Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend its Rules To Add New Subparagraph (i)(6) to Rule 7.31, 74119-74122 [2021-28245]
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Federal Register / Vol. 86, No. 247 / Wednesday, December 29, 2021 / Notices
increasing competition to the benefit of
those companies and their shareholders.
Accordingly, the Exchange does not
believe the proposed rule change will
impose any burden on competition that
is not necessary or appropriate in
furtherance of the purposes of the Act.
In addition, the Exchange does not
believe that the proposal to modify the
suite of complimentary products and
services it provides to eligible listed
companies will impose any burden on
competition that is not necessary or
appropriate in furtherance of the
purposes of the Act. In this regard, the
NYSE notes that the specific tools and
services offered to eligible listed
companies as part of the complimentary
offering limited to those categories of
issuers under Section 907.00 are
provided solely by third-party vendors.
In addition, the NYSE may choose to
use multiple vendors for the same type
of product or service. The NYSE also
notes that currently listed and newly
listed companies would not be required
to accept the offered products and
services from the NYSE, and an issuer’s
receipt of an NYSE listing is not
conditioned on the issuer’s acceptance
of such products and services. In
addition, the NYSE notes that, from
time to time, issuers elect to purchase
products and services from other
vendors at their own expense instead of
accepting the products and services
described above offered by the
Exchange.
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C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of
publication of this notice in the Federal
Register or 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.
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
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For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.18
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2021–28326 Filed 12–28–21; 8:45 am]
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rulecomments@sec.gov. Please include File
Number SR–NYSE–2021–68 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–2021–68. 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–2021–68 and should
be submitted on or before January 19,
2022.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
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BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–93850; File No. SR–NYSE–
2021–75]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Amend its
Rules To Add New Subparagraph (i)(6)
to Rule 7.31
December 22, 2021.
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
16, 2021, New York Stock Exchange
LLC (‘‘NYSE’’ or the ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’) a
proposed rule change as described in
Items I and II below, which Items have
been prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend its
rules to (1) add new subparagraph (i)(6)
to Rule 7.31 (Orders and Modifiers)
regarding orders designated with a
‘‘retail’’ modifier and (2) delete current
Rule 13 (Retail Modifier). 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,
18 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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Federal Register / Vol. 86, No. 247 / Wednesday, December 29, 2021 / Notices
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend its
rules to (1) add new subparagraph (i)(6)
to Rule 7.31 (Orders and Modifiers)
regarding orders designated with a
‘‘retail’’ modifier and (2) delete current
Rule 13 (Retail Modifiers).
Proposed Rule Change
Currently, the Exchange’s Rule 13
(Retail Modifiers) permits member
organizations to designate an order with
a ‘‘retail’’ modifier. Such orders, if
properly designated, are eligible for
‘‘Retail Modifier’’ rates available for
such orders on the Exchange’s Price
List.3
The Exchange proposes to move the
text of Rule 13 to the Exchange’s Pillar
rules, and specifically, to new
subparagraph (i)(6) to Rule 7.31 (Orders
and Modifiers), and to make
modifications to the rule text to conform
it to rules currently in effect on its
affiliate exchanges NYSE American LLC
(‘‘NYSE American’’) 4 and NYSE
National, Inc. (‘‘NYSE National’’).5 The
Exchange does not propose any changes
to the fees applicable to orders
designated with a ‘‘retail’’ modifier.
Proposed Rule 7.31(i)(6)
Proposed Rule 7.31(i)(6)(A) would
specify that an order designated with a
‘‘retail’’ modifier is an agency order or
a riskless principal order that meets the
criteria of FINRA Rule 5320.03 that
originates from a natural person and is
submitted to the Exchange by a member
organization, provided that no change is
made to the terms of the order with
respect to price or side of market and
the order does not originate from a
trading algorithm or any other
computerized methodology. It would
also specify that an order with a ‘‘retail’’
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3 These
requirements are distinct from, but
related to, the Exchange’s requirements for a ‘‘Retail
Order’’ under its Retail Liquidity Program pursuant
to Rule 7.44.
4 See Securities Exchange Act Release No. 92254
(June 24, 2021), 86 FR 34819 (June 30, 2021) (SR–
NYSEAMER–2021–31) (notice of filing and
immediate effectiveness of proposed rule change to
add the ‘‘retail’’ order modifier to NYSE American
Rule 7.31E(i)(4)).
5 See Securities Exchange Act Release No. 92446
(July 20, 2021), 86 FR 40108 (July 26, 2021) (SR–
NYSENAT–2021–15) (notice of filing and
immediate effectiveness of proposed rule change to
add the ‘‘retail’’ order modifier to NYSE National
Rule 7.31(i)(4)).
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modifier is separate and distinct from a
‘‘Retail Order’’ under Rule 7.44. This
proposed rule is based on the
Exchange’s current Rule 13(f)(2)(A)
without any differences, except that the
cross-reference in Rule 13 to former
Rule 107C (Retail Liquidity Program)
would be updated to instead crossreference Rule 7.44 (Retail Liquidity
Program).
Proposed Rule 7.31(i)(6)(B) would
specify that a member organization
would be required to designate an order
as ‘‘retail’’ in the form and/or manner
prescribed by the Exchange. This
proposed rule is based on the
Exchange’s current Rule 13(f)(2)(B)
without any differences, except that the
introductory language ‘‘ ’Retail’ modifier
designation’’ would be deleted.
Proposed Rule 7.31(i)(6)(C) would
specify that in order to submit an order
with a ‘‘retail’’ modifier, a member
organization must submit an attestation,
in a form prescribed by the Exchange,
that substantially all orders designated
as ‘‘retail’’ would meet the requirements
set out in paragraph (A) above. This
proposed rule is based on the
Exchange’s current Rule 13(f)(2)(C)
without any differences, except that the
Exchange proposes to change the phrase
‘‘submitted as ‘retail’ ’’ to ‘‘designated as
‘retail,’ ’’ to conform the rule text to that
of NYSE American Rule 7.31E(i)(4)(C)
and NYSE National Rule 7.31(i)(4)(C).
Proposed Rule 7.31(i)(6)(D) would
specify that a member organization must
have written policies and procedures
reasonably designed to assure that it
will only designate orders as ‘‘retail’’ if
all requirements of Rule 7.31(i)(6)(A) are
met. Such written policies and
procedures must require the member
organization to (i) exercise due diligence
before entering a ‘‘retail’’ order to assure
that entry as a ‘‘retail’’ order is in
compliance with the requirements
specified by the Exchange, and (ii)
monitor whether orders entered as
‘‘retail’’ orders meet the applicable
requirements. If a member organization
represents ‘‘retail’’ orders from another
broker-dealer customer, the member
organization’s supervisory procedures
must be reasonably designed to assure
that the orders it receives from such
broker-dealer customer that it designates
as ‘‘retail’’ orders meet the definition of
a ‘‘retail’’ order. The member
organization must (i) obtain an annual
written representation, in a form
acceptable to the Exchange, from each
broker-dealer customer that sends it
orders to be designated as ‘‘retail’’
orders’’ that entry of such orders as
‘‘retail’’ orders will be in compliance
with the requirements specified by the
Exchange, and (ii) monitor whether its
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broker-dealer customer’s ‘‘retail’’ order
flow meets the applicable requirements.
This proposed rule is based on the
Exchange’s current Rule 13(f)(2)(D)
without any differences.
Proposed Rule 7.31(i)(6)(E) would
specify that a member organization that
fails to abide by the requirements
specified in paragraphs (i)(6)(A)–(D) of
Rule 7.31 would not be eligible for the
‘‘Retail Modifier’’ rates for orders it
designates as ‘‘retail’’ orders. This
proposed rule is based on NYSE
American Rule 7.31E(i)(4)(E) and NYSE
National Rule 7.31(i)(4)(E) with the
following non-substantive differences:
The proposed rule (i) would use the
term ‘‘member organization’’ instead of
‘‘ETP Holder,’’ and, (ii) because the
Exchange operates a Retail Liquidity
Provider Program (‘‘RLP’’) pursuant to
Rule 7.44 that separately defines the
term ‘‘Retail Order,’’ the proposed rule
would use the terms ‘‘order designated
as ‘retail’’ or ‘‘Retail Modifier’’ instead
of the term ‘‘Retail Order.’’ 6
Deletion of Rule 13
Because the Exchange is relocating
current Rule 13 to proposed Rule
7.31(i)(6) and such subsection would
define the term ‘‘Retail Modifier’’ and
corresponding requirements, the
Exchange proposes to delete Rule 13 in
its entirety.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
Section 6(b) of the Act,7 in general, and
furthers the objectives of Sections
6(b)(5) of the Act,8 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
regulating, clearing, settling, processing
information with respect to, and
facilitating transactions in securities, to
remove impediments to and perfect the
mechanism of a free and open market
and a national market system, and, in
general, to protect investors and the
6 The Exchange does not propose to copy text
from Rule 13(f)(2)(E) or (F) into the Rule 7.31(i)(6)
definition of ‘‘Retail Modifier.’’ Those sections
provide that a member organization that fails to
abide by the requirements pertaining to orders
designated as ‘‘retail’’ will be ‘‘disqualified’’ from
submitting ‘‘retail’’ orders, which disqualification
the member organization may appeal. The Exchange
believes that the appropriate consequence for
incorrectly designating an order with a ‘‘retail’’
modifier would be that such orders would be
ineligible for preferential ‘‘retail’’ fees, as proposed
Rule 7.31(i)(6)(E) would provide. Such orders
would still be eligible to trade pursuant to the non‘‘retail’’ fees in the Exchange’s Price List.
7 15 U.S.C. 78f(b).
8 15 U.S.C. 78f(b)(5).
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Federal Register / Vol. 86, No. 247 / Wednesday, December 29, 2021 / Notices
public interest and because it is not
designed to permit unfair
discrimination between customers,
issuers, brokers, or dealers.
The Exchange believes that moving
the text described above from Rule 13 to
new subparagraph (i)(6) of Rule 7.31
would remove impediments to and
perfect the mechanism of a free and
open market and a national market
system by bringing the Exchange’s rule
for ‘‘retail’’ modifiers into Rule 7.31, the
Exchange’s Pillar rule regarding Orders
and Modifiers. Relocating the rule text
regarding ‘‘retail’’ modifiers into Rule
7.31 and deleting Rule 13 would
eliminate any potential confusion
among market participants regarding the
availability of the ‘‘retail’’ modifier for
orders on the Exchange’s Pillar trading
system.
The Exchange believes that the
requirements specified in proposed Rule
7.31(i)(6) regarding the proposed
designation of ‘‘retail’’ orders, along
with the requirements for member
organization attestations and written
policies and procedures, would remove
impediments to and perfect the
mechanism of a free and open market
and a national market system because
they are substantively identical to the
requirements for designating orders as
‘‘retail’’ on NYSE American and NYSE
National, and therefore would
harmonize the requirements for
designating orders as ‘‘retail’’ across the
three affiliated exchanges. Such
uniformity will enhance market
participants’ understanding of the
process for designating orders as
‘‘retail’’ across the exchanges, and will
minimize any potential confusion that
could result from having slightly
different programs on each exchange.
The Exchange believes that it would
remove impediments to and perfect the
mechanism of a free and open market
and a national market system to omit
text from Rule 13(f)(2)(E) and (F) from
proposed Rule 7.31(i)(6). The Exchange
believes that the proposed change
providing that orders that fail to meet
the ‘‘retail’’ modifier requirements
would be ineligible for such preferential
fees would remove impediments to and
perfect the mechanism of a free and
open market system, because orders
failing to meet the requirements of
‘‘retail’’ orders would not receive the
corresponding pricing benefits. Orders
failing to meet the requirements of
‘‘retail’’ orders would still be eligible to
trade pursuant to the non-‘‘retail’’ prices
in the Exchange’s Price List.
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B. Self-Regulatory Organization’s
Statement on Burden on Competition
In accordance with Section 6(b)(8) of
the Act,9 the Exchange believes that the
proposed rule change would not 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 competition at all, but merely
moves, with minor changes, the
Exchange’s existing rule for designating
orders as ‘‘retail’’ into the Exchange’s
Pillar rule regarding Orders and
Modifiers.
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
Because the proposed rule change (i)
does not significantly affect the
protection of investors or the public
interest; (ii) does not impose any
significant burden on competition; and
(iii) does not become operative prior to
30 days from the date on which it was
filed, or such shorter time as the
Commission may designate, if
consistent with the protection of
investors and the public interest, the
proposed rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 10 and Rule 19b–4(f)(6) 11
thereunder.
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) 12 of the Act to
determine whether the proposed rule
change should be approved or
disapproved.
9 15
U.S.C. 78f(b)(8).
U.S.C. 78s(b)(3)(A).
11 17 CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6) requires a self-regulatory organization to give
the Commission written notice of its intent to file
the proposed rule change at least give business days
prior to the date of filing of the propose rule change,
or such short time as designated by the
Commission. The Exchange has satisfied this
requirement.
12 15 U.S.C. 78s(b)(2)(B).
10 15
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74121
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–2021–75 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–2021–75. 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–2021–75, and
should be submitted on or before
January 19, 2022.
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For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.13
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–28245 Filed 12–28–21; 8:45 am]
BILLING CODE 8011–01–P
(A) Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change
1. Purpose
SECURITIES AND EXCHANGE
COMMISSION
Self-Regulatory Organizations; The
Depository Trust Company; Notice of
Filing of Proposed Rule Change To
Enhance Capital Requirements and
Make Other Changes
The purpose of this proposed rule
change is to (i) enhance DTC’s capital
requirements for Participants, (ii)
redefine DTC’s Watch List and eliminate
DTC’s enhanced surveillance list and
(iii) make certain other clarifying,
technical and supplementary changes in
the Rules, including definitional
updates, to accomplish items (i) and (ii).
December 22, 2021.
(i) Background
[Release No. 34–93854; File No. SR–DTC–
2021–017]
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Exchange Act’’) 1 and Rule 19b–4
thereunder,2 notice is hereby given that
on December 13, 2021, The Depository
Trust Company (‘‘DTC’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I, II and III
below, which Items have been prepared
by the clearing agency. The Commission
is publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Clearing Agency’s Statement of the
Terms of Substance of the Proposed
Rule Change
The proposed rule change consists of
amendments to the Rules, By-Laws and
Organization Certificate (‘‘Rules’’) of
DTC in order to (i) enhance DTC’s
capital requirements for Participants, (ii)
redefine DTC’s Watch List and eliminate
DTC’s enhanced surveillance list and
(iii) make certain other clarifying,
technical and supplementary changes in
the Rules, including definitional
updates, to accomplish items (i) and (ii),
as described in greater detail below.3
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clearing agency has prepared
summaries, set forth in sections A, B,
and C below, of the most significant
aspects of such statements.
II. Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change
In its filing with the Commission, the
clearing agency included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 Capitalized terms not defined herein are defined
in the Rules, available at https://www.dtcc.com/∼/
media/Files/Downloads/legal/rules/dtc_rules.pdf.
Central securities depositories
(‘‘CSDs’’) play a key role in financial
markets by mitigating counterparty
credit risk on transactions of their
participants. As a CSD, DTC is exposed
to the credit risks of its Participants. The
credit risks borne by DTC are mitigated,
in part, by the capital maintained by
Participants, which serves as a lossabsorbing buffer.
In accordance with Section
17A(b)(4)(B) of the Exchange Act,4 a
registered clearing agency such as DTC
may, among other things, deny
participation to, or condition the
participation of, any person on such
person meeting such standards of
financial responsibility prescribed by
the rules of the registered clearing
agency.
In furtherance of this authority, DTC
requires applicants and Participants to
meet the relevant financial
responsibility standards prescribed by
the Rules. These financial responsibility
standards generally require Participants
to have and maintain certain levels of
capital, as more particularly described
in the Rules and below.
DTC’s capital requirements for
Participants have not been updated in
over 20 years. Since that time, there
have been significant changes to the
financial markets that warrant DTC
revisiting its capital requirements. For
example, the regulatory environment
within which DTC and its Participants
operate has undergone various changes.
The implementation of the Basel III
standards,5 the designation of many
banks as systemically important by the
13 17
1 15
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4 15
U.S.C. 78q–1(b)(4)(B).
Committee on Banking Supervision, The
Basel Framework, available at https://www.bis.org/
basel_framework/index.htm?export=pdf (‘‘Basel III
Standards’’).
5 Basel
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Financial Stability Board,6 as well as the
designation of DTC as a systemically
important financial market utility
(‘‘SIFMU’’) by the Financial Stability
Oversight Council,7 have significantly
increased the regulatory requirements,
including capital requirements, of many
financial institutions and CSDs.
Similarly, the Covered Clearing Agency
Standards (‘‘CCAS’’) adopted by the
Commission have raised the regulatory
standards applicable to CSDs such as
DTC.8
There also have been significant
Participant changes over the past 20
years. Numerous mergers, acquisitions,
and new market entrants have created a
diverse group of Participants that has
expanded the credit-risk profiles that
DTC must manage.
Moreover, transaction values at DTC
have increased significantly over the
years.9 Although the increase does not
present more risk to DTC directly, as
DTC’s services are nonguaranteed and
fully collateralized, DTC does have an
interest in ensuring that its Participants
have a certain minimum amount of
capital to help support the increased
activity.
Although these factors do not directly
require DTC to increase capital
requirements for Participants (e.g., there
is no specific regulation or formula that
prescribes a set capital requirement for
participants of a CSD such as DTC), the
overarching and collective focus of the
regulatory changes noted above, in light
of the many heightened risks to the
financial industry, has been to increase
the stability of the financial markets in
order to reduce systemic risk. As a selfregulatory organization, a SIFMU, and
being exposed to the new and increased
risks over the past 20 years, DTC has a
responsibility to do the same.
Enhancing its capital requirements
helps meet that responsibility and
improve DTC’s credit risk management.
Enhanced capital requirements also
help mitigate other risks posed directly
or indirectly by Participants such as
legal risk, operational risk and cyber
risk, as better capitalized Participants
have greater financial resources in order
6 See Financial Stability Board, 2021 list of global
systemically important banks, available at https://
www.fsb.org/wp-content/uploads/P231121.pdf.
7 See U.S. Department of the Treasury,
Designations, Financial Market Utility Designations,
available at https://home.treasury.gov/policyissues/financial-markets-financial-institutions-andfiscal-service/fsoc/designations.
8 17 CFR 240.17Ad–22(e).
9 See, e.g., DTCC Annual Reports, available at
https://www.dtcc.com/about/annual-report. DTC is
a wholly owned subsidiary of The Depository Trust
& Clearing Corporation (‘‘DTCC’’). The DTCC
Annual Reports highlight and track DTC
transactional values year-over-year.
E:\FR\FM\29DEN1.SGM
29DEN1
]]>Agencies
[Federal Register Volume 86, Number 247 (Wednesday, December 29, 2021)]
[Notices]
[Pages 74119-74122]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-28245]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-93850; File No. SR-NYSE-2021-75]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend its Rules To Add New Subparagraph (i)(6) to Rule 7.31
December 22, 2021.
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 16, 2021, New York Stock Exchange LLC (``NYSE'' or the
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') a proposed rule change as described in Items I and II
below, which Items have been prepared by the Exchange. The Commission
is publishing this notice to solicit comments on the proposed rule
change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend its rules to (1) add new
subparagraph (i)(6) to Rule 7.31 (Orders and Modifiers) regarding
orders designated with a ``retail'' modifier and (2) delete current
Rule 13 (Retail Modifier). 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,
[[Page 74120]]
set forth in sections A, B, and C below, of the most significant parts
of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend its rules to (1) add new
subparagraph (i)(6) to Rule 7.31 (Orders and Modifiers) regarding
orders designated with a ``retail'' modifier and (2) delete current
Rule 13 (Retail Modifiers).
Proposed Rule Change
Currently, the Exchange's Rule 13 (Retail Modifiers) permits member
organizations to designate an order with a ``retail'' modifier. Such
orders, if properly designated, are eligible for ``Retail Modifier''
rates available for such orders on the Exchange's Price List.\3\
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\3\ These requirements are distinct from, but related to, the
Exchange's requirements for a ``Retail Order'' under its Retail
Liquidity Program pursuant to Rule 7.44.
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The Exchange proposes to move the text of Rule 13 to the Exchange's
Pillar rules, and specifically, to new subparagraph (i)(6) to Rule 7.31
(Orders and Modifiers), and to make modifications to the rule text to
conform it to rules currently in effect on its affiliate exchanges NYSE
American LLC (``NYSE American'') \4\ and NYSE National, Inc. (``NYSE
National'').\5\ The Exchange does not propose any changes to the fees
applicable to orders designated with a ``retail'' modifier.
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\4\ See Securities Exchange Act Release No. 92254 (June 24,
2021), 86 FR 34819 (June 30, 2021) (SR-NYSEAMER-2021-31) (notice of
filing and immediate effectiveness of proposed rule change to add
the ``retail'' order modifier to NYSE American Rule 7.31E(i)(4)).
\5\ See Securities Exchange Act Release No. 92446 (July 20,
2021), 86 FR 40108 (July 26, 2021) (SR-NYSENAT-2021-15) (notice of
filing and immediate effectiveness of proposed rule change to add
the ``retail'' order modifier to NYSE National Rule 7.31(i)(4)).
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Proposed Rule 7.31(i)(6)
Proposed Rule 7.31(i)(6)(A) would specify that an order designated
with a ``retail'' modifier is an agency order or a riskless principal
order that meets the criteria of FINRA Rule 5320.03 that originates
from a natural person and is submitted to the Exchange by a member
organization, provided that no change is made to the terms of the order
with respect to price or side of market and the order does not
originate from a trading algorithm or any other computerized
methodology. It would also specify that an order with a ``retail''
modifier is separate and distinct from a ``Retail Order'' under Rule
7.44. This proposed rule is based on the Exchange's current Rule
13(f)(2)(A) without any differences, except that the cross-reference in
Rule 13 to former Rule 107C (Retail Liquidity Program) would be updated
to instead cross-reference Rule 7.44 (Retail Liquidity Program).
Proposed Rule 7.31(i)(6)(B) would specify that a member
organization would be required to designate an order as ``retail'' in
the form and/or manner prescribed by the Exchange. This proposed rule
is based on the Exchange's current Rule 13(f)(2)(B) without any
differences, except that the introductory language `` 'Retail' modifier
designation'' would be deleted.
Proposed Rule 7.31(i)(6)(C) would specify that in order to submit
an order with a ``retail'' modifier, a member organization must submit
an attestation, in a form prescribed by the Exchange, that
substantially all orders designated as ``retail'' would meet the
requirements set out in paragraph (A) above. This proposed rule is
based on the Exchange's current Rule 13(f)(2)(C) without any
differences, except that the Exchange proposes to change the phrase
``submitted as `retail' '' to ``designated as `retail,' '' to conform
the rule text to that of NYSE American Rule 7.31E(i)(4)(C) and NYSE
National Rule 7.31(i)(4)(C).
Proposed Rule 7.31(i)(6)(D) would specify that a member
organization must have written policies and procedures reasonably
designed to assure that it will only designate orders as ``retail'' if
all requirements of Rule 7.31(i)(6)(A) are met. Such written policies
and procedures must require the member organization to (i) exercise due
diligence before entering a ``retail'' order to assure that entry as a
``retail'' order is in compliance with the requirements specified by
the Exchange, and (ii) monitor whether orders entered as ``retail''
orders meet the applicable requirements. If a member organization
represents ``retail'' orders from another broker-dealer customer, the
member organization's supervisory procedures must be reasonably
designed to assure that the orders it receives from such broker-dealer
customer that it designates as ``retail'' orders meet the definition of
a ``retail'' order. The member organization must (i) obtain an annual
written representation, in a form acceptable to the Exchange, from each
broker-dealer customer that sends it orders to be designated as
``retail'' orders'' that entry of such orders as ``retail'' orders will
be in compliance with the requirements specified by the Exchange, and
(ii) monitor whether its broker-dealer customer's ``retail'' order flow
meets the applicable requirements. This proposed rule is based on the
Exchange's current Rule 13(f)(2)(D) without any differences.
Proposed Rule 7.31(i)(6)(E) would specify that a member
organization that fails to abide by the requirements specified in
paragraphs (i)(6)(A)-(D) of Rule 7.31 would not be eligible for the
``Retail Modifier'' rates for orders it designates as ``retail''
orders. This proposed rule is based on NYSE American Rule
7.31E(i)(4)(E) and NYSE National Rule 7.31(i)(4)(E) with the following
non-substantive differences: The proposed rule (i) would use the term
``member organization'' instead of ``ETP Holder,'' and, (ii) because
the Exchange operates a Retail Liquidity Provider Program (``RLP'')
pursuant to Rule 7.44 that separately defines the term ``Retail
Order,'' the proposed rule would use the terms ``order designated as
`retail'' or ``Retail Modifier'' instead of the term ``Retail Order.''
\6\
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\6\ The Exchange does not propose to copy text from Rule
13(f)(2)(E) or (F) into the Rule 7.31(i)(6) definition of ``Retail
Modifier.'' Those sections provide that a member organization that
fails to abide by the requirements pertaining to orders designated
as ``retail'' will be ``disqualified'' from submitting ``retail''
orders, which disqualification the member organization may appeal.
The Exchange believes that the appropriate consequence for
incorrectly designating an order with a ``retail'' modifier would be
that such orders would be ineligible for preferential ``retail''
fees, as proposed Rule 7.31(i)(6)(E) would provide. Such orders
would still be eligible to trade pursuant to the non-``retail'' fees
in the Exchange's Price List.
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Deletion of Rule 13
Because the Exchange is relocating current Rule 13 to proposed Rule
7.31(i)(6) and such subsection would define the term ``Retail
Modifier'' and corresponding requirements, the Exchange proposes to
delete Rule 13 in its entirety.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\7\ in general, and furthers the
objectives of Sections 6(b)(5) of the Act,\8\ 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 regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, to remove impediments to and
perfect the mechanism of a free and open market and a national market
system, and, in general, to protect investors and the
[[Page 74121]]
public interest and because it is not designed to permit unfair
discrimination between customers, issuers, brokers, or dealers.
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\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that moving the text described above from
Rule 13 to new subparagraph (i)(6) of Rule 7.31 would remove
impediments to and perfect the mechanism of a free and open market and
a national market system by bringing the Exchange's rule for ``retail''
modifiers into Rule 7.31, the Exchange's Pillar rule regarding Orders
and Modifiers. Relocating the rule text regarding ``retail'' modifiers
into Rule 7.31 and deleting Rule 13 would eliminate any potential
confusion among market participants regarding the availability of the
``retail'' modifier for orders on the Exchange's Pillar trading system.
The Exchange believes that the requirements specified in proposed
Rule 7.31(i)(6) regarding the proposed designation of ``retail''
orders, along with the requirements for member organization
attestations and written policies and procedures, would remove
impediments to and perfect the mechanism of a free and open market and
a national market system because they are substantively identical to
the requirements for designating orders as ``retail'' on NYSE American
and NYSE National, and therefore would harmonize the requirements for
designating orders as ``retail'' across the three affiliated exchanges.
Such uniformity will enhance market participants' understanding of the
process for designating orders as ``retail'' across the exchanges, and
will minimize any potential confusion that could result from having
slightly different programs on each exchange.
The Exchange believes that it would remove impediments to and
perfect the mechanism of a free and open market and a national market
system to omit text from Rule 13(f)(2)(E) and (F) from proposed Rule
7.31(i)(6). The Exchange believes that the proposed change providing
that orders that fail to meet the ``retail'' modifier requirements
would be ineligible for such preferential fees would remove impediments
to and perfect the mechanism of a free and open market system, because
orders failing to meet the requirements of ``retail'' orders would not
receive the corresponding pricing benefits. Orders failing to meet the
requirements of ``retail'' orders would still be eligible to trade
pursuant to the non-``retail'' prices in the Exchange's Price List.
B. Self-Regulatory Organization's Statement on Burden on Competition
In accordance with Section 6(b)(8) of the Act,\9\ the Exchange
believes that the proposed rule change would not 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 competition at all, but merely moves, with minor changes, the
Exchange's existing rule for designating orders as ``retail'' into the
Exchange's Pillar rule regarding Orders and Modifiers.
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\9\ 15 U.S.C. 78f(b)(8).
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C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received from Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the proposed rule change (i) does not significantly affect
the protection of investors or the public interest; (ii) does not
impose any significant burden on competition; and (iii) does not become
operative prior to 30 days from the date on which it was filed, or such
shorter time as the Commission may designate, if consistent with the
protection of investors and the public interest, the proposed rule
change has become effective pursuant to Section 19(b)(3)(A) of the Act
\10\ and Rule 19b-4(f)(6) \11\ thereunder.
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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least give business days prior to the date of filing of the propose
rule change, or such short time as designated by the Commission. The
Exchange has satisfied this requirement.
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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) \12\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\12\ 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-2021-75 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-2021-75. 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-2021-75, and should be submitted on
or before January 19, 2022.
[[Page 74122]]
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-28245 Filed 12-28-21; 8:45 am]
BILLING CODE 8011-01-P
