Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Add Commentary .02 to Rule 7.35B, 28115-28119 [2020-10068]

Download as PDF jbell on DSKJLSW7X2PROD with NOTICES Federal Register / Vol. 85, No. 92 / Tuesday, May 12, 2020 / Notices to their market makers. The Commission notes that the proposed rule change does not present any unique or novel regulatory issues. Accordingly, the Commission hereby waives the operative delay and designates the proposal operative upon filing.21 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: (i) Necessary or appropriate in the public interest; (ii) for the protection of investors; or (iii) 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 should be approved or disapproved. 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–CboeBZX–2020–037 and should be submitted on or before June 2, 2020. 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: For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.22 J. Matthew DeLesDernier, Assistant Secretary. 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– CboeBZX–2020–037 on the subject line. SECURITIES AND EXCHANGE COMMISSION 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–CboeBZX–2020–037. 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 21 For purposes only of waiving the 30-day operative delay, the Commission has also considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). VerDate Sep<11>2014 18:47 May 11, 2020 Jkt 250001 [FR Doc. 2020–10055 Filed 5–11–20; 8:45 am] BILLING CODE 8011–01–P [Release No. 34–88829; File No. SR–NYSE– 2020–41] Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Add Commentary .02 to Rule 7.35B May 6, 2020. Pursuant to Section 19(b)(1) 1 of the Securities Exchange Act of 1934 (the ‘‘Act’’) 2 and Rule 19b–4 thereunder,3 notice is hereby given that on May 4, 2020, New York Stock Exchange LLC (‘‘NYSE’’ 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. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to add Commentary .02 to Rule 7.35B to provide that, for a temporary period that begins on May 6, 2020 and ends on the 22 17 CFR 200.30–3(a)(12). U.S.C.78s(b)(1). 2 15 U.S.C. 78a. 3 17 CFR 240.19b–4. 1 15 PO 00000 Frm 00131 Fmt 4703 Sfmt 4703 28115 earlier of the reopening of the Trading Floor facilities or after the Exchange closes on May 15, 2020, the Exchange would make available specified Closing Auction Imbalance Information to member organizations beginning one hour before the end of Core Trading Hours. 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 to add Commentary .02 to Rule 7.35B to provide that, for a temporary period that begins on May 6, 2020 and ends on the earlier of the reopening of the Trading Floor facilities or after the Exchange closes on May 15, 2020, the Exchange would make available specified Closing Auction Imbalance Information to member organizations beginning one hour before the end of Core Trading Hours. Background In its listed securities, the Exchange disseminates Auction Imbalance Information 4 for the Closing Auction, as provided for in Rule 7.35B(e), beginning at the Closing Auction Imbalance Freeze Time, which is 10 minutes before the scheduled end of Core Trading Hours.5 4 The term ‘‘Auction Imbalance Information’’ means the information that is disseminated by the Exchange for an Auction (see Rule 7.35(a)(4)) and, depending on the Auction, can include Total Imbalance (Rule 7.35(a)(4)(A)(i)); Closing Imbalance (Rule 7.35(a)(4)(A)(ii); Paired Quantity, Unpaired Quantity, and Side of Unpaired Quantity (Rule 7.35(a)(4)(B)); Continuous Book Clearing Price (Rule 7.35(a)(4)(C)); and Closing Interest Only Clearing Price (Rule 7.35(a)(4)(D)). 5 For the Closing Auction, the Exchange begins disseminating the following Auction Imbalance Information at the Closing Auction Imbalance Continued E:\FR\FM\12MYN1.SGM 12MYN1 28116 Federal Register / Vol. 85, No. 92 / Tuesday, May 12, 2020 / Notices jbell on DSKJLSW7X2PROD with NOTICES In addition to disseminating Auction Imbalance Information on its proprietary data feeds, specified Auction Imbalance Information is also made available to member organizations via the NYSE Pillar Trade Ops Portal, which is a free web-based management tool for member organizations to manage their interaction with the Exchange.6 Auction Imbalance Information for the Closing Auction becomes available on the NYSE Pillar Trade Ops Portal at the Closing Auction Imbalance Freeze time, as provided for in Rule 7.35B(e)(1)(A), and includes the following content: Total Imbalance, Side of Total Imbalance, Paired Quantity, Continuous Book Clearing Price, and Closing Interest Only Clearing Price. On the portal, such data is updated every 30 seconds, and once updated, overwrites the prior data available on the portal. To access such Auction Imbalance Information, users of the NYSE Pillar Trade Ops Portal must manually query the tool to view Auction Imbalance Information.7 In addition, pursuant to Rule 7.35B(e)(1)(B), beginning two hours before the end of Core Trading Hours (e.g., beginning at 2 p.m. Eastern Time) up to the Closing Auction Imbalance Freeze Time (e.g., 3:50 p.m. Eastern Time), the Exchange makes available Total Imbalance, Side of Total Imbalance, Paired Quantity, Unpaired Quantity, Side of Unpaired Quantity, and if published, Manual Closing Imbalance, to Floor brokers for any security (i) in which a Floor broker has entered an order or (ii) as specifically requested by a Floor broker. This Auction Imbalance Information is provided in a manner that does not permit electronic distribution. Specifically, this information is Freeze Time: Total Imbalance, Side of Total Imbalance, Paired Quantity, Unpaired Quantity, Side of Unpaired Quantity, Continuous Book Clearing Price, Closing Interest Only Clearing Price, and Regulatory Closing Imbalance. See Rules 7.35B(e)(1)(A) and 7.35B(e)(2). See also Rule 7.35(a)(7) (specifying the Closing Auction Imbalance Freeze Time). 6 Through the NYSE Pillar Trade Ops Portal, NYSE member organizations can view their executed trade details, review their Pillar order entry and drop copy sessions, and view their firm’s volume by liquidity tag. To gain access, a member organization’s compliance department must submit a form to establish which individuals at that firm are authorized to become users of the NYSE Pillar Trade Ops Portal. Information about the NYSE Pillar Trade Ops Portal is available here: https:// www.nyse.com/pillar/trade-ops-portal. 7 See User Guide for the NYSE Trade Ops Portal, available here: https://www.nyse.com/publicdocs/ nyse/NYSE_Trade_Ops_Portal_User_Guide.pdf. The static information that is displayed can be manually exported to an Excel table, but is not otherwise not available for real-time distribution of the data. VerDate Sep<11>2014 18:47 May 11, 2020 Jkt 250001 displayed on the trading systems that Floor Brokers use on the Trading Floor. Temporary Floor Closure Impacts Floor Brokers and Their Customers Since March 9, 2020, markets worldwide have been experiencing unprecedented market-wide declines and volatility because of the ongoing spread of COVID–19. Beginning on March 16, 2020, to slow the spread of COVID–19 through social-distancing measures, significant limitations were placed on large gatherings throughout the country. On March 18, 2020, the CEO of the Exchange made a determination under Rule 7.1(c)(3) that, beginning March 23, 2020, the Trading Floor facilities located at 11 Wall Street in New York City would close and the Exchange would move, on a temporary basis, to fully electronic trading.8 Pursuant to Rule 7.1(e), the CEO notified the Board of Directors of the Exchange of this determination. Because the Trading Floor is temporarily closed, Floor brokers are not present on the Trading Floor and do not have access to their Floor-based systems for trading and cannot enter orders available to Floor brokers, such as Closing D Orders. Unlike Market-onClose (‘‘MOC’’) and Limit-on-Close (‘‘LOC’’) Orders, Closing D Orders can be entered into Exchange systems up to ten seconds before the end of Core Trading Hours.9 By contrast, MOC and LOC Orders can be entered in the last ten minutes of trading only to offset a published Regulatory Closing Imbalance.10 Accordingly, while the Trading Floor is closed, customers of Floor brokers seeking to participate in the Closing Auction must arrange to have their closing-only interest entered before 3:50 p.m. Notwithstanding the temporary closure of the Trading Floor, Floor brokers continue to provide services to their institutional investor customers. For such customers, Floor brokers continue to play an important role for those transactions that require the expertise of a professional trading agent, and a key component of that role as agent for these sophisticated customers is to provide market ‘‘color,’’ including providing imbalance information 8 The Exchange’s current rules establish how the Exchange will function fully-electronically. The CEO also closed the NYSE American Options Trading Floor, which is located at the same 11 Wall Street facilities, and the NYSE Arca Options Trading Floor, which is located in San Francisco, CA. See Press Release, dated March 18, 2020, available here: https://ir.theice.com/press/pressreleases/all-categories/2020/03-18-2020-204202110. 9 See Rule 7.35B(f)(3). 10 See Rule 7.35B(f)(1). PO 00000 Frm 00132 Fmt 4703 Sfmt 4703 leading into the close. However, because Floor brokers do not have access to their Floor-based systems, they no longer have access to the systems that display Auction Imbalance Information, as provided for under Rule 7.35B(e)(1)(B). As such, during this temporary period, Floor brokers are no longer able to provide their customers with the same level of market color about the Closing Auction as they would when the Trading Floor is open. Proposed Rule Change Both Floor brokers and their customers have requested that, during the temporary period while the Trading Floor is closed, be provided access to Auction Imbalance before 3:50 p.m. so that Floor brokers can provide a similar level of service that they provide when the Trading Floor is open. The Exchange has been advised that Floor brokers’ lack of access to imbalance information is particularly impactful because Floor brokers cannot use Closing D Orders during this temporary period, and Floor broker customers need to enter their closing-only interest before 3:50 p.m. if they want to participate in the Closing Auction. The Exchange has identified a temporary, interim technology solution to provide Floor brokers with Auction Imbalance Information before the Closing Auction Imbalance Freeze Time so that Floor brokers can continue to provide the type of service to their customers that they provided before the Trading Floor was temporarily closed. Specifically, the Exchange proposes to temporarily change the NYSE Pillar Trade Ops Portal to make the Closing Auction Imbalance Information available on that portal beginning at 3:00 p.m., rather than at the Closing Auction Imbalance Freeze Time at 3:50 p.m. Because the NYSE Pillar Trade Ops Portal is available to all member organizations, any User authorized to access the portal, including non-Floor brokers, would have access to this Auction Imbalance Information beginning at 3:00 p.m. Because the Exchange would be leveraging different technology, the Auction Imbalance Information would differ from what is available to Floor brokers on the Trading Floor pursuant to Rule 7.35B(e)(1)(B). As described above, the portal would include Total Imbalance, Side of Total Imbalance, and Paired Quantity, which are provided under Rule 7.35B(e)(1)(B), and would also include Continuous Book Clearing Price and Closing Interest Only Clearing Price, which are not provided under Rule 7.35B(e)(1)(B). In addition, the portal does not support Unpaired E:\FR\FM\12MYN1.SGM 12MYN1 Federal Register / Vol. 85, No. 92 / Tuesday, May 12, 2020 / Notices jbell on DSKJLSW7X2PROD with NOTICES Quantity or Side of Unpaired Quantity, which are provided under Rule 7.35B(e)(1)(B). As described above, the Exchange provides data pursuant to Rule 7.35B(e)(1)(B) in a manner that does not permit electronic redistribution. Auction Imbalance Information made available before the Closing Auction Imbalance Freeze Time would be similarly limited. To view the data on the NYSE Pillar Trade Ops Portal, a User must manually query the tool, and the data is updated only every 30 seconds. Once the data is updated on a 30-second interval, the tool overwrites the last set of data that was available for display. The tool permits export of the data to an Excel file, but that export must be performed manually, and it only exports the static information that is available to be viewed at that given time. Accordingly, the NYSE Pillar Trade Ops Portal does not permit realtime electronic redistribution of the data. The purpose of this proposed rule change is to provide Floor brokers with a tool to provide preliminary guidance to their customers of whether to enter MOC or LOC Orders, and on which side of the market, earlier in the trading session. It would not replace or supersede the data that is distributed via the Exchange’s proprietary data feeds beginning at the Closing Auction Imbalance Freeze Time. Finally, this Auction Imbalance Information would be available beginning at 3:00 p.m., not 2:00 p.m. This proposed time period is consistent with the period when Auction Imbalance Information is made available on NYSE Arca, Inc. (‘‘NYSE Arca’’)11 and NYSE American LLC (‘‘NYSE American’’), which both operate electronic auctions without a Trading Floor.12 For example, NYSE American similarly restricts entry of MOC and LOC Orders after 3:50 p.m.,13 and makes its Auction Imbalance Information available beginning at 3:00 p.m. The Exchange believes that providing such imbalance information beginning at 3:00 p.m. during this temporary period would provide sufficient time for member organizations and their customers to enter MOC and LOC Orders before the Closing Auction Imbalance Freeze Time. To effect this change, the Exchange proposes to add Commentary .02 to Rule 7.35B, which would provide: For a temporary period that begins on May 6, 2020 and ends on the earlier of the reopening of the Trading Floor facilities or NYSE Arca Rule 7.35–E(d)(1). NYSE American Rule 7.35E(d)(1). 13 See NYSE American Rule 7.35E(d)(2). after the Exchange closes on May 15, 2020, beginning one hour before the end of Core Trading Hours up to the Closing Auction Imbalance Freeze Time, the Exchange will make available Total Imbalance, Side of Total Imbalance, Paired Quantity, Continuous Book Clearing Price, and Closing Interest Only Clearing Price to member organizations. This Auction Imbalance Information will be provided in a manner that does not permit electronic real-time distribution and will be updated every 30 seconds. At the Closing Auction Imbalance Freeze Time, Auction Imbalance Information for the Closing Auction would be made available as provided for under Rule 7.35B(e)(1)(A). Accordingly, this proposed rule text addresses only what would be different during the temporary period while the Trading Floor is closed, i.e., that specified Auction Imbalance Information would be available to member organizations for the period 3:00 p.m. to 3:50 p.m. Eastern Time. The Exchange has tested the technology change to begin disseminating such Auction Imbalance Information via the NYSE Pillar Trade Ops Portal at 3:00 p.m. Eastern Time. In addition, when the Trading Floors were temporarily closed, numerous Floor brokers received authorization to become Users of the NYSE Pillar Trade Ops Portal, and therefore already have connectivity to that portal to access Auction Imbalance Information. Accordingly, the Exchange would be able to implement the proposed rule change immediately when the technology is available, which is anticipated for May 6, 2020. 2. Statutory Basis The proposed rule change is consistent with Section 6(b) of the Act,14 in general, and furthers the objectives of Section 6(b)(5) of the Act,15 in particular, in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, and to remove impediments to and perfect the mechanism of a free and open market and a national market system. As a result of uncertainty related to the ongoing spread of COVID–19, the U.S. equities markets are experiencing unprecedented market volatility. In addition, social-distancing measures have been implemented throughout the country, including in New York City, to reduce the spread of COVID–19. Directly related to such social- 11 See 12 See VerDate Sep<11>2014 18:47 May 11, 2020 Jkt 250001 14 15 15 15 PO 00000 U.S.C. 78f(b). U.S.C. 78f(b)(5). Frm 00133 Fmt 4703 Sfmt 4703 28117 distancing measures, the CEO of the Exchange made a determination under Rule 7.1(c)(3) that beginning March 23, 2020, the Trading Floor facilities located at 11 Wall Street in New York City would close and the Exchange would move, on a temporary basis, to fully electronic trading. The Exchange believes that the proposed rule change would remove impediments to and perfect the mechanism of a free and open market and a national market system because, during the temporary period while the Trading Floor is closed and Floor brokers do not have access to Auction Imbalance Information as provided for in Rule 7.35B(e)(1)(B), providing Auction Imbalance Information to member organizations via the NYSE Pillar Trade Ops Portal beginning at 3:00 p.m. would allow Floor brokers to provide their customers with similar levels of service with respect to providing market color about the Closing Auction as they would when the Trading Floor is open. The proposed rule change is designed to be an interim, temporary solution that would be in effect only during the temporary period when the Trading Floor is closed. Because of the temporary nature of the proposed relief, the Exchange believes that it would remove impediments to and perfect the mechanism of a free and open market and a national market system to leverage existing technology rather than attempt to reproduce the data that is provided to Floor brokers pursuant to Rule 7.35B(e)(1)(B) on the exact same terms. By using existing technology, the Exchange can provide this service to Floor brokers on an expedited basis. In addition, the Exchange believes that the proposed rule change would remove impediments to and perfect the mechanism of a free and open market and a national market system because during the temporary period during which the Trading Floor is closed, Closing D Orders are not available, and therefore, unless a Regulatory Closing Imbalance has been published, MOC and LOC Orders must be entered by the Closing Auction Imbalance Freeze Time. The Exchange therefore believes that during this period when Closing D Orders are not available, providing all member organizations with access to the Auction Imbalance Information at 3:00 p.m. would assist them in making their closing-interest order entry decisions before 3:50 p.m. The Exchange further believes that providing such information beginning at 3:00 p.m. would remove impediments to and perfect the mechanism of a free and open market and a national market E:\FR\FM\12MYN1.SGM 12MYN1 28118 Federal Register / Vol. 85, No. 92 / Tuesday, May 12, 2020 / Notices system because, similar to how NYSE American functions, providing such imbalance information beginning 50 minutes before the Closing Auction Imbalance Freeze Time would provide sufficient time for member organizations to make order entry decisions for the Closing Auction. The Exchange also believes that it would remove impediments to and perfect the mechanism of a free and open market and a national market system to provide that the Auction Imbalance Information that would be available on the NYSE Pillar Trade Ops Portal would not be provided in a manner that permits electronic real-time distribution. This proposed rule change is designed to provide Floor brokers with a tool to provide guidance to their customers of whether to enter MOC or LOC Orders, and on which side of the market. It would not replace or supersede the data that is distributed via the Exchange’s proprietary data feeds beginning at the Closing Auction Imbalance Freeze Time. The Exchange believes that, by clearly stating that this relief will be in effect through the earlier of the reopening of the Trading Floor facilities or the close of the Exchange on May 15, 2020, market participants will have advance notice that the Exchange would disseminate Auction Imbalance Information via the NYSE Pillar Trade Ops Tool beginning at 3:00 p.m. for only a temporary period. jbell on DSKJLSW7X2PROD with NOTICES B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change would 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 issues but rather is designed to provide Floor brokers with a tool to provide guidance to their customers of whether to enter MOC or LOC Orders, and on which side of the market, before the Closing Auction Imbalance Freeze Time. The proposed rule change is designed to be in effect only during a temporary period when the Exchange Trading Floor has been closed in response to socialdistancing measures designed to reduce the spread of the COVID–19 virus and, as a result, Floor brokers do not have access to information as provided for in Rule 7.35B(e)(1)(B) and cannot enter Closing D Orders. VerDate Sep<11>2014 18:47 May 11, 2020 Jkt 250001 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 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 16 and Rule 19b– 4(f)(6) thereunder.17 A proposed rule change filed under Rule 19b-4(f)(6) 18 normally does not become operative prior to 30 days after the date of the filing. However, pursuant to Rule 19b–4(f)(6)(iii),19 the Commission may designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange has asked the Commission to waive the 30-day operative delay so that the proposal may become operative immediately upon filing. The Exchange believes that waiver of the operative delay would be consistent with the protection of investors and the public interest because the proposed rule change is designed to be in effect only during a temporary period when the Exchange Trading Floor has been closed in response to social-distancing measures designed to reduce the spread of the COVID–19 virus and Floor brokers, as a result, do not have access to their Floorbased systems for trading and the information as provided for in Rule 7.35B(e)(1)(B) and cannot enter Closing D Orders. In addition, when the Trading Floors were temporarily closed, numerous Floor brokers received authorization to become Users of the NYSE Pillar Trade Ops Portal, and therefore already have connectivity to that portal to access Auction Imbalance Information. Moreover, the Exchange represents that it has tested, and will be 16 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(6). As required under Rule 19b–4(f)(6)(iii), the Exchange provided the Commission with written notice of its intent to file the proposed rule change, along with a brief description and the 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. 18 17 CFR 240.19b–4(f)(6). 19 17 CFR 240.19b–4(f)(6)(iii). 17 17 PO 00000 Frm 00134 Fmt 4703 Sfmt 4703 able to implement, the proposed interim technology change on May 6, 2020. For the foregoing reasons, the Commission believes that waiver of the operative delay is consistent with the protection of investors and the public interest and has determined to waive the 30-day operative date so that the proposal may take effect upon filing.20 At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings under Section 19(b)(2)(B) 21 of the Act 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– NYSE–2020–41 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–2020–41. 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 20 For purposes only of accelerating the operative date of this proposal, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). 21 15 U.S.C. 78s(b)(2)(B). E:\FR\FM\12MYN1.SGM 12MYN1 Federal Register / Vol. 85, No. 92 / Tuesday, May 12, 2020 / Notices 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–2020–41 and should be submitted on or before June 2, 2020. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.22 J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2020–10068 Filed 5–11–20; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION II. Description of the Proposal [Release No. 34–88824; File No. S7–24–89] Joint Industry Plan; Order Approving the Forty-Fourth Amendment to the Joint Self-Regulatory Organization Plan Governing the Collection, Consolidation and Dissemination of Quotation and Transaction Information for Nasdaq-Listed Securities Traded on Exchanges on an Unlisted Trading Privileges Basis, as Modified by the Commission, Concerning Conflicts of Interest May 6, 2020. I. Introduction On July 5, 2019,1 the Joint SelfRegulatory Organization Plan Governing the Collection, Consolidation and Dissemination of Quotation and Transaction Information for NasdaqListed Securities Traded on Exchanges on an Unlisted Trading Privileges Basis (‘‘Nasdaq/UTP Plan’’ or ‘‘Plan’’) 2 jbell on DSKJLSW7X2PROD with NOTICES 22 17 CFR 200.30–3(a)(12). Letter from Robert Books, Chair, Nasdaq/ UTP Plan Operating Committee to Vanessa Countryman, Secretary, Commission, dated July 3, 2019 (‘‘Transmittal Letter’’). 2 The Plan governs the collection, processing, and dissemination on a consolidated basis of quotation information and transaction reports in Eligible Securities for its Participants. This consolidated 1 See VerDate Sep<11>2014 18:47 May 11, 2020 Jkt 250001 participants (‘‘Participants’’) 3 filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) pursuant to Section 11A of the Securities Exchange Act of 1934 (‘‘Act’’),4 and Rule 608 of Regulation National Market System (‘‘NMS’’) thereunder,5 a proposal to amend the Nasdaq/UTP Plan. The amendment represents the 44th amendment to the Nasdaq/UTP Plan (‘‘Amendment’’). As described in the Amendment, the Participants proposed to make mandatory a conflicts of interest disclosure regime that currently is voluntary. The Amendment was published for comment in the Federal Register on January 14, 2020.6 This order approves the Amendment to the Plan, as modified by the Commission. The Commission concludes that the Amendment, as modified, is appropriate in the public interest, for the protection of investors and the maintenance of fair and orderly markets, to remove impediments to, and perfect the mechanism of a national market system, or is otherwise in furtherance of the purposes of the Act.7 A copy of the Amendment, as modified by the Commission, is attached as Exhibit A hereto. Under the current practice, which the Amendment proposed to make mandatory, the Participants,8 the information informs investors of the current quotation and recent trade prices of Nasdaq securities. It enables investors to ascertain from one data source the current prices in all the markets trading Nasdaq securities. The Plan serves as the required transaction reporting plan for its Participants, which is a prerequisite for their trading Eligible Securities. See Securities Exchange Act Release No. 55647 (April 19, 2007), 72 FR 20891 (April 26, 2007). 3 The Participants are the national securities association and national securities exchanges that submit trades and quotes to the Plan and include: Cboe BYX Exchange, Inc., Cboe BZX Exchange, Inc., Cboe EDGA Exchange, Inc., Cboe EDGX Exchange, Inc., Cboe Exchange, Inc., NYSE Chicago, Inc., Financial Industry Regulatory Authority, Inc., The Investors’ Exchange LLC, Long-Term Stock Exchange, Inc., Nasdaq BX, Inc., Nasdaq ISE, LLC, Nasdaq PHLX, Inc., The Nasdaq Stock Market LLC, New York Stock Exchange LLC, NYSE American LLC, NYSE Arca, Inc., and NYSE National, Inc. (each a ‘‘Participant’’ and collectively, the ‘‘Participants’’). Participants are also members of the Plan’s Operating Committee. 4 15 U.S.C. 78k–1. 5 17 CFR 242.608. 6 See Securities Exchange Act Release No. 87908 (January 8, 2020), 85 FR 2202 (January 14, 2020) (‘‘Notice’’). Comments received in response to the Notice are available at https://www.sec.gov/ comments/s7-24-89/s72489.shtml. 7 17 CFR 242.608(b)(2). 8 See supra note 3 (listing the Participants). PO 00000 Frm 00135 Fmt 4703 Sfmt 4703 28119 Processor,9 the Administrator,10 and the members of the Advisory Committee 11 (collectively, the ‘‘Disclosing Parties’’)12 voluntarily respond to a set of questions designed to provide transparency regarding potential conflicts of interest of such parties. Each of the Disclosing Parties’ responses is made publicly available on the Plan’s website and is updated at least annually.13 The Amendment would make this practice mandatory. The Participants stated that they believe that publicly providing these responses increases transparency and confidence in the governance of the Plan.14 According to the Participants, with exchanges permitted to offer both proprietary market data products and also acting as Participants in running the public market data stream, potential conflicts of interest are inherent.15 There may be instances in which representatives from the Participants and Advisory Committee members have responsibilities with respect to both proprietary data and Securities Information Processor (‘‘SIP’’) data.16 Drawing on the expertise of persons with such overlapping responsibilities may give rise to potential conflicts of interest, and to address such potential conflicts of interest, the Participants adopted a voluntary conflicts disclosure regime with questions that are tailored to elicit responses that disclose potential conflicts of interest. Under their current approach to disclosure, each self-regulatory organization (‘‘SRO’’) discloses details about its ownership; whether it offers and charges for proprietary market data; the names of all representatives authorized to vote; and a narrative description of the representatives’ role within the organization, including any direct responsibilities related to the development, dissemination, sale, or 9 The ‘‘Processor’’ is charged with collecting, processing and preparing for distribution or publication all Plan information. The Processor for the Nasdaq/UTP Plan is Nasdaq Stock Market LLC (‘‘Nasdaq’’). 10 The ‘‘Administrator’’ is charged with administering the Plan to include data feed approval, customer communications, contract management, and related functions. The Administrator of the Plan is Nasdaq. 11 The ‘‘Advisory Committee members’’ are natural persons who represent particular types of financial services firms or actors in the securities market, and who were selected by Plan participants to be on the Advisory Committee. 12 A list of the Processor, Administrator, and Advisory Committee members, along with their conflict of interest disclosures, is available at https://www.utpplan.com/governance. 13 See id. 14 See Notice, supra note 6, 85 FR at 2203. 15 See id. 16 See id. E:\FR\FM\12MYN1.SGM 12MYN1

Agencies

[Federal Register Volume 85, Number 92 (Tuesday, May 12, 2020)]
[Notices]
[Pages 28115-28119]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-10068]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-88829; File No. SR-NYSE-2020-41]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Add Commentary .02 to Rule 7.35B

May 6, 2020.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that on May 4, 2020, New York Stock Exchange LLC (``NYSE'' 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 add Commentary .02 to Rule 7.35B to 
provide that, for a temporary period that begins on May 6, 2020 and 
ends on the earlier of the reopening of the Trading Floor facilities or 
after the Exchange closes on May 15, 2020, the Exchange would make 
available specified Closing Auction Imbalance Information to member 
organizations beginning one hour before the end of Core Trading Hours. 
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 to add Commentary .02 to Rule 7.35B to 
provide that, for a temporary period that begins on May 6, 2020 and 
ends on the earlier of the reopening of the Trading Floor facilities or 
after the Exchange closes on May 15, 2020, the Exchange would make 
available specified Closing Auction Imbalance Information to member 
organizations beginning one hour before the end of Core Trading Hours.
Background
    In its listed securities, the Exchange disseminates Auction 
Imbalance Information \4\ for the Closing Auction, as provided for in 
Rule 7.35B(e), beginning at the Closing Auction Imbalance Freeze Time, 
which is 10 minutes before the scheduled end of Core Trading Hours.\5\

[[Page 28116]]

In addition to disseminating Auction Imbalance Information on its 
proprietary data feeds, specified Auction Imbalance Information is also 
made available to member organizations via the NYSE Pillar Trade Ops 
Portal, which is a free web-based management tool for member 
organizations to manage their interaction with the Exchange.\6\
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    \4\ The term ``Auction Imbalance Information'' means the 
information that is disseminated by the Exchange for an Auction (see 
Rule 7.35(a)(4)) and, depending on the Auction, can include Total 
Imbalance (Rule 7.35(a)(4)(A)(i)); Closing Imbalance (Rule 
7.35(a)(4)(A)(ii); Paired Quantity, Unpaired Quantity, and Side of 
Unpaired Quantity (Rule 7.35(a)(4)(B)); Continuous Book Clearing 
Price (Rule 7.35(a)(4)(C)); and Closing Interest Only Clearing Price 
(Rule 7.35(a)(4)(D)).
    \5\ For the Closing Auction, the Exchange begins disseminating 
the following Auction Imbalance Information at the Closing Auction 
Imbalance Freeze Time: Total Imbalance, Side of Total Imbalance, 
Paired Quantity, Unpaired Quantity, Side of Unpaired Quantity, 
Continuous Book Clearing Price, Closing Interest Only Clearing 
Price, and Regulatory Closing Imbalance. See Rules 7.35B(e)(1)(A) 
and 7.35B(e)(2). See also Rule 7.35(a)(7) (specifying the Closing 
Auction Imbalance Freeze Time).
    \6\ Through the NYSE Pillar Trade Ops Portal, NYSE member 
organizations can view their executed trade details, review their 
Pillar order entry and drop copy sessions, and view their firm's 
volume by liquidity tag. To gain access, a member organization's 
compliance department must submit a form to establish which 
individuals at that firm are authorized to become users of the NYSE 
Pillar Trade Ops Portal. Information about the NYSE Pillar Trade Ops 
Portal is available here: https://www.nyse.com/pillar/trade-ops-portal.
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    Auction Imbalance Information for the Closing Auction becomes 
available on the NYSE Pillar Trade Ops Portal at the Closing Auction 
Imbalance Freeze time, as provided for in Rule 7.35B(e)(1)(A), and 
includes the following content: Total Imbalance, Side of Total 
Imbalance, Paired Quantity, Continuous Book Clearing Price, and Closing 
Interest Only Clearing Price. On the portal, such data is updated every 
30 seconds, and once updated, overwrites the prior data available on 
the portal. To access such Auction Imbalance Information, users of the 
NYSE Pillar Trade Ops Portal must manually query the tool to view 
Auction Imbalance Information.\7\
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    \7\ See User Guide for the NYSE Trade Ops Portal, available 
here: https://www.nyse.com/publicdocs/nyse/NYSE_Trade_Ops_Portal_User_Guide.pdf. The static information that is 
displayed can be manually exported to an Excel table, but is not 
otherwise not available for real-time distribution of the data.
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    In addition, pursuant to Rule 7.35B(e)(1)(B), beginning two hours 
before the end of Core Trading Hours (e.g., beginning at 2 p.m. Eastern 
Time) up to the Closing Auction Imbalance Freeze Time (e.g., 3:50 p.m. 
Eastern Time), the Exchange makes available Total Imbalance, Side of 
Total Imbalance, Paired Quantity, Unpaired Quantity, Side of Unpaired 
Quantity, and if published, Manual Closing Imbalance, to Floor brokers 
for any security (i) in which a Floor broker has entered an order or 
(ii) as specifically requested by a Floor broker. This Auction 
Imbalance Information is provided in a manner that does not permit 
electronic distribution. Specifically, this information is displayed on 
the trading systems that Floor Brokers use on the Trading Floor.
Temporary Floor Closure Impacts Floor Brokers and Their Customers
    Since March 9, 2020, markets worldwide have been experiencing 
unprecedented market-wide declines and volatility because of the 
ongoing spread of COVID-19. Beginning on March 16, 2020, to slow the 
spread of COVID-19 through social-distancing measures, significant 
limitations were placed on large gatherings throughout the country.
    On March 18, 2020, the CEO of the Exchange made a determination 
under Rule 7.1(c)(3) that, beginning March 23, 2020, the Trading Floor 
facilities located at 11 Wall Street in New York City would close and 
the Exchange would move, on a temporary basis, to fully electronic 
trading.\8\ Pursuant to Rule 7.1(e), the CEO notified the Board of 
Directors of the Exchange of this determination.
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    \8\ The Exchange's current rules establish how the Exchange will 
function fully-electronically. The CEO also closed the NYSE American 
Options Trading Floor, which is located at the same 11 Wall Street 
facilities, and the NYSE Arca Options Trading Floor, which is 
located in San Francisco, CA. See Press Release, dated March 18, 
2020, available here: https://ir.theice.com/press/press-releases/all-categories/2020/03-18-2020-204202110.
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    Because the Trading Floor is temporarily closed, Floor brokers are 
not present on the Trading Floor and do not have access to their Floor-
based systems for trading and cannot enter orders available to Floor 
brokers, such as Closing D Orders. Unlike Market-on-Close (``MOC'') and 
Limit-on-Close (``LOC'') Orders, Closing D Orders can be entered into 
Exchange systems up to ten seconds before the end of Core Trading 
Hours.\9\ By contrast, MOC and LOC Orders can be entered in the last 
ten minutes of trading only to offset a published Regulatory Closing 
Imbalance.\10\ Accordingly, while the Trading Floor is closed, 
customers of Floor brokers seeking to participate in the Closing 
Auction must arrange to have their closing-only interest entered before 
3:50 p.m.
---------------------------------------------------------------------------

    \9\ See Rule 7.35B(f)(3).
    \10\ See Rule 7.35B(f)(1).
---------------------------------------------------------------------------

    Notwithstanding the temporary closure of the Trading Floor, Floor 
brokers continue to provide services to their institutional investor 
customers. For such customers, Floor brokers continue to play an 
important role for those transactions that require the expertise of a 
professional trading agent, and a key component of that role as agent 
for these sophisticated customers is to provide market ``color,'' 
including providing imbalance information leading into the close. 
However, because Floor brokers do not have access to their Floor-based 
systems, they no longer have access to the systems that display Auction 
Imbalance Information, as provided for under Rule 7.35B(e)(1)(B). As 
such, during this temporary period, Floor brokers are no longer able to 
provide their customers with the same level of market color about the 
Closing Auction as they would when the Trading Floor is open.
Proposed Rule Change
    Both Floor brokers and their customers have requested that, during 
the temporary period while the Trading Floor is closed, be provided 
access to Auction Imbalance before 3:50 p.m. so that Floor brokers can 
provide a similar level of service that they provide when the Trading 
Floor is open. The Exchange has been advised that Floor brokers' lack 
of access to imbalance information is particularly impactful because 
Floor brokers cannot use Closing D Orders during this temporary period, 
and Floor broker customers need to enter their closing-only interest 
before 3:50 p.m. if they want to participate in the Closing Auction.
    The Exchange has identified a temporary, interim technology 
solution to provide Floor brokers with Auction Imbalance Information 
before the Closing Auction Imbalance Freeze Time so that Floor brokers 
can continue to provide the type of service to their customers that 
they provided before the Trading Floor was temporarily closed. 
Specifically, the Exchange proposes to temporarily change the NYSE 
Pillar Trade Ops Portal to make the Closing Auction Imbalance 
Information available on that portal beginning at 3:00 p.m., rather 
than at the Closing Auction Imbalance Freeze Time at 3:50 p.m. Because 
the NYSE Pillar Trade Ops Portal is available to all member 
organizations, any User authorized to access the portal, including non-
Floor brokers, would have access to this Auction Imbalance Information 
beginning at 3:00 p.m.
    Because the Exchange would be leveraging different technology, the 
Auction Imbalance Information would differ from what is available to 
Floor brokers on the Trading Floor pursuant to Rule 7.35B(e)(1)(B). As 
described above, the portal would include Total Imbalance, Side of 
Total Imbalance, and Paired Quantity, which are provided under Rule 
7.35B(e)(1)(B), and would also include Continuous Book Clearing Price 
and Closing Interest Only Clearing Price, which are not provided under 
Rule 7.35B(e)(1)(B). In addition, the portal does not support Unpaired

[[Page 28117]]

Quantity or Side of Unpaired Quantity, which are provided under Rule 
7.35B(e)(1)(B).
    As described above, the Exchange provides data pursuant to Rule 
7.35B(e)(1)(B) in a manner that does not permit electronic 
redistribution. Auction Imbalance Information made available before the 
Closing Auction Imbalance Freeze Time would be similarly limited. To 
view the data on the NYSE Pillar Trade Ops Portal, a User must manually 
query the tool, and the data is updated only every 30 seconds. Once the 
data is updated on a 30-second interval, the tool overwrites the last 
set of data that was available for display. The tool permits export of 
the data to an Excel file, but that export must be performed manually, 
and it only exports the static information that is available to be 
viewed at that given time. Accordingly, the NYSE Pillar Trade Ops 
Portal does not permit real-time electronic redistribution of the data. 
The purpose of this proposed rule change is to provide Floor brokers 
with a tool to provide preliminary guidance to their customers of 
whether to enter MOC or LOC Orders, and on which side of the market, 
earlier in the trading session. It would not replace or supersede the 
data that is distributed via the Exchange's proprietary data feeds 
beginning at the Closing Auction Imbalance Freeze Time.
    Finally, this Auction Imbalance Information would be available 
beginning at 3:00 p.m., not 2:00 p.m. This proposed time period is 
consistent with the period when Auction Imbalance Information is made 
available on NYSE Arca, Inc. (``NYSE Arca'') \11\ and NYSE American LLC 
(``NYSE American''), which both operate electronic auctions without a 
Trading Floor.\12\ For example, NYSE American similarly restricts entry 
of MOC and LOC Orders after 3:50 p.m.,\13\ and makes its Auction 
Imbalance Information available beginning at 3:00 p.m. The Exchange 
believes that providing such imbalance information beginning at 3:00 
p.m. during this temporary period would provide sufficient time for 
member organizations and their customers to enter MOC and LOC Orders 
before the Closing Auction Imbalance Freeze Time.
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    \11\ See NYSE Arca Rule 7.35-E(d)(1).
    \12\ See NYSE American Rule 7.35E(d)(1).
    \13\ See NYSE American Rule 7.35E(d)(2).
---------------------------------------------------------------------------

    To effect this change, the Exchange proposes to add Commentary .02 
to Rule 7.35B, which would provide:

    For a temporary period that begins on May 6, 2020 and ends on 
the earlier of the reopening of the Trading Floor facilities or 
after the Exchange closes on May 15, 2020, beginning one hour before 
the end of Core Trading Hours up to the Closing Auction Imbalance 
Freeze Time, the Exchange will make available Total Imbalance, Side 
of Total Imbalance, Paired Quantity, Continuous Book Clearing Price, 
and Closing Interest Only Clearing Price to member organizations. 
This Auction Imbalance Information will be provided in a manner that 
does not permit electronic real-time distribution and will be 
updated every 30 seconds.

    At the Closing Auction Imbalance Freeze Time, Auction Imbalance 
Information for the Closing Auction would be made available as provided 
for under Rule 7.35B(e)(1)(A). Accordingly, this proposed rule text 
addresses only what would be different during the temporary period 
while the Trading Floor is closed, i.e., that specified Auction 
Imbalance Information would be available to member organizations for 
the period 3:00 p.m. to 3:50 p.m. Eastern Time.
    The Exchange has tested the technology change to begin 
disseminating such Auction Imbalance Information via the NYSE Pillar 
Trade Ops Portal at 3:00 p.m. Eastern Time. In addition, when the 
Trading Floors were temporarily closed, numerous Floor brokers received 
authorization to become Users of the NYSE Pillar Trade Ops Portal, and 
therefore already have connectivity to that portal to access Auction 
Imbalance Information. Accordingly, the Exchange would be able to 
implement the proposed rule change immediately when the technology is 
available, which is anticipated for May 6, 2020.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Act,\14\ in general, and furthers the objectives of Section 6(b)(5) of 
the Act,\15\ in particular, in that it is designed to prevent 
fraudulent and manipulative acts and practices, to promote just and 
equitable principles of trade, to foster cooperation and coordination 
with persons engaged in facilitating transactions in securities, and to 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system.
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78f(b).
    \15\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    As a result of uncertainty related to the ongoing spread of COVID-
19, the U.S. equities markets are experiencing unprecedented market 
volatility. In addition, social-distancing measures have been 
implemented throughout the country, including in New York City, to 
reduce the spread of COVID-19. Directly related to such social-
distancing measures, the CEO of the Exchange made a determination under 
Rule 7.1(c)(3) that beginning March 23, 2020, the Trading Floor 
facilities located at 11 Wall Street in New York City would close and 
the Exchange would move, on a temporary basis, to fully electronic 
trading.
    The Exchange believes that the proposed rule change would remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system because, during the temporary period while the 
Trading Floor is closed and Floor brokers do not have access to Auction 
Imbalance Information as provided for in Rule 7.35B(e)(1)(B), providing 
Auction Imbalance Information to member organizations via the NYSE 
Pillar Trade Ops Portal beginning at 3:00 p.m. would allow Floor 
brokers to provide their customers with similar levels of service with 
respect to providing market color about the Closing Auction as they 
would when the Trading Floor is open.
    The proposed rule change is designed to be an interim, temporary 
solution that would be in effect only during the temporary period when 
the Trading Floor is closed. Because of the temporary nature of the 
proposed relief, the Exchange believes that it would remove impediments 
to and perfect the mechanism of a free and open market and a national 
market system to leverage existing technology rather than attempt to 
reproduce the data that is provided to Floor brokers pursuant to Rule 
7.35B(e)(1)(B) on the exact same terms. By using existing technology, 
the Exchange can provide this service to Floor brokers on an expedited 
basis.
    In addition, the Exchange believes that the proposed rule change 
would remove impediments to and perfect the mechanism of a free and 
open market and a national market system because during the temporary 
period during which the Trading Floor is closed, Closing D Orders are 
not available, and therefore, unless a Regulatory Closing Imbalance has 
been published, MOC and LOC Orders must be entered by the Closing 
Auction Imbalance Freeze Time. The Exchange therefore believes that 
during this period when Closing D Orders are not available, providing 
all member organizations with access to the Auction Imbalance 
Information at 3:00 p.m. would assist them in making their closing-
interest order entry decisions before 3:50 p.m.
    The Exchange further believes that providing such information 
beginning at 3:00 p.m. would remove impediments to and perfect the 
mechanism of a free and open market and a national market

[[Page 28118]]

system because, similar to how NYSE American functions, providing such 
imbalance information beginning 50 minutes before the Closing Auction 
Imbalance Freeze Time would provide sufficient time for member 
organizations to make order entry decisions for the Closing Auction.
    The Exchange also believes that it would remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system to provide that the Auction Imbalance Information that would be 
available on the NYSE Pillar Trade Ops Portal would not be provided in 
a manner that permits electronic real-time distribution. This proposed 
rule change is designed to provide Floor brokers with a tool to provide 
guidance to their customers of whether to enter MOC or LOC Orders, and 
on which side of the market. It would not replace or supersede the data 
that is distributed via the Exchange's proprietary data feeds beginning 
at the Closing Auction Imbalance Freeze Time.
    The Exchange believes that, by clearly stating that this relief 
will be in effect through the earlier of the reopening of the Trading 
Floor facilities or the close of the Exchange on May 15, 2020, market 
participants will have advance notice that the Exchange would 
disseminate Auction Imbalance Information via the NYSE Pillar Trade Ops 
Tool beginning at 3:00 p.m. for only a temporary period.

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

    The Exchange does not believe that the proposed rule change would 
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 issues but rather is designed 
to provide Floor brokers with a tool to provide guidance to their 
customers of whether to enter MOC or LOC Orders, and on which side of 
the market, before the Closing Auction Imbalance Freeze Time. The 
proposed rule change is designed to be in effect only during a 
temporary period when the Exchange Trading Floor has been closed in 
response to social-distancing measures designed to reduce the spread of 
the COVID-19 virus and, as a result, Floor brokers do not have access 
to information as provided for in Rule 7.35B(e)(1)(B) and cannot enter 
Closing D Orders.

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 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 \16\ and Rule 19b-4(f)(6) thereunder.\17\
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    \16\ 15 U.S.C. 78s(b)(3)(A).
    \17\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written 
notice of its intent to file the proposed rule change, along with a 
brief description and the 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.
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) \18\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\19\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay so that the proposal 
may become operative immediately upon filing. The Exchange believes 
that waiver of the operative delay would be consistent with the 
protection of investors and the public interest because the proposed 
rule change is designed to be in effect only during a temporary period 
when the Exchange Trading Floor has been closed in response to social-
distancing measures designed to reduce the spread of the COVID-19 virus 
and Floor brokers, as a result, do not have access to their Floor-based 
systems for trading and the information as provided for in Rule 
7.35B(e)(1)(B) and cannot enter Closing D Orders. In addition, when the 
Trading Floors were temporarily closed, numerous Floor brokers received 
authorization to become Users of the NYSE Pillar Trade Ops Portal, and 
therefore already have connectivity to that portal to access Auction 
Imbalance Information. Moreover, the Exchange represents that it has 
tested, and will be able to implement, the proposed interim technology 
change on May 6, 2020. For the foregoing reasons, the Commission 
believes that waiver of the operative delay is consistent with the 
protection of investors and the public interest and has determined to 
waive the 30-day operative date so that the proposal may take effect 
upon filing.\20\
---------------------------------------------------------------------------

    \18\ 17 CFR 240.19b-4(f)(6).
    \19\ 17 CFR 240.19b-4(f)(6)(iii).
    \20\ For purposes only of accelerating the operative date of 
this proposal, the Commission has considered the proposed rule's 
impact on efficiency, competition, and capital formation. 15 U.S.C. 
78c(f).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of such proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings under 
Section 19(b)(2)(B) \21\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \21\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-NYSE-2020-41 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-2020-41. 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

[[Page 28119]]

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-2020-41 and should be 
submitted on or before June 2, 2020.
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    \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. 2020-10068 Filed 5-11-20; 8:45 am]
BILLING CODE 8011-01-P
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