with 
current requirements by removing provisions that, because of technical 
enhancements to trading and improvements to electronic communications, 
are obsolete and no longer necessary without delay. Accordingly, the 
Commission hereby waives the 30-day operative delay and designates the 
proposal operative upon filing.\19\
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    \18\ 17 CFR 240.19b-4(f)(6)(iii).
    \19\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule change'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 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 will 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 [email protected]. Please include 
File Number SR-NYSE-2022-34 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-2022-34. 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-2022-34 and should be submitted on 
or before September 6, 2022.
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    \20\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\20\
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-17533 Filed 8-15-22; 8:45 am]
BILLING CODE 8011-01-P