Document ID: SEC-2019-0779-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange, LLC
Posted Date: 2019-06-06T04:00Z

[Federal Register Volume 84, Number 109 (Thursday, June 6, 2019)]
[Notices]
[Pages 26462-26464]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-11799]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-85990; File No. SR-NYSE-2019-32]

Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing of Proposed Rule Change To Amend Rule 123D

May 31, 2019
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on May 24, 2019, New York Stock Exchange LLC (``NYSE'' or the 
``Exchange'') filed with the Securities and Exchange Commission 
(``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.
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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 to amend Rule 123D to permit the Exchange to

[[Page 26463]]

declare a regulatory halt in a security that traded in the over-the-
counter market prior to the initial pricing on the Exchange. 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend Rule 123D to permit the Exchange to 
declare a regulatory halt in a security that traded in the over-the-
counter market prior to the initial pricing on the Exchange.
Proposed Rule Change
    Current Rule 123D(d) permits the Exchange to declare a regulatory 
halt in a security that is the subject of an initial pricing on the 
Exchange of a security that has not been listed on a national 
securities exchange or traded in the over-the-counter market pursuant 
to FINRA Form 211 (the ``OTC market'') immediately prior to the initial 
pricing. Accordingly, the Exchange has authority to declare a 
regulatory halt for any initial listing that is not a transfer from 
either another national securities exchange or the OTC market. 
Regulatory halts under the rule terminate when the DMM opens the 
security.
    The Exchange proposes to delete the clause ``or traded in the over-
the-counter market pursuant to FINRA Form 211'' before ``immediately 
prior to the initial pricing.'' The proposed amendment would thus 
enable the Exchange to declare a regulatory halt for a security that is 
having its initial listing on the Exchange that was traded in the OTC 
market immediately prior to its initial pricing on the Exchange.
    The Exchange believes that it would be consistent with the 
protection of investors and the public interest for the Exchange, as a 
primary listing exchange, to have to authority to declare a regulatory 
halt for security that was previously traded in the OTC market prior to 
its initial pricing on the Exchange. An OTC market security that will 
be listed on a primary listing exchange will be removed from the OTC 
trading list on the day prior to its initial pricing on the Exchange. 
However, on the day of its initial listing, such security can trade on 
an unlisted trading permit (``UTP'') basis before the first transaction 
on the primary listing exchange. The Exchange believes that permitting 
the Exchange to declare a regulatory halt in such securities before 
trading on the Exchange begins would avoid potential price disparities 
or anomalies that may occur during any UTP trading before the first 
transaction on the primary listing exchange. More specifically, the 
Exchange believes that quoting and trading in the pre-market of an OTC 
transfer can be erratic and investors may be harmed if their securities 
trade during this period. The Exchange believes that the proposed 
limited authority to declare a regulatory halt in the hours prior to 
the OTC transfer pricing on the Exchange would mitigate any potential 
price disparities and contribute to a fair and orderly market once the 
security opens on the Exchange. The Exchange believes that such 
authority would be consistent with the protection of investors and the 
public interest.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\3\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\4\ in particular, because it 
is designed to prevent fraudulent and manipulative acts and practices, 
promote just and equitable principles of trade, remove impediments to 
and perfect the mechanism of a free and open market and a national 
market system, and protect investors and the public interest.
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    \3\ 15 U.S.C. 78f(b).
    \4\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed amendment to Rule 123D to 
provide authority to declare a regulatory halt in a security that is an 
OTC transfer would remove impediments to and perfect the mechanism of a 
free and open market and a national market system by providing the 
Exchange with authority to halt trading across all markets for a 
security that has traded in the OTC market and not previously listed on 
the Exchange, but for which a regulatory halt would promote fair and 
orderly markets. The Exchange believes that permitting the Exchange to 
declare a regulatory halt in such securities before trading on the 
Exchange begins would avoid potential price disparities or anomalies 
that may occur during any UTP trading before the first transaction on 
the primary listing exchange. More specifically, the Exchange believes 
that quoting and trading in the pre-market of an OTC transfer can be 
erratic and investors may be harmed if their securities trade during 
this period. The Exchange therefore believes that having the authority 
to declare a regulatory halt for a security that is the subject of an 
OTC transfer is consistent with the protection of investors and the 
public interest and would promote fair and orderly markets by helping 
to protect against volatility in pricing before the initial transaction 
on the primary listing exchange.

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 Exchange believes that 
the benefit to investors to halt trading in a security that transfers 
from an OTC market to a primary listing exchange outweighs any burden 
on competition that may result from a regulatory halt in such security 
before the initial listing on the primary listing exchange. The 
proposed rule change is consistent with existing authority for the 
Exchange to declare a regulatory halt in trading of a security before 
the initial pricing on the Exchange and would extend that authority to 
a transfer from the OTC market.

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

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period up to 90 days (i) as the 
Commission may designate if it finds such longer period to be 
appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:

[[Page 26464]]

    (A) By order approve or disapprove the proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule 
change should be 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 rule-comments@sec.gov. Please include 
File Number SR-NYSE-2019-32 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-2019-32. 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-2019-32, and should be submitted on 
or before June 27, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\5\
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    \5\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-11799 Filed 6-5-19; 8:45 am]
 BILLING CODE 8011-01-P