Self-Regulatory Organizations; NYSE American LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Rule 6800 Series, 47813-47816 [2020-17132]
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Federal Register / Vol. 85, No. 152 / Thursday, August 6, 2020 / Notices
the ’380 patent to be invalid. After
requesting and receiving supplemental
briefing on the issue of the effect, if any,
of affirming the EDVA summary
judgment on the Commission’s final
determination, the Federal Circuit, on
the same date, affirmed both the
$6,242,500 Commission civil penalty
order and the EDVA summary judgment
of invalidity. See DeLorme v. ITC, 805
F.3d 1328 (Fed. Cir. 2015) (‘‘DeLorme
I’’); DeLorme Publishing Co. v. BriarTek
IP, Inc., 622 Fed.Appx. 912 (Fed. Cir.
2015).
On December 22, 2015, following
issuance of the Federal Circuit’s
decision in DeLorme I, DeLorme filed a
petition to rescind, or in the alternative,
to modify the civil penalty order under
Commission Rule 210.76(a)(1) because
of ‘‘changed conditions,’’ i.e., the EDVA
invalidity judgment and the affirmance
of that judgment. Stating that the
arguments raised by DeLorme involved
issues that could have been raised in
DeLorme I or were raised and rejected
by the Federal Circuit in DeLorme I, the
Commission denied DeLorme’s petition
based on res judicata. DeLorme
appealed the Commission’s final
determination denying its petition to the
Federal Circuit. The Court reversed the
Commission’s final determination and
remanded the case for consideration of
DeLorme’s petition. See DBN Holding,
Inc. v. ITC, 755 Fed.Appx. 993, 2018
WL 6181653 (Fed. Cir. Nov. 27, 2018)
(‘‘DeLorme II’’) (finding that although
there is no requirement that the civil
penalty be rescinded because of the
invalidity finding, the Commission
nevertheless should have considered
DeLorme’s petition). The Federal Circuit
issued its mandate on January 18, 2019.
On March 27, 2019, the Commission
issued an order to the parties requesting
briefing regarding whether the
Commission should rescind or modify
the civil penalty order in light of the
final judgment of invalidity of the
relevant claims of the ’380 patent in
accordance with DeLorme II. DeLorme,
BriarTek, and OUII filed their initial
submissions on April 25, April 26, and
April 26, 2019, respectively. These
parties filed their response submissions
on May 12, May 13, and May 12, 2019,
respectively.
Having reviewed the record in this
investigation, including the parties’
written submissions, the Commission
has determined to deny DeLorme’s
petition to rescind, or in the alternative,
modify the civil penalty order. The
Commission has also issued an opinion
explaining the basis for the
Commission’s action and has terminated
the proceeding on remand from the
Federal Circuit.
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The Commission vote for this
determination took place on July 31,
2020.
The authority for the Commission’s
determination is contained in section
337 of the Tariff Act of 1930, as
amended, 19 U.S.C. 1337, and in part
210 of the Commission’s Rules of
Practice and Procedure, 19 CFR part
210.
By order of the Commission.
Issued: July 31, 2020.
Lisa Barton,
Secretary to the Commission.
[FR Doc. 2020–17139 Filed 8–5–20; 8:45 am]
BILLING CODE 7020–02–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–89439; File No. SR–
NYSEAMER–2020–60]
Self-Regulatory Organizations; NYSE
American LLC; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend the Rule 6800
Series
July 31, 2020.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on July 27,
2020, NYSE American LLC (‘‘NYSE
American’’ or the ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been prepared by the 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 amend the
Rule 6800 Series, the Exchange’s
compliance rule (‘‘Compliance Rule’’)
regarding the National Market System
Plan Governing the Consolidated Audit
Trail (the ‘‘CAT NMS Plan’’ or ‘‘Plan’’) 3
to be consistent with an amendment to
the CAT NMS Plan recently approved
by the Commission. The proposed rule
change is available on the Exchange’s
website at www.nyse.com, at the
principal office of the Exchange, and at
1 15
U.S.C. 78a.
CFR 240.19b–4.
3 Unless otherwise specified, capitalized terms
used in this rule filing are defined as set forth in
the Compliance Rule.
47813
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 purpose of this proposed rule
change is to amend the Rule 6800
Series, the Compliance Rule regarding
the CAT NMS Plan, to be consistent
with an amendment to the CAT NMS
Plan recently approved by the
Commission.4 The Commission
approved an amendment to the CAT
NMS Plan to amend the requirements
for Firm Designated IDs in four ways: (1)
To prohibit the use of account numbers
as Firm Designated IDs for trading
accounts that are not proprietary
accounts; (2) to require that the Firm
Designated ID for a trading account be
persistent over time for each Industry
Member so that a single account may be
tracked across time within a single
Industry Member; (3) to permit the use
of relationship identifiers as Firm
Designated IDs in certain circumstances;
and (4) to permit the use of entity
identifiers as Firm Designated IDs in
certain circumstances (the ‘‘FDID
Amendment’’). As a result, the
Exchange proposes to amend the
definition of ‘‘Firm Designated ID’’ in
Rule 6810 to reflect the changes to the
CAT NMS Plan regarding the
requirements for Firm Designated IDs.
Rule 6810(r) defines the term ‘‘Firm
Designated ID’’ to mean ‘‘a unique
identifier for each trading account
designated by Industry Members for
purposes of providing data to the
Central Repository, where each such
identifier is unique among all identifiers
from any given Industry Member for
each business date.’’
2 17
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4 See Securities Exchange Act Release No. 89397
(July 24, 2020) (Federal Register publication
pending).
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(1) Prohibit Use of Account Numbers
The Exchange proposes to amend the
definition of ‘‘Firm Designated ID’’ in
Rule 6810(r) to provide that Industry
Members may not use account numbers
as the Firm Designated ID for trading
accounts that are not proprietary
accounts. Specifically, the Exchange
proposes to add the following to the
definition of a Firm Designated ID:
‘‘provided, however, such identifier
may not be the account number for such
trading account if the trading account is
not a proprietary account.’’
(2) Persistent Firm Designated ID
The Exchange also proposes to amend
the definition of ‘‘Firm Designated ID’’
in Rule 6810(r) to require a Firm
Designated ID assigned by an Industry
Member to a trading account to be
persistent over time, not for each
business day.5 To effect this change, the
Exchange proposes to amend the
definition of ‘‘Firm Designated ID’’ in
Rule 6810(r) to add ‘‘and persistent’’
after ‘‘unique’’ and delete ‘‘for each
business date’’ so that the definition of
‘‘Firm Designated ID’’ would read, in
relevant part, as follows:
A unique and persistent identifier for each
trading account designated by Industry
Members for purposes of providing data to
the Central Repository . . . where each such
identifier is unique among all identifiers
from any given Industry Member.
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(3) Relationship Identifiers
The FDID Amendment also permits
an Industry Member to provide a
relationship identifier as the Firm
Designated ID, rather than an identifier
that represents a trading account, in
certain scenarios in which an Industry
Member does not have an account
number available to its order handling
and/or execution system at the time of
order receipt (e.g., certain institutional
accounts, managed accounts, accounts
for individuals). In such scenarios, the
trading account structure may not be
available when a new order is first
received from a client and, instead, only
an identifier representing the client’s
5 If an Industry Member assigns a new account
number or entity identifier to a client or customer
due to a merger, acquisition or some other corporate
action, then the Industry Member should create a
new Firm Designated ID to identify the new account
identifier/relationship identifier/entity identifier in
use at the Industry Member for the entity. In
addition, if a previously assigned Firm Designated
ID is no longer in use by an Industry Member (e.g.,
if the trading account associated with the Firm
Designated ID has been closed), then an Industry
Member may reuse the Firm Designated ID for
another trading account. The Plan Processor will
maintain a history of the use of each Firm
Designated ID, including, for example, the effective
dates of the Firm Designated ID with respect to each
associated trading account.
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trading relationship is available. In
these limited instances, the Industry
Member may provide an identifier used
by the Industry Member to represent the
client’s trading relationship with the
Industry Member instead of an account
number.
When a trading relationship is
established at a broker-dealer for clients,
the broker-dealer typically creates a
parent account, under which additional
subaccounts are created. However, in
some cases, the broker-dealer
establishes the parent relationship for a
client using a relationship identifier as
opposed to an actual parent account.
The relationship identifier could be any
of a variety of identifiers, such as a short
name for a relevant individual or
institution. This relationship identifier
is established prior to any trading for
the client. If a relationship identifier has
been established rather than a parent
account, and an order is placed on
behalf of the client, any executed trades
will be kept in a firm account (e.g., a
facilitation or average price account)
until they are allocated to the proper
subaccount(s), i.e., the accounts
associated with the parent relationship
identifier connecting them to the client.
Relationship identifiers are used in
circumstances in which the account
structure is not available to the trading
system at the time of order placement.
The clients have established accounts
prior to the trade that satisfy relevant
regulatory obligations for opening
accounts, such as Know Your Customer
and other customer obligations.
However, the order receipt workflows
operate using relationship identifiers,
not accounts.
For Firm Designated ID purposes, as
with an identifier for a trading account,
the relationship identifier must be
persistent over time. The relationship
identifier also must be unique among all
identifiers from any given Industry
Member. With these requirements, a
single relationship could be tracked
across time within a single Industry
Member using the Firm Designated ID.
In addition, the relationship identifier
must be masked as the relationship
identifier could be a name or otherwise
provide an indication as to the identity
of the relationship. The masking
requirement would avoid potentially
revealing the identity of the
relationship.
An example of the use of a
relationship identifier as a Firm
Designated ID would be as follows:
Suppose that Big Fund Manager is
known in Industry Member A’s systems
as ‘‘BFM1.’’ When an order is placed by
Big Fund Manager, the order is tagged
to BFM1. Industry Member A could use
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a masked version of BFM1 in place of
the Firm Designated ID representing a
trading account when reporting a new
order from Big Fund Manager instead of
the account numbers to which executed
shares/contracts will be allocated at a
later time via a booking or other system.
Similarly, another example of the use of
a relationship identifier as a Firm
Designated ID would involve an
individual in place of the Big Fund
Manager in the above example.
In accordance with the FDID
Amendment, the Exchange proposes to
amend the definition of a ‘‘Firm
Designated ID’’ in Rule 6810(r) to permit
Industry Members to provide a
relationship identifier as the Firm
Designated ID as described above.
Specifically, the Exchange proposes to
amend the definition of ‘‘Firm
Designated ID’’ in Rule 6810(r) to state
that a Firm Designated ID means, in
relevant part, ‘‘a unique and persistent
relationship identifier when an Industry
Member does not have an account
number available to its order handling
and/or execution system at the time of
order receipt, provided, however, such
identifier must be masked.’’
(4) Entity Identifiers
The FDID Amendment also permits
Industry Members to provide an entity
identifier, rather than an identifier that
represents a trading account, when an
employee of the Industry Member is
exercising discretion over multiple
client accounts and creates an
aggregated order for which a trading
account number of the Industry Member
is not available at the time of order
origination. An entity identifier is an
identifier of the Industry Member that
represents the firm discretionary
relationship with the client rather than
a firm trading account.
The scenarios in which a firm uses an
entity identifier are comparable to when
a firm uses a relationship identifier (as
described above) except the entity
identifier represents the Industry
Member rather than a client. As with
relationship identifiers, entity
identifiers are used in circumstances in
which the account structure is not
available to the trading system at the
time of order placement. In this
workflow, the Industry Member’s order
handling and/execution system does not
have an account number at the time of
order origination. The relevant clients
that will receive an allocation of the
execution have established accounts
prior to the trade that satisfy relevant
regulatory obligations for opening
accounts, such as Know Your Customer
and other customer obligations.
However, the order origination
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workflows operate using entity
identifiers, not accounts.
For Firm Designated ID purposes, as
with the identifier for a trading account
or a relationship, the entity identifier
must be persistent over time. The entity
identifier also must be unique among all
identifiers from any given Industry
Member. Each Industry Member must
make its own risk determination as to
whether it believes it is necessary to
mask the entity identifier when using an
entity identifier to report the Firm
Designated ID to CAT.
An example of the use of an entity
identifier as a Firm Designated ID would
be when Industry Member 1 has an
employee that is a registered
representative that has discretion over
several client accounts held at Industry
Member 1. The registered representative
places an order that he will later
allocate to individual client accounts.
At the time the order is placed, the
trading system only knows it involves a
representative of Industry Member 1
and it does not have a specific trading
account that could be used for Firm
Designated ID reporting. Therefore,
Industry Member 1 could report IM1, its
entity identifier, as the FDID with the
new order.
In accordance with the FDID
Amendment to the CAT NMS Plan, the
Exchange proposes to amend the
definition of ‘‘Firm Designated ID’’ in
Rule 6810(r) to permit the use of an
entity identifier as a Firm Designated ID
as described above. Specifically, the
Exchange proposes to amend the
definition of a ‘‘Firm Designated ID’’ in
Rule 6810(r) to state that a Firm
Designated ID means, in relevant part,
‘‘a unique and persistent entity
identifier when an employee of an
Industry Member is exercising
discretion over multiple client accounts
and creates an aggregated order for
which a trading account number of the
Industry Member is not available at the
time of order origination.’’
impose any burden on competition that
is not necessary or appropriate.
NYSE American believes that this
proposal is consistent with the Act
because it is consistent with, and
implements, a recent amendment to the
CAT NMS Plan, and is designed to
assist the Exchange and its Industry
Members in meeting regulatory
obligations pursuant to the Plan. In
approving the Plan, the SEC noted that
the Plan ‘‘is necessary and 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.’’ 8 To the extent
that this proposal implements the Plan,
and applies specific requirements to
Industry Members, the Exchange
believes that this proposal furthers the
objectives of the Plan, as identified by
the SEC, and is therefore consistent with
the Act.
2. Statutory Basis
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
NYSE American believes that the
proposed rule change is consistent with
the provisions of Section 6(b)(5) of the
Act,6 which require, among other
things, that the Exchange’s rules must
be designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, and, in general, to protect
investors and the public interest, and
Section 6(b)(8) of the Act,7 which
requires that the Exchange’s rules not
U.S.C. 78f(b)(6).
7 15 U.S.C. 78f(b)(8).
17:13 Aug 05, 2020
NYSE American does not believe that
the proposed rule change will result in
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. NYSE
American notes that the proposed rule
changes are consistent with a recent
amendment to the CAT NMS Plan, and
are designed to assist the Exchange in
meeting its regulatory obligations
pursuant to the Plan. NYSE American
also notes that the amendment to the
Compliance Rule will apply equally to
all Industry Members that trade NMS
Securities and OTC Equity Securities. In
addition, all national securities
exchanges and FINRA are proposing
this amendment to their Compliance
Rules. Therefore, this is not a
competitive rule filing, and, therefore, it
does not impose a burden on
competition.
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
The Exchange has filed the proposed
rule change pursuant to Section
8 See Securities Exchange Act Release No. 79318
(November 15, 2016), 81 FR 84696, 84697
(November 23, 2016).
6 15
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B. Self-Regulatory Organization’s
Statement on Burden on Competition
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47815
19(b)(3)(A)(iii) of the Act 9 and Rule
19b–4(f)(6) thereunder.10 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
prior to 30 days from the date on which
it was filed, or such shorter time as the
Commission may designate, if
consistent with the protection of
investors and the public interest, the
proposed rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 11 and Rule 19b–4(f)(6)(iii)
thereunder.12
A proposed rule change filed under
Rule 19b–4(f)(6) 13 normally does not
become operative prior to 30 days after
the date of the filing. However, pursuant
to Rule 19b–4(f)(6)(iii),14 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 by July 31, 2020. The
Commission believes that waiver of the
30-day operative delay is consistent
with the protection of investors and the
public interest because it implements an
amendment to the CAT NMS Plan
approved by the Commission.15
Accordingly, the Commission hereby
waives the 30-day operative delay and
designates the proposal operative as of
July 31, 2020.16
At any time within 60 days of the
filing of this 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 will institute proceedings
to determine whether the proposed rule
9 15
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6).
11 15 U.S.C. 78s(b)(3)(A).
12 17 CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6)(iii) requires the Exchange to give the
Commission written notice of the Exchange’s intent
to file the proposed rule change, along with a brief
description and text of the proposed rule change,
at least five business days prior to the date of filing
of the proposed rule change, or such shorter time
as designated by the Commission. The Exchange
has satisfied this requirement.
13 17 CFR 240.19b–4(f)(6).
14 17 CFR 240.19b–4(f)(6)(iii).
15 See Securities Exchange Act Release No. 89397
(July 24, 2020) (Federal Register publication
pending).
16 For purposes only of waiving the 30-day
operative delay, the Commission has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
10 17
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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–
NYSEAMER–2020–60 on the subject
line.
Paper Comments
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• 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–NYSEAMER–2020–60. This
file number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
internet website (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–NYSEAMER–2020–60, and
should be submitted on or before
August 27, 2020.
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For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.17
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–17132 Filed 8–5–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–89446; File No. SR–CBOE–
2020–073]
Self-Regulatory Organizations; Cboe
Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change Relating to Amend
Chapter 7, Section B of the Rules,
Which Is the Exchange’s Compliance
Rule (‘‘Compliance Rule’’) Regarding
the National Market System Plan
Governing the Consolidated Audit Trail
(the ‘‘CAT NMS Plan’’ or ‘‘Plan’’) To Be
Consistent With an Amendment to the
CAT NMS Plan Recently Approved by
the Securities and Exchange
Commission (‘‘Commission’’)
July 31, 2020.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on July 30,
2020, Cboe Exchange, Inc. (the
‘‘Exchange’’ or ‘‘Cboe Options’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Cboe Exchange, Inc. (the ‘‘Exchange’’
or ‘‘Cboe Options’’) proposes to amend
Chapter 7, Section B of the Rules, which
is the Exchange’s compliance rule
(‘‘Compliance Rule’’) regarding the
National Market System Plan Governing
the Consolidated Audit Trail (the ‘‘CAT
NMS Plan’’ or ‘‘Plan’’) 3 to be consistent
with an amendment to the CAT NMS
Plan recently approved by the Securities
and Exchange Commission (the
‘‘Commission’’). The text of the
proposed rule change is provided
below.
17 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 Unless otherwise specified, capitalized terms
used in this rule filing are defined as set forth in
the Compliance Rule.
1 15
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(additions are italicized; deletions are
[bracketed])
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Rules of Cboe Exchange, Inc.
*
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*
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Rule 7.20. Definitions
For purposes of this Section B to Chapter
7:
*
*
*
*
*
(r) ‘‘Firm Designated ID’’ means (1) a
unique and persistent identifier for each
trading account designated by Industry
Members for purposes of providing data to
the Central Repository, provided, however,
such identifier may not be the account
number for such trading account if the
trading account is not a proprietary account;
(2) a unique and persistent relationship
identifier when an Industry Member does not
have an account number available to its
order handling and/or execution system at
the time of order receipt, provided, however,
such identifier must be masked; or (3) a
unique and persistent entity identifier when
an employee of an Industry Member is
exercising discretion over multiple client
accounts and creates an aggregated order for
which a trading account number of the
Industry Member is not available at the time
of order origination, where each such
identifier is unique among all identifiers
from any given Industry Member[ for each
business date].
*
*
*
*
*
The text of the proposed rule change
is also available on the Exchange’s
website (https://www.cboe.com/
AboutCBOE/
CBOELegalRegulatoryHome.aspx), at
the Exchange’s Office of the Secretary,
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
Exchange 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 these
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 aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The purpose of this proposed rule
change is to amend Chapter 7, Section
B of the Rules, the Compliance Rule
regarding the CAT NMS Plan, to be
E:\FR\FM\06AUN1.SGM
06AUN1
]]>Agencies
[Federal Register Volume 85, Number 152 (Thursday, August 6, 2020)]
[Notices]
[Pages 47813-47816]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-17132]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-89439; File No. SR-NYSEAMER-2020-60]
Self-Regulatory Organizations; NYSE American LLC; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
the Rule 6800 Series
July 31, 2020.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on July 27, 2020, NYSE American LLC (``NYSE American'' or the
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II below, which Items have been prepared by the 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. 78a.
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend the Rule 6800 Series, the Exchange's
compliance rule (``Compliance Rule'') regarding the National Market
System Plan Governing the Consolidated Audit Trail (the ``CAT NMS
Plan'' or ``Plan'') \3\ to be consistent with an amendment to the CAT
NMS Plan recently approved by the Commission. 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.
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\3\ Unless otherwise specified, capitalized terms used in this
rule filing are defined as set forth in the Compliance Rule.
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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 purpose of this proposed rule change is to amend the Rule 6800
Series, the Compliance Rule regarding the CAT NMS Plan, to be
consistent with an amendment to the CAT NMS Plan recently approved by
the Commission.\4\ The Commission approved an amendment to the CAT NMS
Plan to amend the requirements for Firm Designated IDs in four ways:
(1) To prohibit the use of account numbers as Firm Designated IDs for
trading accounts that are not proprietary accounts; (2) to require that
the Firm Designated ID for a trading account be persistent over time
for each Industry Member so that a single account may be tracked across
time within a single Industry Member; (3) to permit the use of
relationship identifiers as Firm Designated IDs in certain
circumstances; and (4) to permit the use of entity identifiers as Firm
Designated IDs in certain circumstances (the ``FDID Amendment''). As a
result, the Exchange proposes to amend the definition of ``Firm
Designated ID'' in Rule 6810 to reflect the changes to the CAT NMS Plan
regarding the requirements for Firm Designated IDs.
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\4\ See Securities Exchange Act Release No. 89397 (July 24,
2020) (Federal Register publication pending).
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Rule 6810(r) defines the term ``Firm Designated ID'' to mean ``a
unique identifier for each trading account designated by Industry
Members for purposes of providing data to the Central Repository, where
each such identifier is unique among all identifiers from any given
Industry Member for each business date.''
[[Page 47814]]
(1) Prohibit Use of Account Numbers
The Exchange proposes to amend the definition of ``Firm Designated
ID'' in Rule 6810(r) to provide that Industry Members may not use
account numbers as the Firm Designated ID for trading accounts that are
not proprietary accounts. Specifically, the Exchange proposes to add
the following to the definition of a Firm Designated ID: ``provided,
however, such identifier may not be the account number for such trading
account if the trading account is not a proprietary account.''
(2) Persistent Firm Designated ID
The Exchange also proposes to amend the definition of ``Firm
Designated ID'' in Rule 6810(r) to require a Firm Designated ID
assigned by an Industry Member to a trading account to be persistent
over time, not for each business day.\5\ To effect this change, the
Exchange proposes to amend the definition of ``Firm Designated ID'' in
Rule 6810(r) to add ``and persistent'' after ``unique'' and delete
``for each business date'' so that the definition of ``Firm Designated
ID'' would read, in relevant part, as follows:
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\5\ If an Industry Member assigns a new account number or entity
identifier to a client or customer due to a merger, acquisition or
some other corporate action, then the Industry Member should create
a new Firm Designated ID to identify the new account identifier/
relationship identifier/entity identifier in use at the Industry
Member for the entity. In addition, if a previously assigned Firm
Designated ID is no longer in use by an Industry Member (e.g., if
the trading account associated with the Firm Designated ID has been
closed), then an Industry Member may reuse the Firm Designated ID
for another trading account. The Plan Processor will maintain a
history of the use of each Firm Designated ID, including, for
example, the effective dates of the Firm Designated ID with respect
to each associated trading account.
A unique and persistent identifier for each trading account
designated by Industry Members for purposes of providing data to the
Central Repository . . . where each such identifier is unique among
all identifiers from any given Industry Member.
(3) Relationship Identifiers
The FDID Amendment also permits an Industry Member to provide a
relationship identifier as the Firm Designated ID, rather than an
identifier that represents a trading account, in certain scenarios in
which an Industry Member does not have an account number available to
its order handling and/or execution system at the time of order receipt
(e.g., certain institutional accounts, managed accounts, accounts for
individuals). In such scenarios, the trading account structure may not
be available when a new order is first received from a client and,
instead, only an identifier representing the client's trading
relationship is available. In these limited instances, the Industry
Member may provide an identifier used by the Industry Member to
represent the client's trading relationship with the Industry Member
instead of an account number.
When a trading relationship is established at a broker-dealer for
clients, the broker-dealer typically creates a parent account, under
which additional subaccounts are created. However, in some cases, the
broker-dealer establishes the parent relationship for a client using a
relationship identifier as opposed to an actual parent account. The
relationship identifier could be any of a variety of identifiers, such
as a short name for a relevant individual or institution. This
relationship identifier is established prior to any trading for the
client. If a relationship identifier has been established rather than a
parent account, and an order is placed on behalf of the client, any
executed trades will be kept in a firm account (e.g., a facilitation or
average price account) until they are allocated to the proper
subaccount(s), i.e., the accounts associated with the parent
relationship identifier connecting them to the client.
Relationship identifiers are used in circumstances in which the
account structure is not available to the trading system at the time of
order placement. The clients have established accounts prior to the
trade that satisfy relevant regulatory obligations for opening
accounts, such as Know Your Customer and other customer obligations.
However, the order receipt workflows operate using relationship
identifiers, not accounts.
For Firm Designated ID purposes, as with an identifier for a
trading account, the relationship identifier must be persistent over
time. The relationship identifier also must be unique among all
identifiers from any given Industry Member. With these requirements, a
single relationship could be tracked across time within a single
Industry Member using the Firm Designated ID. In addition, the
relationship identifier must be masked as the relationship identifier
could be a name or otherwise provide an indication as to the identity
of the relationship. The masking requirement would avoid potentially
revealing the identity of the relationship.
An example of the use of a relationship identifier as a Firm
Designated ID would be as follows: Suppose that Big Fund Manager is
known in Industry Member A's systems as ``BFM1.'' When an order is
placed by Big Fund Manager, the order is tagged to BFM1. Industry
Member A could use a masked version of BFM1 in place of the Firm
Designated ID representing a trading account when reporting a new order
from Big Fund Manager instead of the account numbers to which executed
shares/contracts will be allocated at a later time via a booking or
other system. Similarly, another example of the use of a relationship
identifier as a Firm Designated ID would involve an individual in place
of the Big Fund Manager in the above example.
In accordance with the FDID Amendment, the Exchange proposes to
amend the definition of a ``Firm Designated ID'' in Rule 6810(r) to
permit Industry Members to provide a relationship identifier as the
Firm Designated ID as described above. Specifically, the Exchange
proposes to amend the definition of ``Firm Designated ID'' in Rule
6810(r) to state that a Firm Designated ID means, in relevant part, ``a
unique and persistent relationship identifier when an Industry Member
does not have an account number available to its order handling and/or
execution system at the time of order receipt, provided, however, such
identifier must be masked.''
(4) Entity Identifiers
The FDID Amendment also permits Industry Members to provide an
entity identifier, rather than an identifier that represents a trading
account, when an employee of the Industry Member is exercising
discretion over multiple client accounts and creates an aggregated
order for which a trading account number of the Industry Member is not
available at the time of order origination. An entity identifier is an
identifier of the Industry Member that represents the firm
discretionary relationship with the client rather than a firm trading
account.
The scenarios in which a firm uses an entity identifier are
comparable to when a firm uses a relationship identifier (as described
above) except the entity identifier represents the Industry Member
rather than a client. As with relationship identifiers, entity
identifiers are used in circumstances in which the account structure is
not available to the trading system at the time of order placement. In
this workflow, the Industry Member's order handling and/execution
system does not have an account number at the time of order
origination. The relevant clients that will receive an allocation of
the execution have established accounts prior to the trade that satisfy
relevant regulatory obligations for opening accounts, such as Know Your
Customer and other customer obligations. However, the order origination
[[Page 47815]]
workflows operate using entity identifiers, not accounts.
For Firm Designated ID purposes, as with the identifier for a
trading account or a relationship, the entity identifier must be
persistent over time. The entity identifier also must be unique among
all identifiers from any given Industry Member. Each Industry Member
must make its own risk determination as to whether it believes it is
necessary to mask the entity identifier when using an entity identifier
to report the Firm Designated ID to CAT.
An example of the use of an entity identifier as a Firm Designated
ID would be when Industry Member 1 has an employee that is a registered
representative that has discretion over several client accounts held at
Industry Member 1. The registered representative places an order that
he will later allocate to individual client accounts. At the time the
order is placed, the trading system only knows it involves a
representative of Industry Member 1 and it does not have a specific
trading account that could be used for Firm Designated ID reporting.
Therefore, Industry Member 1 could report IM1, its entity identifier,
as the FDID with the new order.
In accordance with the FDID Amendment to the CAT NMS Plan, the
Exchange proposes to amend the definition of ``Firm Designated ID'' in
Rule 6810(r) to permit the use of an entity identifier as a Firm
Designated ID as described above. Specifically, the Exchange proposes
to amend the definition of a ``Firm Designated ID'' in Rule 6810(r) to
state that a Firm Designated ID means, in relevant part, ``a unique and
persistent entity identifier when an employee of an Industry Member is
exercising discretion over multiple client accounts and creates an
aggregated order for which a trading account number of the Industry
Member is not available at the time of order origination.''
2. Statutory Basis
NYSE American believes that the proposed rule change is consistent
with the provisions of Section 6(b)(5) of the Act,\6\ which require,
among other things, that the Exchange's rules must be designed to
prevent fraudulent and manipulative acts and practices, to promote just
and equitable principles of trade, and, in general, to protect
investors and the public interest, and Section 6(b)(8) of the Act,\7\
which requires that the Exchange's rules not impose any burden on
competition that is not necessary or appropriate.
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\6\ 15 U.S.C. 78f(b)(6).
\7\ 15 U.S.C. 78f(b)(8).
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NYSE American believes that this proposal is consistent with the
Act because it is consistent with, and implements, a recent amendment
to the CAT NMS Plan, and is designed to assist the Exchange and its
Industry Members in meeting regulatory obligations pursuant to the
Plan. In approving the Plan, the SEC noted that the Plan ``is necessary
and 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.'' \8\ To the
extent that this proposal implements the Plan, and applies specific
requirements to Industry Members, the Exchange believes that this
proposal furthers the objectives of the Plan, as identified by the SEC,
and is therefore consistent with the Act.
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\8\ See Securities Exchange Act Release No. 79318 (November 15,
2016), 81 FR 84696, 84697 (November 23, 2016).
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B. Self-Regulatory Organization's Statement on Burden on Competition
NYSE American does not believe that the proposed rule change will
result in any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act. NYSE American
notes that the proposed rule changes are consistent with a recent
amendment to the CAT NMS Plan, and are designed to assist the Exchange
in meeting its regulatory obligations pursuant to the Plan. NYSE
American also notes that the amendment to the Compliance Rule will
apply equally to all Industry Members that trade NMS Securities and OTC
Equity Securities. In addition, all national securities exchanges and
FINRA are proposing this amendment to their Compliance Rules.
Therefore, this is not a competitive rule filing, and, therefore, it
does not impose a burden on competition.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \9\ and Rule 19b-4(f)(6) thereunder.\10\
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 prior to
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, if consistent with the protection of
investors and the public interest, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act \11\ and Rule 19b-
4(f)(6)(iii) thereunder.\12\
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\9\ 15 U.S.C. 78s(b)(3)(A)(iii).
\10\ 17 CFR 240.19b-4(f)(6).
\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires the Exchange to give the Commission written notice of the
Exchange's intent to file the proposed rule change, along with a
brief description and text of the proposed rule change, at least
five business days prior to the date of filing of the proposed rule
change, or such shorter time as designated by the Commission. The
Exchange has satisfied this requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) \13\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\14\ 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 by July 31, 2020. The Commission believes that
waiver of the 30-day operative delay is consistent with the protection
of investors and the public interest because it implements an amendment
to the CAT NMS Plan approved by the Commission.\15\ Accordingly, the
Commission hereby waives the 30-day operative delay and designates the
proposal operative as of July 31, 2020.\16\
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\13\ 17 CFR 240.19b-4(f)(6).
\14\ 17 CFR 240.19b-4(f)(6)(iii).
\15\ See Securities Exchange Act Release No. 89397 (July 24,
2020) (Federal Register publication pending).
\16\ For purposes only of waiving the 30-day operative delay,
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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At any time within 60 days of the filing of this 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 will institute proceedings to
determine whether the proposed rule
[[Page 47816]]
change should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-NYSEAMER-2020-60 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-NYSEAMER-2020-60. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (https://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549, on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-NYSEAMER-2020-60, and should be
submitted on or before August 27, 2020.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
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\17\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-17132 Filed 8-5-20; 8:45 am]
BILLING CODE 8011-01-P
