Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Proposed Rule Change To Amend Rule 7.31-E, 71118-71120 [2020-24633]
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71118
Federal Register / Vol. 85, No. 216 / Friday, November 6, 2020 / Notices
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.10
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–24634 Filed 11–5–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Sunshine Act Meeting; Cancellation
FEDERAL REGISTER CITATION OF PREVIOUS
ANNOUNCEMENT: 85 FR 69370, November
2, 2020.
PREVIOUSLY ANNOUNCED TIME AND DATE OF
THE MEETING: Wednesday, November 4,
2020 at 2:00 p.m.
The Closed
Meeting scheduled for Wednesday,
November 4, 2020 at 2:00 p.m., has been
cancelled.
CHANGES IN THE MEETING:
CONTACT PERSON FOR MORE INFORMATION:
For further information; please contact
Vanessa A. Countryman from the Office
of the Secretary at (202) 551–5400.
Dated: November 4, 2020.
Vanessa A. Countryman,
Secretary.
[FR Doc. 2020–24811 Filed 11–4–20; 11:15 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–90311; File No. SR–
NYSEArca–2020–92]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing of Proposed
Rule Change To Amend Rule 7.31–E
November 2, 2020.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934
(‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that on October
20, 2020, NYSE Arca, Inc. (‘‘NYSE
Arca’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the self-regulatory organization. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
10 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
VerDate Sep<11>2014
19:00 Nov 05, 2020
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend
Rule 7.31–E to cancel ALO Orders that
lock displayed interest. The proposed
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 amend
Rule 7.31–E (Orders and Modifiers) to
provide that ALO Orders that lock
displayed interest would be cancelled.
Specifically, the Exchange proposes to
amend Rules 7.31–E(e)(2), which
describes how the Exchange processes
ALO Orders, and 7.31–E(e)(3)(D), which
describes how the Exchange processes
Day ISO ALO Orders. Currently, under
Rule 7.31–E(e)(2)(B)(iii), an arriving
ALO Order to buy (sell) with a limit
price that would lock a displayed order
priced equal to or below (above) the
PBO (PBB) on the NYSE Arca Book will
be assigned a working price and display
price one minimum price variation
(‘‘MPV’’) below (above) the displayed
order. Day ISO ALO Orders that would
lock displayed interest on the NYSE
Arca Book are processed in the same
manner.4 The Exchange proposes to
amend these rules to provide that
arriving ALO and Day ISO ALO Orders
with a limit price that would lock
displayed interest on the NYSE Arca
Book would be cancelled.
To effect this change, the Exchange
proposes to delete the portion of Rule
7.31–E(e)(2)(B)(iii) providing that an
ALO Order that locks displayed interest
will be ‘‘assigned a working price and
4 See
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display price one MPV below (above)
the displayed order on the NYSE Arca
Book’’ and instead provide that such
order would be cancelled. In addition,
to simplify the rule text, the Exchange
proposes to combine Rule 7.31–
E(e)(2)(B)(iii), as revised, into Rule 7.31–
E(e)(2)(B)(ii). Proposed amended Rule
7.31–E(e)(2)(B)(ii) would thus provide:
If the limit price of the ALO Order to buy
(sell) crosses the working price of any
displayed or non-displayed order on the
NYSE Arca Book priced equal to or below
(above) the PBO (PBB), it will trade as the
liquidity taker with such order(s). Any
untraded quantity of the ALO Order will
have a working price equal to the PBO (PBB)
and a display price one MPV below (above)
the PBO (PBB), provided that if the limit
price of the ALO Order to buy (sell) locks the
display price of any order ranked Priority 2—
Display Orders on the NYSE Arca Book
priced equal to or below (above) the PBO
(PBB), it will be cancelled.
The Exchange also proposes the
following conforming changes to Rules
7.31–E(e)(2)(B) and 7.31–E(e)(2)(C) to
reflect the proposed change to how ALO
Orders that lock displayed interest
would be handled:
• The Exchange proposes to
renumber current Rule 7.31–
E(e)(2)(B)(iv) as 7.31–E(e)(2)(B)(iii) to
accommodate the proposed combination
of current Rules 7.31–E(e)(2)(B)(ii) and
7.31–E(e)(2)(B)(iii), as described above.
• The Exchange proposes to replace
introductory references providing that
an ALO Order will be ‘‘priced’’ or
‘‘priced or trade, or both,’’ with the
phrase ‘‘will be processed’’ in Rules
7.31–E(e)(2)(B), 7.31–E(e)(2)(B)(iv)(a)
(which would become Rule 7.31–
E(e)(2)(B)(iii)(a) after renumbering),
7.31–E(e)(2)(C), and 7.31–E(e)(2)(C)(i).
The Exchange proposes to use the term
‘‘processed’’ because some ALO Orders
would be cancelled (and therefore not
priced or traded).
• The Exchange proposes to
renumber current Rule 7.31–
E(e)(2)(B)(v) as 7.31–E(e)(2)(B)(iv) to
accommodate the proposed combination
of current Rules 7.31–E(e)(2)(B)(ii) and
7.31–E(e)(2)(B)(iii), as described above.
• The Exchange further proposes to
revise Rule 7.31–E(e)(2)(C)(i) to delete
the reference to orders ranked Priority
2—Display Orders because, as noted
above, an ALO Order would no longer
be repriced based on contra-side Priority
2—Display Orders and instead would be
cancelled. Accordingly, the only time a
resting ALO Order would be repriced is
if the contra-side PBBO re-prices.
The Exchange proposes to amend
Rule 7.31–E(e)(3)(D) to align the rules
governing Day ISO ALOs with the
proposed changes to ALO Orders.
E:\FR\FM\06NON1.SGM
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Federal Register / Vol. 85, No. 216 / Friday, November 6, 2020 / Notices
Currently, pursuant to Rule 7.31–
E(e)(3)(D)(ii), if the limit price of an
arriving Day ISO ALO locks the display
price of a displayed order on the NYSE
Arca Book, it will be assigned a working
price and display price one MPV below
(above) the price of the displayed order.
As with ALO Orders, the Exchange
proposes to amend this rule to specify
that arriving Day ISO ALOs that lock
displayed interest would be cancelled.
To effect this change, the Exchange
proposes to delete the portion of Rule
7.31–E(e)(3)(D)(ii) that provides that a
Day ISO ALO that locks displayed
interest will be ‘‘assigned a working
price and display price one MPV below
(above) the displayed order on the
NYSE Arca Book’’ and instead provide
that such order would be cancelled. In
addition, to simplify the rule text, the
Exchange proposes to combine Rule
7.31–E(e)(3)(D)(ii), as revised, with Rule
7.31–E(e)(3)(D)(i). Proposed amended
Rule 7.31–E(e)(3)(D)(i) would thus
provide:
If the limit price of the Day ISO ALO to
buy (sell) crosses the working price of any
displayed or non-displayed order on the
NYSE Arca Book, it will trade as the liquidity
taker with such order(s). Any untraded
quantity of the Day ISO ALO will have a
working price and display price equal to its
limit price, provided that if the limit price of
the Day ISO ALO to buy (sell) locks the
display price of any order ranked Priority 2—
Display Orders on the NYSE Arca Book, it
will be cancelled.
The Exchange also proposes the
following conforming changes
consistent with the proposed change to
cancel Day ISO ALOs that lock
displayed interest:
• The Exchange proposes to
renumber Rule 7.31–E(e)(3)(D)(iii) as
Rule 7.31–E(e)(3)(D)(ii) to accommodate
the proposed combination of current
Rules 7.31–E(e)(3)(D)(i) and 7.31–
E(e)(3)(D)(ii), as described above.
• The Exchange proposes to replace
introductory references providing that a
Day ISO ALO Order will be ‘‘priced’’ or
‘‘priced or trade, or both,’’ with the
phrase ‘‘will be processed’’ in Rules
7.31–E(e)(3)(D) and 7.31–E(3)(D)(ii)(a)
(as renumbered). The Exchange
proposes this change to reflect that
certain ALO Orders would be cancelled
(and therefore not priced or traded).
• The Exchange proposes to delete
Rule 7.31–E(e)(3)(D)(iv), which
currently specifies how a Day ISO ALO
will be processed after it is displayed.
Because a Day ISO ALO would now
either display at its limit price (because,
by its terms, it can be displayed at a
price that locks or crosses the contraside PBBO) 5 or be cancelled if it locks
displayed interest on the NYSE Arca
Book, there would no longer be any
circumstances where a resting Day ISO
ALO would reprice and therefore this
rule text would no longer be applicable.
*
*
*
*
*
Because of the technology changes
associated with this proposed rule
change, the Exchange will announce the
implementation date by Trader Update.
Subject to approval of this proposed
rule change, the Exchange anticipates
that the proposed changes will be
implemented in January 2021.
2. Statutory Basis
The proposed rule change is
consistent with Section 6(b) of the Act,6
in general, and furthers the objectives of
Section 6(b)(5),7 in particular, because 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, 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 the proposed
rule change would remove impediments
to and perfect the mechanism of a free
and open market by simplifying the
treatment of ALO Orders that lock
displayed orders. The Exchange believes
that cancelling ALO Orders that lock
displayed interest, rather than repricing
them, would provide ETP Holders with
greater determinism with respect to how
ALO Orders would be processed on the
Exchange and enhance ETP Holders’
ability to manage order flow to suit their
business needs. In addition, the
Exchange believes that cancelling ALO
Orders that would otherwise be
marketable against displayed interest on
the NYSE Arca Book is consistent with
the terms of the ALO Order, i.e., that
such orders would not take liquidity on
the Exchange. The Exchange further
believes that the proposed changes
would promote just and equitable
principles of trade and 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 the proposed behavior
to cancel ALO Orders on the Exchange
if the limit price would lock contra-side
displayed orders would be consistent
with functionality available on other
6 15
5 See
Rule 7.31–E(e)(3)(C).
VerDate Sep<11>2014
19:00 Nov 05, 2020
7 15
Jkt 253001
PO 00000
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
Frm 00073
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71119
exchanges for similar order types when
they lock displayed interest.8
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange believes that the proposed
rule change would reduce the burden on
competition because it would simplify
the treatment of such orders when they
lock displayed interest and promote
consistency with functionality offered
for similar order types on other
exchanges.9
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 within 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:
8 See, e.g., Cboe BZX Exchange, Inc. (‘‘BZX’’)
Rules 11.9(c)(6), 11.9(g)(1)(D), 11.9(g)(2)(D), and
11.13(a)(2)(C) (a Post Only Order that locks
displayed interest on BZX may be cancelled at the
User’s option); Nasdaq Stock Exchange LLC
(‘‘Nasdaq’’) Rule 4702(b)(4)(A) (Nasdaq Participants
may opt to have Post-Only Orders cancel if they
lock orders displayed on the Nasdaq Book); MEMX
LLC (‘‘MEMX’’) Rules 11.6(a), 11.6(l), and
11.8(b)(10) (Users have the option to apply Post
Only and Cancel Back instructions to orders that
would lock displayed interest, and MEMX cancels
ISO orders with Post Only and Day instructions if
they lock displayed interest).
9 See id.
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71120
Federal Register / Vol. 85, No. 216 / Friday, November 6, 2020 / Notices
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
NYSEArca–2020–92 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–NYSEArca–2020–92. 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–NYSEArca–2020–92 and
should be submitted on or before
November 27, 2020.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.10
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–24633 Filed 11–5–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–90302; File No. SR–FINRA–
2020–038]
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Notice of Filing of
Proposed Amendments to FINRA
Rules 5122 (Private Placements of
Securities Issued by Members) and
5123 (Private Placements of Securities)
That Would Require Members To File
Retail Communications Concerning
Private Placement Offerings That Are
Subject to Those Rules’ Filing
Requirements
November 2, 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 October
28, 2020, the Financial Industry
Regulatory Authority, Inc. (‘‘FINRA’’)
filed with the Securities and Exchange
Commission (‘‘SEC’’ or ‘‘Commission’’)
the proposed rule change as described
in Items I, II, and III below, which Items
have been prepared by FINRA. 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
FINRA is proposing to amend FINRA
Rules 5122 (Private Placements of
Securities Issued by Members) and 5123
(Private Placements of Securities) that
would require members to file retail
communications concerning private
placement offerings that are subject to
those rules’ filing requirements.
The text of the proposed rule change
is available on FINRA’s website at
https://www.finra.org, at the principal
office of FINRA 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,
FINRA 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. FINRA has prepared
summaries, set forth in sections A, B,
and C below, of the most significant
aspects of such statements.
1 15
10 17
CFR 200.30–3(a)(12).
VerDate Sep<11>2014
19:00 Nov 05, 2020
2 17
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PO 00000
U.S.C. 78s(b)(1).
CFR 240.19b–4.
Frm 00074
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Sfmt 4703
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
FINRA Rules 5122 and 5123
Rule 5122 applies to private
placements of unregistered securities
issued by a member or a control entity 3
(‘‘member private offerings’’). The rule
requires the member or control entity to
provide prospective investors with a
private placement memorandum
(‘‘PPM’’), term sheet or other offering
document that discloses the intended
use of the offering proceeds, the offering
expenses and the amount of selling
compensation that will be paid to the
member and its associated persons.
The rule also requires a member to
file the PPM, term sheet or other
offering document with the FINRA
Corporate Financing Department (‘‘Corp
Fin’’) at or prior to the first time the
document is provided to any
prospective investor.4 Many member
private offerings are exempt from the
rule’s requirements, including among
others, offerings sold only to
institutional accounts, as defined in
FINRA Rule 4512(c),5 qualified
purchasers, as defined in the Investment
Company Act of 1940,6 and qualified
institutional buyers,7 as defined in Rule
144A under the Securities Act of 1933
(‘‘Securities Act’’).8
3 A ‘‘control entity’’ means any entity that
controls or is under common control with a
member, or that is controlled by a member or its
associated persons. See FINRA Rule 5122(a)(2).
Control means beneficial interest, as defined in
FINRA Rule 5130(i)(1), of more than 50 percent of
the outstanding voting shares of a corporation, or
the right to more than 50 percent of the
distributable profits or losses of a partnership or
other non-corporate legal entity. Control is
determined immediately after the closing of an
offering, and in the case of an offering with multiple
intended closings, immediately following each
closing. See FINRA Rule 5122(a)(3).
4 Rule 5122 also requires the filing of any
amendments to such documents within 10 days of
being provided to any investor or prospective
investor. See FINRA Rule 5122(b)(2).
5 Rule 4512(c) defines ‘‘institutional account’’ as
the account of:
(1) A bank, savings and loan association,
insurance company or registered investment
company;
(2) an investment adviser registered either with
the SEC under Section 203 of the Investment
Advisers Act or with a state securities commission
(or any agency or office performing like functions);
or
(3) any other person (whether a natural person,
corporation, partnership, trust or otherwise) with
total assets of at least $50 million.
6 See 15 U.S.C. 80a–2(a)(51).
7 See 17 CFR 230.144A(a)(1).
8 Rule 5122 exempts the following member
private offerings:
(1) Offerings sold solely to:
E:\FR\FM\06NON1.SGM
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]]>Agencies
[Federal Register Volume 85, Number 216 (Friday, November 6, 2020)]
[Notices]
[Pages 71118-71120]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-24633]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-90311; File No. SR-NYSEArca-2020-92]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
of Proposed Rule Change To Amend Rule 7.31-E
November 2, 2020.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that on October 20, 2020, NYSE Arca, Inc. (``NYSE Arca'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II below, which Items have been prepared by the self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 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 Rule 7.31-E to cancel ALO Orders
that lock displayed interest. The proposed 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 amend Rule 7.31-E (Orders and Modifiers)
to provide that ALO Orders that lock displayed interest would be
cancelled. Specifically, the Exchange proposes to amend Rules 7.31-
E(e)(2), which describes how the Exchange processes ALO Orders, and
7.31-E(e)(3)(D), which describes how the Exchange processes Day ISO ALO
Orders. Currently, under Rule 7.31-E(e)(2)(B)(iii), an arriving ALO
Order to buy (sell) with a limit price that would lock a displayed
order priced equal to or below (above) the PBO (PBB) on the NYSE Arca
Book will be assigned a working price and display price one minimum
price variation (``MPV'') below (above) the displayed order. Day ISO
ALO Orders that would lock displayed interest on the NYSE Arca Book are
processed in the same manner.\4\ The Exchange proposes to amend these
rules to provide that arriving ALO and Day ISO ALO Orders with a limit
price that would lock displayed interest on the NYSE Arca Book would be
cancelled.
---------------------------------------------------------------------------
\4\ See Rule 7.31-E(e)(3)(D)(ii).
---------------------------------------------------------------------------
To effect this change, the Exchange proposes to delete the portion
of Rule 7.31-E(e)(2)(B)(iii) providing that an ALO Order that locks
displayed interest will be ``assigned a working price and display price
one MPV below (above) the displayed order on the NYSE Arca Book'' and
instead provide that such order would be cancelled. In addition, to
simplify the rule text, the Exchange proposes to combine Rule 7.31-
E(e)(2)(B)(iii), as revised, into Rule 7.31-E(e)(2)(B)(ii). Proposed
amended Rule 7.31-E(e)(2)(B)(ii) would thus provide:
If the limit price of the ALO Order to buy (sell) crosses the
working price of any displayed or non-displayed order on the NYSE
Arca Book priced equal to or below (above) the PBO (PBB), it will
trade as the liquidity taker with such order(s). Any untraded
quantity of the ALO Order will have a working price equal to the PBO
(PBB) and a display price one MPV below (above) the PBO (PBB),
provided that if the limit price of the ALO Order to buy (sell)
locks the display price of any order ranked Priority 2--Display
Orders on the NYSE Arca Book priced equal to or below (above) the
PBO (PBB), it will be cancelled.
The Exchange also proposes the following conforming changes to
Rules 7.31-E(e)(2)(B) and 7.31-E(e)(2)(C) to reflect the proposed
change to how ALO Orders that lock displayed interest would be handled:
The Exchange proposes to renumber current Rule 7.31-
E(e)(2)(B)(iv) as 7.31-E(e)(2)(B)(iii) to accommodate the proposed
combination of current Rules 7.31-E(e)(2)(B)(ii) and 7.31-
E(e)(2)(B)(iii), as described above.
The Exchange proposes to replace introductory references
providing that an ALO Order will be ``priced'' or ``priced or trade, or
both,'' with the phrase ``will be processed'' in Rules 7.31-E(e)(2)(B),
7.31-E(e)(2)(B)(iv)(a) (which would become Rule 7.31-E(e)(2)(B)(iii)(a)
after renumbering), 7.31-E(e)(2)(C), and 7.31-E(e)(2)(C)(i). The
Exchange proposes to use the term ``processed'' because some ALO Orders
would be cancelled (and therefore not priced or traded).
The Exchange proposes to renumber current Rule 7.31-
E(e)(2)(B)(v) as 7.31-E(e)(2)(B)(iv) to accommodate the proposed
combination of current Rules 7.31-E(e)(2)(B)(ii) and 7.31-
E(e)(2)(B)(iii), as described above.
The Exchange further proposes to revise Rule 7.31-
E(e)(2)(C)(i) to delete the reference to orders ranked Priority 2--
Display Orders because, as noted above, an ALO Order would no longer be
repriced based on contra-side Priority 2--Display Orders and instead
would be cancelled. Accordingly, the only time a resting ALO Order
would be repriced is if the contra-side PBBO re-prices.
The Exchange proposes to amend Rule 7.31-E(e)(3)(D) to align the
rules governing Day ISO ALOs with the proposed changes to ALO Orders.
[[Page 71119]]
Currently, pursuant to Rule 7.31-E(e)(3)(D)(ii), if the limit price of
an arriving Day ISO ALO locks the display price of a displayed order on
the NYSE Arca Book, it will be assigned a working price and display
price one MPV below (above) the price of the displayed order. As with
ALO Orders, the Exchange proposes to amend this rule to specify that
arriving Day ISO ALOs that lock displayed interest would be cancelled.
To effect this change, the Exchange proposes to delete the portion
of Rule 7.31-E(e)(3)(D)(ii) that provides that a Day ISO ALO that locks
displayed interest will be ``assigned a working price and display price
one MPV below (above) the displayed order on the NYSE Arca Book'' and
instead provide that such order would be cancelled. In addition, to
simplify the rule text, the Exchange proposes to combine Rule 7.31-
E(e)(3)(D)(ii), as revised, with Rule 7.31-E(e)(3)(D)(i). Proposed
amended Rule 7.31-E(e)(3)(D)(i) would thus provide:
If the limit price of the Day ISO ALO to buy (sell) crosses the
working price of any displayed or non-displayed order on the NYSE
Arca Book, it will trade as the liquidity taker with such order(s).
Any untraded quantity of the Day ISO ALO will have a working price
and display price equal to its limit price, provided that if the
limit price of the Day ISO ALO to buy (sell) locks the display price
of any order ranked Priority 2--Display Orders on the NYSE Arca
Book, it will be cancelled.
The Exchange also proposes the following conforming changes
consistent with the proposed change to cancel Day ISO ALOs that lock
displayed interest:
The Exchange proposes to renumber Rule 7.31-
E(e)(3)(D)(iii) as Rule 7.31-E(e)(3)(D)(ii) to accommodate the proposed
combination of current Rules 7.31-E(e)(3)(D)(i) and 7.31-
E(e)(3)(D)(ii), as described above.
The Exchange proposes to replace introductory references
providing that a Day ISO ALO Order will be ``priced'' or ``priced or
trade, or both,'' with the phrase ``will be processed'' in Rules 7.31-
E(e)(3)(D) and 7.31-E(3)(D)(ii)(a) (as renumbered). The Exchange
proposes this change to reflect that certain ALO Orders would be
cancelled (and therefore not priced or traded).
The Exchange proposes to delete Rule 7.31-E(e)(3)(D)(iv),
which currently specifies how a Day ISO ALO will be processed after it
is displayed. Because a Day ISO ALO would now either display at its
limit price (because, by its terms, it can be displayed at a price that
locks or crosses the contra-side PBBO) \5\ or be cancelled if it locks
displayed interest on the NYSE Arca Book, there would no longer be any
circumstances where a resting Day ISO ALO would reprice and therefore
this rule text would no longer be applicable.
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\5\ See Rule 7.31-E(e)(3)(C).
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* * * * *
Because of the technology changes associated with this proposed
rule change, the Exchange will announce the implementation date by
Trader Update. Subject to approval of this proposed rule change, the
Exchange anticipates that the proposed changes will be implemented in
January 2021.
2. Statutory Basis
The proposed rule change is consistent with Section 6(b) of the
Act,\6\ in general, and furthers the objectives of Section 6(b)(5),\7\
in particular, because 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, 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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\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(5).
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The Exchange believes the proposed rule change would remove
impediments to and perfect the mechanism of a free and open market by
simplifying the treatment of ALO Orders that lock displayed orders. The
Exchange believes that cancelling ALO Orders that lock displayed
interest, rather than repricing them, would provide ETP Holders with
greater determinism with respect to how ALO Orders would be processed
on the Exchange and enhance ETP Holders' ability to manage order flow
to suit their business needs. In addition, the Exchange believes that
cancelling ALO Orders that would otherwise be marketable against
displayed interest on the NYSE Arca Book is consistent with the terms
of the ALO Order, i.e., that such orders would not take liquidity on
the Exchange. The Exchange further believes that the proposed changes
would promote just and equitable principles of trade and 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 the proposed behavior to cancel ALO Orders on
the Exchange if the limit price would lock contra-side displayed orders
would be consistent with functionality available on other exchanges for
similar order types when they lock displayed interest.\8\
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\8\ See, e.g., Cboe BZX Exchange, Inc. (``BZX'') Rules
11.9(c)(6), 11.9(g)(1)(D), 11.9(g)(2)(D), and 11.13(a)(2)(C) (a Post
Only Order that locks displayed interest on BZX may be cancelled at
the User's option); Nasdaq Stock Exchange LLC (``Nasdaq'') Rule
4702(b)(4)(A) (Nasdaq Participants may opt to have Post-Only Orders
cancel if they lock orders displayed on the Nasdaq Book); MEMX LLC
(``MEMX'') Rules 11.6(a), 11.6(l), and 11.8(b)(10) (Users have the
option to apply Post Only and Cancel Back instructions to orders
that would lock displayed interest, and MEMX cancels ISO orders with
Post Only and Day instructions if they lock displayed interest).
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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 Act. The Exchange believes that
the proposed rule change would reduce the burden on competition because
it would simplify the treatment of such orders when they lock displayed
interest and promote consistency with functionality offered for similar
order types on other exchanges.\9\
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\9\ See id.
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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 within 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:
[[Page 71120]]
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-NYSEArca-2020-92 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-NYSEArca-2020-92. 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-NYSEArca-2020-92 and should be submitted
on or before November 27, 2020.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-24633 Filed 11-5-20; 8:45 am]
BILLING CODE 8011-01-P
