Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Add Commentary .07 to Rule 7.35A To Provide That, for a Temporary Period, the Exchange Will Permit DMMs Limited-Entry to the Trading Floor or Remote Access to Floor-Based System for Certain Auctions, 335-338 [2020-29131]
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Federal Register / Vol. 86, No. 2 / Tuesday, January 5, 2021 / Notices
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compliance difficulties justify tripling
the Non-Compliance Period for this core
quantitative listing standard from one
year to three years, and permitting ETPs
to trade on the Exchange for an
additional two years without the
protections, described above, that the
Beneficial Holders Rule was designed to
provide. For example, the Exchange
states that no new manipulation
concerns would arise with a longer NonCompliance Period than a shorter one,
but does not address why tripling the
period during which the same
regulatory risks posed by a NonCompliance Period would be present is
consistent with the Exchange Act. As
discussed above, the Beneficial Holders
Rule and other minimum number of
holders requirements are important to
ensure that trading in exchange listed
securities is fair and orderly and not
susceptible to manipulation, and the
Exchange does not explain why it is
consistent with the Exchange Act to
permit ETPs to trade for two additional
years without any of the protections of
the Beneficial Holders Rule. The
Exchange also states that the
manipulation risk is not materially
greater with 49 beneficial holders than
with 50, but there is no minimum
number of beneficial holders during the
Non-Compliance Period, and the
Exchange does not sufficiently address
why the manipulation and other
regulatory risks to fair and orderly
markets, investor protection and the
public interest would not be materially
greater with a number of beneficial
holders that is substantially smaller
than 49 (e.g., 10 or 20).
Finally, while the Exchange asserts
that existing surveillances and other
listing standards are sufficient to
mitigate manipulation concerns, it does
not offer any explanation of the basis for
that view or provide any supporting
information or evidence to support its
conclusion. Notably, although the
Exchange acknowledges that the
Beneficial Holders Rule helps to ensure
that trading in exchange-listed securities
is not susceptible to manipulation, the
Exchange does not explain how any of
its specific existing surveillances or
other listing requirements effectively
address, in the absence of the Beneficial
Holders Rule, those manipulation
concerns and other regulatory risks to
fair and orderly markets, investor
protection and the public interest.32
32 The Exchange states that its surveillances focus
on detecting securities trading outside of their
normal patterns, followed by surveillance analysis
and investigations, where appropriate, to review the
behavior of all relevant parties for all relevant
trading violations. The Exchange also states that it
or the Financial Industry Regulatory Authority, on
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Accordingly, the Commission is unable
to assess whether the Exchange’s
assertion has merit.
The Commission identified all of
these concerns in the OIP, but the
Exchange has not responded or
provided additional data addressing
these concerns.33 As stated above, under
the Commission’s Rules of Practice, the
‘‘burden to demonstrate that a proposed
rule change is consistent with the
Exchange Act and the rules and
regulations issued thereunder . . . is on
the self-regulatory organization [‘SRO’]
that proposed the rule change.’’ 34 The
description of a proposed rule change,
its purpose and operation, its effect, and
a legal analysis of its consistency with
applicable requirements must all be
sufficiently detailed and specific to
support an affirmative Commission
finding, and any failure of an SRO to
provide this information may result in
the Commission not having a sufficient
basis to make an affirmative finding that
a proposed rule change is consistent
with the Exchange Act and the
applicable rules and regulations.35 The
Commission concludes that, because
BZX has not demonstrated that its
proposal is designed to prevent
fraudulent and manipulative acts and
practices or to protect investors and the
public interest, the Exchange has not
met its burden to demonstrate that its
proposal is consistent with Section
6(b)(5) of the Exchange Act.36 For this
behalf of the Exchange, or both, communicate as
needed regarding ETP trading with other markets
and the Intermarket Surveillance Group member
entities, and may obtain trading information in
ETPs from such markets and other entities.
33 While one commenter suggests alternative
liquidity standards (see SecLenX Letter, supra note
14), this commenter does not explain them with any
specificity or explain how they would satisfy the
requirements of the Exchange Act, and, in any
event, the Exchange has not proposed them. The
other commenter asserts that the creation and
redemption processes, which tap into the liquidity
of the underlying holdings, coupled with the
enhanced disclosures mandated under Rule 6c–11
under the Investment Company Act of 1940,
mitigate manipulation concerns. See SIFMA Letter,
supra note 14, at 3. However, neither the Exchange
nor that commenter explains why arbitrage
opportunities would sufficiently mitigate
manipulation concerns for the full range of ETPs,
including ETPs overlying a portfolio of instruments
that are themselves illiquid, or where market
interest in the ETP is not sufficient to attract
effective arbitrage activity. While this commenter
asserts that certain disclosures under Rule 6c–11
under the Investment Company Act of 1940 provide
investors with additional insight into the
effectiveness of an ETF’s arbitrage (see SIFMA
Letter, supra note 14, at 3–4), neither the Exchange
nor the commenter explains how such disclosures
might prevent manipulation.
34 Rule 700(b)(3), Commission Rules of Practice,
17 CFR 201.700(b)(3).
35 See id.
36 In disapproving this proposed rule change, the
Commission has considered the proposed rule’s
impact on efficiency, competition, and capital
PO 00000
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335
reason, the Commission must
disapprove the proposal.
IV. Conclusion
For the reasons set forth above, the
Commission does not find, pursuant to
Section 19(b)(2) of the Exchange Act,
that the proposed rule change is
consistent with the requirements of the
Exchange Act and the rules and
regulations thereunder applicable to a
national securities exchange, and in
particular, with Section 6(b)(5) of the
Exchange Act.
It is therefore ordered, pursuant to
Section 19(b)(2) of the Exchange Act,
that proposed rule change SR–
CboeBZX–2020–036 is disapproved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.37
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–29139 Filed 1–4–21; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–90810; File No. SR–NYSE–
2020–109]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Add
Commentary .07 to Rule 7.35A To
Provide That, for a Temporary Period,
the Exchange Will Permit DMMs
Limited-Entry to the Trading Floor or
Remote Access to Floor-Based System
for Certain Auctions
December 29, 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
28, 2020, New York Stock Exchange
LLC (‘‘NYSE’’ or the ‘‘Exchange’’) filed
formation. See 15 U.S.C. 78c(f). Although one
commenter (see SecLenX Letter, supra note 14)
asserts that the current Beneficial Holders Rule
disproportionately punishes smaller companies and
disincentivizes issuers from launching funds that
can prove their investment merit over the long term,
no data is provided—by the commenter or the
Exchange—to support these conclusions. Similarly,
although the other commenter (see SIFMA Letter,
supra note 14, at 4) asserts that the current
Beneficial Holders Rule puts newer and smaller
sponsors at an unnecessary disadvantage to larger
sponsors having the enterprise-wide scale and
distribution reach to gather assets in the months
after launch, neither the commenter nor the
Exchange has provided data to support this
conclusion.
37 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
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Federal Register / Vol. 86, No. 2 / Tuesday, January 5, 2021 / Notices
with the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been prepared by the self-regulatory
organization. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to add
Commentary .07 to Rule 7.35A to
provide that, for a temporary period that
begins December 28, 2020, and ends on
the earlier of a full reopening of the
Trading Floor facilities to DMMs or after
the Exchange closes on April 30, 2021,
the Exchange would (1) permit a DMM
limited entry to the Trading Floor or (2)
provide a DMM remote access to Floorbased systems, for the purpose of
effecting a manual Core Open Auction
in connection with a corporate action
that may result in a significant price
discovery event or a manual Direct
Listing Auction. 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
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1. Purpose
The Exchange proposes to add
Commentary .07 to Rule 7.35A to
provide that, for a temporary period that
begins December 28, 2020, and ends on
the earlier of a full reopening of the
Trading Floor facilities to DMMs or after
the Exchange closes on April 30, 2021,
the Exchange would (1) permit a DMM
limited entry to the Trading Floor or (2)
provide a DMM remote access to Floorbased systems, for the purpose of
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effecting a manual Core Open Auction
in connection with a corporate action
that may result in a significant price
discovery event or a manual Direct
Listing Auction.
Background
On December 23, 2020, in response to
changes in the New York City-area
public health conditions, the CEO of the
Exchange made a determination under
Rule 7.1(c)(3) that DMMs would
temporarily return to remote operations
beginning on Monday, December 28,
2020.4 The Exchange previously moved
to fully electronic trading on a
temporary basis 5 and then partially
reopened in two phases,6 subject to
safety measures designed to prevent the
spread of COVID–19.
During the prior temporary period
when DMMs operated remotely, the
Exchange added Commentaries .02, .03,
.04, and .05 to Rule 7.35A, which set
forth limited circumstances when a
DMM may be permitted limited entry to
the Trading Floor or provided remote
access to Floor-based systems for the
purpose of effecting a manual IPO
Auction, Core Open Auction in
connection with a listed company’s
post-IPO public offering, or Trading Halt
Auction for reopening a security
following a regulatory halt issued under
Section 2 of the Listed Company
Manual.7 Because these Commentaries
remain operative,8 beginning December
4 See Trader Update, dated December 23, 2020,
available here: https://www.nyse.com/publicdocs/
nyse/notifications/trader-update/DMMs_moving_
remote_December_2020.pdf.
5 Beginning March 23, 2020, the Trading Floor
facilities located at 11 Wall Street in New York City
temporarily closed. See Press Release, dated March
18, 2020, available here: https://ir.theice.com/press/
press-releases/all-categories/2020/03-18-2020204202110. The Exchange’s current rules establish
how the Exchange will function fully-electronically.
6 On May 23, 2020, the Trading Floor was
reopened on a limited basis to a subset of Floor
brokers. See Securities Exchange Act Release No.
88933 (May 22, 2020), 85 FR 32059 (May 28, 2020)
(SR–NYSE–2020–47) (Notice of filing and
immediate effectiveness of proposed rule change).
On June 17, 2020, the Trading Floor was reopened
to a subset of DMMs. See Securities Exchange Act
Release No. 89086 (June 17, 2020) (SR–NYSE–
2020–52) (Notice of filing and immediate
effectiveness of proposed rule change).
7 See Securities Exchange Act Release Nos. 88488
(March 26, 2020), 85 FR 18286 (April 1, 2020) (SR–
NYSE–2020–23) (amending Rule 7.35A to add
Commentary .02); 88546 (April 2, 2020), 85 FR
19782 (April 8, 2020) (SR–NYSE–2020–28)
(amending Rule 7.35A to add Commentary .03);
88705 (April 21, 2020), 85 FR 23413 (April 27,
2020) (SR–NYSE–2020–35) (amending Rule 7.35A
to add Commentary .04); and 88950 (May 26, 2020),
85 FR 33252 (June 1, 2020) (SR–NYSE–2020–48)
(amending Rule 7.35A to add Commentary .05).
8 See Securities Exchange Act Release No. 90795
(December 23, 2020) (SR–NYSE–2020–106) (Notice
of filing and immediate effectiveness of proposed
rule change to extend the temporary period for
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Fmt 4703
Sfmt 4703
28, 2020, the relief described in these
Commentaries will be available to
DMMs.
Proposed Rule Change
The Exchange proposes to add
Commentary .07 to Rule 7.35A to
provide that, for a temporary period that
begins December 28, 2020, and ends on
the earlier of a full reopening of the
Trading Floor facilities to DMMs or after
the Exchange closes on April 30, 2021,
the Exchange would (1) permit a DMM
limited entry to the Trading Floor or (2)
provide a DMM remote access to Floorbased systems, for the purpose of
effecting a manual Core Open Auction
in connection with a corporate action
that may result in a significant price
discovery event or a manual Direct
Listing Auction.
As noted above, during the prior
temporary period while the Trading
Floor was closed to DMMs, the
Exchange permitted limited reentry to
the Trading Floor for the purposes of
effecting an IPO Auction, Core Open
Auction in connection with a post-IPO
offering, and specified Trading Halt
Auctions. The Exchange has also
provided DMMs with remote access to
NYSE trading systems that are located
on the Trading Floor so that a DMM can
manually effect such Auctions remotely.
The Exchange now proposes to provide
DMMs with limited entry to the Trading
Floor or remote access to NYSE trading
systems so that a DMM may manually
effect a Core Open Auction in
connection with a corporate action that
may result in a significant price
discovery event or a Direct Listing
Auction.
To effect this change, the Exchange
proposes to add Commentary .07 to Rule
7.35A to provide that:
For a temporary period that begins on
December 28, 2020 and ends on the earlier
of a full reopening of the Trading Floor
facilities to DMMs or after the Exchange
closes on April 30, 2021, the Exchange will
(1) permit a DMM limited entry to the
Trading Floor or (2) provide a DMM remote
access to Floor-based systems, for the
purpose of effecting a manual Core Open
Auction in connection with a corporate
action that may result in a significant price
discovery event or a manual Direct Listing
Auction.
After a security is listed, an issuer
may undergo a corporate action that
results in a significant price discovery
event for the Core Open Auction on the
morning of such corporate action. For
example, a new company may be listing
in connection with a carve-out or spinoff transaction. In such cases, both the
specified Commentaries to Rules 7.35, 7.35A, 7.35B,
and 7.35C and temporary rule relief in Rule 36.30).
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newly listed company and the existing
issuer that is carving out or spinning off
a new listed company may undergo
significant price discovery events in
their respective Core Open Auctions.
Similarly, a company emerging from
bankruptcy may have a significant price
discovery event for its Core Open
Auction. In addition, upon consumption
of a business combination, the Core
Open Auction for an issuer listed as a
special purpose acquisition company
(‘‘SPAC’’) may also result in a
significant price discovery event.9
While a DMM is permitted under
Exchange rules to effect Core Open
Auctions electronically, even when a
security is affected by a corporate
action, DMMs generally manually
facilitate Core Open Auctions for issuers
undergoing corporate actions that may
result in a significant price discovery
event. When a DMM manually effects
such Core Open Auctions, the DMM is
able to publish pre-opening indications
pursuant to Rule 7.35A(d), which would
be in addition to the Auction Imbalance
Information available for such Core
Open Auctions, thus promoting
transparency in advance of a significant
pricing event. In addition, when
manually effecting such Core Open
Auctions, the DMM can assess the buy
and sell interest and determine when
and at what price to open the security.
The Exchange believes that during the
temporary period when DMMs are
operating remotely, it would promote
fair and orderly markets to provide
DMMs with limited entry to the Trading
Floor or remote access to Floor-based
systems so that DMMs may continue to
effect such Core Open Auctions
manually.
Separately, because of the importance
of the DMM to the Direct Listing
Auction, the Exchange recently
amended Rule 7.35C to provide that the
Exchange would not facilitate Direct
Listing Auctions.10 In addition, DMMs
are not permitted to facilitate a Direct
Listing Auction electronically.11
Accordingly, a DMM must facilitate a
Direct Listing Auction manually. To
enable the Exchange to provide issuers
with the option to list on the Exchange
via a Direct Listing during the
temporary period when DMMs are
operating remotely, the Exchange
9 Section 102.06 of the Listed Company Manual
sets forth initial listing requirements applicable to
a company whose business plan is to complete an
initial public offering and engage in a merger or
acquisition with one or more unidentified
companies within a specified period of time.
10 See Securities Exchange Act Release No. 90768
(December 22, 2020) (SR–NYSE–2019–67) (Order
setting aside action by delegated authority and
approving a proposed rule change).
11 See Rule 7.35C(c)(1)(C).
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proposes that DMMs be permitted
limited entry to the Trading Floor and
be provided remote access to Floorbased systems for the purpose of
manually effecting a Direct Listing
Auction.
This proposed rule change could be
implemented immediately.
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) of the Act,13
in particular, in that it is designed to
prevent fraudulent and manipulative
acts and practices, to promote just and
equitable principles of trade, to foster
cooperation and coordination with
persons engaged in facilitating
transactions in securities, and to remove
impediments to and perfect the
mechanism of a free and open market
and a national market system.
On December 23, 2020, the CEO made
a determination under Rule 7.1(c)(3)
that, beginning December 28, 2020, as a
precautionary measure, DMM units
would return to working remotely.
The Exchange believes that the
proposed rule change would remove
impediments to and perfect the
mechanism of a free and open market
and a national market system because it
would promote fair and orderly Core
Open Auctions in connection with an
issuer undergoing a corporate action
that may result in a significant price
discovery event. The Exchange believes
that it would promote fair and orderly
markets to provide the DMM with
mechanisms to facilitate such Core
Open Auctions manually because it
would provide flexibility for the DMM
of when to facilitate such Auctions and
at what price. DMMs would also be able
to publish pre-opening indications in
connection with such Core Open
Auctions, which would promote
transparency.
In addition, because a Direct Listing
Auction must be effected manually, this
proposed rule change would allow for
Direct Listing Auctions to occur during
the period when the Trading Floor is
temporarily closed to DMMs.
Accordingly, this proposed rule change
would remove impediments to and
perfect the mechanism of a free and
open market and a national market
system because the Exchange would be
able to provide issuers with the option
to list on the Exchange via a Direct
Listing during the temporary period
when DMMs are operating remotely.
12 15
13 15
PO 00000
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
Frm 00053
Fmt 4703
The Exchange believes that, by clearly
stating that this relief will be in effect
through the earlier of the reopening of
the Trading Floor facilities or the close
of the Exchange on April 30, 2021,
market participants will have advance
notice that a Core Open Auction in
connection with an issuer undergoing a
corporate action that may result in a
significant price discovery event may be
effected manually by the DMM during
this period, and therefore may not be
conducted at 9:30 a.m.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change would impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. The
proposed rule change is not designed to
address any competitive issues but
rather is designed to ensure fair and
orderly Core Open Auctions in
connection with a corporate action that
may result in a significant pricing event
and Direct Listing Auctions by
providing a DMM with either limited
access to the Trading Floor or remote
access to Floor-based systems for the
sole purpose of effecting such Auctions
manually during a temporary period
when the Exchange Trading Floor has
been closed to DMMs in response to
social-distancing measures designed to
reduce the spread of the COVID–19
virus.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed
rule change pursuant to Section
19(b)(3)(A)(iii) of the Act 14 and Rule
19b–4(f)(6) thereunder.15 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
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
14 15
15 17
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337
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U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6).
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Federal Register / Vol. 86, No. 2 / Tuesday, January 5, 2021 / Notices
19(b)(3)(A)(iii) of the Act 16 and Rule
19b–4(f)(6)(iii) thereunder.17
A proposed rule change filed under
Rule 19b–4(f)(6) 18 normally does not
become operative prior to 30 days after
the date of the filing. However, pursuant
to Rule 19b–4(f)(6)(iii),19 the
Commission may designate a shorter
time if such action is consistent with the
protection of investors and the public
interest. The Exchange has asked the
Commission to waive the 30-day
operative delay so that the proposal may
take effect immediately. The Exchange
has stated that, because of the rapid
changes to the New York City-area
public health conditions, it made the
determination to close the Trading Floor
to DMMs with only two business days’
notice before such closure would take
effect. However, the Exchange
represents that at least three SPACs
listed on the Exchange are anticipated to
complete their business combinations
during the week of December 28, 2020,
and the Core Open Auctions for such
securities are expected to be significant
pricing events. The Exchange has asked
the Commission to waive the operative
delay so that the DMM assigned to these
securities would be able to effect the
Core Open Auctions manually. The
Commission believes that waiver of the
operative delay is consistent with the
protection of investors and the public
interest because it will allow the
proposed rules to become effective in
time for DMMs to manually effect Core
Open Auctions for those securities that
are anticipated to have significant price
discovery events during the week of
December 28, 2020. Accordingly, the
Commission hereby waives the 30-day
operative delay and designates the
proposal operative upon filing.20
At any time within 60 days of the
filing of such proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
16 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 complied with this requirement.
18 17 CFR 240.19b–4(f)(6).
19 17 CFR 240.19b–4(f)(6)(iii).
20 For purposes only of accelerating the operative
date of this proposal, the Commission has
considered the proposed rule’s impact on
efficiency, competition, and capital formation. 15
U.S.C. 78c(f).
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17 17
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Commission takes such action, the
Commission shall institute proceedings
under Section 19(b)(2)(B) 21 of the Act to
determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
NYSE–2020–109 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–2020–109. 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
21 15
PO 00000
U.S.C. 78s(b)(2)(B).
Frm 00054
Fmt 4703
Sfmt 4703
Number SR–NYSE–2020–109 and
should be submitted on or before
January 26, 2021.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.22
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–29131 Filed 1–4–21; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–90812; File No. SR–
PEARL–2020–35]
Self-Regulatory Organizations; MIAX
PEARL, LLC; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend the MIAX
PEARL Fee Schedule
December 29, 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 December
21, 2020, MIAX PEARL, LLC (‘‘MIAX
PEARL’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) a proposed rule change
as described in Items I, II, and III below,
which Items have been prepared by the
Exchange. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange is filing a proposal to
amend the MIAX PEARL Fee Schedule
(the ‘‘Fee Schedule’’) to increase the
number of additional Limited Service
MIAX Express Order Interface (‘‘MEO’’)
Ports available to Members.3 The
Exchange does not propose to amend
the fees for additional Limited Service
MEO Ports.
The text of the proposed rule change
is available on the Exchange’s website at
https://www.miaxoptions.com/rulefilings/pearl at MIAX PEARL’s principal
office, and at the Commission’s Public
Reference Room.
22 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 The term ‘‘Member’’ means an individual or
organization that is registered with the Exchange
pursuant to Chapter II of these Rules for purposes
of trading on the Exchange as an ‘‘Electronic
Exchange Member’’ or ‘‘Market Maker.’’ Members
are deemed ‘‘members’’ under the Exchange Act.
See Exchange Rule 100.
1 15
E:\FR\FM\05JAN1.SGM
05JAN1
]]>Agencies
[Federal Register Volume 86, Number 2 (Tuesday, January 5, 2021)]
[Notices]
[Pages 335-338]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-29131]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-90810; File No. SR-NYSE-2020-109]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Add Commentary .07 to Rule 7.35A To Provide That, for a Temporary
Period, the Exchange Will Permit DMMs Limited-Entry to the Trading
Floor or Remote Access to Floor-Based System for Certain Auctions
December 29, 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 28, 2020, New York Stock Exchange LLC (``NYSE''
or the ``Exchange'') filed
[[Page 336]]
with the Securities and Exchange Commission (the ``Commission'') the
proposed rule change as described in Items I and II below, which Items
have been prepared by the self-regulatory organization. The Commission
is publishing this notice to solicit comments on the proposed rule
change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to add Commentary .07 to Rule 7.35A to
provide that, for a temporary period that begins December 28, 2020, and
ends on the earlier of a full reopening of the Trading Floor facilities
to DMMs or after the Exchange closes on April 30, 2021, the Exchange
would (1) permit a DMM limited entry to the Trading Floor or (2)
provide a DMM remote access to Floor-based systems, for the purpose of
effecting a manual Core Open Auction in connection with a corporate
action that may result in a significant price discovery event or a
manual Direct Listing Auction. The proposed rule change is available on
the Exchange's website at www.nyse.com, at the principal office of the
Exchange, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to add Commentary .07 to Rule 7.35A to
provide that, for a temporary period that begins December 28, 2020, and
ends on the earlier of a full reopening of the Trading Floor facilities
to DMMs or after the Exchange closes on April 30, 2021, the Exchange
would (1) permit a DMM limited entry to the Trading Floor or (2)
provide a DMM remote access to Floor-based systems, for the purpose of
effecting a manual Core Open Auction in connection with a corporate
action that may result in a significant price discovery event or a
manual Direct Listing Auction.
Background
On December 23, 2020, in response to changes in the New York City-
area public health conditions, the CEO of the Exchange made a
determination under Rule 7.1(c)(3) that DMMs would temporarily return
to remote operations beginning on Monday, December 28, 2020.\4\ The
Exchange previously moved to fully electronic trading on a temporary
basis \5\ and then partially reopened in two phases,\6\ subject to
safety measures designed to prevent the spread of COVID-19.
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\4\ See Trader Update, dated December 23, 2020, available here:
https://www.nyse.com/publicdocs/nyse/notifications/trader-update/DMMs_moving_remote_December_2020.pdf.
\5\ Beginning March 23, 2020, the Trading Floor facilities
located at 11 Wall Street in New York City temporarily closed. See
Press Release, dated March 18, 2020, available here: https://ir.theice.com/press/press-releases/all-categories/2020/03-18-2020-204202110. The Exchange's current rules establish how the Exchange
will function fully-electronically.
\6\ On May 23, 2020, the Trading Floor was reopened on a limited
basis to a subset of Floor brokers. See Securities Exchange Act
Release No. 88933 (May 22, 2020), 85 FR 32059 (May 28, 2020) (SR-
NYSE-2020-47) (Notice of filing and immediate effectiveness of
proposed rule change). On June 17, 2020, the Trading Floor was
reopened to a subset of DMMs. See Securities Exchange Act Release
No. 89086 (June 17, 2020) (SR-NYSE-2020-52) (Notice of filing and
immediate effectiveness of proposed rule change).
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During the prior temporary period when DMMs operated remotely, the
Exchange added Commentaries .02, .03, .04, and .05 to Rule 7.35A, which
set forth limited circumstances when a DMM may be permitted limited
entry to the Trading Floor or provided remote access to Floor-based
systems for the purpose of effecting a manual IPO Auction, Core Open
Auction in connection with a listed company's post-IPO public offering,
or Trading Halt Auction for reopening a security following a regulatory
halt issued under Section 2 of the Listed Company Manual.\7\ Because
these Commentaries remain operative,\8\ beginning December 28, 2020,
the relief described in these Commentaries will be available to DMMs.
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\7\ See Securities Exchange Act Release Nos. 88488 (March 26,
2020), 85 FR 18286 (April 1, 2020) (SR-NYSE-2020-23) (amending Rule
7.35A to add Commentary .02); 88546 (April 2, 2020), 85 FR 19782
(April 8, 2020) (SR-NYSE-2020-28) (amending Rule 7.35A to add
Commentary .03); 88705 (April 21, 2020), 85 FR 23413 (April 27,
2020) (SR-NYSE-2020-35) (amending Rule 7.35A to add Commentary .04);
and 88950 (May 26, 2020), 85 FR 33252 (June 1, 2020) (SR-NYSE-2020-
48) (amending Rule 7.35A to add Commentary .05).
\8\ See Securities Exchange Act Release No. 90795 (December 23,
2020) (SR-NYSE-2020-106) (Notice of filing and immediate
effectiveness of proposed rule change to extend the temporary period
for specified Commentaries to Rules 7.35, 7.35A, 7.35B, and 7.35C
and temporary rule relief in Rule 36.30).
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Proposed Rule Change
The Exchange proposes to add Commentary .07 to Rule 7.35A to
provide that, for a temporary period that begins December 28, 2020, and
ends on the earlier of a full reopening of the Trading Floor facilities
to DMMs or after the Exchange closes on April 30, 2021, the Exchange
would (1) permit a DMM limited entry to the Trading Floor or (2)
provide a DMM remote access to Floor-based systems, for the purpose of
effecting a manual Core Open Auction in connection with a corporate
action that may result in a significant price discovery event or a
manual Direct Listing Auction.
As noted above, during the prior temporary period while the Trading
Floor was closed to DMMs, the Exchange permitted limited reentry to the
Trading Floor for the purposes of effecting an IPO Auction, Core Open
Auction in connection with a post-IPO offering, and specified Trading
Halt Auctions. The Exchange has also provided DMMs with remote access
to NYSE trading systems that are located on the Trading Floor so that a
DMM can manually effect such Auctions remotely. The Exchange now
proposes to provide DMMs with limited entry to the Trading Floor or
remote access to NYSE trading systems so that a DMM may manually effect
a Core Open Auction in connection with a corporate action that may
result in a significant price discovery event or a Direct Listing
Auction.
To effect this change, the Exchange proposes to add Commentary .07
to Rule 7.35A to provide that:
For a temporary period that begins on December 28, 2020 and ends
on the earlier of a full reopening of the Trading Floor facilities
to DMMs or after the Exchange closes on April 30, 2021, the Exchange
will (1) permit a DMM limited entry to the Trading Floor or (2)
provide a DMM remote access to Floor-based systems, for the purpose
of effecting a manual Core Open Auction in connection with a
corporate action that may result in a significant price discovery
event or a manual Direct Listing Auction.
After a security is listed, an issuer may undergo a corporate
action that results in a significant price discovery event for the Core
Open Auction on the morning of such corporate action. For example, a
new company may be listing in connection with a carve-out or spin-off
transaction. In such cases, both the
[[Page 337]]
newly listed company and the existing issuer that is carving out or
spinning off a new listed company may undergo significant price
discovery events in their respective Core Open Auctions. Similarly, a
company emerging from bankruptcy may have a significant price discovery
event for its Core Open Auction. In addition, upon consumption of a
business combination, the Core Open Auction for an issuer listed as a
special purpose acquisition company (``SPAC'') may also result in a
significant price discovery event.\9\
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\9\ Section 102.06 of the Listed Company Manual sets forth
initial listing requirements applicable to a company whose business
plan is to complete an initial public offering and engage in a
merger or acquisition with one or more unidentified companies within
a specified period of time.
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While a DMM is permitted under Exchange rules to effect Core Open
Auctions electronically, even when a security is affected by a
corporate action, DMMs generally manually facilitate Core Open Auctions
for issuers undergoing corporate actions that may result in a
significant price discovery event. When a DMM manually effects such
Core Open Auctions, the DMM is able to publish pre-opening indications
pursuant to Rule 7.35A(d), which would be in addition to the Auction
Imbalance Information available for such Core Open Auctions, thus
promoting transparency in advance of a significant pricing event. In
addition, when manually effecting such Core Open Auctions, the DMM can
assess the buy and sell interest and determine when and at what price
to open the security. The Exchange believes that during the temporary
period when DMMs are operating remotely, it would promote fair and
orderly markets to provide DMMs with limited entry to the Trading Floor
or remote access to Floor-based systems so that DMMs may continue to
effect such Core Open Auctions manually.
Separately, because of the importance of the DMM to the Direct
Listing Auction, the Exchange recently amended Rule 7.35C to provide
that the Exchange would not facilitate Direct Listing Auctions.\10\ In
addition, DMMs are not permitted to facilitate a Direct Listing Auction
electronically.\11\ Accordingly, a DMM must facilitate a Direct Listing
Auction manually. To enable the Exchange to provide issuers with the
option to list on the Exchange via a Direct Listing during the
temporary period when DMMs are operating remotely, the Exchange
proposes that DMMs be permitted limited entry to the Trading Floor and
be provided remote access to Floor-based systems for the purpose of
manually effecting a Direct Listing Auction.
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\10\ See Securities Exchange Act Release No. 90768 (December 22,
2020) (SR-NYSE-2019-67) (Order setting aside action by delegated
authority and approving a proposed rule change).
\11\ See Rule 7.35C(c)(1)(C).
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This proposed rule change could be implemented immediately.
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) of
the Act,\13\ in particular, in that it is designed to prevent
fraudulent and manipulative acts and practices, to promote just and
equitable principles of trade, to foster cooperation and coordination
with persons engaged in facilitating transactions in securities, and to
remove impediments to and perfect the mechanism of a free and open
market and a national market system.
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\12\ 15 U.S.C. 78f(b).
\13\ 15 U.S.C. 78f(b)(5).
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On December 23, 2020, the CEO made a determination under Rule
7.1(c)(3) that, beginning December 28, 2020, as a precautionary
measure, DMM units would return to working remotely.
The Exchange believes that the proposed rule change would remove
impediments to and perfect the mechanism of a free and open market and
a national market system because it would promote fair and orderly Core
Open Auctions in connection with an issuer undergoing a corporate
action that may result in a significant price discovery event. The
Exchange believes that it would promote fair and orderly markets to
provide the DMM with mechanisms to facilitate such Core Open Auctions
manually because it would provide flexibility for the DMM of when to
facilitate such Auctions and at what price. DMMs would also be able to
publish pre-opening indications in connection with such Core Open
Auctions, which would promote transparency.
In addition, because a Direct Listing Auction must be effected
manually, this proposed rule change would allow for Direct Listing
Auctions to occur during the period when the Trading Floor is
temporarily closed to DMMs. Accordingly, this proposed rule change
would remove impediments to and perfect the mechanism of a free and
open market and a national market system because the Exchange would be
able to provide issuers with the option to list on the Exchange via a
Direct Listing during the temporary period when DMMs are operating
remotely.
The Exchange believes that, by clearly stating that this relief
will be in effect through the earlier of the reopening of the Trading
Floor facilities or the close of the Exchange on April 30, 2021, market
participants will have advance notice that a Core Open Auction in
connection with an issuer undergoing a corporate action that may result
in a significant price discovery event may be effected manually by the
DMM during this period, and therefore may not be conducted at 9:30 a.m.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change would
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The proposed rule change is
not designed to address any competitive issues but rather is designed
to ensure fair and orderly Core Open Auctions in connection with a
corporate action that may result in a significant pricing event and
Direct Listing Auctions by providing a DMM with either limited access
to the Trading Floor or remote access to Floor-based systems for the
sole purpose of effecting such Auctions manually during a temporary
period when the Exchange Trading Floor has been closed to DMMs in
response to social-distancing measures designed to reduce the spread of
the COVID-19 virus.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \14\ and Rule 19b-4(f)(6) thereunder.\15\
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 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
[[Page 338]]
19(b)(3)(A)(iii) of the Act \16\ and Rule 19b-4(f)(6)(iii)
thereunder.\17\
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\14\ 15 U.S.C. 78s(b)(3)(A)(iii).
\15\ 17 CFR 240.19b-4(f)(6).
\16\ 15 U.S.C. 78s(b)(3)(A)(iii).
\17\ 17 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 complied with this requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) \18\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\19\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has asked
the Commission to waive the 30-day operative delay so that the proposal
may take effect immediately. The Exchange has stated that, because of
the rapid changes to the New York City-area public health conditions,
it made the determination to close the Trading Floor to DMMs with only
two business days' notice before such closure would take effect.
However, the Exchange represents that at least three SPACs listed on
the Exchange are anticipated to complete their business combinations
during the week of December 28, 2020, and the Core Open Auctions for
such securities are expected to be significant pricing events. The
Exchange has asked the Commission to waive the operative delay so that
the DMM assigned to these securities would be able to effect the Core
Open Auctions manually. The Commission believes that waiver of the
operative delay is consistent with the protection of investors and the
public interest because it will allow the proposed rules to become
effective in time for DMMs to manually effect Core Open Auctions for
those securities that are anticipated to have significant price
discovery events during the week of December 28, 2020. Accordingly, the
Commission hereby waives the 30-day operative delay and designates the
proposal operative upon filing.\20\
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\18\ 17 CFR 240.19b-4(f)(6).
\19\ 17 CFR 240.19b-4(f)(6)(iii).
\20\ For purposes only of accelerating the operative date of
this proposal, the Commission has considered the proposed rule's
impact on efficiency, competition, and capital formation. 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of such proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings under
Section 19(b)(2)(B) \21\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\21\ 15 U.S.C. 78s(b)(2)(B).
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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-2020-109 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-2020-109. 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-2020-109 and should be submitted on
or before January 26, 2021.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\22\
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\22\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-29131 Filed 1-4-21; 8:45 am]
BILLING CODE 8011-01-P
