Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing of Proposed Rule Change To Amend Article IV, Section 4.05 of the Thirteenth Amended and Restated Operating Agreement of the Exchange, 52392-52394 [2020-18559]
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Federal Register / Vol. 85, No. 165 / Tuesday, August 25, 2020 / Notices
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–
FICC–2020–010 on the subject line.
Paper Comments
khammond on DSKJM1Z7X2PROD with NOTICES
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549.
All submissions should refer to File
Number SR–FICC–2020–010. 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 FICC and on DTCC’s website
(https://dtcc.com/legal/sec-rulefilings.aspx). 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–FICC–
2020–010 and should be submitted on
or before September 15, 2020.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.38
J. Matthew DeLesDernier,
Assistant Secretary.
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.
[FR Doc. 2020–18560 Filed 8–24–20; 8:45 am]
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–89615; File No. SR–NYSE–
2020–67]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing of Proposed Rule Change To
Amend Article IV, Section 4.05 of the
Thirteenth Amended and Restated
Operating Agreement of the Exchange
August 19, 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 August 7,
2020, New York Stock Exchange LLC
(‘‘NYSE’’ 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
Article IV, Section 4.05 of the
Thirteenth Amended and Restated
Operating Agreement of the Exchange
(‘‘Operating Agreement’’), to allow the
use of regulatory fines for charitable
donations, and to make additional
conforming and non-substantive edits.
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
1 15
38 17
CFR 200.30–3(a)(12).
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U.S.C. 78s(b)(1).
CFR 240.19b–4.
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1. Purpose
The Exchange proposes to amend
Article IV, Section 4.05 (Limitation on
Distributions) of the Exchange’s
Operating Agreement to allow the use of
regulatory fines for charitable donations,
and to make additional conforming and
non-substantive edits.
Currently, regulatory fines and other
regulatory income may only be used to
fund the Exchange’s legal, regulatory
and surveillance operations, and may
not be distributed.3 However, the size of
a regulatory fine is not related to the
regulatory or legal budget of the
Exchange. Rather, it is tailored to
address the misconduct at issue in the
matter for which it is levied. As a result,
there may be times when the amount of
the regulatory fines collected by the
Exchange regulatory staff, when
combined with regulatory fees and other
regulatory income, is greater than the
amount needed to fund the legal,
regulatory and surveillance operations.
The Exchange proposes that on such
occasions it be able to distribute money
obtained from regulatory fines to
charity.
The Exchange proposes that any such
charitable donations be subject to
approval by the Regulatory Oversight
Committee (‘‘ROC’’). All ROC members
are members of the Board of Directors
that meet the requirements of the
independence policy of the Exchange,
and the ROC is charged with reviewing
the regulatory budget of the Exchange
and inquiring into the adequacy of
resources available in the budget for
regulatory activities.4
3 See Thirteenth Amended and Restated
Operating Agreement of New York Stock Exchange
LLC, Art. IV, Sec. 4.05; see also Securities Exchange
Act Release No. 79115 (October 18, 2016), 81 FR
73187 (October 24, 2016) (SR–NYSE–2016–66)
(Notice of Filing and Immediate Effectiveness of
Proposed Rule Change Amending Article IV,
Section 4.05 of the Tenth Amended and Restated
Operating Agreement of the Exchange).
4 See Operating Agreement, Article II, Section
2.03(h)(ii) and Securities Exchange Act Release No.
75288 (June 24, 2015), 80 FR 37316 (June 30, 2015)
(SR– NYSE–2015–27) (Notice of Filing of Proposed
Rule Change Amending the Eighth Amended and
Restated Operating Agreement of the Exchange To
Establish a Regulatory Oversight Committee as a
Committee of the Board of Directors of the
Exchange and Make Certain Conforming
Amendments to Exchange Rules). The
independence policy is subject to Commission
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Federal Register / Vol. 85, No. 165 / Tuesday, August 25, 2020 / Notices
Accordingly, the Exchange proposes
to amend Section 4.05 as follows
(proposed additions italicized):
Any regulatory assets or any regulatory
fees, fines or penalties collected by the
Company’s regulatory staff will be applied to
fund the legal, regulatory and surveillance
operations of the Company, and the
Company shall not distribute such assets,
fees, fines or penalties to the Member or any
other entity, with the exception that
regulatory fines may be used to make
charitable donations, subject to approval by
the ROC.
The Exchange believes that the
proposed change would be consistent
with previous rules of the Exchange
regarding fine income. Specifically,
between 2007 and 2016 the Exchange
was subject to certain internal
procedures regarding the use of fine
income (the ‘‘Fine Income
Procedures’’).5 The Fine Income
Procedures provided that the NYSE
Regulation, Inc. Board of Directors
could determine to use unused fine
income that had accumulated beyond a
level reasonably necessary for future
contingencies for a charitable purpose.6
The ROC assumed that responsibility
from the Board of Directors of NYSE
Regulation, Inc.7
The Exchange proposes to make
technical and conforming changes to the
recitals and signature page of the
Operating Agreement.
2. Statutory Basis
khammond on DSKJM1Z7X2PROD with NOTICES
The Exchange believes that the
proposed rule change is consistent with
Section 6(b) of the Exchange Act 8 in
general, and Section 6(b)(1) 9 in
particular, in that it enables the
Exchange to be so organized as to have
the capacity to be able to carry out the
purposes of the Exchange Act and to
comply, and to enforce compliance by
its exchange members and persons
associated with its exchange members,
with the provisions of the Exchange Act,
the rules and regulations thereunder,
review. See Securities Exchange Act Release No.
85913 (May 22, 2019), 84 FR 24853 (May 29, 2019)
(SR–NYSE–2019–27) (Notice of Filing and
Immediate Effectiveness of Proposed Rule Change
To Amend the Independence Policy of the Board of
Directors of the Exchange).
5 See Securities Exchange Act Release No. 78326
(July 14, 2016), 81 FR 47184 (July 20, 2016) (SR–
NYSE–2016–37) (Order Approving Proposed Rule
Change Removing From Its Rules Certain Internal
Procedures Regarding the Use of Fine Income).
6 See Securities Exchange Act Release No. 77899
(May 24, 2016), 81 FR 34393 (May 31, 2016) (SR–
NYSE–2016–37) (Notice of Filing of Proposed Rule
Change Removing From Its Rules Certain Internal
Procedures Regarding the Use of Fine Income).
7 See 80 FR 37316, supra note 4, at note 25.
8 15 U.S.C. 78f(b).
9 15 U.S.C. 78f(b)(1).
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and the rules of the Exchange. The
Exchange believes that the proposed
rule change also is consistent with
Section 6(b)(4),10 which requires that
the rules of the exchange provide for the
equitable allocation of reasonable dues,
fees, and other charges among the
exchange’s members and issuers and
other persons using its facilities, and
Section 6(b)(5),11 which requires that
the rules of the exchange be 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 regulating, clearing,
settling, processing information with
respect to, and facilitating transactions
in securities, to remove impediments to,
and perfect the mechanism of a free and
open market and a national market
system and, in general, to protect
investors and the public interest.
The Exchange believes that the
proposed change would allow the
Exchange to be so organized as to
comply, and to enforce compliance by
its exchange members and persons
associated with its exchange members,
with the provisions of the Exchange Act,
the rules and regulations thereunder,
and the rules of the Exchange, because
the proposed change would recognize
that the size of a regulatory fine is not
related to the regulatory or legal budget
of the Exchange, and as a result there
may be times when the amount of the
regulatory fines collected by the
Exchange regulatory staff, when
combined with regulatory fees and other
regulatory income, is greater than the
amount needed to fund the legal,
regulatory and surveillance operations.
In such a case, the proposed change
would give the Exchange the option to
make charitable donations using
regulatory fines.
The Exchange believes that it would
be appropriate to permit charitable
donations because such donations
would not be commercial in nature.
Indeed, by keeping them unavailable for
commercial distributions or other
commercial purposes, the proposed
amended Section 4.05 would continue
to ‘‘guard against the possibility that
fines may be assessed to respond to
budgetary needs rather than to serve a
disciplinary purpose.’’ 12 It would
‘‘continue to help ensure that the
Exchange does not inappropriately use
its regulatory assets, fees, fines or
10 15
U.S.C. 78f(b)(4).
U.S.C. 78f(b)(5).
12 81 FR 34393, supra note 6, at 34395, citing
Securities Exchange Act Release No. 55216 (January
31, 2007), 72 FR 5779 (February 7, 2007) (NYSE–
2006–109), at 5780.
11 15
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52393
penalties for commercial purposes or to
distribute such assets, fees, fines or
penalties to its direct parent, NYSE
Group, Inc., or to any other entity.’’ 13
For the same reasons, the Exchange
believes that the proposed change
would provide for the equitable
allocation of reasonable dues, fees, and
other charges among the Exchange’s
members.
The Exchange believes that the
proposed change would promote just
and equitable principles of trade,
remove impediments to, and perfect the
mechanism of a free and open market
and a national market system and, in
general, protect investors and the public
interest because requiring ROC approval
would facilitate an independent
assessment of proposed charitable
donations using regulatory fines. The
Exchange believes that it is appropriate
to have the ROC evaluate proposed
charitable donations not only because
its members are independent, but also
because the ROC is responsible for
overseeing the Exchange’s regulatory
and self-regulatory organization
responsibilities and assessing its
regulatory performance, including
reviewing the regulatory budget of the
Exchange and inquiring into the
adequacy of resources available in the
budget for regulatory activities.14 As a
result, the ROC would be able to
evaluate a proposed charitable donation
within the context of the Exchange’s
regulatory responsibilities and
resources. Indeed, as it has previously
noted, the Exchange ‘‘believes that the
responsibility to assure the proper
exercise by Exchange regulatory staff of
the Exchange’s power to fine member
organizations . . . properly lies with the
ROC . . . .’’ 15 That responsibility
extends to the proposed use of
regulatory fines.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Exchange Act.
The proposed rule change is not
intended to address competitive issues
but rather is concerned solely with the
administration and functioning of the
Exchange.
13 81
FR 47184, supra note 5, at 47187.
Operating Agreement, Article II, Section
2.03(h)(ii).
15 81 FR 34393, supra note 6, at 34397.
14 See
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52394
Federal Register / Vol. 85, No. 165 / Tuesday, August 25, 2020 / Notices
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of
publication of this notice in the Federal
Register, or such longer period up to 90
days (i) as the Commission may
designate if it finds such longer period
to be appropriate and publishes its
reasons for so finding or (ii) as to which
the self-regulatory organization
consents, the Commission will:
(A) By order approve or disapprove
the proposed rule change, or
(B) institute proceedings to determine
whether the proposed rule change
should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
NYSE–2020–67 on the subject line.
khammond on DSKJM1Z7X2PROD with NOTICES
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–2020–67. 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
VerDate Sep<11>2014
19:55 Aug 24, 2020
Jkt 250001
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–2020–67, and
should be submitted on or before
September 15, 2020.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.16
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–18559 Filed 8–24–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–89608; File No. SR–
NYSEArca–2019–77]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Order Granting Approval of
a Proposed Rule Change, as Modified
by Amendment No. 1, To List and
Trade Shares of the AdvisorShares
Pure US Cannabis ETF Under NYSE
Arca Rule 8.600–E
August 19, 2020.
I. Introduction
On December 13, 2019, NYSE Arca,
Inc. (‘‘NYSE Arca’’ or ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’), pursuant
to Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’) 1 and Rule
19b–4 thereunder,2 a proposed rule
change to list and trade shares
(‘‘Shares’’) of the AdvisorShares Pure
US Cannabis ETF (‘‘Fund’’) under NYSE
Arca Rule 8.600–E (‘‘Managed Fund
Shares’’). The proposed rule change was
published for comment in the Federal
Register on December 26, 2019.3 On
January 28, 2020, pursuant to Section
19(b)(2) of the Act,4 the Commission
16 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 See Securities Exchange Act Release No. 87791
(December 18, 2019), 84 FR 71057.
4 15 U.S.C. 78s(b)(2).
1 15
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designated a longer period within which
to approve the proposed rule change,
disapprove the proposed rule change, or
institute proceedings to determine
whether to approve or disapprove the
proposed rule change.5 On March 13,
2020, the Commission instituted
proceedings under Section 19(b)(2)(B) of
the Act 6 to determine whether to
approve or disapprove the proposed
rule change.7 On June 12, 2020,
pursuant to Section 19(b)(2) of the Act,8
the Commission designated a longer
period within which to issue an order
approving or disapproving the proposed
rule change.9 On July 7, 2020, the
Exchange filed Amendment No. 1 to the
proposed rule change.10 The
Commission has received no comment
letters on the proposal. This order
approves the proposed rule change, as
modified by Amendment No. 1.
II. Description of the Proposed Rule
Change, as Modified by Amendment
No. 1 11
The Exchange proposes to list and
trade Shares of the Fund under
Commentary .01 to NYSE Arca Rule
8.600–E, which governs the listing and
trading of Managed Fund Shares on the
Exchange. AdvisorShares Investments,
LLC (‘‘Adviser’’) is the investment
5 See Securities Exchange Act Release No. 88066,
85 FR 6009 (February 3, 2020). The Commission
designated March 25, 2020, as the date by which
it should approve, disapprove, or institute
proceedings to determine whether to approve or
disapprove the proposed rule change.
6 15 U.S.C. 78s(b)(2)(B).
7 See Securities Exchange Act Release No. 88378,
85 FR 15834 (March 19, 2020).
8 15 U.S.C. 78s(b)(2).
9 See Securities Exchange Act Release No. 89057,
85 FR 36910 (June 18, 2020). The Commission
designated August 22, 2020, as the date by which
the Commission shall either approve or disapprove
the proposed rule change.
10 In Amendment No. 1, the Exchange (i)
represented that the Fund has obtained an opinion
of counsel that provides that (a) the Fund and its
shareholders will not violate the Controlled
Substances Act, 21 U.S.C. 801, et seq., (‘‘Controlled
Substances Act’’) or the Money Laundering Control
Act, 18 U.S.C. 1956, et seq., for the Fund’s purchase
of securities issued by Cannabis Companies (as
defined herein) which participate in the cannabis
industry in full compliance with state law and (b)
the Fund’s execution of a cash-settled total return
swap, under certain circumstances, would not
subject the Fund and its shareholders to regulatory
liability should a court hold that the total return
swap violates the Act or the Controlled Substances
Act; and (ii) made other conforming technical
changes. Because Amendment No. 1 to the
proposed rule change does not materially alter the
substance of the proposed rule change and makes
conforming and technical changes, Amendment No.
1 is not subject to notice and comment. Amendment
No. 1 is available on the Commission’s website at:
https://www.sec.gov/comments/sr-nysearca-201977/srnysearca201977-7394645-218996.pdf.
11 Additional information regarding the Shares
and the Fund can be found in Amendment No. 1,
supra note 10, and the Registration Statement, infra
note 13.
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]]>Agencies
[Federal Register Volume 85, Number 165 (Tuesday, August 25, 2020)]
[Notices]
[Pages 52392-52394]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-18559]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-89615; File No. SR-NYSE-2020-67]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing of Proposed Rule Change To Amend Article IV, Section
4.05 of the Thirteenth Amended and Restated Operating Agreement of the
Exchange
August 19, 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 August 7, 2020, New York Stock Exchange LLC (``NYSE'' 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.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend Article IV, Section 4.05 of the
Thirteenth Amended and Restated Operating Agreement of the Exchange
(``Operating Agreement''), to allow the use of regulatory fines for
charitable donations, and to make additional conforming and non-
substantive edits. The proposed rule change is available on the
Exchange's website at www.nyse.com, at the principal office of the
Exchange, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend Article IV, Section 4.05 (Limitation
on Distributions) of the Exchange's Operating Agreement to allow the
use of regulatory fines for charitable donations, and to make
additional conforming and non-substantive edits.
Currently, regulatory fines and other regulatory income may only be
used to fund the Exchange's legal, regulatory and surveillance
operations, and may not be distributed.\3\ However, the size of a
regulatory fine is not related to the regulatory or legal budget of the
Exchange. Rather, it is tailored to address the misconduct at issue in
the matter for which it is levied. As a result, there may be times when
the amount of the regulatory fines collected by the Exchange regulatory
staff, when combined with regulatory fees and other regulatory income,
is greater than the amount needed to fund the legal, regulatory and
surveillance operations. The Exchange proposes that on such occasions
it be able to distribute money obtained from regulatory fines to
charity.
---------------------------------------------------------------------------
\3\ See Thirteenth Amended and Restated Operating Agreement of
New York Stock Exchange LLC, Art. IV, Sec. 4.05; see also Securities
Exchange Act Release No. 79115 (October 18, 2016), 81 FR 73187
(October 24, 2016) (SR-NYSE-2016-66) (Notice of Filing and Immediate
Effectiveness of Proposed Rule Change Amending Article IV, Section
4.05 of the Tenth Amended and Restated Operating Agreement of the
Exchange).
---------------------------------------------------------------------------
The Exchange proposes that any such charitable donations be subject
to approval by the Regulatory Oversight Committee (``ROC''). All ROC
members are members of the Board of Directors that meet the
requirements of the independence policy of the Exchange, and the ROC is
charged with reviewing the regulatory budget of the Exchange and
inquiring into the adequacy of resources available in the budget for
regulatory activities.\4\
---------------------------------------------------------------------------
\4\ See Operating Agreement, Article II, Section 2.03(h)(ii) and
Securities Exchange Act Release No. 75288 (June 24, 2015), 80 FR
37316 (June 30, 2015) (SR- NYSE-2015-27) (Notice of Filing of
Proposed Rule Change Amending the Eighth Amended and Restated
Operating Agreement of the Exchange To Establish a Regulatory
Oversight Committee as a Committee of the Board of Directors of the
Exchange and Make Certain Conforming Amendments to Exchange Rules).
The independence policy is subject to Commission review. See
Securities Exchange Act Release No. 85913 (May 22, 2019), 84 FR
24853 (May 29, 2019) (SR-NYSE-2019-27) (Notice of Filing and
Immediate Effectiveness of Proposed Rule Change To Amend the
Independence Policy of the Board of Directors of the Exchange).
---------------------------------------------------------------------------
[[Page 52393]]
Accordingly, the Exchange proposes to amend Section 4.05 as follows
---------------------------------------------------------------------------
(proposed additions italicized):
Any regulatory assets or any regulatory fees, fines or penalties
collected by the Company's regulatory staff will be applied to fund
the legal, regulatory and surveillance operations of the Company,
and the Company shall not distribute such assets, fees, fines or
penalties to the Member or any other entity, with the exception that
regulatory fines may be used to make charitable donations, subject
to approval by the ROC.
The Exchange believes that the proposed change would be consistent
with previous rules of the Exchange regarding fine income.
Specifically, between 2007 and 2016 the Exchange was subject to certain
internal procedures regarding the use of fine income (the ``Fine Income
Procedures'').\5\ The Fine Income Procedures provided that the NYSE
Regulation, Inc. Board of Directors could determine to use unused fine
income that had accumulated beyond a level reasonably necessary for
future contingencies for a charitable purpose.\6\ The ROC assumed that
responsibility from the Board of Directors of NYSE Regulation, Inc.\7\
---------------------------------------------------------------------------
\5\ See Securities Exchange Act Release No. 78326 (July 14,
2016), 81 FR 47184 (July 20, 2016) (SR-NYSE-2016-37) (Order
Approving Proposed Rule Change Removing From Its Rules Certain
Internal Procedures Regarding the Use of Fine Income).
\6\ See Securities Exchange Act Release No. 77899 (May 24,
2016), 81 FR 34393 (May 31, 2016) (SR-NYSE-2016-37) (Notice of
Filing of Proposed Rule Change Removing From Its Rules Certain
Internal Procedures Regarding the Use of Fine Income).
\7\ See 80 FR 37316, supra note 4, at note 25.
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The Exchange proposes to make technical and conforming changes to
the recitals and signature page of the Operating Agreement.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Exchange Act \8\ in general, and Section
6(b)(1) \9\ in particular, in that it enables the Exchange to be so
organized as to have the capacity to be able to carry out the purposes
of the Exchange Act and to comply, and to enforce compliance by its
exchange members and persons associated with its exchange members, with
the provisions of the Exchange Act, the rules and regulations
thereunder, and the rules of the Exchange. The Exchange believes that
the proposed rule change also is consistent with Section 6(b)(4),\10\
which requires that the rules of the exchange provide for the equitable
allocation of reasonable dues, fees, and other charges among the
exchange's members and issuers and other persons using its facilities,
and Section 6(b)(5),\11\ which requires that the rules of the exchange
be 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 regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, to remove impediments to, and
perfect the mechanism of a free and open market and a national market
system and, in general, to protect investors and the public interest.
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\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(1).
\10\ 15 U.S.C. 78f(b)(4).
\11\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that the proposed change would allow the
Exchange to be so organized as to comply, and to enforce compliance by
its exchange members and persons associated with its exchange members,
with the provisions of the Exchange Act, the rules and regulations
thereunder, and the rules of the Exchange, because the proposed change
would recognize that the size of a regulatory fine is not related to
the regulatory or legal budget of the Exchange, and as a result there
may be times when the amount of the regulatory fines collected by the
Exchange regulatory staff, when combined with regulatory fees and other
regulatory income, is greater than the amount needed to fund the legal,
regulatory and surveillance operations. In such a case, the proposed
change would give the Exchange the option to make charitable donations
using regulatory fines.
The Exchange believes that it would be appropriate to permit
charitable donations because such donations would not be commercial in
nature. Indeed, by keeping them unavailable for commercial
distributions or other commercial purposes, the proposed amended
Section 4.05 would continue to ``guard against the possibility that
fines may be assessed to respond to budgetary needs rather than to
serve a disciplinary purpose.'' \12\ It would ``continue to help ensure
that the Exchange does not inappropriately use its regulatory assets,
fees, fines or penalties for commercial purposes or to distribute such
assets, fees, fines or penalties to its direct parent, NYSE Group,
Inc., or to any other entity.'' \13\
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\12\ 81 FR 34393, supra note 6, at 34395, citing Securities
Exchange Act Release No. 55216 (January 31, 2007), 72 FR 5779
(February 7, 2007) (NYSE-2006-109), at 5780.
\13\ 81 FR 47184, supra note 5, at 47187.
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For the same reasons, the Exchange believes that the proposed
change would provide for the equitable allocation of reasonable dues,
fees, and other charges among the Exchange's members.
The Exchange believes that the proposed change would promote just
and equitable principles of trade, remove impediments to, and perfect
the mechanism of a free and open market and a national market system
and, in general, protect investors and the public interest because
requiring ROC approval would facilitate an independent assessment of
proposed charitable donations using regulatory fines. The Exchange
believes that it is appropriate to have the ROC evaluate proposed
charitable donations not only because its members are independent, but
also because the ROC is responsible for overseeing the Exchange's
regulatory and self-regulatory organization responsibilities and
assessing its regulatory performance, including reviewing the
regulatory budget of the Exchange and inquiring into the adequacy of
resources available in the budget for regulatory activities.\14\ As a
result, the ROC would be able to evaluate a proposed charitable
donation within the context of the Exchange's regulatory
responsibilities and resources. Indeed, as it has previously noted, the
Exchange ``believes that the responsibility to assure the proper
exercise by Exchange regulatory staff of the Exchange's power to fine
member organizations . . . properly lies with the ROC . . . .'' \15\
That responsibility extends to the proposed use of regulatory fines.
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\14\ See Operating Agreement, Article II, Section 2.03(h)(ii).
\15\ 81 FR 34393, supra note 6, at 34397.
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Exchange Act. The proposed rule
change is not intended to address competitive issues but rather is
concerned solely with the administration and functioning of the
Exchange.
[[Page 52394]]
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of publication of this notice in the
Federal Register, or such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(A) By order approve or disapprove the proposed rule change, or
(B) institute proceedings to determine whether the proposed rule
change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-NYSE-2020-67 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-2020-67. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (https://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549, on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-NYSE-2020-67, and should be submitted on
or before September 15, 2020.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-18559 Filed 8-24-20; 8:45 am]
BILLING CODE 8011-01-P
