Document ID: SEC-2022-0772-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Chicago, Inc.
Posted Date: 2022-06-07T04:00Z

[Federal Register Volume 87, Number 109 (Tuesday, June 7, 2022)]
[Notices]
[Pages 34740-34742]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-12167]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-95015; File No. SR-NYSECHX-2022-09]

Self-Regulatory Organizations; NYSE Chicago, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Adopt a 
New Rule 11.2210

June 1, 2022.
    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 May 20, 2022, 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, II, 
and III below, which Items have been prepared by the Exchange. The 
Exchange filed the proposed rule change as a ``non-controversial'' 
proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act 
\4\ and Rule 19b-4(f)(6) thereunder.\5\ The Commission is publishing 
this notice to solicit comments on the proposed rule change from 
interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
    \4\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \5\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes, in connection with a companion filing to 
adopt investigation, disciplinary, sanction, and other procedural rules 
modeled on the rules of its affiliates, to adopt a new Rule 11.2210 
governing communications with the public that would incorporate FINRA 
Rule 2210 by reference and rename and amend Article 8, Rule 13 
governing advertising, promotion and telemarketing. 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
    In connection with a companion filing to adopt investigation, 
disciplinary, sanction, and other procedural rules modeled on the rules 
of its affiliates,\6\ the Exchange proposes to adopt a new Rule 11.2210 
(Communications with the Public) governing communications with the 
public that would incorporate FINRA Rule 2210 by reference and rename 
and amend Article 8, Rule 13 governing advertising, promotion and 
telemarketing.
---------------------------------------------------------------------------

    \6\ See SR-NYSECHX-2022-10.
---------------------------------------------------------------------------

Background
    Beginning in 2013, each of the Exchange's affiliates have adopted 
rules relating to investigation, discipline, sanction, and other 
procedural rules based on the rules of the Financial Industry 
Regulatory Authority (``FINRA'').\7\ To facilitate rule

[[Page 34741]]

harmonization among self-regulatory organizations, the Exchange has 
separately proposed the NYSE Chicago Rule 10.8000 and 10.9000 Series 
based on the text of the NYSE Arca Rule 10.8000 and Rule 10.9000 
Series, with certain changes, as described in its companion filing.
---------------------------------------------------------------------------

    \7\ In 2013, the Commission approved the New York Stock Exchange 
LLC's (``NYSE'') adoption of FINRA's disciplinary rules. See 
Securities Exchange Act Release No. 69045 (March 5, 2013), 78 FR 
15394 (March 11, 2013) (SR-NYSE-2013-02). In 2016, NYSE American LLC 
(``NYSE American'') adopted its Rule 8000 and Rule 9000 Series based 
on the NYSE and FINRA Rule 8000 and Rule 9000 Series. See Securities 
Exchange Act Release Nos. 77241 (February 26, 2016), 81 FR 11311 
(March 3, 2016) (SR-NYSEMKT-2016-30). In 2018, the Commission 
approved NYSE National, Inc.'s (``NYSE National'') adoption of the 
NYSE National Rule 10.8000 and Rule 10.9000 Series based on the NYSE 
American and FINRA Rule 8000 and Rule 9000 Series. See Securities 
Exchange Act Release No. 83289 (May 17, 2018), 83 FR 23968 (May 23, 
2018) (SR-NYSENat-2018-02). In 2019, NYSE Arca, Inc. (``NYSE Arca'') 
adopted the NYSE Arca Rule 10.8000 and 10.9000 Series based on the 
NYSE American Rule 8000 and Rule 9000 Series. See Securities 
Exchange Act Release No. 85639 (April 12, 2019), 84 FR 16346 (April 
18, 2019) (SR-NYSEArca-2019-15).
---------------------------------------------------------------------------

    The proposed NYSE Chicago Rule 10.8000 and 10.9000 Series contain 
rules that presume that the Exchange has adopted FINRA Rule 2210. 
Specifically, Rule 10.9551 (Failure to Comply with Public Communication 
Standards Pursuant to FINRA Rule 2210 as Incorporated by Reference in 
Rule 11.2210) would permit Exchange regulatory staff to issue a written 
notice requiring a Participant or Participant Firm to file 
communications with FINRA's Advertising Regulation Department at least 
10 days prior to use if the staff determined that the Participant or 
Participant Firm had departed from the standards of proposed Rule 
11.2210. The Participant or Participant Firm could file a written 
request for a hearing with the Office of Hearing Officers pursuant to 
proposed Rule 10.9559. FINRA Rule 2210 proposed to be incorporated by 
reference in proposed Rule 11.2210 references the procedures in FINRA 
Rules 9551 and 9559, which are substantially the same as those in 
proposed Rules 10.9551 and 10.9559. Similarly, FINRA Rule 2210 proposed 
to be incorporated by reference in proposed Rule 11.2210 references the 
procedures in the FINRA Rule 9600 Series for obtaining exemptive relief 
as permitted under FINRA Rule 2210. The FINRA Rule 9600 Series is 
substantially the same as the proposed Rule 10.9600 Series.
    Current Article 8, Rule 13 governs advertising, promotion and 
telemarketing.
Proposed Rule Change
    Proposed Rule 11.2210 would provide that Participants, Participant 
Firms and covered persons shall comply with FINRA Rule 2210, which is 
incorporated by reference herein, as if such Rule were part of the 
Exchange's rules. The proposed rule would further provide that 
references to FINRA Rule 2210 would be construed as references to Rule 
11.2210. The proposed rule would also provide that references to FINRA 
Rules 9551 and 9559 and to the FINRA Rule 9600 Series in FINRA Rule 
2210 shall be construed as references to the Exchange's Rules 10.9551 
and 10.9559 and to the Rule 10.9600 Series, respectively. Finally, 
proposed Rule 11.2210 would provide that all defined terms, including 
any variations thereof, contained in the rule shall be read to refer to 
the Exchange-related meaning of such term. The proposed rule is the 
same as the version adopted by the Exchange's affiliate NYSE National 
except that the Exchange would use ``Participants'' and ``Participant 
Firms'' rather than ``ETP Holders'' and would use ``covered persons'' 
rather than ``Associated Persons of ETP Holders.'' \8\
---------------------------------------------------------------------------

    \8\ See Securities Exchange Act Release No. 83289 (May 17, 
2018), 83 FR 23968 (May 23, 2018) (SR-NYSENat-2018-02). The Exchange 
also proposes to insert a space between ``Rule 11.5190'' and 
``Notification'' in the heading following proposed Rule 11.2210.
---------------------------------------------------------------------------

    Article 8, Rule 13, which governs advertising, promotion and 
telemarketing, would be renamed ``Telemarketing'' by deleting 
``Advertising'' and ``Promotion'' from the current heading. The 
Exchange would also amend current Article 8, Rule 13 to remove those 
portions of the current rule that are duplicative of the standards set 
forth in FINRA Rule 2210. Specifically, the Exchange would delete 
subsection (a) prohibiting false and misleading advertisement, which is 
duplicative of FINRA Rule 2210(d)(1)(B); \9\ subsection (b) setting 
forth categories and standards of advertisement, which is duplicative 
of FINRA Rule 2210(a); and subsection (c) governing market letters and 
sales literature, which is duplicative of the approval and review 
requirements set forth in FINRA Rule 2210(b). The remaining thirteen 
subsections of Article 8, Rule 13 from (d) to (p) governing 
telemarketing practices would become new subsections (a) to (m), 
respectively. The remaining subsections of Article 8, Rule 13 overlap 
with FINRA Rule 3230 (Telemarketing).\10\
---------------------------------------------------------------------------

    \9\ Article 8, Rule 13(a) is currently subject to a plan for the 
allocation of regulatory responsibilities pursuant to Rule 17d-2 of 
the Act that the Exchange and FINRA have filed with the Commission 
(``17d-2 Plan''). See 17 CFR 240.17d-2; Securities Exchange Act 
Release No. 62657 (August 5, 2010), 75 FR 49005 (August 12, 2010) 
(No. 4-274) (Notice); Securities Exchange Act Release No. 62866 
(September 8, 2010), 75 FR 55833 (August 14, 2010) (No. 4-274) 
(Order). The Exchange and FINRA are also parties to a Regulatory 
Services Agreement pursuant to which FINRA has agreed to perform 
certain regulatory functions of the Exchange on behalf of the 
Exchange and which cover the remaining subsections of Article 8, 
Rule 13 with the exception of subsection (d). See note 8, infra.
    \10\ Article 8, Rule 13(d) is in fact part of the existing 17d-2 
Plan. See Securities Exchange Act Release No. 85921 (May 23, 2019), 
84 FR 25105 (May 30, 2019) (No. 4-274) (Notice); Securities Exchange 
Act Release No. 86161 (June 20, 2019), 84 FR 29923 (June 25, 2019) 
(No. 4-274) (Order).
---------------------------------------------------------------------------

Exemption Request
    The Exchange will request an exemption under Section 36 of the Act 
from the rule filing requirements of Section 19(b) of the Act with 
respect to the incorporation by reference of proposed Rule 11.2210 and 
to the extent Rule 11.2210 is effected solely by virtue of a change to 
cross-referenced FINRA rule.\11\
---------------------------------------------------------------------------

    \11\ See 15 U.S.C. 78s(b).
---------------------------------------------------------------------------

Implementation
    The proposed rule changes that are the subject of this filing will 
be operative on the same date that the new disciplinary rules will be 
effective but only if the Exchange's request for an exemption under 
Section 36 of the Act from filing proposed rule changes, described 
above, is granted by that date. As explained in the Exchange's 
companion filing to adopt new disciplinary rules, once that proposed 
rule change is effective, the Exchange intends to announce by 
Information Memorandum with at least 30 days advance notice the 
operative date of the new rules. In the event the exemption is not 
granted by date announced in the proposed Information Memorandum, the 
Exchange will submit a filing to designate a different operative date.
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, 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.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes that proposed Rule 11.2210, which would be 
new for the Exchange, would provide for a harmonized approach and 
promote application of consistent regulatory standards to Participant 
and Participant

[[Page 34742]]

Firm requirements relating to communications with the public by 
incorporating by reference the FINRA communications with the public 
rule, thereby promoting just and equitable principles of trade and 
removing impediments to and perfecting the mechanism of a free and open 
market and a national market system, and in general, protecting 
investors and the public interest. In addition, incorporation of FINRA 
Rule 2210 by reference would add clarity and transparency to the 
Exchange's rules by separating the standards governing communications 
with the public and telemarketing into distinct rules similar to the 
approach taken by FINRA.

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 provide greater 
harmonization between Exchange and FINRA rules of similar purpose 
relating to communications with the public.

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; 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.
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \15\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    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) \16\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \16\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

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-NYSECHX-2022-09 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-2022-09. 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-2022-09 and should be submitted 
on or before June 28, 2022.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
---------------------------------------------------------------------------

    \17\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-12167 Filed 6-6-22; 8:45 am]
BILLING CODE 8011-01-P