Self-Regulatory Organizations; NYSE Chicago, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Adopting Rules Relating to Order Audit Trail System Requirements, 64942-64946 [2019-25456]
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Federal Register / Vol. 84, No. 227 / Monday, November 25, 2019 / Notices
Affected public: Individuals or
Households.
Abstract: The Railroad Retirement
Board (RRB) utilizes voluntary customer
surveys to ascertain customer
satisfaction with the RRB in terms of
timeliness, appropriateness, access, and
other measures of quality service.
Information Collection Request (ICR)
Title: Customer Satisfaction
Monitoring.
OMB Control Number: 3220–0192.
Form(s) submitted: G–201.
Type of request: Extension without
change of a currently approved
collection.
Surveys involve individuals that are
direct or indirect beneficiaries of RRB
services as well as railroad employers
who must report earnings.
Changes proposed: The RRB proposes
no changes to Form G–201.
Annual
responses
Form No.
Time
(minutes)
Burden
(hours)
G–201 ..........................................................................................................................................
Web-Site Survey ..........................................................................................................................
Periodic Survey ............................................................................................................................
Focus Groups ..............................................................................................................................
50
300
1,020
250
2
5
12
120
2
25
204
500
Total ......................................................................................................................................
1,620
........................
731
Additional Information or Comments:
Copies of the forms and supporting
documents can be obtained from
Kennisha Tucker at (312) 469–2591 or
Kennisha.Tucker@rrb.gov.
Comments regarding the information
collection should be addressed to Brian
Foster, Railroad Retirement Board, 844
North Rush Street, Chicago, Illinois
60611–1275 or Brian.Foster@rrb.gov and
to the OMB Desk Officer for the RRB,
Fax: 202–395–6974, Email address:
OIRA_Submission@omb.eop.gov.
Stephanie Hillyard,
Secretary to the Board.
[FR Doc. 2019–25497 Filed 11–22–19; 8:45 am]
BILLING CODE 7905–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–87573; File No. SR–
NYSECHX–2019–19]
Self-Regulatory Organizations; NYSE
Chicago, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change Adopting Rules Relating
to Order Audit Trail System
Requirements
November 19, 2019.
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
November 6, 2019, the NYSE Chicago,
Inc. (‘‘NYSE Chicago’’ 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
U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
17:31 Nov 22, 2019
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to adopt rules
relating to Order Audit Trail System
requirements, and amend Article 11,
Rule 4 in anticipation of the Exchange’s
transition to trading to the Pillar trading
platform. 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 adopt rules
relating to Order Audit Trail System
(‘‘OATS’’) requirements, and amend
Article 11, Rule 4 in anticipation of the
Exchange’s transition to trading to the
Pillar trading platform.4 Pillar is an
4 The Exchange has announced that, subject to
rule approvals, it will transition to trading on Pillar
on November 4, 2019. See Trader Update, available
at https://www.nyse.com/publicdocs/nyse/markets/
1 15
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solicit comments on the proposed rule
change from interested persons.
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integrated trading technology platform
designed to use a single specification for
connecting to the equites and options
markets operated by the Exchange and
its affiliates, NYSE Arca, Inc. (‘‘NYSE
Arca’’), NYSE American, LLC (‘‘NYSE
American’’), NYSE National, Inc.
(‘‘NYSE National’’), and New York
Stock Exchange LLC (‘‘NYSE’’) (the
‘‘Affiliated Exchanges’’).
Background
In July 2018, the Exchange and its
direct parent company were acquired by
NYSE Group, Inc. (‘‘Transaction’’).5 As
a result of the Transaction, the Exchange
became part of a corporate family
including the Affiliated Exchanges.
Following the Transaction, the
Exchange continued to operate as a
separate self-regulatory organization
with rules, membership rosters and
listings distinct from the rules,
membership rosters and listings of the
other Affiliated Exchanges.
The Exchange recently adopted the
rule numbering framework of NYSE
National rules, which are organized in
13 Rules.6 In addition, the Exchange has
amended its rules to support the
transition of trading in Tape A, Tape B,
and Tape C-listed securities from its
current trading platform to a fully
automated price-time priority allocation
model that operates on the Pillar trading
nyse-chicago/NYSE_Chicago_Migration.pdf. The
Exchange originally filed the proposed rule change
on October 31, 2019 (SR–NYSECHX–2019–17) and
withdrew such filing on November 6, 2019, and is
now submitting this proposed rule change to
include additional specificity.
5 See Securities Exchange Act Release No. 83635
(July 13, 2018), 83 FR 34182 (July 19, 2018) (SR–
CHX–2018–004); see also Securities Exchange Act
Release No. 83303 (May 22, 2018), 83 FR 24517
(May 29, 2018) (SR–CHX–2018–004).
6 See Securities Exchange Act Release No. 85297
(March 12, 2019), 84 FR 9854 (March 18, 2019) (SR–
NYSECHX–2019–03) (Notice of Filing and
Immediate Effectiveness) (‘‘Framework Filing’’).
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platform.7 As part of this transition, the
Exchange will continue to support
Institutional Brokers, as provided for
under Article 17, and is updating the
Brokerplex system, which is described
in Article 17, Rule 5, to interface with
the Pillar trading platform.8
As described in the Framework Filing,
Rule 0 currently provides that the
Exchange and FINRA are parties to a
Regulatory Services Agreement (‘‘RSA’’)
pursuant to which FINRA has agreed to
perform certain regulatory functions of
the Exchange on behalf of the
Exchange.9 The Exchange notes that
pursuant to the RSA, FINRA will
perform certain regulatory surveillance
of trading activity on the Exchange and
conduct various regulatory services on
behalf of the Exchange, similar to what
FINRA has contracted to do for the
Affiliated Exchanges. Notwithstanding
the RSA, the Exchange will retain legal
responsibility for the regulation of its
members and its market and the
performance of FINRA as its regulatory
services provider.
Because of both the transition to the
Pillar trading platform and the
regulatory relationship with FINRA, the
Exchange proposes to amend specified
rules relating to regulatory reporting
requirements. First, the Exchange
proposes to add new Rules 6.7400
through 6.7470 that are based on NYSE
National OATS rules relating to order
audit trail system requirements. These
OATS requirements are in turn based on
the FINRA OATS requirements, and
will facilitate the regulatory relationship
with FINRA. Second, the Exchange
proposes to decommission one of the
systems for Institutional Brokers to
report certain trading activity on away
markets, as specified in Article 11, Rule
4. With this proposed change,
Institutional Brokers will continue to be
required to report this trading activity,
but will no longer be able to submit this
data via regulatory drop copies into
Brokerplex.
7 See Securities Exchange Act Release No. 87264
(October 9, 2019), 84 FR 55345 (October 16, 2019)
(SR–NYSECHX–2019–08) (Approval Order).
8 The term ‘‘Institutional Broker’’ is defined in
Article 1, Rule 1(n) to mean a member of the
Exchange who is registered as an Institutional
Broker pursuant to the provisions of Article 17 and
has satisfied all Exchange requirements to operate
as an Institutional Broker on the Exchange.
9 See Rule 0 (Regulation of the Exchange and
Participants). The rule also provides that
notwithstanding the fact that the Exchange has
entered into an RSA with FINRA to perform certain
of the Exchange’s functions, the Exchange shall
retain ultimate legal responsibility for, and control
of, such functions.
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Proposed Rule 6.7400 (Order Audit
Trail System)
The Exchange proposes OATS rules
based on NYSE National Rules 6.7400
Series, which in turn are based on the
FINRA Rules 7400 Series. The proposed
NYSE Chicago Rule 6.7400 Series would
consist of proposed Rules 6.7410
through 6.7470, which are based on
NYSE National Rules 6.7410 through
6.7470 without any substantive
differences. The Exchange proposes
non-substantive differences throughout
the Rule 6.7400 Series to refer to the
Exchange instead of NYSE National.
• Proposed Rule 6.7410 (Definitions)
would set forth definitions used for
purposes of the Rule 6.7400 Series and
is based on NYSE National Rule 6.7410
without any substantive differences
other than to refer to Exchange members
as Participants rather than ETP Holders.
• Proposed Rule 6.7420
(Applicability) would specify that the
requirements of the Rule 6.7400 Series
are applicable to all Participants and
their associated persons and to all NMS
Stocks that trade on the Exchange, and
is based on NYSE National Rule 6.720
without any differences other than to
refer to Exchange members as
Participants rather than ETP Holders.
• Proposed Rule 6.7430
(Synchronization of ETP Holder
Business Clocks) would require
Participants to synchronize business
clocks used for purposes of recording
the date and time of specified events,
and is based on NYSE National Rule
6.7430 without any differences other
than to refer to Exchange members as
Participants rather than ETP Holders.
• Proposed Rule 6.7440 (Recording of
Order Information) would require
Participants to comply with FINRA Rule
7440 as if such rule were part of the
Exchange’s rules and is based on NYSE
National Rule 6.7440 without any
substantive differences other than to
refer to Exchange members as
Participants rather than ETP Holders.
• Proposed Rule 6.7450 (Order Data
Transmission Requirements) would
require Participants to comply with
FINRA Rule 7450 as if such rule were
part of the Exchange’s rules and is based
on NYSE National Rule 6.7450 without
any substantive differences other than to
refer to Exchange members as
Participants rather than ETP Holders.
• Proposed Rule 6.7460 (Violation of
Order Audit Trail System Rules) would
provide that failure of a Participant or
associated person to comply with the
requirements of proposed Rules 6.7410
through 6.7460 may be considered
conduct that is inconsistent with high
standards of commercial honor and just
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64943
and equitable principles of trade. This
proposed rule is based on NYSE
National Rule 6.7460 with a nonsubstantive difference to cross reference
Article 9, Rule 2, instead of NYSE
National Rule 11.3.1 and to refer to an
Exchange member as a Participant
rather than an ETP Holder.
• Proposed Rule 6.7470 (Exemption
to the Order Recording and Data
Transmission Requirements) would
provide for how a Participant may apply
for an exemption from the Rule 6.7400
Series and is based on NYSE National
Rule 6.7470–E without any differences
other than to refer to an Exchange
member as a Participant rather than an
ETP Holder. Proposed Rule 6.7470(c)
provides that the rule would be in effect
until November 15, 2019, the date
prescribed by the National Market
System Plan Governing the
Consolidated Audit Trail (‘‘CAT NMS
Plan’’).
The Exchange does not currently
require its Participants to maintain
order information pursuant to an order
tracking system and therefore, does not
have the OATS rules or similar rules in
its rulebook. The Exchange does not
believe that requiring Participants to
comply with the OATS requirements
would impose an undue burden on such
Participants or its associated persons. In
fact, Participants that are also FINRA
members (‘‘Dual Members’’) are already
be subject to FINRA’s OATS
requirements. Similarly, because the
Affiliated Exchanges have rules based
on the FINRA OATS requirements,
Participants that are not members of
FINRA, but are members of the
Affiliated Exchanges will already be
subject to such OATS requirements.10
To the extent an Exchange Participant is
not also a member of FINRA, one of the
Affiliated Exchanges, or Nasdaq (which
also requires compliance with FINRA
OATS requirements), the Exchange
believes that the OATS requirements for
non-FINRA members are not onerous, as
order information pursuant to those
rules need only be submitted upon
request.11
Finally, Institutional Brokers will not
have to undertake any additional
obligations under the proposed OATS
requirements because the Exchange will
be providing an OATS-compliant
system for Institutional Brokers by
10 The Affiliated Exchanges all have substantially
similar requirements and the proposed rules are
similar to the rules adopted by the Affiliated
Exchanges. See NYSE Rules 7410 through 7470;
NYSE Arca Rules 6.7410–E through 6.7470–E;
NYSE American Rules 7410–Equities through
7470–Equities; and NYSE National Rules 6.7410
through 6.7470. See also Nasdaq Rule 7400A Series.
11 See proposed Rule 6.7450(b).
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updating Brokerplex to automatically
capture and report to FINRA the OATS
requirements.12 Accordingly, if an
Institutional Broker has not previously
been a member of either FINRA or an
Affiliated Exchange that has OATS
requirements, such Institutional Broker
will be able to comply with the OATS
requirements. The Exchange-provided
OATS system for Institutional Brokers
will be available contemporaneous with
the transition to trading on the Pillar
trading platform.
The Exchange believes that requiring
Participants to comply with the OATS
rules will further promote cross-market
surveillance and enhance FINRA’s
ability to conduct surveillance and
investigations for the Exchange under
the RSA. The proposed sub-numbering
of the OATS Rules (i.e., 7410–7470)
mirrors the rule numbers for the OATS
rules on FINRA, NYSE, and NYSE
National.
Proposed Decommissioning of
Exchange-Provided Regulatory
Reporting Systems
The Exchange currently provides a
system that facilitates the ability for
Participants to provide reports of
specified off-exchange trading activity
to the Exchange, as described in
Interpretation and Policies .01 to Article
11, Rule 4. The only Participants that
use this regulatory reporting system are
the Institutional Brokers. With the
transition to Pillar, the Exchange
proposes to decommission this
regulatory reporting system and amend
the rules that require use of this specific
system. This proposed rule change does
not change in any way Institutional
Brokers’ obligations to maintain records
of off-exchange trading activity and
report such activity to the Exchange.13
Specifically, Interpretation and
Policies .01 to Article 11, Rule 4
provides that Participants shall not use
any electronic means of communication
for sending orders from the Exchange to
trade in another market or trading venue
(which is defined as a ‘‘layoff service’’),
until the Participant or the layoff service
provider has established a process for
providing the Exchange with specific
information relating to the off-Exchange
trading activity on a real time basis in
an electronic format acceptable to the
Exchange.14 Only Institutional Brokers
use such layoff services to engage in
single-sided order executions on away
markets; such services are unrelated to
either qualified contingent trading or
contingent trading. The Exchange uses
the current Brokerplex system to
support reporting of these regulatory
‘‘drop copies’’ from a layoff service.
With the transition to Pillar, the
Exchange proposes to decommission the
system in Brokerplex that receives
regulatory drop copies of off-exchange
trading from a layoff service, as
described in Interpretation and Policies
.01 to Article 11, Rule 4. The Exchange
therefore proposes to amend
Interpretation and Policies .01 to Article
11, Rule 4 to delete the requirement that
Institutional Brokers provide the
specified information on a real-time
basis in an electronic format acceptable
to the Exchange. In lieu of the current
system, the Exchange proposes that it
will require any Institutional Broker that
engages in this trading activity to
provide reports of such activity in a
format acceptable to the Exchange
within a time frame designated by the
Exchange, which generally would be not
later than trade date plus one day.15
Accordingly, with this proposed rule
change, Institutional Brokers will
continue to be subject to the
requirements of Article 11, Rule 4,
which specifies the records that
Institutional Brokers must report
relating to specified off-exchange
trading activity. The proposed rule
change eliminates only the interface
with Brokerplex to submit these
regulatory drop copies on a real-time
basis. Such reports would still be
required to be submitted to the
Exchange, albeit in a different format.
Because the Exchange does not
currently utilize this data to perform
this surveillance in real-time, the
Exchange believes that it will be able to
maintain its existing surveillance
coverage with respect to this trading
activity and use the new reports that
will be provided by Institutional
Brokers to monitor this activity. In other
words, the Exchange does not need realtime submission of this information to
conduct this surveillance.
In addition, with respect to
Institutional Brokers that are also
members of FINRA, because such firms
would be subject to OATS requirements,
12 In preparation for the transition to trading to
Pillar, Institutional Brokers have successfully tested
the OATS-compliant Brokerplex.
13 See Article 11, Rule 3.
14 See Securities Exchange Act Release No. 52534
(September 29, 2005), 70 FR 58500 (October 6,
2005) (Order Approving Proposed Rule Change and
Amendment Nos. 1, 2, and 3 Thereto and Notice of
Filing and Order Granting Accelerated Approval to
Amendment No. 4 Thereto Relating to a Prohibition
on Using a Layoff Service Unless the Service
Provides Required Information to the Exchange)
(SR–CHX–2004–25).
15 See NYSE Chicago IM–19–06, dated October
29, 2019, available at https://www.nyse.com/
publicdocs/nyse/markets/nyse-chicago/ruleinterpretations/2019/Chicago%20Number%201906%2010.29.19.pdf.
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any trading on a layoff service would be
reported via OATS and available to
FINRA as well.
2. Statutory Basis
The proposed rule change is
consistent with Section 6(b) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),16 in general, and furthers the
objectives of Section 6(b)(5),17 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.
The Exchange believes that the
proposed Rule 6.7400 Series, relating to
Order Audit Trail System, would
remove impediments to and perfect the
mechanism of a free and open market
and a national market system because
the proposed rule series is based on the
approved rules of NYSE National,
which are based on FINRA’s OATS
rules. The Exchange further believes
that the proposed OATS rules would
promote just and equitable principles of
trade as such rules would further
promote cross-market surveillance and
enhance FINRA’s ability to conduct
surveillance and investigations for the
Exchange under the RSA. The Exchange
does not believe that adding the OATS
rules to the Exchange would impose a
burden on Exchange Participants
because Participants that are members
of FINRA, one of the Affiliated
Exchanges, or Nasdaq, are already
subject to OATS requirements under the
rules of those SROs. To the extent an
Exchange Participant is not also a
member of FINRA, one of the Affiliated
Exchanges, or Nasdaq, such member
would not be subject to ongoing
reporting requirements under the
proposed OATS rules, and therefore it
would not be onerous for such
Participants to comply if OATS
information were requested in the
course of a regulatory inquiry. Finally,
because the Exchange will be providing
an OATS-compliant system for
Institutional Brokers, if an Institutional
Broker has not previously been a
member of either FINRA or an Affiliated
Exchange that has OATS requirements,
such Institutional Broker will be able to
comply with the OATS requirements.
16 15
17 15
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U.S.C. 78f(b).
U.S.C. 78f(b)(5).
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The Exchange believes that the
proposed amendment to Article 11, Rule
4 would remove impediments to and
perfect the mechanism of a free and
open market and a national market
system because the proposed rule
change simply decommissions the use
of an exchange system that accepts
regulatory drop copies that would no
longer be available once the Exchange
transitions to trading to the Pillar
trading platform. The Exchange further
believes that the proposed rule change
would promote just and equitable
principles of trade because Institutional
Brokers would still be required to
maintain records of off-exchange trading
activity as specified in that Rule and
report such activity to the Exchange.
Because Institutional Brokers would
still be providing the Exchange with this
data, the Exchange would not be
changing its surveillances relating to
this trading activity. In addition,
because the Exchange does not conduct
such surveillances in real time, it does
not need real-time submission of data to
perform these surveillances.
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 designed to
address any competitive issue but rather
to provide for rules to support the
transition to trading on the Exchange to
the Pillar trading platform. The
Exchange operates in a highly
competitive environment in which its
unaffiliated exchange competitors
operate multiple affiliated exchanges
that operate under common rules. By
basing its rules on those of its affiliated
exchanges, the Exchange will provide
Participants with consistency across
affiliated exchanges, thereby enabling
the Exchange to compete with
unaffiliated exchange competitors that
similarly operate multiple exchanges on
the same trading platform.
In addition, the Exchange does not
believe that the proposed rule change
will impose any burden on competition
on Participants that is not necessary or
appropriate in furtherance of the
purposes of the Act because the
Exchange has proposed non-trading
rules based on those of its affiliates, e.g.,
OATS rules. For those Participants that
are already members of FINRA, an
affiliated exchange, or Nasdaq, such
Participants are already familiar with
such rules in connection with their
membership on those SROs. In addition,
the Exchange will be providing an
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OATS-compliant system for
Institutional Brokers; therefore, if an
Institutional Broker has not previously
been a member of either FINRA or an
Affiliated Exchange that has OATS
requirements, such Institutional Broker
will be able to comply with the OATS
requirements. Moreover, these proposed
rules would provide for greater
harmonization among SROs of the rules
for investigations and disciplinary
matters, resulting in less burdensome
and more efficient regulatory
compliance for common members and
facilitating the Exchange’s performance
of its regulatory functions. The
proposed OATS rules would also
facilitate FINRA’s performance of crossmarket surveillances on behalf of the
Exchange.
The Exchange does not believe that
amending the regulatory ‘‘drop copy’’
rule would impose a burden
competition on Institutional Brokers
that is not necessary or appropriate in
furtherance of the purposes of the Act.
The proposed rule, which will apply
equally to all Institutional Brokers,
merely deletes the requirement that
Institutional Brokers provide
information related to their off-exchange
trading activity on a real-time basis in
an electronic format acceptable to the
Exchange. Institutional Brokers would
continue to be required to maintain
records of their off-exchange trading
activity and in lieu of the current
system, Institutional Brokers would be
required to provide reports of such
activity in a format acceptable to the
Exchange within a time frame
designated by the Exchange.
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 18 and Rule 19b–
4(f)(6) thereunder.19
18 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6)(iii) requires a self-regulatory organization to
19 17
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64945
A proposed rule change filed
pursuant to Rule 19b–4(f)(6) under the
Act 20 normally does not become
operative for 30 days after the date of its
filing. However, Rule 19b–4(f)(6)(iii) 21
permits the Commission to designate a
shorter time if such action is consistent
with the protection of investors and the
public interest. The Exchange has
requested that the Commission waive
the 30-day operative delay so that the
proposed rule change can become
effective contemporaneously with the
transition to the Pillar trading platform.
For this reason, the Commission hereby
waives the 30-day operative delay and
designates the proposed rule change as
operative upon filing.22
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 shall 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 (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
NYSECHX–2019–19 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.
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 satisfied this requirement.
20 17 CFR 240.19b–4(f)(6).
21 17 CFR 240.19b–4(f)(6)(iii).
22 For purposes only of waiving the 30-day
operative delay, the Commission also has
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
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Federal Register / Vol. 84, No. 227 / Monday, November 25, 2019 / Notices
All submissions should refer to File
Number SR–NYSECHX–2019–19. 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 (https://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–2019–19, and
should be submitted on or before
December 16, 2019.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.23
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019–25456 Filed 11–22–19; 8:45 am]
BILLING CODE 8011–01–P
SMALL BUSINESS ADMINISTRATION
Meeting of the Advisory Committee on
Veterans Business Affairs (ACVBA)
U.S. Small Business
Administration (SBA).
ACTION: Notice of open Federal Advisory
Committee meeting.
AGENCY:
The SBA is issuing this notice
to announce the location, date, time and
agenda for the next meeting of the
Advisory Committee on Veterans
Business Affairs (ACVBA). The meeting
is open to the public. Due to renovations
at SBA Headquarters, the meeting will
SUMMARY:
23 17
CFR 200.30–3(a)(12).
VerDate Sep<11>2014
17:31 Nov 22, 2019
Jkt 250001
be held at the American Legion
Headquarters in Washington, DC.
DATES: Thursday, December 5, 2019,
from 9:00 a.m. to 4:00 p.m. EST.
ADDRESSES: The meeting will be held at
The American Legion, 1608 K St. NW,
Large Conference Room, Washington,
DC 20006 and via teleconference and
webinar.
The
meeting is open to the public; however
advance notice of attendance is
requested. To RSVP and confirm
attendance, the general public should
email veteransbusiness@sba.gov with
subject line—‘‘RSVP for December 5,
2019 ACVBA Public Meeting.’’ Anyone
wishing to make comments to the
Advisory Committee on Veterans
Business Affairs (ACVBA)must contact
SBA’s Office of Veterans Business
Development (OVBD) no later than
November 26, 2019 via email
veteransbusiness@sba.gov, or Timothy
Green, Deputy Associate Administrator,
OVBD at (202) 205–6773. Comments for
the record will be limited to five
minutes to accommodate as many
participants as possible.
Special accommodation requests
should also be directed to OVBD at
(202) 205–6773 or veteransbusiness@
sba.gov. For more information on
veteran owned small business programs,
please visit www.sba.gov/ovbd.
Participants can join the meeting via
teleconference: Join Zoom Meeting
https://legion.zoom.us/j/190076622.
Meeting ID: 190 076 622
+19292056099,190076622# US (New
York)
+16699006833,190076622# US (San
Jose)
Dial by your location
+1 929 205 6099 US (New York)
+1 669 900 6833 US (San Jose)
877 853 5257 US Toll-free
888 475 4499 US Toll-free
Find your local number: https://
zoom.us/u/abmxT2ohhz. To receive
copies of meeting documents email your
request including the meeting title and
date, to veteransbusiness@sba.gov.
Those attending the meeting are
encouraged to arrive early to allow for
security clearance into the building.
For security purposes attendees are
asked to:
1. RSVP by sending an email to
veteransbusiness@sba.gov by November
30, 2019.
2. Know the name of the event being
attended: The meeting event is the
Advisory Committee on Veterans
Business Affairs (ACVBA)
SUPPLEMENTARY INFORMATION: Pursuant
to section 10(a)(2) of the Federal
FOR FURTHER INFORMATION CONTACT:
PO 00000
Frm 00127
Fmt 4703
Sfmt 4703
Advisory Committee Act (5 U.S.C.,
Appendix 2), SBA announces the
meeting of the Advisory Committee on
Veterans Business Affairs. The ACVBA
is established pursuant to 15 U.S.C.
657(b) note and serves as an
independent source of advice and
policy. The purpose of this meeting is
to discuss efforts that support veteranowned small businesses, updates on
past and current events, and the
ACVBA’s objectives for fiscal year 2020.
Dated: November 19, 2019.
Nicole Nelson,
Committee Management Officer (Acting).
[FR Doc. 2019–25488 Filed 11–22–19; 8:45 am]
BILLING CODE P
SMALL BUSINESS ADMINISTRATION
[Disaster Declaration #16202 and #16203;
South Dakota Disaster Number SD–00098]
Presidential Declaration of a Major
Disaster for the State of South Dakota
U.S. Small Business
Administration.
ACTION: Notice.
AGENCY:
This is a Notice of the
Presidential declaration of a major
disaster for the State of South Dakota
(FEMA–4469–DR), dated 11/18/2019.
Incident: Severe storms, tornadoes,
and flooding.
Incident Period: 09/09/2019 through
09/26/2019.
DATES: Issued on 11/18/2019.
Physical Loan Application Deadline
Date: 01/17/2020.
Economic Injury (EIDL) Loan
Application Deadline Date: 08/18/2020.
ADDRESSES: Submit completed loan
applications to: U.S. Small Business
Administration, Processing and
Disbursement Center, 14925 Kingsport
Road, Fort Worth, TX 76155.
FOR FURTHER INFORMATION CONTACT: A.
Escobar, Office of Disaster Assistance,
U.S. Small Business Administration,
409 3rd Street SW, Suite 6050,
Washington, DC 20416, (202) 205–6734.
SUPPLEMENTARY INFORMATION: Notice is
hereby given that as a result of the
President’s major disaster declaration on
11/18/2019, applications for disaster
loans may be filed at the address listed
above or other locally announced
locations. The following areas have been
determined to be adversely affected by
the disaster:
Primary Counties (Physical Damage and
Economic Injury Loans): Brookings,
Charles Mix, Davison, Hanson,
Hutchinson, Lake, Lincoln,
McCook, Minnehaha, Moody, and
SUMMARY:
E:\FR\FM\25NON1.SGM
25NON1
]]>Agencies
[Federal Register Volume 84, Number 227 (Monday, November 25, 2019)]
[Notices]
[Pages 64942-64946]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-25456]
=======================================================================
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-87573; File No. SR-NYSECHX-2019-19]
Self-Regulatory Organizations; NYSE Chicago, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change Adopting
Rules Relating to Order Audit Trail System Requirements
November 19, 2019.
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 November 6, 2019, the NYSE Chicago, Inc. (``NYSE
Chicago'' 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 adopt rules relating to Order Audit Trail
System requirements, and amend Article 11, Rule 4 in anticipation of
the Exchange's transition to trading to the Pillar trading platform.
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 adopt rules relating to Order Audit Trail
System (``OATS'') requirements, and amend Article 11, Rule 4 in
anticipation of the Exchange's transition to trading to the Pillar
trading platform.\4\ Pillar is an integrated trading technology
platform designed to use a single specification for connecting to the
equites and options markets operated by the Exchange and its
affiliates, NYSE Arca, Inc. (``NYSE Arca''), NYSE American, LLC (``NYSE
American''), NYSE National, Inc. (``NYSE National''), and New York
Stock Exchange LLC (``NYSE'') (the ``Affiliated Exchanges'').
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\4\ The Exchange has announced that, subject to rule approvals,
it will transition to trading on Pillar on November 4, 2019. See
Trader Update, available at https://www.nyse.com/publicdocs/nyse/markets/nyse-chicago/NYSE_Chicago_Migration.pdf. The Exchange
originally filed the proposed rule change on October 31, 2019 (SR-
NYSECHX-2019-17) and withdrew such filing on November 6, 2019, and
is now submitting this proposed rule change to include additional
specificity.
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Background
In July 2018, the Exchange and its direct parent company were
acquired by NYSE Group, Inc. (``Transaction'').\5\ As a result of the
Transaction, the Exchange became part of a corporate family including
the Affiliated Exchanges. Following the Transaction, the Exchange
continued to operate as a separate self-regulatory organization with
rules, membership rosters and listings distinct from the rules,
membership rosters and listings of the other Affiliated Exchanges.
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\5\ See Securities Exchange Act Release No. 83635 (July 13,
2018), 83 FR 34182 (July 19, 2018) (SR-CHX-2018-004); see also
Securities Exchange Act Release No. 83303 (May 22, 2018), 83 FR
24517 (May 29, 2018) (SR-CHX-2018-004).
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The Exchange recently adopted the rule numbering framework of NYSE
National rules, which are organized in 13 Rules.\6\ In addition, the
Exchange has amended its rules to support the transition of trading in
Tape A, Tape B, and Tape C-listed securities from its current trading
platform to a fully automated price-time priority allocation model that
operates on the Pillar trading
[[Page 64943]]
platform.\7\ As part of this transition, the Exchange will continue to
support Institutional Brokers, as provided for under Article 17, and is
updating the Brokerplex system, which is described in Article 17, Rule
5, to interface with the Pillar trading platform.\8\
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\6\ See Securities Exchange Act Release No. 85297 (March 12,
2019), 84 FR 9854 (March 18, 2019) (SR-NYSECHX-2019-03) (Notice of
Filing and Immediate Effectiveness) (``Framework Filing'').
\7\ See Securities Exchange Act Release No. 87264 (October 9,
2019), 84 FR 55345 (October 16, 2019) (SR-NYSECHX-2019-08) (Approval
Order).
\8\ The term ``Institutional Broker'' is defined in Article 1,
Rule 1(n) to mean a member of the Exchange who is registered as an
Institutional Broker pursuant to the provisions of Article 17 and
has satisfied all Exchange requirements to operate as an
Institutional Broker on the Exchange.
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As described in the Framework Filing, Rule 0 currently provides
that the Exchange and FINRA are parties to a Regulatory Services
Agreement (``RSA'') pursuant to which FINRA has agreed to perform
certain regulatory functions of the Exchange on behalf of the
Exchange.\9\ The Exchange notes that pursuant to the RSA, FINRA will
perform certain regulatory surveillance of trading activity on the
Exchange and conduct various regulatory services on behalf of the
Exchange, similar to what FINRA has contracted to do for the Affiliated
Exchanges. Notwithstanding the RSA, the Exchange will retain legal
responsibility for the regulation of its members and its market and the
performance of FINRA as its regulatory services provider.
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\9\ See Rule 0 (Regulation of the Exchange and Participants).
The rule also provides that notwithstanding the fact that the
Exchange has entered into an RSA with FINRA to perform certain of
the Exchange's functions, the Exchange shall retain ultimate legal
responsibility for, and control of, such functions.
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Because of both the transition to the Pillar trading platform and
the regulatory relationship with FINRA, the Exchange proposes to amend
specified rules relating to regulatory reporting requirements. First,
the Exchange proposes to add new Rules 6.7400 through 6.7470 that are
based on NYSE National OATS rules relating to order audit trail system
requirements. These OATS requirements are in turn based on the FINRA
OATS requirements, and will facilitate the regulatory relationship with
FINRA. Second, the Exchange proposes to decommission one of the systems
for Institutional Brokers to report certain trading activity on away
markets, as specified in Article 11, Rule 4. With this proposed change,
Institutional Brokers will continue to be required to report this
trading activity, but will no longer be able to submit this data via
regulatory drop copies into Brokerplex.
Proposed Rule 6.7400 (Order Audit Trail System)
The Exchange proposes OATS rules based on NYSE National Rules
6.7400 Series, which in turn are based on the FINRA Rules 7400 Series.
The proposed NYSE Chicago Rule 6.7400 Series would consist of proposed
Rules 6.7410 through 6.7470, which are based on NYSE National Rules
6.7410 through 6.7470 without any substantive differences. The Exchange
proposes non-substantive differences throughout the Rule 6.7400 Series
to refer to the Exchange instead of NYSE National.
Proposed Rule 6.7410 (Definitions) would set forth
definitions used for purposes of the Rule 6.7400 Series and is based on
NYSE National Rule 6.7410 without any substantive differences other
than to refer to Exchange members as Participants rather than ETP
Holders.
Proposed Rule 6.7420 (Applicability) would specify that
the requirements of the Rule 6.7400 Series are applicable to all
Participants and their associated persons and to all NMS Stocks that
trade on the Exchange, and is based on NYSE National Rule 6.720 without
any differences other than to refer to Exchange members as Participants
rather than ETP Holders.
Proposed Rule 6.7430 (Synchronization of ETP Holder
Business Clocks) would require Participants to synchronize business
clocks used for purposes of recording the date and time of specified
events, and is based on NYSE National Rule 6.7430 without any
differences other than to refer to Exchange members as Participants
rather than ETP Holders.
Proposed Rule 6.7440 (Recording of Order Information)
would require Participants to comply with FINRA Rule 7440 as if such
rule were part of the Exchange's rules and is based on NYSE National
Rule 6.7440 without any substantive differences other than to refer to
Exchange members as Participants rather than ETP Holders.
Proposed Rule 6.7450 (Order Data Transmission
Requirements) would require Participants to comply with FINRA Rule 7450
as if such rule were part of the Exchange's rules and is based on NYSE
National Rule 6.7450 without any substantive differences other than to
refer to Exchange members as Participants rather than ETP Holders.
Proposed Rule 6.7460 (Violation of Order Audit Trail
System Rules) would provide that failure of a Participant or associated
person to comply with the requirements of proposed Rules 6.7410 through
6.7460 may be considered conduct that is inconsistent with high
standards of commercial honor and just and equitable principles of
trade. This proposed rule is based on NYSE National Rule 6.7460 with a
non-substantive difference to cross reference Article 9, Rule 2,
instead of NYSE National Rule 11.3.1 and to refer to an Exchange member
as a Participant rather than an ETP Holder.
Proposed Rule 6.7470 (Exemption to the Order Recording and
Data Transmission Requirements) would provide for how a Participant may
apply for an exemption from the Rule 6.7400 Series and is based on NYSE
National Rule 6.7470-E without any differences other than to refer to
an Exchange member as a Participant rather than an ETP Holder. Proposed
Rule 6.7470(c) provides that the rule would be in effect until November
15, 2019, the date prescribed by the National Market System Plan
Governing the Consolidated Audit Trail (``CAT NMS Plan'').
The Exchange does not currently require its Participants to
maintain order information pursuant to an order tracking system and
therefore, does not have the OATS rules or similar rules in its
rulebook. The Exchange does not believe that requiring Participants to
comply with the OATS requirements would impose an undue burden on such
Participants or its associated persons. In fact, Participants that are
also FINRA members (``Dual Members'') are already be subject to FINRA's
OATS requirements. Similarly, because the Affiliated Exchanges have
rules based on the FINRA OATS requirements, Participants that are not
members of FINRA, but are members of the Affiliated Exchanges will
already be subject to such OATS requirements.\10\ To the extent an
Exchange Participant is not also a member of FINRA, one of the
Affiliated Exchanges, or Nasdaq (which also requires compliance with
FINRA OATS requirements), the Exchange believes that the OATS
requirements for non-FINRA members are not onerous, as order
information pursuant to those rules need only be submitted upon
request.\11\
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\10\ The Affiliated Exchanges all have substantially similar
requirements and the proposed rules are similar to the rules adopted
by the Affiliated Exchanges. See NYSE Rules 7410 through 7470; NYSE
Arca Rules 6.7410-E through 6.7470-E; NYSE American Rules 7410-
Equities through 7470-Equities; and NYSE National Rules 6.7410
through 6.7470. See also Nasdaq Rule 7400A Series.
\11\ See proposed Rule 6.7450(b).
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Finally, Institutional Brokers will not have to undertake any
additional obligations under the proposed OATS requirements because the
Exchange will be providing an OATS-compliant system for Institutional
Brokers by
[[Page 64944]]
updating Brokerplex to automatically capture and report to FINRA the
OATS requirements.\12\ Accordingly, if an Institutional Broker has not
previously been a member of either FINRA or an Affiliated Exchange that
has OATS requirements, such Institutional Broker will be able to comply
with the OATS requirements. The Exchange-provided OATS system for
Institutional Brokers will be available contemporaneous with the
transition to trading on the Pillar trading platform.
---------------------------------------------------------------------------
\12\ In preparation for the transition to trading to Pillar,
Institutional Brokers have successfully tested the OATS-compliant
Brokerplex.
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The Exchange believes that requiring Participants to comply with
the OATS rules will further promote cross-market surveillance and
enhance FINRA's ability to conduct surveillance and investigations for
the Exchange under the RSA. The proposed sub-numbering of the OATS
Rules (i.e., 7410-7470) mirrors the rule numbers for the OATS rules on
FINRA, NYSE, and NYSE National.
Proposed Decommissioning of Exchange-Provided Regulatory Reporting
Systems
The Exchange currently provides a system that facilitates the
ability for Participants to provide reports of specified off-exchange
trading activity to the Exchange, as described in Interpretation and
Policies .01 to Article 11, Rule 4. The only Participants that use this
regulatory reporting system are the Institutional Brokers. With the
transition to Pillar, the Exchange proposes to decommission this
regulatory reporting system and amend the rules that require use of
this specific system. This proposed rule change does not change in any
way Institutional Brokers' obligations to maintain records of off-
exchange trading activity and report such activity to the Exchange.\13\
---------------------------------------------------------------------------
\13\ See Article 11, Rule 3.
---------------------------------------------------------------------------
Specifically, Interpretation and Policies .01 to Article 11, Rule 4
provides that Participants shall not use any electronic means of
communication for sending orders from the Exchange to trade in another
market or trading venue (which is defined as a ``layoff service''),
until the Participant or the layoff service provider has established a
process for providing the Exchange with specific information relating
to the off-Exchange trading activity on a real time basis in an
electronic format acceptable to the Exchange.\14\ Only Institutional
Brokers use such layoff services to engage in single-sided order
executions on away markets; such services are unrelated to either
qualified contingent trading or contingent trading. The Exchange uses
the current Brokerplex system to support reporting of these regulatory
``drop copies'' from a layoff service.
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\14\ See Securities Exchange Act Release No. 52534 (September
29, 2005), 70 FR 58500 (October 6, 2005) (Order Approving Proposed
Rule Change and Amendment Nos. 1, 2, and 3 Thereto and Notice of
Filing and Order Granting Accelerated Approval to Amendment No. 4
Thereto Relating to a Prohibition on Using a Layoff Service Unless
the Service Provides Required Information to the Exchange) (SR-CHX-
2004-25).
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With the transition to Pillar, the Exchange proposes to
decommission the system in Brokerplex that receives regulatory drop
copies of off-exchange trading from a layoff service, as described in
Interpretation and Policies .01 to Article 11, Rule 4. The Exchange
therefore proposes to amend Interpretation and Policies .01 to Article
11, Rule 4 to delete the requirement that Institutional Brokers provide
the specified information on a real-time basis in an electronic format
acceptable to the Exchange. In lieu of the current system, the Exchange
proposes that it will require any Institutional Broker that engages in
this trading activity to provide reports of such activity in a format
acceptable to the Exchange within a time frame designated by the
Exchange, which generally would be not later than trade date plus one
day.\15\
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\15\ See NYSE Chicago IM-19-06, dated October 29, 2019,
available at https://www.nyse.com/publicdocs/nyse/markets/nyse-chicago/rule-interpretations/2019/Chicago%20Number%2019-06%2010.29.19.pdf.
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Accordingly, with this proposed rule change, Institutional Brokers
will continue to be subject to the requirements of Article 11, Rule 4,
which specifies the records that Institutional Brokers must report
relating to specified off-exchange trading activity. The proposed rule
change eliminates only the interface with Brokerplex to submit these
regulatory drop copies on a real-time basis. Such reports would still
be required to be submitted to the Exchange, albeit in a different
format. Because the Exchange does not currently utilize this data to
perform this surveillance in real-time, the Exchange believes that it
will be able to maintain its existing surveillance coverage with
respect to this trading activity and use the new reports that will be
provided by Institutional Brokers to monitor this activity. In other
words, the Exchange does not need real-time submission of this
information to conduct this surveillance.
In addition, with respect to Institutional Brokers that are also
members of FINRA, because such firms would be subject to OATS
requirements, any trading on a layoff service would be reported via
OATS and available to FINRA as well.
2. Statutory Basis
The proposed rule change is consistent with Section 6(b) of the
Securities Exchange Act of 1934 (the ``Act''),\16\ in general, and
furthers the objectives of Section 6(b)(5),\17\ 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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\16\ 15 U.S.C. 78f(b).
\17\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that the proposed Rule 6.7400 Series,
relating to Order Audit Trail System, would remove impediments to and
perfect the mechanism of a free and open market and a national market
system because the proposed rule series is based on the approved rules
of NYSE National, which are based on FINRA's OATS rules. The Exchange
further believes that the proposed OATS rules would promote just and
equitable principles of trade as such rules would further promote
cross-market surveillance and enhance FINRA's ability to conduct
surveillance and investigations for the Exchange under the RSA. The
Exchange does not believe that adding the OATS rules to the Exchange
would impose a burden on Exchange Participants because Participants
that are members of FINRA, one of the Affiliated Exchanges, or Nasdaq,
are already subject to OATS requirements under the rules of those SROs.
To the extent an Exchange Participant is not also a member of FINRA,
one of the Affiliated Exchanges, or Nasdaq, such member would not be
subject to ongoing reporting requirements under the proposed OATS
rules, and therefore it would not be onerous for such Participants to
comply if OATS information were requested in the course of a regulatory
inquiry. Finally, because the Exchange will be providing an OATS-
compliant system for Institutional Brokers, if an Institutional Broker
has not previously been a member of either FINRA or an Affiliated
Exchange that has OATS requirements, such Institutional Broker will be
able to comply with the OATS requirements.
[[Page 64945]]
The Exchange believes that the proposed amendment to Article 11,
Rule 4 would remove impediments to and perfect the mechanism of a free
and open market and a national market system because the proposed rule
change simply decommissions the use of an exchange system that accepts
regulatory drop copies that would no longer be available once the
Exchange transitions to trading to the Pillar trading platform. The
Exchange further believes that the proposed rule change would promote
just and equitable principles of trade because Institutional Brokers
would still be required to maintain records of off-exchange trading
activity as specified in that Rule and report such activity to the
Exchange. Because Institutional Brokers would still be providing the
Exchange with this data, the Exchange would not be changing its
surveillances relating to this trading activity. In addition, because
the Exchange does not conduct such surveillances in real time, it does
not need real-time submission of data to perform these surveillances.
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 designed to address any competitive issue but rather to provide for
rules to support the transition to trading on the Exchange to the
Pillar trading platform. The Exchange operates in a highly competitive
environment in which its unaffiliated exchange competitors operate
multiple affiliated exchanges that operate under common rules. By
basing its rules on those of its affiliated exchanges, the Exchange
will provide Participants with consistency across affiliated exchanges,
thereby enabling the Exchange to compete with unaffiliated exchange
competitors that similarly operate multiple exchanges on the same
trading platform.
In addition, the Exchange does not believe that the proposed rule
change will impose any burden on competition on Participants that is
not necessary or appropriate in furtherance of the purposes of the Act
because the Exchange has proposed non-trading rules based on those of
its affiliates, e.g., OATS rules. For those Participants that are
already members of FINRA, an affiliated exchange, or Nasdaq, such
Participants are already familiar with such rules in connection with
their membership on those SROs. In addition, the Exchange will be
providing an OATS-compliant system for Institutional Brokers;
therefore, if an Institutional Broker has not previously been a member
of either FINRA or an Affiliated Exchange that has OATS requirements,
such Institutional Broker will be able to comply with the OATS
requirements. Moreover, these proposed rules would provide for greater
harmonization among SROs of the rules for investigations and
disciplinary matters, resulting in less burdensome and more efficient
regulatory compliance for common members and facilitating the
Exchange's performance of its regulatory functions. The proposed OATS
rules would also facilitate FINRA's performance of cross-market
surveillances on behalf of the Exchange.
The Exchange does not believe that amending the regulatory ``drop
copy'' rule would impose a burden competition on Institutional Brokers
that is not necessary or appropriate in furtherance of the purposes of
the Act. The proposed rule, which will apply equally to all
Institutional Brokers, merely deletes the requirement that
Institutional Brokers provide information related to their off-exchange
trading activity on a real-time basis in an electronic format
acceptable to the Exchange. Institutional Brokers would continue to be
required to maintain records of their off-exchange trading activity and
in lieu of the current system, Institutional Brokers would be required
to provide reports of such activity in a format acceptable to the
Exchange within a time frame designated by the Exchange.
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 \18\ and Rule 19b-
4(f)(6) thereunder.\19\
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\18\ 15 U.S.C. 78s(b)(3)(A).
\19\ 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 satisfied this requirement.
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A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act \20\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6)(iii) \21\ permits the
Commission to designate a shorter time if such action is consistent
with the protection of investors and the public interest. The Exchange
has requested that the Commission waive the 30-day operative delay so
that the proposed rule change can become effective contemporaneously
with the transition to the Pillar trading platform. For this reason,
the Commission hereby waives the 30-day operative delay and designates
the proposed rule change as operative upon filing.\22\
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\20\ 17 CFR 240.19b-4(f)(6).
\21\ 17 CFR 240.19b-4(f)(6)(iii).
\22\ For purposes only of waiving the 30-day operative delay,
the Commission also has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 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 shall 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 (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-NYSECHX-2019-19 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 64946]]
All submissions should refer to File Number SR-NYSECHX-2019-19. 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 (https://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-2019-19, and should be submitted
on or before December 16, 2019.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\23\
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\23\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-25456 Filed 11-22-19; 8:45 am]
BILLING CODE 8011-01-P
