Self-Regulatory Organizations; New York Stock Exchange LLC; NYSE National, Inc.; NYSE Arca, Inc.; NYSE American LLC; NYSE Chicago, Inc.; Order Granting Approval of Proposed Rule Changes Relating to Repricing of Depth-of-Book Orders in Response to a Locked or Crossed Market, 27259-27261 [2020-09711]

Download as PDF Federal Register / Vol. 85, No. 89 / Thursday, May 7, 2020 / Notices is no longer in existence, is not engaged in business as an investment adviser, or is prohibited from registering as an investment adviser under section 203A, the Commission shall by order, cancel the registration of such person. The registrant has not filed a Form ADV amendment with the Commission as required by rule 204–1 under the Act and appears to be no longer in business as an investment adviser or is otherwise not engaged in business as an investment adviser.1 Accordingly, the Commission believes that reasonable grounds exist for a finding that this registrant is no longer eligible to be registered with the Commission as an investment adviser and that the registration should be cancelled pursuant to section 203(h) of the Act. Notice is also given that any interested person may, by May 25, 2020, at 5:30 p.m., submit to the Commission in writing a request for a hearing on the cancellation, accompanied by a statement as to the nature of his or her interest, the reason for such request, and the issues, if any, of fact or law proposed to be controverted, and he or she may request that he or she be notified if the Commission should order a hearing thereon. Any such communication should be emailed to the Commission’s Secretary at Secretarys-Office@sec.gov. At any time after May 25, 2020, the Commission may issue an order cancelling the registration, upon the basis of the information stated above, unless an order for a hearing on the cancellation shall be issued upon request or upon the Commission’s own motion. Persons who requested a hearing, or who requested to be advised as to whether a hearing is ordered, will receive any notices and orders issued in this matter, including the date of the hearing (if ordered) and any postponements thereof. Any adviser whose registration is cancelled under delegated authority may appeal that decision directly to the Commission in accordance with rules 430 and 431 of the Commission’s rules of practice (17 CFR 201.430 and 431). khammond on DSKJM1Z7X2PROD with NOTICES Olawale´ Oriola, Senior Counsel at 202– 551–6541; SEC, Division of Investment Management, Investment Adviser 1 Rule 204–1 under the Act requires any adviser that is required to complete Form ADV to amend the form at least annually and to submit the amendments electronically through the Investment Adviser Registration Depository. Jkt 250001 [FR Doc. 2020–09708 Filed 5–6–20; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–88793; File Nos. SR–NYSE– 2020–13, SR–NYSENAT–2020–09, SR– NYSEArca–2020–17, SR–NYSEAMER–2020– 12; SR–NYSECHX–2020–06] Self-Regulatory Organizations; New York Stock Exchange LLC; NYSE National, Inc.; NYSE Arca, Inc.; NYSE American LLC; NYSE Chicago, Inc.; Order Granting Approval of Proposed Rule Changes Relating to Repricing of Depth-of-Book Orders in Response to a Locked or Crossed Market May 1, 2020. I. Introduction On February 28, 2020, New York Stock Exchange LLC (‘‘NYSE’’), NYSE National, Inc. (‘‘NYSE National’’), NYSE Arca, Inc. (‘‘NYSE Arca’’), NYSE American LLC (‘‘NYSE American’’), and NYSE Chicago Inc. (‘‘NYSE CHX’’, and collectively, the ‘‘Exchanges’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 proposed rule changes regarding their rules on the repricing of orders in certain market situations and related rules relevant to each Exchange. The proposed rule changes were published for comment in the Federal Register on March 18, 2020.3 The Commission has received no comments on the proposed rule changes. The Commission is approving the proposed rule changes. CFR 200.30–5(e)(2). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 See Securities Exchange Act Release Nos. 88362 (March 12, 2020), 85 FR 15538 (SR–NYSE–2020–13) (‘‘NYSE Notice’’); 88368 (March 12, 2020), 85 FR 15510 (SR–NYSENAT–2020–09); 88369 (March 12, 2020), 85 FR 15515 (SR–NYSEArca–2020–17) (‘‘NYSE Arca Notice’’); 88363 (March 12, 2020), 85 FR 15544 (SR–NYSEAMER–2020–12) (‘‘NYSE American Notice’’); 88367 (March 12, 2020), 85 FR 15551 (SR–NYSECHX–2020–06) (collectively, the ‘‘Notices’’). For ease of reference, page citations in this order are from the NYSE Notice, as published in the Federal Register. 1 15 FOR FURTHER INFORMATION CONTACT: 16:45 May 06, 2020 For the Commission, by the Division of Investment Management, pursuant to delegated authority.2 J. Matthew DeLesDernier, Assistant Secretary. 2 17 The Commission: Secretarys-Office@sec.gov. ADDRESSES: VerDate Sep<11>2014 Regulation Office, 100 F Street NE, Washington, DC 20549–8549. PO 00000 Frm 00056 Fmt 4703 Sfmt 4703 27259 II. Description of the Proposed Rule Change Each Exchange’s current rules provide that, if an away market (‘‘Away Market’’) updates its Protected Best Bid and Offer (‘‘PBBO’’) and crosses not only the BBO of the Exchange, but also displayed orders in the Exchange’s Book not represented in the Best Bid or Offer (‘‘BBO’’), (i.e., depth-of-book orders), and then the Exchange’s BBO cancels or trades, the Exchange will not disseminate its next-best priced depthof-book order as its new BBO to the securities information processor (‘‘SIP’’). Instead, the Exchange will reprice such order before it is disseminated to the SIP.4 For example, consider a scenario where NYSE’s Best Bid (‘‘BB’’) is $10.05, and on the NYSE Book there is an order to buy 100 shares ranked as a Priority 2—Display Order at $10.04 (‘‘Order A’’). Currently, Order A is displayed in the NYSE’s proprietary depth-of-book market data at that $10.04 price, but is not disseminated to the SIP. If an Away Market subsequently publishes a Protected Best Offer (‘‘PBO’’) of $10.03, NYSE’s BB of $10.05 will not reprice (i.e., it will ‘‘stand its ground’’). However, if that $10.05 BB trades, cancels, or routes, NYSE will not disseminate Order A to the SIP as the new BB at $10.04. Instead, Order A will be assigned a display price of $10.02 and a NYSE working price of $10.03, which is equal to the Away Market PBO, and will be disseminated to the SIP as the NYSE BB at $10.02. Order A subsequently will be repriced to $10.04 once the Away Market PBO no longer locks or crosses the NYSE BB. Each time Order A is repriced, including back to its original price, it is assigned a new working time. In addition, NYSE currently applies this repricing functionality to other order types (specifically, D Orders and Primary Pegged Orders), and following an auction.5 The Exchanges propose to eliminate their existing rules requiring the repricing functionality described above, and to add new rule text that provides that, if an Away Market locks or crosses the BBO, the Exchange would not change the display price of any Limit 4 See NYSE Notice, 85 FR at 15538–39. id. The rules of the other Exchanges do not provide for D Orders, but, except for NYSE American, they do provide for Primary Pegged Orders and apply the same repricing functionality to those orders. Similarly, the other Exchanges that provide for auctions on their markets (NYSE American and NYSE Arca) apply the same repricing functionality following an auction; NYSE CHX and NYSE National do not have auctions on their markets. 5 See E:\FR\FM\07MYN1.SGM 07MYN1 27260 Federal Register / Vol. 85, No. 89 / Thursday, May 7, 2020 / Notices Order ranked Priority 2—Display Orders (which would include previously displayed depth-of-book orders) and that any such orders would be eligible to be disseminated as the Exchange’s BBO.6 As a result, in the example set forth above, Order A instead would not be repriced before being displayed and disseminated to the SIP following the prior Exchange BB being executed or cancelled.7 Accordingly, Order A would be disseminated to the SIP as the Exchange’s new BB at $10.04, even if that price would cross the Away Market Protected Bid of $10.03.8 The Exchanges also propose other changes to their rules related to this proposal, as further described below. Odd-Lot Orders The Exchanges propose to extend the same processing of orders, discussed above, to odd-lot orders. Currently, the working and display prices of odd-lot orders are bound by the PBBO, which means that resting odd-lot orders can be repriced if the PBBO changes or becomes locked or crossed. Under the proposals, odd-lot sized orders would be priced in the same manner as orders of a round-lot size or higher.9 Reserve Orders The Exchanges also propose several related changes for the processing of Reserve Orders. First, in a scenario when the PBBO is crossed and the display quantity of a resting, nonroutable Reserve Order is decremented to an odd-lot size, the Exchanges propose that the display price and working price of the remaining odd-lot quantity of the Reserve Order would not change.10 The Exchanges state that this proposed change is consistent with the above-described changes establishing how resting, displayed orders, including 6 See NYSE Notice, 85 FR at 15540. such resting orders no longer would be repriced if locked or crossed by an Away Market, such orders would not need to be assigned new working times and would therefore retain priority at their original price. See id. 8 The Exchanges also propose that Primary Pegged Orders and D Orders (where applicable, as noted in supra note 5) not be subject to the repricing functionality, but propose instead that such orders be eligible to trade at their current working price; however, they would wait for a PBBO that is not locked or crossed before the display and working price of those orders are adjusted. See NYSE Notice, 85 FR at 15540–41. 9 See NYSE Notice, 85 FR at 15542. 10 The Exchanges propose this change only for non-routable Reserve Orders, stating that it is not necessary for routable Reserve Orders because when such orders replenish, the replenish quantity is evaluated for routing to Away Markets (i.e., it would be routed) and thus would not be displayed at a price that crosses an Away Market. See id. khammond on DSKJM1Z7X2PROD with NOTICES 7 Because VerDate Sep<11>2014 16:45 May 06, 2020 Jkt 250001 odd-lot sized orders, will be disseminated to the SIP. However, the Exchanges propose that the reserve interest that replenishes the display quantity (which interest was not previously displayed) would be assigned a display price one MPV below (above) the PBO (PBB) and a working price equal to the PBO (PBB). Because this is the first time such interest would be displayed, the Exchanges propose to adjust the display and working price so that the replenished quantity would not lock or cross the Away Market, which is the same manner in which an arriving Non-Routable Limit Order is priced.11 Similarly, the Exchanges propose that the working price of the reserve interest of resting Reserve Orders that are not displayed be adjusted in the same manner that the working price of NonDisplayed Limit Orders are adjusted.12 Trading After UTP Regulatory Halts or Auctions Finally, the Exchanges propose changes to their order processing rules following UTP Regulatory Halts or auctions, if the PBBO becomes locked or crossed, as described in further detail below. Specifically, when transitioning to continuous trading following a UTP Regulatory Halt, the Exchanges’ proposals provide that before publishing a quote, previously-entered orders would be routed (if routable) or cancelled (if non-routable) if such orders would be marketable against protected quotations on Away Markets.13 When transitioning to continuous trading following an auction on NYSE— and, on NYSE American and NYSE Arca, following specifically an auction not preceded by continuous trading 14— before publishing a quote, these Exchanges would also route (if routable), or cancel (if not routable), any orders that are marketable against a PBBO on an Away Market (except for Primary Pegged Orders on NYSE and NYSE Arca, D Orders on NYSE, and, 11 See, e.g., NYSE Rule 7.31(e)(1) (describing how an arriving Non-Routable Limit Order is priced). 12 See, e.g., NYSE Rule 7.31(d)(2)(A) (describing how the working price of a Non-Displayed Limit Orders is adjusted). If the limit price of a NonDisplayed Limit Order to buy (sell) is at or below (above) the PBO (PBB), it will have a working price equal to the limit price. If the limit price of a NonDisplayed Limit Order to buy (sell) is above (below) the PBO (PBB), it will have a working price equal to the PBO (PBB). 13 See NYSE Notice, 85 FR at 15541. 14 Such auctions include a Trading Halt Auction, a Closing Auction if not preceded by continuous trading, and an IPO Auction on NYSE American. With respect to auctions preceded by continuous trading on NYSE American and NYSE Arca, see next paragraph. PO 00000 Frm 00057 Fmt 4703 Sfmt 4703 during a Short Sale Price Test, sell short orders on all three exchanges). Then, the Exchanges would (i) trade any orders that are marketable against any other orders on their book; (ii) replenish the display quantity of any Reserve Orders, (iii) assign Primary Pegged and D Orders (for those Exchanges, where applicable) a display and working price as noted above, provided that if the PBBO is locked or crossed or if there is no PBBO to peg to, they would be cancelled; and (iv) price any sell short orders (for the Exchanges, where applicable) to a Permitted Price.15 On NYSE American and NYSE Arca, to specify how orders would be processed before publishing a quote when transitioning from a prior trading session or following the Core Open or Closing Auction, which are transitions preceded by continuous trading and where the exchange has a published quote immediately preceding the transition, these Exchanges propose that those displayed orders are eligible be disseminated to the SIP at their thencurrent price.16 These Exchanges state that this proposed change is consistent with the other proposed changes, described above, about how orders will be disseminated to the SIP even if crossed by an Away Market.17 Because of the technology changes associated with these proposed rule changes, the Exchanges propose to announce the implementation date of the proposed rule changes by Trader Update and to implement these changes in Spring 2020. III. Discussion and Commission Findings After careful consideration of the proposed rule changes, the Commission finds that the Exchanges’ proposed rule changes are consistent with the requirements of the Act and the rules and regulations thereunder applicable to national securities exchanges. In particular, the Commission finds that 15 See, e.g., NYSE Rule 7.16(f)(5) (describing the Permitted Price for sell short orders). 16 To effect this change, NYSE American proposes to amend Rule 7.35E(h)(3)(A)(i)—its provision governing transitioning from a prior trading session or following the Early Open Auction, Core Open Auction, or Closing Auction—by specifying that it applies only to such auctions if preceded by continuous trading, and deleting its last clause, which provides that, if the new published quote is worse than the previously-published quote and would lock or cross the PBBO, the display price of Limit Orders will be adjusted in accordance with the rule describing the repricing functionality that is proposed to be deleted. NYSE Arca proposes to make the equivalent amendment to its Rule 7.35– E(h)(3)(A)(i). NYSE American and NYSE Arca also propose a non-substantive change to their respective definitions of ‘‘previously-live orders’’. 17 See NYSE Arca Notice, supra note 3, 85 FR at 15518. E:\FR\FM\07MYN1.SGM 07MYN1 Federal Register / Vol. 85, No. 89 / Thursday, May 7, 2020 / Notices the Exchanges’ proposed rule changes are consistent with Section 6(b)(5) of the Act,18 which requires that the rules of an exchange be designed, among other things, to promote just and equitable principles of trade, 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, and not be designed to permit unfair discrimination between customers, issuers, brokers or dealers. The Exchanges state that their proposed rule changes will make their rules consistent with the rules and functionalities of other exchanges.19 Accordingly, the proposals remove impediments to and perfect the mechanism of a free and open market and are not designed to permit unfair discrimination to the extent that they promote consistency among the rules of the equity exchanges regarding how orders are priced, processed, and disseminated to the SIP. Based on the foregoing, the Commission therefore finds that the proposed rule changes are consistent with the Act.20 IV. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,21 that the proposed rule changes (SR–NYSE– 2020–13, SR–NYSENAT–2020–09, SR– NYSEArca–2020–17, SR–NYSEAMER– 2020–12; and SR–NYSECHX–2020–06) be, and hereby are approved. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.22 J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2020–09711 Filed 5–6–20; 8:45 am] BILLING CODE 8011–01–P OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE [Docket Number USTR–2020–0019] Generalized System of Preferences (GSP): Notice Regarding the 2020 GSP Annual Product Review Office of the United States Trade Representative. khammond on DSKJM1Z7X2PROD with NOTICES AGENCY: 18 15 VerDate Sep<11>2014 16:45 May 06, 2020 Jkt 250001 ACTION: Notice and request for comments. modified by subsequent Executive Orders and Presidential Proclamations. The Office of the United States Trade Representative (USTR) has accepted petitions submitted in connection with the 2020 GSP Annual Product Review for further review. Due to COVID–19, the GSP Subcommittee of the Trade Policy Staff Committee will foster public participation via written submissions rather than an in-person hearing. This notice includes the schedule for submission of comments and responses to questions from the GSP Subcommittee, on all petitions that USTR accepted for the 2020 GSP Annual Product Review. DATES: May 27, 2020 at 11:59 p.m. EDT: Deadline for submission of written comments on petitions accepted for the 2020 GSP Annual Product Review. June 16, 2020 at 11:59 p.m. EDT: Deadline for the GSP Subcommittee to pose questions on written comments. June 30, 2020 at 11:59 p.m. EDT: Deadline for submission of commenters’ responses to questions from the GSP Subcommittee. July 10, 2020 at 11:59 p.m. EDT: Deadline for replies from other interested parties to the written comments and responses to questions. July 22, 2020 at 11:59 p.m. EDT: Deadline for the GSP Subcommittee to pose additional questions on written comments. August 5, 2020 at 11:59 p.m. EDT: Deadline for submission of responses to any additional questions from the GSP Subcommittee. ADDRESSES: USTR strongly prefers electronic submissions made through the Federal eRulemaking portal: https:// www.regulations.gov (Regulations.gov). Follow the instructions for submitting comments below. The docket number is USTR–2020–0019. For alternatives to online submissions, please contact Claudia Chlebek in advance of the relevant deadline at gsp@ustr.eop.gov or 202–395–2974. FOR FURTHER INFORMATION CONTACT: Claudia Chlebek at gsp@ustr.eop.gov or 202–395–2974. SUPPLEMENTARY INFORMATION: B. Petitions Requesting Modifications of GSP Product Eligibility On March 2, 2020 (85 FR 12381), USTR announced the 2020 GSP Annual Review to consider petitions to modify the list of products that are eligible for duty-free treatment under the GSP program and petitions to waive competitive need limitations (CNLs) on imports of certain products from specific beneficiary countries. The GSP Subcommittee considered the product and CNL waiver petitions submitted in response to this announcement. USTR has decided to accept for review several petitions seeking to add or remove products from GSP eligibility for all GSP beneficiary countries. USTR posted a list of petitions and products accepted for review on the USTR website at: https://ustr.gov/sites/default/ files/IssueAreas/gsp/2020_GSP_ Annual_Review-Petitions_Accepted_ for_Review.pdf under the title ‘‘2020 GSP Annual Review—Petitions Accepted for Review. You also can find this list at Regulations.gov in Docket Number USTR–2020–0019. Acceptance of a petition only indicates that the subject of the petition warranted further consideration and that a review of the requested action will take place. The U.S. International Trade Commission also will review the selected petitions and provide a report to USTR on the probable economic effects of adding or removing products from GSP eligibility during the 2020 GSP Annual Review. The President will proclaim any modifications to the list of articles eligible for duty-free treatment under the GSP resulting from the 2020 GSP Annual Product Review by November 1, 2020. SUMMARY: A. Background U.S.C. 78f(b)(5). NYSE Notice, 85 FR at 15543. See also IEX Rules 11.190(h)(3)(A)(i) and (h)(3)(B)(i), and LTSE Rules 11.190(g)(3)(A)(i) and (g)(3)(B)(i). 20 In approving these proposed rule changes, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 21 15 U.S.C. 78s(b)(2). 22 17 CFR 200.30–3(a)(12). 19 See 27261 The GSP program provides for the duty-free importation of designated articles when imported from designated beneficiary developing countries. The GSP program is authorized by Title V of the Trade Act of 1974 (19 U.S.C. 2461– 2467), as amended, and is implemented in accordance with Executive Order 11888 of November 24, 1975, as PO 00000 Frm 00058 Fmt 4703 Sfmt 4703 C. Public Participation Due to COVID–19, the GSP Subcommittee will foster public participation via written submissions rather than an in-person hearing on all petitions USTR accepted for the 2020 GSP Annual Product Review. USTR invites public comments on these petitions according to the schedule set out in the Dates section above. The GSP Subcommittee will review comments and replies to comments, if any, and may ask clarifying questions to commenters. The GSP Subcommittee will post the questions it asks on the public docket, other than questions that include properly designated business confidential information (BCI). USTR will send questions that include properly designated BCI to the relevant commenters by email, and will not post E:\FR\FM\07MYN1.SGM 07MYN1

Agencies

[Federal Register Volume 85, Number 89 (Thursday, May 7, 2020)]
[Notices]
[Pages 27259-27261]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-09711]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-88793; File Nos. SR-NYSE-2020-13, SR-NYSENAT-2020-09, 
SR-NYSEArca-2020-17, SR-NYSEAMER-2020-12; SR-NYSECHX-2020-06]


Self-Regulatory Organizations; New York Stock Exchange LLC; NYSE 
National, Inc.; NYSE Arca, Inc.; NYSE American LLC; NYSE Chicago, Inc.; 
Order Granting Approval of Proposed Rule Changes Relating to Repricing 
of Depth-of-Book Orders in Response to a Locked or Crossed Market

May 1, 2020.

I. Introduction

    On February 28, 2020, New York Stock Exchange LLC (``NYSE''), NYSE 
National, Inc. (``NYSE National''), NYSE Arca, Inc. (``NYSE Arca''), 
NYSE American LLC (``NYSE American''), and NYSE Chicago Inc. (``NYSE 
CHX'', and collectively, the ``Exchanges'') filed with the Securities 
and Exchange Commission (``Commission''), pursuant to Section 19(b)(1) 
of the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 
thereunder,\2\ proposed rule changes regarding their rules on the re-
pricing of orders in certain market situations and related rules 
relevant to each Exchange. The proposed rule changes were published for 
comment in the Federal Register on March 18, 2020.\3\ The Commission 
has received no comments on the proposed rule changes. The Commission 
is approving the proposed rule changes.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release Nos. 88362 (March 12, 
2020), 85 FR 15538 (SR-NYSE-2020-13) (``NYSE Notice''); 88368 (March 
12, 2020), 85 FR 15510 (SR-NYSENAT-2020-09); 88369 (March 12, 2020), 
85 FR 15515 (SR-NYSEArca-2020-17) (``NYSE Arca Notice''); 88363 
(March 12, 2020), 85 FR 15544 (SR-NYSEAMER-2020-12) (``NYSE American 
Notice''); 88367 (March 12, 2020), 85 FR 15551 (SR-NYSECHX-2020-06) 
(collectively, the ``Notices''). For ease of reference, page 
citations in this order are from the NYSE Notice, as published in 
the Federal Register.
---------------------------------------------------------------------------

II. Description of the Proposed Rule Change

    Each Exchange's current rules provide that, if an away market 
(``Away Market'') updates its Protected Best Bid and Offer (``PBBO'') 
and crosses not only the BBO of the Exchange, but also displayed orders 
in the Exchange's Book not represented in the Best Bid or Offer 
(``BBO''), (i.e., depth-of-book orders), and then the Exchange's BBO 
cancels or trades, the Exchange will not disseminate its next-best 
priced depth-of-book order as its new BBO to the securities information 
processor (``SIP''). Instead, the Exchange will reprice such order 
before it is disseminated to the SIP.\4\
---------------------------------------------------------------------------

    \4\ See NYSE Notice, 85 FR at 15538-39.
---------------------------------------------------------------------------

    For example, consider a scenario where NYSE's Best Bid (``BB'') is 
$10.05, and on the NYSE Book there is an order to buy 100 shares ranked 
as a Priority 2--Display Order at $10.04 (``Order A''). Currently, 
Order A is displayed in the NYSE's proprietary depth-of-book market 
data at that $10.04 price, but is not disseminated to the SIP. If an 
Away Market subsequently publishes a Protected Best Offer (``PBO'') of 
$10.03, NYSE's BB of $10.05 will not reprice (i.e., it will ``stand its 
ground''). However, if that $10.05 BB trades, cancels, or routes, NYSE 
will not disseminate Order A to the SIP as the new BB at $10.04. 
Instead, Order A will be assigned a display price of $10.02 and a NYSE 
working price of $10.03, which is equal to the Away Market PBO, and 
will be disseminated to the SIP as the NYSE BB at $10.02. Order A 
subsequently will be repriced to $10.04 once the Away Market PBO no 
longer locks or crosses the NYSE BB. Each time Order A is repriced, 
including back to its original price, it is assigned a new working 
time. In addition, NYSE currently applies this repricing functionality 
to other order types (specifically, D Orders and Primary Pegged 
Orders), and following an auction.\5\
---------------------------------------------------------------------------

    \5\ See id. The rules of the other Exchanges do not provide for 
D Orders, but, except for NYSE American, they do provide for Primary 
Pegged Orders and apply the same repricing functionality to those 
orders. Similarly, the other Exchanges that provide for auctions on 
their markets (NYSE American and NYSE Arca) apply the same repricing 
functionality following an auction; NYSE CHX and NYSE National do 
not have auctions on their markets.
---------------------------------------------------------------------------

    The Exchanges propose to eliminate their existing rules requiring 
the repricing functionality described above, and to add new rule text 
that provides that, if an Away Market locks or crosses the BBO, the 
Exchange would not change the display price of any Limit

[[Page 27260]]

Order ranked Priority 2--Display Orders (which would include previously 
displayed depth-of-book orders) and that any such orders would be 
eligible to be disseminated as the Exchange's BBO.\6\ As a result, in 
the example set forth above, Order A instead would not be repriced 
before being displayed and disseminated to the SIP following the prior 
Exchange BB being executed or cancelled.\7\ Accordingly, Order A would 
be disseminated to the SIP as the Exchange's new BB at $10.04, even if 
that price would cross the Away Market Protected Bid of $10.03.\8\ The 
Exchanges also propose other changes to their rules related to this 
proposal, as further described below.
---------------------------------------------------------------------------

    \6\ See NYSE Notice, 85 FR at 15540.
    \7\ Because such resting orders no longer would be repriced if 
locked or crossed by an Away Market, such orders would not need to 
be assigned new working times and would therefore retain priority at 
their original price. See id.
    \8\ The Exchanges also propose that Primary Pegged Orders and D 
Orders (where applicable, as noted in supra note 5) not be subject 
to the repricing functionality, but propose instead that such orders 
be eligible to trade at their current working price; however, they 
would wait for a PBBO that is not locked or crossed before the 
display and working price of those orders are adjusted. See NYSE 
Notice, 85 FR at 15540-41.
---------------------------------------------------------------------------

Odd-Lot Orders

    The Exchanges propose to extend the same processing of orders, 
discussed above, to odd-lot orders. Currently, the working and display 
prices of odd-lot orders are bound by the PBBO, which means that 
resting odd-lot orders can be repriced if the PBBO changes or becomes 
locked or crossed. Under the proposals, odd-lot sized orders would be 
priced in the same manner as orders of a round-lot size or higher.\9\
---------------------------------------------------------------------------

    \9\ See NYSE Notice, 85 FR at 15542.
---------------------------------------------------------------------------

Reserve Orders

    The Exchanges also propose several related changes for the 
processing of Reserve Orders. First, in a scenario when the PBBO is 
crossed and the display quantity of a resting, non-routable Reserve 
Order is decremented to an odd-lot size, the Exchanges propose that the 
display price and working price of the remaining odd-lot quantity of 
the Reserve Order would not change.\10\ The Exchanges state that this 
proposed change is consistent with the above-described changes 
establishing how resting, displayed orders, including odd-lot sized 
orders, will be disseminated to the SIP.
---------------------------------------------------------------------------

    \10\ The Exchanges propose this change only for non-routable 
Reserve Orders, stating that it is not necessary for routable 
Reserve Orders because when such orders replenish, the replenish 
quantity is evaluated for routing to Away Markets (i.e., it would be 
routed) and thus would not be displayed at a price that crosses an 
Away Market. See id.
---------------------------------------------------------------------------

    However, the Exchanges propose that the reserve interest that 
replenishes the display quantity (which interest was not previously 
displayed) would be assigned a display price one MPV below (above) the 
PBO (PBB) and a working price equal to the PBO (PBB). Because this is 
the first time such interest would be displayed, the Exchanges propose 
to adjust the display and working price so that the replenished 
quantity would not lock or cross the Away Market, which is the same 
manner in which an arriving Non-Routable Limit Order is priced.\11\ 
Similarly, the Exchanges propose that the working price of the reserve 
interest of resting Reserve Orders that are not displayed be adjusted 
in the same manner that the working price of Non-Displayed Limit Orders 
are adjusted.\12\
---------------------------------------------------------------------------

    \11\ See, e.g., NYSE Rule 7.31(e)(1) (describing how an arriving 
Non-Routable Limit Order is priced).
    \12\ See, e.g., NYSE Rule 7.31(d)(2)(A) (describing how the 
working price of a Non-Displayed Limit Orders is adjusted). If the 
limit price of a Non-Displayed Limit Order to buy (sell) is at or 
below (above) the PBO (PBB), it will have a working price equal to 
the limit price. If the limit price of a Non-Displayed Limit Order 
to buy (sell) is above (below) the PBO (PBB), it will have a working 
price equal to the PBO (PBB).
---------------------------------------------------------------------------

Trading After UTP Regulatory Halts or Auctions

    Finally, the Exchanges propose changes to their order processing 
rules following UTP Regulatory Halts or auctions, if the PBBO becomes 
locked or crossed, as described in further detail below.
    Specifically, when transitioning to continuous trading following a 
UTP Regulatory Halt, the Exchanges' proposals provide that before 
publishing a quote, previously-entered orders would be routed (if 
routable) or cancelled (if non-routable) if such orders would be 
marketable against protected quotations on Away Markets.\13\
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    \13\ See NYSE Notice, 85 FR at 15541.
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    When transitioning to continuous trading following an auction on 
NYSE--and, on NYSE American and NYSE Arca, following specifically an 
auction not preceded by continuous trading \14\--before publishing a 
quote, these Exchanges would also route (if routable), or cancel (if 
not routable), any orders that are marketable against a PBBO on an Away 
Market (except for Primary Pegged Orders on NYSE and NYSE Arca, D 
Orders on NYSE, and, during a Short Sale Price Test, sell short orders 
on all three exchanges). Then, the Exchanges would (i) trade any orders 
that are marketable against any other orders on their book; (ii) 
replenish the display quantity of any Reserve Orders, (iii) assign 
Primary Pegged and D Orders (for those Exchanges, where applicable) a 
display and working price as noted above, provided that if the PBBO is 
locked or crossed or if there is no PBBO to peg to, they would be 
cancelled; and (iv) price any sell short orders (for the Exchanges, 
where applicable) to a Permitted Price.\15\
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    \14\ Such auctions include a Trading Halt Auction, a Closing 
Auction if not preceded by continuous trading, and an IPO Auction on 
NYSE American. With respect to auctions preceded by continuous 
trading on NYSE American and NYSE Arca, see next paragraph.
    \15\ See, e.g., NYSE Rule 7.16(f)(5) (describing the Permitted 
Price for sell short orders).
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    On NYSE American and NYSE Arca, to specify how orders would be 
processed before publishing a quote when transitioning from a prior 
trading session or following the Core Open or Closing Auction, which 
are transitions preceded by continuous trading and where the exchange 
has a published quote immediately preceding the transition, these 
Exchanges propose that those displayed orders are eligible be 
disseminated to the SIP at their then-current price.\16\ These 
Exchanges state that this proposed change is consistent with the other 
proposed changes, described above, about how orders will be 
disseminated to the SIP even if crossed by an Away Market.\17\
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    \16\ To effect this change, NYSE American proposes to amend Rule 
7.35E(h)(3)(A)(i)--its provision governing transitioning from a 
prior trading session or following the Early Open Auction, Core Open 
Auction, or Closing Auction--by specifying that it applies only to 
such auctions if preceded by continuous trading, and deleting its 
last clause, which provides that, if the new published quote is 
worse than the previously-published quote and would lock or cross 
the PBBO, the display price of Limit Orders will be adjusted in 
accordance with the rule describing the repricing functionality that 
is proposed to be deleted. NYSE Arca proposes to make the equivalent 
amendment to its Rule 7.35-E(h)(3)(A)(i). NYSE American and NYSE 
Arca also propose a non-substantive change to their respective 
definitions of ``previously-live orders''.
    \17\ See NYSE Arca Notice, supra note 3, 85 FR at 15518.
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    Because of the technology changes associated with these proposed 
rule changes, the Exchanges propose to announce the implementation date 
of the proposed rule changes by Trader Update and to implement these 
changes in Spring 2020.

III. Discussion and Commission Findings

    After careful consideration of the proposed rule changes, the 
Commission finds that the Exchanges' proposed rule changes are 
consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to national securities exchanges. In 
particular, the Commission finds that

[[Page 27261]]

the Exchanges' proposed rule changes are consistent with Section 
6(b)(5) of the Act,\18\ which requires that the rules of an exchange be 
designed, among other things, to promote just and equitable principles 
of trade, 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, and not be designed to 
permit unfair discrimination between customers, issuers, brokers or 
dealers.
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    \18\ 15 U.S.C. 78f(b)(5).
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    The Exchanges state that their proposed rule changes will make 
their rules consistent with the rules and functionalities of other 
exchanges.\19\ Accordingly, the proposals remove impediments to and 
perfect the mechanism of a free and open market and are not designed to 
permit unfair discrimination to the extent that they promote 
consistency among the rules of the equity exchanges regarding how 
orders are priced, processed, and disseminated to the SIP. Based on the 
foregoing, the Commission therefore finds that the proposed rule 
changes are consistent with the Act.\20\
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    \19\ See NYSE Notice, 85 FR at 15543. See also IEX Rules 
11.190(h)(3)(A)(i) and (h)(3)(B)(i), and LTSE Rules 
11.190(g)(3)(A)(i) and (g)(3)(B)(i).
    \20\ In approving these proposed rule changes, the Commission 
has considered the proposed rule's impact on efficiency, 
competition, and capital formation. See 15 U.S.C. 78c(f).
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IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\21\ that the proposed rule changes (SR-NYSE-2020-13, SR-NYSENAT-
2020-09, SR-NYSEArca-2020-17, SR-NYSEAMER-2020-12; and SR-NYSECHX-2020-
06) be, and hereby are approved.
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    \21\ 15 U.S.C. 78s(b)(2).
    \22\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\22\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-09711 Filed 5-6-20; 8:45 am]
 BILLING CODE 8011-01-P
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