Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing of Proposed Rule Change To Add New Rule 46B To Permit the Appointment of Regulatory Trading Officials and Amend Rules 47 and 75, 5511-5513 [2020-01646]

Download as PDF Federal Register / Vol. 85, No. 20 / Thursday, January 30, 2020 / Notices Commission believes that the information provided by OCC provides a comprehensive and sufficient response to the FIA’s request for clarification. The Commission believes that OCC’s proposal with respect to the Operational Loss Fee will permit OCC to raise additional equity in the event that its equity falls close to or below the Target Capital Requirement and therefore finds that it is consistent with Rule 17Ad– 22(e)(15)(iii) of the Exchange Act. The Commission finds, therefore, that adoption of these aspects of the proposed Capital Management Policy and supporting rule changes are consistent with Exchange Act Rule 17Ad–22(e)(15).127 V. Conclusion On the basis of the foregoing, the Commission finds that the Proposed Rule Change is consistent with the requirements of the Exchange Act, and in particular, the requirements of Section 17A of the Exchange Act 128 and the rules and regulations thereunder. It is therefore ordered, pursuant to Section 19(b)(2) of the Exchange Act,129 that the Proposed Rule Change (SR– OCC–2019–007), as modified by Partial Amendment No. 1, be, and hereby is, approved. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.130 J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2020–01643 Filed 1–29–20; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–88033; File No. SR–NYSE– 2020–03] Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing of Proposed Rule Change To Add New Rule 46B To Permit the Appointment of Regulatory Trading Officials and Amend Rules 47 and 75 January 24, 2020. khammond on DSKJM1Z7X2PROD with NOTICES Pursuant to Section 19(b)(1) 1 of the Securities Exchange Act of 1934 (‘‘Act’’) 2 and Rule 19b–4 thereunder,3 127 17 CFR 240.17Ad–22(e)(15). approving this Proposed Rule Change, the Commission has considered the proposed rules’ impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 129 15 U.S.C. 78s(b)(2). 130 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 2 15 U.S.C. 78a. 3 17 CFR 240.19b–4. 128 In VerDate Sep<11>2014 16:56 Jan 29, 2020 Jkt 250001 notice is hereby given that, on January 14, 2020, New York Stock Exchange LLC (‘‘NYSE’’ or ‘‘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 self-regulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes a new Rule 46B to permit the appointment of Regulatory Trading Officials and corresponding amendments to Rules 47 and 75 to permit Regulatory Trading Officials to review whether a bid or offer was verbalized at the point of sale in time to be eligible for inclusion in the Closing Auction. The proposed rule change is available on the Exchange’s website at www.nyse.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes a new Rule 46B to permit the appointment of Regulatory Trading Officials and corresponding amendments to Rules 47 and 75 to permit Regulatory Trading Officials to review whether a bid or offer was verbalized at the point of sale in time to be eligible for inclusion in the Closing Auction. Background Rule 46 permits the Exchange to appoint active NYSE members 4 as Floor 4 Rule 2(a) states that the term ‘‘member,’’ when referring to a natural person, means a natural PO 00000 Frm 00145 Fmt 4703 Sfmt 4703 5511 Officials. Rule 46 also permits the Exchange to appoint ‘‘qualified’’ 5 ICE employees to act as Floor Governors, one of the more senior types of Floor Officials (‘‘Staff Governors’’).6 Floor Officials are delegated certain authority from the Board of Directors of the Exchange to supervise and regulate active openings and unusual situations that arise in connection with the making of bids, offers or transactions on the Trading Floor,7 and to review and approve certain trading actions. Currently, only Floor Officials are authorized to act under the Exchange’s rules in connection with certain situations involving bids, offers or transactions on the Trading Floor. Specifically, Rule 75 (Disputes as to Bids and Offers) mandates that disputes arising on bids or offers that are not settled by agreement between the interested members shall be settled by a Floor Official. Under Rule 47 (Floor Officials—Unusual Situations), Floor Officials have the authority to ‘‘supervise and regulate active openings and unusual situations that may arise in connection with the making of bids, offers or transactions on the Floor.’’ Unusual situations may arise that could impede or prevent Floor brokers from representing customer interest before the end of Core Trading Hours.8 In the event of such a potentially unusual situation,9 a Floor broker may person associated with a member organization who has been approved by the Exchange and designated by such member organization to effect transactions on the Exchange Trading Floor or any facility thereof. See also note 7, infra. 5 Supplementary Material .10 defines ‘‘qualified’’ employees as ‘‘employees of ICE or any of its subsidiaries, excluding employees of NYSE Regulation, Inc., who shall have satisfied any applicable testing or qualification required by the NYSE for all Floor Governors.’’ 6 Pursuant to Rules 46 and 46A, Floor Governors are one of several ranks of the broader category of Floor Officials, including, in order of increasing seniority, Floor Officials, Senior Floor Officials, Executive Floor Officials, Floor Governors and Executive Floor Governors. See Securities Exchange Act Release No. 57627 (April 4, 2008), 73 FR 19919 (April 11, 2008) (SR–NYSE–2008–19). 7 The term ‘‘Trading Floor’’ is defined in Rule 6A to mean the restricted-access physical areas designated by the Exchange for the trading of securities, commonly known as the ‘‘Main Room’’ and the ‘‘Buttonwood Room.’’ 8 See NYSE Rule 52. Core Trading Hours are defined in Rule 1.1(d) to mean the hours of 9:30 a.m. ET through 4:00 p.m. ET, or such other hours as may be determined by the Exchange, for example, an early scheduled closing time. 9 Unusual situations may arise, for example, if the Floor broker hand-held device malfunctions or ceases to work or if a Floor broker is physically impeded, as a result of a crowd condition beyond that of normal traffic flow on the Exchange’s trading Floor or some other circumstance beyond the Floor broker’s control, in his or her ability to be present at a post before the DMM closes the security. See E:\FR\FM\30JAN1.SGM Continued 30JAN1 5512 Federal Register / Vol. 85, No. 20 / Thursday, January 30, 2020 / Notices consult with a Floor Official and the Designated Market Maker (‘‘DMM’’) in the relevant security regarding whether and how that customer interest can be represented so that it is eligible to participate in the Closing Auction.10 The Floor Official’s role in this consultation is to provide an impartial professional assessment of the situation consistent with NYSE Rule 47. Currently, the DMM makes the final determination whether to include or exclude Floor broker verbal interest in the Closing Auction. Proposed Rule Change khammond on DSKJM1Z7X2PROD with NOTICES The Exchange proposes a new ‘‘Regulatory Trading Official’’ that may be consulted regarding whether a bid or offer was verbalized at the point of sale in time to be eligible for inclusion in the Closing Auction by the DMM. Under proposed Rule 46B, Regulatory Trading Officials would be an Exchange employee or officer designated by the Chief Regulatory Officer or its designee to perform the functions specified in Exchange rules. As proposed, Regulatory Trading Officials would have the authority to review whether a bid or offer was verbalized at the point of sale in time to be eligible for inclusion in the Closing Auction. The final determination to include or exclude verbal interest from the Closing Auction will be made by the DMM pursuant to Rule 104. Floor Officials would retain the authority to settle disputes arising on bids or offers for all transactions on the Exchange other than the Closing Auction. The Exchange believes that it is more appropriate for a regulatory employee to consult with a Floor broker and DMM relating to the timely entry of verbal interest in the Closing Auction. Whether a bid or offer was verbalized at the point of sale in time to be eligible for inclusion in the Closing Auction will often require assessing whether a Floor broker complied with the rules for entry of verbal interest prior to the Closing NYSE Member Education Bulletin 19–01 (June 21, 2019). 10 Floor broker buy and sell interest is eligible to participate in the Closing Auction if, by the end of Core Trading Hours, such interest is (1) entered into an Exchange system and recorded in accordance with Rule 123(e), and (2) either entered electronically or verbally represented at the point of sale. When verbally representing customer interest, Floor brokers must bid or offer by articulating the following elements: Symbol, side (buy or sell), size, and, if the order is a limit order, the price. See Member Education Bulletin 19–01 (June 21, 2019); see generally Rule 123(b) (record of orders must contain the required terms of the order, including the name and amount of the security, the terms of the order and the time when such order was received). VerDate Sep<11>2014 16:56 Jan 29, 2020 Jkt 250001 Auction.11 The Exchange believes that having a regulatory employee involved in such discussions will emphasize the importance of including verbal interest entered in a timely manner in the closing auction. To effectuate these changes, the Exchange proposes a new Rule 46B that would provide that a Regulatory Trading Official would be an Exchange employee or officer designated by the Chief Regulatory Officer or its designee to perform those functions specified in Exchange rules. The Exchange further proposes to amend Rule 47 to specify that, whether a bid or offer was verbalized at the point of sale in time to be eligible for inclusion in the Closing Auction by a DMM, would be governed by Rule 75(b). The proposed changes to Rule 75 would separate the current rule text into two sections. First, the existing text of Rule 75 relating to the authority of Floor Officials to resolve disputes between members arising on bids or offers would be renumbered as new subsection (a)(1) and the existing text of Supplementary Material .10 would be renumbered as new subsection (a)(2). The Exchange proposes no substantive changes to the existing text of Rule 75 or current Supplementary Material .10. The proposed authority of Regulatory Trading Officials would be set forth in a new subsection (b) to Rule 75. Proposed Rule 75(b) would provide that a Regulatory Trading Official may be consulted regarding whether a bid or offer was verbalized at the point of sale in time to be eligible for inclusion in the Closing Auction by the DMM. The proposed rule would provide that either the Floor broker with the verbal interest or the DMM responsible for the Closing Auction in the relevant security may request Regulatory Trading Official review. Proposed Rule 75(b) would also provide that if such a request has been made, the DMM will not facilitate the Closing Auction until a Regulatory Trading Official has completed his or her review. Finally, the proposed rule would provide, consistent with current rules, that the final determination to include or exclude verbal interest from the Closing Auction will be made by the DMM pursuant to Rule 104. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act,12 in general, and furthers the objectives of Section 6(b)(5) of the Act,13 in particular, because it is 11 See note 10, supra. U.S.C. 78f(b). 13 15 U.S.C. 78f(b)(5). Frm 00146 Fmt 4703 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 14 For example, the pricing and valuation of certain indices, funds, and derivative products require primary market prints. 12 15 PO 00000 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. In particular, the Exchange believes that creating a new category of trading official to review whether a bid or offer was verbalized in time to be included in the Closing Auction would promote just and equitable principles of trade and remove impediments to a free and open market by providing additional certainty to the Closing Auction when a dispute arises, thereby facilitating fair competition among brokers and dealers and among exchange markets. The Exchange’s Closing Auction is a recognized industry reference point,14 and the Exchange believes that having a regulatory employee review whether verbal interest was correctly and timely entered at the end of the trading day would promote the efficient execution of the Closing Auction, thereby contributing to fair and orderly markets and strengthening investor confidence in the market. The Exchange believes that assigning responsibility for reviewing whether verbal interest was eligible for inclusion in the Closing Auction to a regulatory employee designated by the Chief Regulatory Officer will contribute to the protection of investors and the public interest. As noted above, the Exchange believes that regulatory employees are appropriately suited to the role of consultation regarding entry of verbal interest in time to participate in the Closing Auction. The Exchange also believes the proposed amendments further the goal of transparency and add clarity to the Exchange’s rules, which would not be inconsistent with the public interest and the protection of investors because investors would not be harmed and in fact would benefit from the increased transparency and clarity in the Exchange’s rules, thereby reducing potential confusion. For the foregoing reasons, the Exchange believes that the proposal is consistent with the Act. Sfmt 4703 E:\FR\FM\30JAN1.SGM 30JAN1 Federal Register / Vol. 85, No. 20 / Thursday, January 30, 2020 / Notices proposed rule change is not designed to address and competitive issues, but rather assign responsibility for reviewing eligibility of verbal interest for inclusion in the Closing Auction to a regulatory employee. Since the proposal does not substantively modify the Closing Auction or system functionality, the proposed changes will not impose any burden on competition. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 45 days of the date of publication of this notice in the Federal Register, or 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: (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: khammond on DSKJM1Z7X2PROD with NOTICES 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– NYSE–2020–03 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–2020–03. 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 VerDate Sep<11>2014 16:56 Jan 29, 2020 Jkt 250001 submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for website viewing and printing in the Commission’s Public Reference Room, 100 F Street NE, Washington, DC 20549 on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–NYSE–2020–03 and should be submitted on or before February 20, 2020. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.15 J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2020–01646 Filed 1–29–20; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. SIPA–180A; File No. SIPC– 2019–01] Securities Investor Protection Corporation; Notice of Filing of Proposed Bylaw Change, as Revised by Amendment No. 1, Relating to SIPC Board Compensation; Correction Pursuant to Section 3(e)(1) of the Securities Investor Protection Act of 1970 (‘‘SIPA’’),1 on October 8, 2019 the Securities Investor Protection Corporation (‘‘SIPC’’) filed with the Securities and Exchange Commission (‘‘Commission’’) a proposed bylaw change relating to the SIPC Board of Directors’ (‘‘Board’’) compensation. On October 24, 2019, SIPC consented to a 90-day extension of time before the proposed bylaw change would take effect pursuant to section 3(e)(1) of 15 17 1 15 PO 00000 CFR 200.30–3(a)(12). U.S.C. 78ccc(e)(1). Frm 00147 Fmt 4703 SIPA.2 On November 19, 2019, SIPC filed a revised version of the proposed bylaw change, which replaced and superseded the original proposed bylaw change in its entirety. On December 10, 2019, SIPC consented to a 90-day extension of time before the proposed bylaw change, as revised by Amendment No. 1, would take effect pursuant to section 3(e)(1) of SIPA.3 Pursuant to section 3(e)(1)(B) of SIPA, the Commission finds that the proposed bylaw change, as revised by Amendment No. 1, involves a matter of such significant public interest that public comment should be obtained.4 Therefore, pursuant to section 3(e)(2)(A) of SIPA,5 the Commission is publishing this notice to solicit comment from interested persons on the proposed bylaw change, as revised by Amendment No. 1.6 In its filing with the Commission, SIPC included statements concerning the purpose of and statutory basis for the proposed bylaw change, as revised by Amendment No. 1, as described below, which description has been substantially prepared by SIPC. I. SIPC’s Statement of the Purpose of, and Statutory Basis for, Proposed SIPC Bylaw Change Relating to SIPC Board Compensation On October 7, 2019, pursuant to Section 3(e)(1) of SIPA, 15 U.S.C. 78ccc(e)(1),7 SIPC submitted for filing with the Commission a proposed amendment to Article 2, Section 6, of the SIPC Bylaws. On November 18, 2019, SIPC submitted a revised version of the proposed amendment to Article 2, Section 6, of the SIPC Bylaws. Article 2, Section 6, of the Bylaws relates to the honoraria paid to non-Governmental members of the Board. As amended, Article 2, Section 6, would: (1) Change the Board Chairperson’s yearly honorarium from 2 Id. 3 Id. 4 15 January 24, 2020. Sfmt 4703 5513 U.S.C. 78ccc(e)(1)(B). U.S.C. 78ccc(e)(2)(A). 6 This notice of SIPC’s filing of a proposed bylaw change, as revised by Amendment No. 1, relating to SIPC Board compensation, supersedes the notice originally published in the Federal Register on January 23, 2020. See Securities Investor Protection Corporation; Notice of Filing of Proposed Bylaw Change, as Revised by Amendment No. 1, Relating to SIPC Board Compensation, Release No. SIPA–180 (Jan. 16, 2020), 85 FR 3960 (Jan. 23, 2020). The notice published on January 23, 2020 inadvertently referenced a provision from the original version of the proposed bylaw change that would have provided for a re-evaluation of Board honoraria every ten years. SIPC’s proposed bylaw change, as revised by Amendment No. 1, does not propose a re-evaluation of Board honoraria every ten years. 7 For convenience, reference hereinafter to provisions of SIPA shall be to the United States Code and shall omit ‘‘15 U.S.C.’’. 5 15 E:\FR\FM\30JAN1.SGM 30JAN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 85, Number 20 (Thursday, January 30, 2020)]
[Notices]
[Pages 5511-5513]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-01646]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-88033; File No. SR-NYSE-2020-03]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing of Proposed Rule Change To Add New Rule 46B To Permit 
the Appointment of Regulatory Trading Officials and Amend Rules 47 and 
75

January 24, 2020.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given 
that, on January 14, 2020, New York Stock Exchange LLC (``NYSE'' or 
``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 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 a new Rule 46B to permit the appointment of 
Regulatory Trading Officials and corresponding amendments to Rules 47 
and 75 to permit Regulatory Trading Officials to review whether a bid 
or offer was verbalized at the point of sale in time to be eligible for 
inclusion in the Closing Auction. The proposed rule change is available 
on the Exchange's website at www.nyse.com, at the principal office of 
the Exchange, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of those statements may be examined at 
the places specified in Item IV below. The Exchange has prepared 
summaries, set forth in sections A, B, and C below, of the most 
significant parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes a new Rule 46B to permit the appointment of 
Regulatory Trading Officials and corresponding amendments to Rules 47 
and 75 to permit Regulatory Trading Officials to review whether a bid 
or offer was verbalized at the point of sale in time to be eligible for 
inclusion in the Closing Auction.
Background
    Rule 46 permits the Exchange to appoint active NYSE members \4\ as 
Floor Officials. Rule 46 also permits the Exchange to appoint 
``qualified'' \5\ ICE employees to act as Floor Governors, one of the 
more senior types of Floor Officials (``Staff Governors'').\6\ Floor 
Officials are delegated certain authority from the Board of Directors 
of the Exchange to supervise and regulate active openings and unusual 
situations that arise in connection with the making of bids, offers or 
transactions on the Trading Floor,\7\ and to review and approve certain 
trading actions.
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    \4\ Rule 2(a) states that the term ``member,'' when referring to 
a natural person, means a natural person associated with a member 
organization who has been approved by the Exchange and designated by 
such member organization to effect transactions on the Exchange 
Trading Floor or any facility thereof. See also note 7, infra.
    \5\ Supplementary Material .10 defines ``qualified'' employees 
as ``employees of ICE or any of its subsidiaries, excluding 
employees of NYSE Regulation, Inc., who shall have satisfied any 
applicable testing or qualification required by the NYSE for all 
Floor Governors.''
    \6\ Pursuant to Rules 46 and 46A, Floor Governors are one of 
several ranks of the broader category of Floor Officials, including, 
in order of increasing seniority, Floor Officials, Senior Floor 
Officials, Executive Floor Officials, Floor Governors and Executive 
Floor Governors. See Securities Exchange Act Release No. 57627 
(April 4, 2008), 73 FR 19919 (April 11, 2008) (SR-NYSE-2008-19).
    \7\ The term ``Trading Floor'' is defined in Rule 6A to mean the 
restricted-access physical areas designated by the Exchange for the 
trading of securities, commonly known as the ``Main Room'' and the 
``Buttonwood Room.''
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    Currently, only Floor Officials are authorized to act under the 
Exchange's rules in connection with certain situations involving bids, 
offers or transactions on the Trading Floor. Specifically, Rule 75 
(Disputes as to Bids and Offers) mandates that disputes arising on bids 
or offers that are not settled by agreement between the interested 
members shall be settled by a Floor Official. Under Rule 47 (Floor 
Officials--Unusual Situations), Floor Officials have the authority to 
``supervise and regulate active openings and unusual situations that 
may arise in connection with the making of bids, offers or transactions 
on the Floor.''
    Unusual situations may arise that could impede or prevent Floor 
brokers from representing customer interest before the end of Core 
Trading Hours.\8\ In the event of such a potentially unusual 
situation,\9\ a Floor broker may

[[Page 5512]]

consult with a Floor Official and the Designated Market Maker (``DMM'') 
in the relevant security regarding whether and how that customer 
interest can be represented so that it is eligible to participate in 
the Closing Auction.\10\ The Floor Official's role in this consultation 
is to provide an impartial professional assessment of the situation 
consistent with NYSE Rule 47. Currently, the DMM makes the final 
determination whether to include or exclude Floor broker verbal 
interest in the Closing Auction.
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    \8\ See NYSE Rule 52. Core Trading Hours are defined in Rule 
1.1(d) to mean the hours of 9:30 a.m. ET through 4:00 p.m. ET, or 
such other hours as may be determined by the Exchange, for example, 
an early scheduled closing time.
    \9\ Unusual situations may arise, for example, if the Floor 
broker hand-held device malfunctions or ceases to work or if a Floor 
broker is physically impeded, as a result of a crowd condition 
beyond that of normal traffic flow on the Exchange's trading Floor 
or some other circumstance beyond the Floor broker's control, in his 
or her ability to be present at a post before the DMM closes the 
security. See NYSE Member Education Bulletin 19-01 (June 21, 2019).
    \10\ Floor broker buy and sell interest is eligible to 
participate in the Closing Auction if, by the end of Core Trading 
Hours, such interest is (1) entered into an Exchange system and 
recorded in accordance with Rule 123(e), and (2) either entered 
electronically or verbally represented at the point of sale. When 
verbally representing customer interest, Floor brokers must bid or 
offer by articulating the following elements: Symbol, side (buy or 
sell), size, and, if the order is a limit order, the price. See 
Member Education Bulletin 19-01 (June 21, 2019); see generally Rule 
123(b) (record of orders must contain the required terms of the 
order, including the name and amount of the security, the terms of 
the order and the time when such order was received).
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Proposed Rule Change
    The Exchange proposes a new ``Regulatory Trading Official'' that 
may be consulted regarding whether a bid or offer was verbalized at the 
point of sale in time to be eligible for inclusion in the Closing 
Auction by the DMM.
    Under proposed Rule 46B, Regulatory Trading Officials would be an 
Exchange employee or officer designated by the Chief Regulatory Officer 
or its designee to perform the functions specified in Exchange rules. 
As proposed, Regulatory Trading Officials would have the authority to 
review whether a bid or offer was verbalized at the point of sale in 
time to be eligible for inclusion in the Closing Auction. The final 
determination to include or exclude verbal interest from the Closing 
Auction will be made by the DMM pursuant to Rule 104. Floor Officials 
would retain the authority to settle disputes arising on bids or offers 
for all transactions on the Exchange other than the Closing Auction.
    The Exchange believes that it is more appropriate for a regulatory 
employee to consult with a Floor broker and DMM relating to the timely 
entry of verbal interest in the Closing Auction. Whether a bid or offer 
was verbalized at the point of sale in time to be eligible for 
inclusion in the Closing Auction will often require assessing whether a 
Floor broker complied with the rules for entry of verbal interest prior 
to the Closing Auction.\11\ The Exchange believes that having a 
regulatory employee involved in such discussions will emphasize the 
importance of including verbal interest entered in a timely manner in 
the closing auction.
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    \11\ See note 10, supra.
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    To effectuate these changes, the Exchange proposes a new Rule 46B 
that would provide that a Regulatory Trading Official would be an 
Exchange employee or officer designated by the Chief Regulatory Officer 
or its designee to perform those functions specified in Exchange rules.
    The Exchange further proposes to amend Rule 47 to specify that, 
whether a bid or offer was verbalized at the point of sale in time to 
be eligible for inclusion in the Closing Auction by a DMM, would be 
governed by Rule 75(b). The proposed changes to Rule 75 would separate 
the current rule text into two sections. First, the existing text of 
Rule 75 relating to the authority of Floor Officials to resolve 
disputes between members arising on bids or offers would be renumbered 
as new subsection (a)(1) and the existing text of Supplementary 
Material .10 would be renumbered as new subsection (a)(2). The Exchange 
proposes no substantive changes to the existing text of Rule 75 or 
current Supplementary Material .10.
    The proposed authority of Regulatory Trading Officials would be set 
forth in a new subsection (b) to Rule 75. Proposed Rule 75(b) would 
provide that a Regulatory Trading Official may be consulted regarding 
whether a bid or offer was verbalized at the point of sale in time to 
be eligible for inclusion in the Closing Auction by the DMM. The 
proposed rule would provide that either the Floor broker with the 
verbal interest or the DMM responsible for the Closing Auction in the 
relevant security may request Regulatory Trading Official review. 
Proposed Rule 75(b) would also provide that if such a request has been 
made, the DMM will not facilitate the Closing Auction until a 
Regulatory Trading Official has completed his or her review. Finally, 
the proposed rule would provide, consistent with current rules, that 
the final determination to include or exclude verbal interest from the 
Closing Auction will be made by the DMM pursuant to Rule 104.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\12\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\13\ 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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    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    In particular, the Exchange believes that creating a new category 
of trading official to review whether a bid or offer was verbalized in 
time to be included in the Closing Auction would promote just and 
equitable principles of trade and remove impediments to a free and open 
market by providing additional certainty to the Closing Auction when a 
dispute arises, thereby facilitating fair competition among brokers and 
dealers and among exchange markets. The Exchange's Closing Auction is a 
recognized industry reference point,\14\ and the Exchange believes that 
having a regulatory employee review whether verbal interest was 
correctly and timely entered at the end of the trading day would 
promote the efficient execution of the Closing Auction, thereby 
contributing to fair and orderly markets and strengthening investor 
confidence in the market.
---------------------------------------------------------------------------

    \14\ For example, the pricing and valuation of certain indices, 
funds, and derivative products require primary market prints.
---------------------------------------------------------------------------

    The Exchange believes that assigning responsibility for reviewing 
whether verbal interest was eligible for inclusion in the Closing 
Auction to a regulatory employee designated by the Chief Regulatory 
Officer will contribute to the protection of investors and the public 
interest. As noted above, the Exchange believes that regulatory 
employees are appropriately suited to the role of consultation 
regarding entry of verbal interest in time to participate in the 
Closing Auction. The Exchange also believes the proposed amendments 
further the goal of transparency and add clarity to the Exchange's 
rules, which would not be inconsistent with the public interest and the 
protection of investors because investors would not be harmed and in 
fact would benefit from the increased transparency and clarity in the 
Exchange's rules, thereby reducing potential confusion.
    For the foregoing reasons, the Exchange believes that the proposal 
is consistent with the Act.

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

    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

[[Page 5513]]

proposed rule change is not designed to address and competitive issues, 
but rather assign responsibility for reviewing eligibility of verbal 
interest for inclusion in the Closing Auction to a regulatory employee. 
Since the proposal does not substantively modify the Closing Auction or 
system functionality, the proposed changes will not impose any burden 
on competition.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 45 days of the date of publication of this notice in the 
Federal Register, or 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:
    (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 (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-NYSE-2020-03 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-2020-03. 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-NYSE-2020-03 and should be  submitted on 
or before February 20, 2020.
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    \15\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-01646 Filed 1-29-20; 8:45 am]
 BILLING CODE 8011-01-P

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