Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing of Proposed Rule Change Revising Rules 46 and 46A To Permit the Appointment of Trading Officials, 86625-86629 [2020-28805]

Download as PDF Federal Register / Vol. 85, No. 250 / Wednesday, December 30, 2020 / Notices the proposed rule change raises any new or novel issues not already considered by the Commission. In addition, the Exchange believes that the proposal is consistent with just and equitable principles of trade and not unfairly discriminatory because the Risk Controls mechanism is available to all Members and their clearing firms without charge. 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 proposal is designed to expand the Exchange’s existing, optional Risk Controls mechanism by adding a new Net Notional Exposure risk control. The Exchange is not proposing to charge any fee for use of any aspect of its Risk Controls mechanism. The Exchange does not believe the proposed rule change will impose any burden on intermarket competition because other exchanges offer similar functionality.10 The Exchange also does not believe that the proposal will impose a burden on intramarket competition because its Risk Controls mechanism is available to all Members, and clearing firms of Members, and provides a way for LTSE Members and clearing firms to manage their risk by preventing trading that is erroneous or exceeds a Member or clearing firm’s financial resources, thereby contributing to the stability of the equities markets. Accordingly, the Exchange does not believe that this proposal will have any impact on competition. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments were neither solicited nor received. 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 11 and Rule 19b–4(f)(6) thereunder.12 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; or (iii) become operative prior to 30 days from the date on which 10 Id. 11 15 12 17 U.S.C. 78s(b)(3)(A)(iii). CFR 240.19b–4(f)(6). VerDate Sep<11>2014 17:47 Dec 29, 2020 Jkt 253001 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)(iii) of the Act 13 and Rule 19b–4(f)(6)(iii) thereunder.14 At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings under Section 19(b)(2)(B) 15 of the Act to determine whether the proposed rule change should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– LTSE–2020–23 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–LTSE–2020–23. 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 13 15 U.S.C. 78s(b)(3)(A)(iii). CFR 240.19b–4(f)(6). In addition, Rule 19b– 4(f)(6)(iii) requires a self-regulatory organization to give the Commission written notice of its 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 fulfilled this requirement. 15 15 U.S.C. 78s(b)(2)(B). 14 17 PO 00000 Frm 00097 Fmt 4703 Sfmt 4703 86625 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–LTSE–2020–23 and should be submitted on or before January 20, 2021. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.16 Eduardo A. Aleman, Deputy Secretary. [FR Doc. 2020–28806 Filed 12–29–20; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–90776; File No. SR–NYSE– 2020–105] Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing of Proposed Rule Change Revising Rules 46 and 46A To Permit the Appointment of Trading Officials December 22, 2020 Pursuant to Section 19(b)(1) 1 of the Securities Exchange Act of 1934 (the ‘‘Act’’) 2 and Rule 19b–4 thereunder,3 notice is hereby given that, on December 15, 2020, New York Stock Exchange LLC (‘‘NYSE’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the self-regulatory organization. The Commission is publishing this notice to solicit 16 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 E:\FR\FM\30DEN1.SGM 30DEN1 86626 Federal Register / Vol. 85, No. 250 / Wednesday, December 30, 2020 / Notices 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 revisions to Rules 46 and 46A to permit the appointment of Trading Officials and to make conforming changes to certain Exchange rules related to Floor Official duties and responsibilities. The proposed rule change is available on the Exchange’s website at www.nyse.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes revisions to Rules 46 and 46A to permit the appointment of Trading Officials and to make conforming changes to certain Exchange rules related to Floor Official duties and responsibilities. Background Rule 46 (Floor Officials— Appointment) and Rule 46A (Executive Floor Governors) currently set forth the process for the Exchange to appoint active NYSE members 4 as Floor Officials. In addition, Rule 46 permits the Exchange to appoint qualified ICE employees to as act as Floor Governors, a more senior type of Floor Official.5 4 Rule 2(a) states that the term ‘‘member,’’ when referring to a natural person, means a natural person associated with a member organization who has been approved by the Exchange and designated by such member organization to effect transactions on the Exchange Trading Floor or any facility thereof. See also note 6, infra. 5 The title ‘‘Floor Official’’ includes a broad category of titles that include, in order of increasing seniority, Floor Officials, Senior Floor Officials, Executive Floor Officials, Floor Governors and Executive Floor Governors. See Rules 46 and 46A (defining Floor Official, Floor Governor, Executive VerDate Sep<11>2014 17:47 Dec 29, 2020 Jkt 253001 The role of the Floor Official evolved out of the self-regulatory scheme of the Securities Exchange Act of 1934, as amended (the ‘‘Act’’).6 Floor Officials are delegated authority from the Exchange’s Board of Directors (the ‘‘Board’’) to supervise and regulate active openings and unusual situations that arise in connection with the making of bids, offers or transactions on the Trading Floor,7 and to review and approve certain trading actions. A number of Exchange Rules specify involvement in the marketplace by Floor Officials, senior-level Floor Officials (i.e., Floor Governors, Executive Floor Officials, Senior Floor Officials and Executive Floor Governors), or both. Exchange members appointed as Floor Officials serve in a volunteer capacity in addition to their regular obligations as either brokers or Designated Market Makers (‘‘DMM’’). In 2008, the Exchange amended Rule 46 to permit qualified ICE employees to be appointed as Floor Governors (‘‘Staff Governors’’).8 At the same time, as a result of the evolution of the equities markets away from manual executions and manual enforcement of rules toward an electronic market that automates executions and in many cases hard codes the rule requirements into the execution logic, many of the trading procedures and situations originally requiring Floor Official involvement have been automated; in other cases, Floor Official approval has become pro forma rather than substantive.9 More recently, the Exchange introduced Regulatory Trading Officials (‘‘RTOs’’) to perform the functions performed by Floor Officials regarding whether a bid or offer is eligible for inclusion in the Closing Auction by the DMM.10 As Floor Official, Senior Floor Official and Executive Floor Governors). 6 See 15 U.S.C. 78f. 7 The term ‘‘Trading Floor’’ is defined in Rule 6A to mean the restricted-access physical areas designated by the Exchange for the trading of securities, commonly known as the ‘‘Main Room’’ and the ‘‘Buttonwood Room.’’ 8 See Securities Exchange Act Release No. 57627 (April 4, 2008), 73 FR 19919 (April 11, 2008) (SR– NYSE–2008–19) (‘‘Release No. 57627’’). 9 See, e.g., Securities Exchange Act Release No. 75695 (August 13, 2015), 80 FR 50365 (August 19, 2015) (SR–NYSE–2015–33) (deletion of Rule 79A.20 requiring prior Floor Official approval for certain DMM dealer trades more than one or two dollars away from the last sale as moot). 10 See Securities Exchange Act Release No. 88765 (April 29, 2020), 85 FR 26771 (May 5, 2020) (SR– NYSE–2020–03). The Exchange has filed a separate proposed rule change to make permanent that Floor Broker Interest would not be eligible to participate in the Closing Auction and in that filing, has also proposed to delete Rule 46B because RTOs would no longer have a role under Exchange rules. See Securities Exchange Act Release No. 90495 PO 00000 Frm 00098 Fmt 4703 Sfmt 4703 described below, the Exchange has now determined to delegate the remaining duties and responsibilities of Floor Officials to the proposed Trading Officials. Proposed Rule Change The Exchange proposes to transition the duties and responsibilities of Floor Officials to Trading Officials, who would be Exchange staff appointed by the NYSE CEO or his or her designee. As proposed, Trading Officials would be the only persons authorized to perform the delegated functions under the Exchange rules on the Floor that member Floor Officials and Staff Governors currently perform. The various seniority-based gradations of Floor Official (Floor Officials, Senior Floor Officials, Executive Floor Officials, Floor Governors and Executive Floor Governors) also would be eliminated. As a practical matter, the current Staff Governors would become the new Trading Officials. Active Exchange members would not be eligible for appointment as Trading Officials. Under current Rules 46 and 46A, Floor Officials are appointed by the Board and re-appointed annually. Floor Officials must also complete a mandatory education program and pass a qualifications exam. These requirements were developed for member Floor Officials, and the Exchange does not propose to retain them for Trading Officials. Like the current Staff Governors, Exchange staff would be appointed as Trading Officials based on experience and necessary business and rule knowledge that would enable them to participate in and supervise various trading situations on the Floor. Once appointed, Trading Officials would be trained and supervised by the Exchange in the same manner as the current Staff Governors. In order to effectuate the proposed changes, the Exchange proposes to delete current Rules 46 and 46A in their entirety and define a Trading Official in new Rule 46 as an Exchange staff person designated by the CEO of the Exchange or his or her designee to perform those functions specified in Exchange rules. In addition, the Exchange proposes certain technical and conforming changes to replace references to Floor Officials, Senior Floor Officials, Executive Floor Officials, Floor Governors and/or Executive Floor Governors with Trading Official in the following rules: (November 24, 2020), 85 FR 77304 (December 1, 2020) (SR–NYSE–2020–95) (Notice) (‘‘NYSE Close Proposal’’). E:\FR\FM\30DEN1.SGM 30DEN1 Federal Register / Vol. 85, No. 250 / Wednesday, December 30, 2020 / Notices • Rule 7.35A (DMM-Facilitated Core Open and Trading Halt Auctions) sets forth the responsibility of DMMs to ensure that registered securities open as close to the beginning of Core Trading Hours as possible or reopen at the end of the halt or pause. Æ Subsection (a)(4) provides for Floor Official participation in the opening and reopening process to provide an impartial professional assessment of unusual situations, as well as to provide guidance with respect to pricing when a significant disparity in supply and demand exists. The rule also contemplates DMMs consultations with Floor Officials under certain specific circumstances. References to Floor Official in Rule 7.35A(a)(4) and (a)(5) would be replaced with Trading Official. Æ Rule 7.35A(d) governs pre-opening indications. Subsection (d)(4) describes the procedures for publishing preopening indications and specifies when publication of a pre-opening indication requires supervision and approval of a Floor Governor. References to Floor Governor in Rule 7.35A(d)(4)(A) and (F)(i) would be replaced with Trading Official. • Rule 7.35B (DMM-Facilitated Closing Auctions) describes the responsibility of each DMM to ensure that registered securities close as soon after the end of Core Trading Hours as possible. Æ Rule 7.35B(a)(1)(C) provides that electronically-entered Floor Broker Interest cannot be reduced in size or replaced except that DMMs can accept a full cancellation of electronicallyentered Floor Broker Interest to correct a Legitimate Error subject to Floor Official approval. Floor Official would be replaced with Trading Official in Rule 7.35B(a)(1).11 Æ Rule 7.35B(d) governs closing imbalances. Subsection (d)(1)(A) describes the circumstances when a DMM may disseminate a Regulatory Closing Imbalance with prior Floor Official approval. Subsection (d)(2) provides that DMMs may disseminate a Manual Closing Imbalance only with prior Floor Official approval beginning one hour before the scheduled end of Core Trading Hours up to the Closing Auction Imbalance Freeze Time. In both subsections, references to Floor Official would be replaced with Trading Official. Æ Rule 7.35B(j) governs temporary rule suspensions. Subsection (j)(3) provides that a determination to declare a temporary suspension as well as any 11 The Exchange has separately proposed to delete Rule 7.35B(a)(1)(C). See id. VerDate Sep<11>2014 17:47 Dec 29, 2020 Jkt 253001 entry or cancellation of orders or closing of a security under subsection (j)(2) must be supervised and approved by an Executive Floor Governor and supervised by an Exchange Officer. The Exchange proposes that supervision and approval of these determinations must be supervised and approved by a Trading Official. • Rule 18(d) (Compensation in Relation to Exchange System Failure) sets forth the process for member organizations to seek reimbursement for losses resulting from system failures. Subsection (d) establishes a Compensation Review Panel consisting of three Floor Governors and three Exchange employees to determine the eligibility of a claim for payment. The Exchange proposes to eliminate the Compensation Review Panel and provide that the Exchange will perform will review claims submitted pursuant to the rule and determine eligibility of a claim for payment. • Rule 37 (Visitors) provides that visitors shall not be admitted to the Floor except by permission of Exchange officer, a Senior Floor Official, Executive Floor Official, a Floor Governor, or an Executive Floor Governor. The Exchange proposes that admission of visitors to the Floor be by permission of the Exchange. • As noted, the text of Rules 46 and 46A would be deleted. The heading of Rule 46 would be changed to ‘‘Trading Officials’’. • Under current Rule 47 (Floor Officials—Unusual Situations), Floor Officials have the power to supervise and regulate active openings and unusual situations that may arise in connection with the making of bids, offers or transactions on the Floor. References to Floor Official would be changed to Trading Officials and the heading would be changed to ‘‘Unusual Situations on the Floor.’’ Current Rule 47 would become new Rule 48. • Rule 75 (Disputes as to Bids and Offers) mandates that disputes arising on bids or offers that are not settled by agreement between the interested members shall be settled by a Floor Official. The Exchange proposes that disputes be settled by a Trading Official and would amend the rule text and Supplementary Material .10 accordingly. The rule currently provides that, if both parties to a dispute involving either a monetary difference of $10,000 or more or a questioned trade, the matter may be referred for resolution to a panel of three Floor Governors, Senior Floor Officials, or Executive Floor Officials, or any combination thereof (‘‘3 Floor Official Panel’’), whose decision shall be PO 00000 Frm 00099 Fmt 4703 Sfmt 4703 86627 binding on the parties. As an alternative to the 3 Floor Official Panel, members may proceed to resolve a dispute through long-standing arbitration procedures established under the Exchange’s rules. The Exchange proposes to eliminate the 3 Floor Official Panel. Disputes involving either a monetary difference of $10,000 or more or a questioned trade would thus be resolved exclusively through arbitration. • Rule 91.50 (Taking or Supplying Securities Named in Order) provides that if there is a continued pattern of rejection of a DMM’s principal transactions, a Floor Official may be called upon and require the broker to review his actions. Floor Official would be changed to Trading Official in Rule 91.50. • Rule 93(b) (Trading for Joint Account) provides that no member while on the Floor shall initiate the purchase or sale on the Exchange of a stock for any account in which the member, the member’s member organization or any other member or allied member therein is directly or indirectly interested with any person other than such member organization or any other member or allied member therein, without the prior approval of a Floor Official. The reference to Floor Official would be changed to Trading Official. • Rule 103.10 (Registration and Capital Requirements of DMMs and DMM Units) governs the temporary reallocation of securities and provides that the CRO or his or her designee and two non-DMM Executive Floor Governors or if only one or no nonDMM Executive Floor Governors is present on the Floor, the most senior non-DMM Floor Governor or Governors based on length of consecutive service as a Floor Governor at the time of any action covered by this rule, acting by a majority, shall have the power to reallocate temporarily any security on an emergency basis whenever such reallocation would be in the public interest. The Exchange proposes that only the CRO or his or her designee would have the power to reallocate temporarily any security on an emergency basis. • Rule 103A (Member Education) provides for the Exchange to develop procedures and standards for qualification and performance of members active on the Floor of the Exchange. The rule currently exempts Executive Floor Governors from the requirement to complete educational modules, which the Exchange proposes to eliminate. The Exchange also proposes the non-substantive change of E:\FR\FM\30DEN1.SGM 30DEN1 86628 Federal Register / Vol. 85, No. 250 / Wednesday, December 30, 2020 / Notices deleting the superfluous ‘‘(I)’’ at the beginning of the rule. • Rule 103B(G) (Security Allocation and Reallocation) describes the allocation freeze policy and provides that, following allocation probation, a second six month period will begin during which a DMM unit may apply for new listings, provided that the unit demonstrates relevant efforts taken to resolve the circumstances that triggered the allocation prohibition. Currently, the determination as to whether a unit may apply for new listings is made by Exchange regulatory staff in consultation with the Executive Floor Governors. The Exchange proposes that this determination will be made solely by regulatory staff. • Rule 104 (Dealings and Responsibilities of DMMs) governs dealings and responsibilities of DMMs. Subsection (i) provides for temporary DMMs and permits a Floor Governor to authorize a member of the Exchange who is not registered as a DMM in such stock or stocks, to act as a temporary DMM under specific circumstances. The Exchange proposes that Trading Officials would perform this function under the rule. • Rule 112(a)(i) (Orders initiated ‘‘Off the Floor’’) provides that all orders in stocks for the account of a member organization or any member, principal executive, approved person, officer, or employee of such organization or a discretionary account serviced by the member or member organization must be sent to the Floor through a clearing firm’s order room or other facilities regularly used for transmission of public customers’ orders to the Floor, except for orders, among others, when a Floor Official expressly invites a member or members to participate in a difficult market situation. The Exchange would replace Trading Official for Floor Official in Rule 112(a)(i). • Rule 124(e) (Midday Auction) provides that, when there is a significant imbalance in a Midday Auction Stock at the end of the Midday Auction Pause, the Midday Auction Pause may be converted to an order imbalance halt with the approval of a Floor Governor or two Floor Officials. The Exchange proposes that the approval would be given by a Trading Official. • Rule 128B (Publication of Changes, Corrections, Cancellations or Omissions and Verification of Transactions) governs changes and corrections to the Consolidated Tape. Æ Rule 128B.10 (Publication on the tape or in the ‘‘sales sheet’’) provides that publication of a change or a correction in a transaction which VerDate Sep<11>2014 17:47 Dec 29, 2020 Jkt 253001 previously appeared on the tape may be made on the tape on the day of the transaction provided that both buying and selling members or member organizations agree to the change in the transaction(s) and receive approval from a Floor Governor, Executive Floor Official, Senior Floor Official or Executive Floor Governor. In the event such publication is not made on the tape on the day of the transaction, it may be published on the tape at least ten minutes prior to the opening of business on the following business day or in the sales sheet within three business days of the transaction with the approval of both the buying and selling members and a Floor Official, provided the price of the transaction does not affect the high, low, opening or closing price of the security on the day of the transaction. The Exchange proposes that Trading Officials provide the approvals required under Rule 128B.10. Æ Rule 128B.13 (Other errors) provides that a correction in the amount of a transaction reported erroneously to the tape by a party to the transaction, may be published on the tape on the day of the transaction, on the tape at least ten minutes prior to the opening on the following business day, or on the ‘‘sales sheet’’ within three business days of the transaction with the approval of a Floor Governor, Executive Floor Official, Senior Floor Official or Executive Floor Governor. The Exchange proposes that Trading Officials provide the approvals required under Rule 128B.13. • Rule 308(g) (Acceptability Proceedings) provides that any person whose application has been disapproved by an Acceptability Committee, or any member of the Board, any member of the Committee for Review, any Executive Floor Governor, and the Division of the Exchange initiating the proceedings may require a review by the Board of any determination of an Acceptability Committee. The Exchange proposes to delete Executive Floor Governors from the rule. • Rule 903(d)(ii) (Off-Hours Transactions) provides that a closing price order to buy (sell) a security for the account of the DMM registered in such security and approved by a Floor Official, coupled with a closing price order to sell (buy) to offset all or part of a market-on-close imbalance in the stock prior to the close, shall be executed upon entry. The Exchange proposes that a Trading Official would provide the required approval under the rule. • Rule 906 (Impact of Trading Halts on Off-Hours Trading) provides that a PO 00000 Frm 00100 Fmt 4703 Sfmt 4703 closing price order to buy (sell) a security for the account of the DMM registered in such security and approved by a Floor Official coupled with a closing price order to sell (buy) to offset all or part of any market-onclose imbalance in the stock prior to the close, shall not be so canceled or precluded from entry as result of corporate developments during the OffHours Trading Session. The Exchange proposes that a Trading Official would provide the required approval under the rule. • Finally, NYSE Listed Company Manual Section 202.04 (Exchange Market Surveillance) provides that a listed issue may be placed under special initial margin and capital requirements, which indicates a determination by the Exchange’s Floor Officials that the market in the issue has assumed a speculative tenor and has become volatile due to the influence of credit, which, if ignored, may lead to unfair and disorderly trading. The reference to Floor Officials would be updated to Trading Officials. 2. Statutory Basis The proposed rule change is consistent with Section 6(b) of the Act,12 in general, and furthers the objectives of Section 6(b)(5),13 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. In particular, the Exchange believes that creating a new category of Trading Official to replace member Floor Officials would promote just and equitable principles of trade and remove impediments to a free and open market by streamlining and modernizing the role of a Trading Official on the Floor. The volunteer member Floor Official is a self-regulatory vestige developed for manual trading. As noted, the Exchange introduced Staff Governors several years ago to address the shortfall in experienced members following the consolidation of trading space on the Exchange.14 More recently, RTOs were introduced to perform certain functions performed by Floor Officials in 12 15 U.S.C. 78f(b). U.S.C. 78f(b)(5). 14 See Release No. 57627, 73 FR at 19920. 13 15 E:\FR\FM\30DEN1.SGM 30DEN1 Federal Register / Vol. 85, No. 250 / Wednesday, December 30, 2020 / Notices connection with the Closing Auction.15 The proposed rule change would complete the evolution of member Floor Officials to Trading Officials that are Exchange-trained and supervised staff, which is similar to how trading officials function on the options markets run by the Exchange’s affiliates.16 By replacing the variety and hierarchy of Floor Officials based on seniority with a single Trading Official appointed by the NYSE CEO, the Exchange would significantly simplify the appointment and retention of individuals with responsibility under the Exchange’s rules to supervise and review trading on the Floor. Further, the proposal would contribute to the protection of investors and the public interest by ensuring that qualified Exchange staff continue to perform the formal roles prescribed by Exchange rules and provide a level of oversight to the marketplace on a dayto-day basis, thereby contributing to the maintenance of a fair and orderly marketplace on the Exchange. Finally, the Exchange believes that the conforming and technical changes would 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 non-substantive changes would add clarity, transparency and consistency to the Exchange’s rules. The Exchange believes that market participants would benefit from the increased clarity, thereby reducing potential confusion and ensuring that persons subject to the Exchange’s jurisdiction, regulators, and the investing public can more easily navigate and understand the Exchange’s rules. 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 proposed rule change is not intended to address competitive issues but is rather concerned with transferring Floor Official duties and responsibilities under Exchange rules to staff Trading Officials. The Exchange believes the proposed rule changes would streamline and modernize the role of the trading official on the Floor, thereby 15 As noted above, the Exchange has separately proposed to delete Rule 46B because RTOs would no longer have a role under Exchange rules. See NYSE Close Proposal, supra note 10. 16 See NYSE American LLC (‘‘NYSE American’’) Rule 900.2NY(82) and NYSE Arca, Inc. (‘‘NYSE Arca’’) Rule 6.1–O(b)(34). VerDate Sep<11>2014 17:47 Dec 29, 2020 Jkt 253001 contributing to the maintenance of a fair and orderly marketplace on the Exchange to the benefit of all members and member organizations and the investing public. Moreover, since the proposal does not substantively modify system functionality or processes on the Exchange, the proposed changes will not impose any 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 Within 45 days of the date of publication of this notice in the Federal Register or 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. 86629 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–2020–105 and should be submitted on or before January 20, 2021. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.17 Eduardo A. Aleman, Deputy Secretary. 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: [FR Doc. 2020–28805 Filed 12–29–20; 8:45 am] 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–2020–105 on the subject line. Self-Regulatory Organizations; NYSE National, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Extend the Effective Date in Commentary .10 Under NYSE National Rule 2.1210 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–2020–105. 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 Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’ or ‘‘Exchange Act’’) 1 and Rule 19b–4 thereunder,2 notice is hereby given that on December 15, 2020, NYSE National, Inc. (‘‘NYSE National’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘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 PO 00000 Frm 00101 Fmt 4703 Sfmt 4703 BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–90771; File No. SR– NYSENAT–2020–38] December 22, 2020. 17 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 E:\FR\FM\30DEN1.SGM 30DEN1

Agencies

[Federal Register Volume 85, Number 250 (Wednesday, December 30, 2020)]
[Notices]
[Pages 86625-86629]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-28805]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-90776; File No. SR-NYSE-2020-105]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing of Proposed Rule Change Revising Rules 46 and 46A To 
Permit the Appointment of Trading Officials

December 22, 2020
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that, on December 15, 2020, New York Stock Exchange LLC (``NYSE'' 
or the ``Exchange'') filed with the Securities and Exchange Commission 
(the ``Commission'') the proposed rule change as described in Items I 
and II below, which Items have been prepared by the self-regulatory 
organization. The Commission is publishing this notice to solicit

[[Page 86626]]

comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes revisions to Rules 46 and 46A to permit the 
appointment of Trading Officials and to make conforming changes to 
certain Exchange rules related to Floor Official duties and 
responsibilities. The proposed rule change is available on the 
Exchange's website at www.nyse.com, at the principal office of the 
Exchange, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of those statements may be examined at 
the places specified in Item IV below. The Exchange has prepared 
summaries, set forth in sections A, B, and C below, of the most 
significant parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes revisions to Rules 46 and 46A to permit the 
appointment of Trading Officials and to make conforming changes to 
certain Exchange rules related to Floor Official duties and 
responsibilities.
Background
    Rule 46 (Floor Officials--Appointment) and Rule 46A (Executive 
Floor Governors) currently set forth the process for the Exchange to 
appoint active NYSE members \4\ as Floor Officials. In addition, Rule 
46 permits the Exchange to appoint qualified ICE employees to as act as 
Floor Governors, a more senior type of Floor Official.\5\
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    \4\ Rule 2(a) states that the term ``member,'' when referring to 
a natural person, means a natural person associated with a member 
organization who has been approved by the Exchange and designated by 
such member organization to effect transactions on the Exchange 
Trading Floor or any facility thereof. See also note 6, infra.
    \5\ The title ``Floor Official'' includes a broad category of 
titles that include, in order of increasing seniority, Floor 
Officials, Senior Floor Officials, Executive Floor Officials, Floor 
Governors and Executive Floor Governors. See Rules 46 and 46A 
(defining Floor Official, Floor Governor, Executive Floor Official, 
Senior Floor Official and Executive Floor Governors).
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    The role of the Floor Official evolved out of the self-regulatory 
scheme of the Securities Exchange Act of 1934, as amended (the 
``Act'').\6\ Floor Officials are delegated authority from the 
Exchange's Board of Directors (the ``Board'') to supervise and regulate 
active openings and unusual situations that arise in connection with 
the making of bids, offers or transactions on the Trading Floor,\7\ and 
to review and approve certain trading actions. A number of Exchange 
Rules specify involvement in the marketplace by Floor Officials, 
senior-level Floor Officials (i.e., Floor Governors, Executive Floor 
Officials, Senior Floor Officials and Executive Floor Governors), or 
both.
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    \6\ See 15 U.S.C. 78f.
    \7\ The term ``Trading Floor'' is defined in Rule 6A to mean the 
restricted-access physical areas designated by the Exchange for the 
trading of securities, commonly known as the ``Main Room'' and the 
``Buttonwood Room.''
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    Exchange members appointed as Floor Officials serve in a volunteer 
capacity in addition to their regular obligations as either brokers or 
Designated Market Makers (``DMM''). In 2008, the Exchange amended Rule 
46 to permit qualified ICE employees to be appointed as Floor Governors 
(``Staff Governors'').\8\ At the same time, as a result of the 
evolution of the equities markets away from manual executions and 
manual enforcement of rules toward an electronic market that automates 
executions and in many cases hard codes the rule requirements into the 
execution logic, many of the trading procedures and situations 
originally requiring Floor Official involvement have been automated; in 
other cases, Floor Official approval has become pro forma rather than 
substantive.\9\ More recently, the Exchange introduced Regulatory 
Trading Officials (``RTOs'') to perform the functions performed by 
Floor Officials regarding whether a bid or offer is eligible for 
inclusion in the Closing Auction by the DMM.\10\ As described below, 
the Exchange has now determined to delegate the remaining duties and 
responsibilities of Floor Officials to the proposed Trading Officials.
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    \8\ See Securities Exchange Act Release No. 57627 (April 4, 
2008), 73 FR 19919 (April 11, 2008) (SR-NYSE-2008-19) (``Release No. 
57627'').
    \9\ See, e.g., Securities Exchange Act Release No. 75695 (August 
13, 2015), 80 FR 50365 (August 19, 2015) (SR-NYSE-2015-33) (deletion 
of Rule 79A.20 requiring prior Floor Official approval for certain 
DMM dealer trades more than one or two dollars away from the last 
sale as moot).
    \10\ See Securities Exchange Act Release No. 88765 (April 29, 
2020), 85 FR 26771 (May 5, 2020) (SR-NYSE-2020-03). The Exchange has 
filed a separate proposed rule change to make permanent that Floor 
Broker Interest would not be eligible to participate in the Closing 
Auction and in that filing, has also proposed to delete Rule 46B 
because RTOs would no longer have a role under Exchange rules. See 
Securities Exchange Act Release No. 90495 (November 24, 2020), 85 FR 
77304 (December 1, 2020) (SR-NYSE-2020-95) (Notice) (``NYSE Close 
Proposal'').
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Proposed Rule Change
    The Exchange proposes to transition the duties and responsibilities 
of Floor Officials to Trading Officials, who would be Exchange staff 
appointed by the NYSE CEO or his or her designee. As proposed, Trading 
Officials would be the only persons authorized to perform the delegated 
functions under the Exchange rules on the Floor that member Floor 
Officials and Staff Governors currently perform. The various seniority-
based gradations of Floor Official (Floor Officials, Senior Floor 
Officials, Executive Floor Officials, Floor Governors and Executive 
Floor Governors) also would be eliminated. As a practical matter, the 
current Staff Governors would become the new Trading Officials. Active 
Exchange members would not be eligible for appointment as Trading 
Officials.
    Under current Rules 46 and 46A, Floor Officials are appointed by 
the Board and re-appointed annually. Floor Officials must also complete 
a mandatory education program and pass a qualifications exam. These 
requirements were developed for member Floor Officials, and the 
Exchange does not propose to retain them for Trading Officials. Like 
the current Staff Governors, Exchange staff would be appointed as 
Trading Officials based on experience and necessary business and rule 
knowledge that would enable them to participate in and supervise 
various trading situations on the Floor. Once appointed, Trading 
Officials would be trained and supervised by the Exchange in the same 
manner as the current Staff Governors.
    In order to effectuate the proposed changes, the Exchange proposes 
to delete current Rules 46 and 46A in their entirety and define a 
Trading Official in new Rule 46 as an Exchange staff person designated 
by the CEO of the Exchange or his or her designee to perform those 
functions specified in Exchange rules.
    In addition, the Exchange proposes certain technical and conforming 
changes to replace references to Floor Officials, Senior Floor 
Officials, Executive Floor Officials, Floor Governors and/or Executive 
Floor Governors with Trading Official in the following rules:

[[Page 86627]]

     Rule 7.35A (DMM-Facilitated Core Open and Trading Halt 
Auctions) sets forth the responsibility of DMMs to ensure that 
registered securities open as close to the beginning of Core Trading 
Hours as possible or reopen at the end of the halt or pause.
    [cir] Subsection (a)(4) provides for Floor Official participation 
in the opening and reopening process to provide an impartial 
professional assessment of unusual situations, as well as to provide 
guidance with respect to pricing when a significant disparity in supply 
and demand exists. The rule also contemplates DMMs consultations with 
Floor Officials under certain specific circumstances. References to 
Floor Official in Rule 7.35A(a)(4) and (a)(5) would be replaced with 
Trading Official.
    [cir] Rule 7.35A(d) governs pre-opening indications. Subsection 
(d)(4) describes the procedures for publishing pre-opening indications 
and specifies when publication of a pre-opening indication requires 
supervision and approval of a Floor Governor. References to Floor 
Governor in Rule 7.35A(d)(4)(A) and (F)(i) would be replaced with 
Trading Official.
     Rule 7.35B (DMM-Facilitated Closing Auctions) describes 
the responsibility of each DMM to ensure that registered securities 
close as soon after the end of Core Trading Hours as possible.
    [cir] Rule 7.35B(a)(1)(C) provides that electronically-entered 
Floor Broker Interest cannot be reduced in size or replaced except that 
DMMs can accept a full cancellation of electronically-entered Floor 
Broker Interest to correct a Legitimate Error subject to Floor Official 
approval. Floor Official would be replaced with Trading Official in 
Rule 7.35B(a)(1).\11\
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    \11\ The Exchange has separately proposed to delete Rule 
7.35B(a)(1)(C). See id.
---------------------------------------------------------------------------

    [cir] Rule 7.35B(d) governs closing imbalances. Subsection 
(d)(1)(A) describes the circumstances when a DMM may disseminate a 
Regulatory Closing Imbalance with prior Floor Official approval. 
Subsection (d)(2) provides that DMMs may disseminate a Manual Closing 
Imbalance only with prior Floor Official approval beginning one hour 
before the scheduled end of Core Trading Hours up to the Closing 
Auction Imbalance Freeze Time. In both subsections, references to Floor 
Official would be replaced with Trading Official.
    [cir] Rule 7.35B(j) governs temporary rule suspensions. Subsection 
(j)(3) provides that a determination to declare a temporary suspension 
as well as any entry or cancellation of orders or closing of a security 
under subsection (j)(2) must be supervised and approved by an Executive 
Floor Governor and supervised by an Exchange Officer. The Exchange 
proposes that supervision and approval of these determinations must be 
supervised and approved by a Trading Official.
     Rule 18(d) (Compensation in Relation to Exchange System 
Failure) sets forth the process for member organizations to seek 
reimbursement for losses resulting from system failures. Subsection (d) 
establishes a Compensation Review Panel consisting of three Floor 
Governors and three Exchange employees to determine the eligibility of 
a claim for payment. The Exchange proposes to eliminate the 
Compensation Review Panel and provide that the Exchange will perform 
will review claims submitted pursuant to the rule and determine 
eligibility of a claim for payment.
     Rule 37 (Visitors) provides that visitors shall not be 
admitted to the Floor except by permission of Exchange officer, a 
Senior Floor Official, Executive Floor Official, a Floor Governor, or 
an Executive Floor Governor. The Exchange proposes that admission of 
visitors to the Floor be by permission of the Exchange.
     As noted, the text of Rules 46 and 46A would be deleted. 
The heading of Rule 46 would be changed to ``Trading Officials''.
     Under current Rule 47 (Floor Officials--Unusual 
Situations), Floor Officials have the power to supervise and regulate 
active openings and unusual situations that may arise in connection 
with the making of bids, offers or transactions on the Floor. 
References to Floor Official would be changed to Trading Officials and 
the heading would be changed to ``Unusual Situations on the Floor.'' 
Current Rule 47 would become new Rule 48.
     Rule 75 (Disputes as to Bids and Offers) mandates that 
disputes arising on bids or offers that are not settled by agreement 
between the interested members shall be settled by a Floor Official. 
The Exchange proposes that disputes be settled by a Trading Official 
and would amend the rule text and Supplementary Material .10 
accordingly. The rule currently provides that, if both parties to a 
dispute involving either a monetary difference of $10,000 or more or a 
questioned trade, the matter may be referred for resolution to a panel 
of three Floor Governors, Senior Floor Officials, or Executive Floor 
Officials, or any combination thereof (``3 Floor Official Panel''), 
whose decision shall be binding on the parties. As an alternative to 
the 3 Floor Official Panel, members may proceed to resolve a dispute 
through long-standing arbitration procedures established under the 
Exchange's rules. The Exchange proposes to eliminate the 3 Floor 
Official Panel. Disputes involving either a monetary difference of 
$10,000 or more or a questioned trade would thus be resolved 
exclusively through arbitration.
     Rule 91.50 (Taking or Supplying Securities Named in Order) 
provides that if there is a continued pattern of rejection of a DMM's 
principal transactions, a Floor Official may be called upon and require 
the broker to review his actions. Floor Official would be changed to 
Trading Official in Rule 91.50.
     Rule 93(b) (Trading for Joint Account) provides that no 
member while on the Floor shall initiate the purchase or sale on the 
Exchange of a stock for any account in which the member, the member's 
member organization or any other member or allied member therein is 
directly or indirectly interested with any person other than such 
member organization or any other member or allied member therein, 
without the prior approval of a Floor Official. The reference to Floor 
Official would be changed to Trading Official.
     Rule 103.10 (Registration and Capital Requirements of DMMs 
and DMM Units) governs the temporary reallocation of securities and 
provides that the CRO or his or her designee and two non-DMM Executive 
Floor Governors or if only one or no non-DMM Executive Floor Governors 
is present on the Floor, the most senior non-DMM Floor Governor or 
Governors based on length of consecutive service as a Floor Governor at 
the time of any action covered by this rule, acting by a majority, 
shall have the power to reallocate temporarily any security on an 
emergency basis whenever such reallocation would be in the public 
interest. The Exchange proposes that only the CRO or his or her 
designee would have the power to reallocate temporarily any security on 
an emergency basis.
     Rule 103A (Member Education) provides for the Exchange to 
develop procedures and standards for qualification and performance of 
members active on the Floor of the Exchange. The rule currently exempts 
Executive Floor Governors from the requirement to complete educational 
modules, which the Exchange proposes to eliminate. The Exchange also 
proposes the non-substantive change of

[[Page 86628]]

deleting the superfluous ``(I)'' at the beginning of the rule.
     Rule 103B(G) (Security Allocation and Reallocation) 
describes the allocation freeze policy and provides that, following 
allocation probation, a second six month period will begin during which 
a DMM unit may apply for new listings, provided that the unit 
demonstrates relevant efforts taken to resolve the circumstances that 
triggered the allocation prohibition. Currently, the determination as 
to whether a unit may apply for new listings is made by Exchange 
regulatory staff in consultation with the Executive Floor Governors. 
The Exchange proposes that this determination will be made solely by 
regulatory staff.
     Rule 104 (Dealings and Responsibilities of DMMs) governs 
dealings and responsibilities of DMMs. Subsection (i) provides for 
temporary DMMs and permits a Floor Governor to authorize a member of 
the Exchange who is not registered as a DMM in such stock or stocks, to 
act as a temporary DMM under specific circumstances. The Exchange 
proposes that Trading Officials would perform this function under the 
rule.
     Rule 112(a)(i) (Orders initiated ``Off the Floor'') 
provides that all orders in stocks for the account of a member 
organization or any member, principal executive, approved person, 
officer, or employee of such organization or a discretionary account 
serviced by the member or member organization must be sent to the Floor 
through a clearing firm's order room or other facilities regularly used 
for transmission of public customers' orders to the Floor, except for 
orders, among others, when a Floor Official expressly invites a member 
or members to participate in a difficult market situation. The Exchange 
would replace Trading Official for Floor Official in Rule 112(a)(i).
     Rule 124(e) (Midday Auction) provides that, when there is 
a significant imbalance in a Midday Auction Stock at the end of the 
Midday Auction Pause, the Midday Auction Pause may be converted to an 
order imbalance halt with the approval of a Floor Governor or two Floor 
Officials. The Exchange proposes that the approval would be given by a 
Trading Official.
     Rule 128B (Publication of Changes, Corrections, 
Cancellations or Omissions and Verification of Transactions) governs 
changes and corrections to the Consolidated Tape.
    [cir] Rule 128B.10 (Publication on the tape or in the ``sales 
sheet'') provides that publication of a change or a correction in a 
transaction which previously appeared on the tape may be made on the 
tape on the day of the transaction provided that both buying and 
selling members or member organizations agree to the change in the 
transaction(s) and receive approval from a Floor Governor, Executive 
Floor Official, Senior Floor Official or Executive Floor Governor. In 
the event such publication is not made on the tape on the day of the 
transaction, it may be published on the tape at least ten minutes prior 
to the opening of business on the following business day or in the 
sales sheet within three business days of the transaction with the 
approval of both the buying and selling members and a Floor Official, 
provided the price of the transaction does not affect the high, low, 
opening or closing price of the security on the day of the transaction. 
The Exchange proposes that Trading Officials provide the approvals 
required under Rule 128B.10.
    [cir] Rule 128B.13 (Other errors) provides that a correction in the 
amount of a transaction reported erroneously to the tape by a party to 
the transaction, may be published on the tape on the day of the 
transaction, on the tape at least ten minutes prior to the opening on 
the following business day, or on the ``sales sheet'' within three 
business days of the transaction with the approval of a Floor Governor, 
Executive Floor Official, Senior Floor Official or Executive Floor 
Governor. The Exchange proposes that Trading Officials provide the 
approvals required under Rule 128B.13.
     Rule 308(g) (Acceptability Proceedings) provides that any 
person whose application has been disapproved by an Acceptability 
Committee, or any member of the Board, any member of the Committee for 
Review, any Executive Floor Governor, and the Division of the Exchange 
initiating the proceedings may require a review by the Board of any 
determination of an Acceptability Committee. The Exchange proposes to 
delete Executive Floor Governors from the rule.
     Rule 903(d)(ii) (Off-Hours Transactions) provides that a 
closing price order to buy (sell) a security for the account of the DMM 
registered in such security and approved by a Floor Official, coupled 
with a closing price order to sell (buy) to offset all or part of a 
market-on-close imbalance in the stock prior to the close, shall be 
executed upon entry. The Exchange proposes that a Trading Official 
would provide the required approval under the rule.
     Rule 906 (Impact of Trading Halts on Off-Hours Trading) 
provides that a closing price order to buy (sell) a security for the 
account of the DMM registered in such security and approved by a Floor 
Official coupled with a closing price order to sell (buy) to offset all 
or part of any market-on-close imbalance in the stock prior to the 
close, shall not be so canceled or precluded from entry as result of 
corporate developments during the Off-Hours Trading Session. The 
Exchange proposes that a Trading Official would provide the required 
approval under the rule.
     Finally, NYSE Listed Company Manual Section 202.04 
(Exchange Market Surveillance) provides that a listed issue may be 
placed under special initial margin and capital requirements, which 
indicates a determination by the Exchange's Floor Officials that the 
market in the issue has assumed a speculative tenor and has become 
volatile due to the influence of credit, which, if ignored, may lead to 
unfair and disorderly trading. The reference to Floor Officials would 
be updated to Trading Officials.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Act,\12\ in general, and furthers the objectives of Section 
6(b)(5),\13\ 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.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    In particular, the Exchange believes that creating a new category 
of Trading Official to replace member Floor Officials would promote 
just and equitable principles of trade and remove impediments to a free 
and open market by streamlining and modernizing the role of a Trading 
Official on the Floor. The volunteer member Floor Official is a self-
regulatory vestige developed for manual trading. As noted, the Exchange 
introduced Staff Governors several years ago to address the shortfall 
in experienced members following the consolidation of trading space on 
the Exchange.\14\ More recently, RTOs were introduced to perform 
certain functions performed by Floor Officials in

[[Page 86629]]

connection with the Closing Auction.\15\ The proposed rule change would 
complete the evolution of member Floor Officials to Trading Officials 
that are Exchange-trained and supervised staff, which is similar to how 
trading officials function on the options markets run by the Exchange's 
affiliates.\16\ By replacing the variety and hierarchy of Floor 
Officials based on seniority with a single Trading Official appointed 
by the NYSE CEO, the Exchange would significantly simplify the 
appointment and retention of individuals with responsibility under the 
Exchange's rules to supervise and review trading on the Floor. Further, 
the proposal would contribute to the protection of investors and the 
public interest by ensuring that qualified Exchange staff continue to 
perform the formal roles prescribed by Exchange rules and provide a 
level of oversight to the marketplace on a day-to-day basis, thereby 
contributing to the maintenance of a fair and orderly marketplace on 
the Exchange.
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    \14\ See Release No. 57627, 73 FR at 19920.
    \15\ As noted above, the Exchange has separately proposed to 
delete Rule 46B because RTOs would no longer have a role under 
Exchange rules. See NYSE Close Proposal, supra note 10.
    \16\ See NYSE American LLC (``NYSE American'') Rule 900.2NY(82) 
and NYSE Arca, Inc. (``NYSE Arca'') Rule 6.1-O(b)(34).
---------------------------------------------------------------------------

    Finally, the Exchange believes that the conforming and technical 
changes would 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 non-substantive 
changes would add clarity, transparency and consistency to the 
Exchange's rules. The Exchange believes that market participants would 
benefit from the increased clarity, thereby reducing potential 
confusion and ensuring that persons subject to the Exchange's 
jurisdiction, regulators, and the investing public can more easily 
navigate and understand the Exchange's rules.

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 proposed rule change is 
not intended to address competitive issues but is rather concerned with 
transferring Floor Official duties and responsibilities under Exchange 
rules to staff Trading Officials. The Exchange believes the proposed 
rule changes would streamline and modernize the role of the trading 
official on the Floor, thereby contributing to the maintenance of a 
fair and orderly marketplace on the Exchange to the benefit of all 
members and member organizations and the investing public. Moreover, 
since the proposal does not substantively modify system functionality 
or processes on the Exchange, the proposed changes will not impose any 
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

    Within 45 days of the date of publication of this notice in the 
Federal Register or 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-2020-105 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-2020-105. 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-2020-105 and should be submitted on 
or before January 20, 2021.
---------------------------------------------------------------------------

    \17\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2020-28805 Filed 12-29-20; 8:45 am]
BILLING CODE 8011-01-P
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