Self-Regulatory Organizations; NYSE Chicago, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Article 17, Rule 5, 77657-77660 [2022-27383]

Download as PDF Federal Register / Vol. 87, No. 242 / Monday, December 19, 2022 / Notices a manner that encourages market participants to continue to provide liquidity and to send order flow to the Exchange. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)(ii) of the Act,20 and Rule 19b–4(f)(2) 21 thereunder. At any time within 60 days of the filing of the 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 to determine whether the proposed rule 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: tkelley on DSK125TN23PROD with NOTICE 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– PEARL–2022–54 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–PEARL–2022–54. 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–PEARL–2022–54 and should be submitted on or before January 9, 2023. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.22 Sherry R. Haywood, Assistant Secretary. [FR Doc. 2022–27376 Filed 12–16–22; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–96489; File No. SR– NYSECHX–2022–31] Self-Regulatory Organizations; NYSE Chicago, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Article 17, Rule 5 December 13, 2022. Pursuant to section 19(b)(1) 1 of the Securities Exchange Act of 1934 (‘‘Act’’) 2 and Rule 19b–4 thereunder,3 notice is hereby given that, on December 9, 2022, the NYSE Chicago, Inc. (‘‘NYSE Chicago’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the self-regulatory organization. The Commission is publishing this notice to solicit 22 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 15 U.S.C. 78a. 3 17 CFR 240.19b–4. 1 15 20 15 21 17 U.S.C. 78s(b)(3)(A)(ii). CFR 240.19b–4(f)(2). VerDate Sep<11>2014 19:38 Dec 16, 2022 Jkt 259001 PO 00000 Frm 00111 Fmt 4703 Sfmt 4703 77657 comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend Article 17, Rule 5 to (1) change how Qualified Contingent Trade (‘‘QCT’’) Cross Orders are handled in the Exchange’s Brokerplex® order management system, and (2) make certain non-substantive conforming changes. 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 amend Article 17, Rule 5 (Brokerplex) in order to (1) change how QCT Cross Orders are handled in the Exchange’s Brokerplex® order management system, and (2) make certain non-substantive conforming changes. Background and Proposed Rule Change The Exchange provides the Brokerplex order management system for use by Institutional Broker Representatives (‘‘IBRs’’),4 to receive, transmit and hold orders from their customers while seeking execution within the NYSE Chicago Marketplace 5 4 IBRs are also known as Institutional Brokers or ‘‘IBs’’. The term ‘‘Institutional Broker’’ is defined in Article 1, Rule 1(n) to mean a member of the Exchange who is registered as an Institutional Broker pursuant to the provisions of Article 17 and has satisfied all Exchange requirements to operate as an Institutional Broker on the Exchange. 5 During the transition to Pillar, the Exchange added the phrase ‘‘NYSE Chicago Marketplace, as applicable’’ in Article 17, Rule 5 as an alternative to the term ‘‘Matching System’’ then used in the Exchange’s rules. See Securities Exchange Act Continued E:\FR\FM\19DEN1.SGM 19DEN1 77658 Federal Register / Vol. 87, No. 242 / Monday, December 19, 2022 / Notices tkelley on DSK125TN23PROD with NOTICE or elsewhere in the National Market System. Brokerplex also can be used to record trade executions and send transaction reports to a Trade Reporting Facility (‘‘TRF’’), as defined in FINRA Rules 6300 et seq., as amended from time-to-time. Brokerplex can also be used to initiate clearing submissions to a Qualified Clearing Agency via the Exchange’s reporting systems. Orders may be entered into Brokerplex manually by an IBR or submitted by an Exchange-approved electronic connection. With certain enumerated exceptions,6 Brokerplex accepts and handles all of the order types, conditions and instructions accepted by the NYSE Chicago Marketplace pursuant to Rule 7.31. In addition to the order types accepted by the NYSE Chicago Marketplace, Brokerplex permits entry and processing of certain additional order types, conditions and instructions accepted by other market centers. Finally, Brokerplex accepts and processes certain specified order types, conditions and instructions set forth in Article 17, Rule 5(c)(3). As set forth in Rule 7.31(g), a QCT Cross Order is a Cross Order that is part of a transaction consisting of two or more component orders that qualifies for a Contingent Order Exemption to the Order Protection Rule pursuant to Rule 7.37(f)(5).7 QCT Cross Orders may thus trade through both manual and protected quotes but may not trade through the Exchange BBO.8 QCT Cross Orders are only available to IBRs. While IBRs are not required to use Brokerplex to manage their orders, including QCT Cross Orders, Brokerplex facilitates the execution of QCT Cross Orders by retaining the QCT Cross Order information submitted by the IBRs and providing such information to IBRs in a format that assists IBRs in processing orders and transactions, responding to request for information Release No. 86709 (August 20, 2019), 84 FR 44654, 44663 (August 26, 2019) (SR–NYSECHX–2019–08) (Notice of Filing of Proposed Rule Change for Trading Rules To Support the Transition of Trading to the Pillar Trading Platform). ‘‘Matching System’’ is defined in Article 1, Rule 1(z) as one of the electronic or automated order routing, execution and reporting systems provided by the Exchange. As discussed below, the term became obsolete following the transition to Pillar and the Exchange now proposes to delete it from Article 17, Rule 5. 6 Brokerplex does not accept the following orders specified in Rule 7.31: Inside Limit Orders, Auction-Only Orders, MPL Orders, Tracking Orders, ISOs, Primary Only Orders, Primary Until 9:45 Orders, Primary After 3:55 Orders, Directed Orders, Pegged Orders, Non-Display Remove Modifier, Proactive if Crossed Modifier, Self-Trade Prevention Modifier, and Minimum Trade Size Modifier. See Article 17, Rule 5(c)(1). 7 See Rule 7.31(g). 8 See Rule 7.37(f)(5). VerDate Sep<11>2014 19:38 Dec 16, 2022 Jkt 259001 from customers and regulatory bodies and for other legitimate business purposes.9 As noted, many of the order types specified in Rule 7.31 that would be sent directly to the matching engine cannot be entered into Brokerplex. As a practical matter, IBR business on the Exchange consists of facilitating crosses, the majority of which are QCT Cross Orders entered into Brokerplex via an Exchange-approved electronic connection or manually by an IBR. Because QCT Cross Orders are exempt from the Order Protection Rule, QCT Cross Orders entered into Brokerplex can be and usually are executed at venues away from the Exchange. The proposed rule change would require that QCT Cross Orders entered into Brokerplex be initially sent to execute on the Exchange. Amendment of Article 17, Rule 5(e) Article 17, Rule 5(e) sets forth the Brokerplex order handling and transmission requirements. Currently, QCT Cross Orders entered into Brokerplex electronically or manually by an IBR can either be submitted (1) to the Exchange’s Matching System or the NYSE Chicago Marketplace, as applicable, to execute and then, if they cannot be executed in the Exchange’s Matching System or NYSE Chicago Marketplace, as applicable, to another destination according to the IBR’s instructions,10 or (2) directly to another trading center.11 The Exchange proposes to amend Article 17, Rule 5(e)(1) to change how QCT Cross Orders are handled in Brokerplex. As proposed, QCT Cross Orders entered into Brokerplex either electronically or manually would be sent to the NYSE Chicago Marketplace to execute in the first instance and then to other trading centers if the order cannot be executed in the NYSE Chicago Marketplace. In other words, IBRs would no longer have the ability to send QCT Cross Orders entered into Brokerplex directly to another trading center in the first instance as provided for in Article 17, Rule 5(e)(1)(B).12 9 See Article 17, Rule 5(b). Article 17, Rule 5(e)(1)(A). 11 See Article 17, Rule 5(e)(1)(B). 12 As noted, the QCT Cross Order is a type of Cross Order that is only available to IBRs. Cross Orders are two-sided orders with instructions to match the identified buy-side with the identified sell-side at a specified price known as the ‘‘cross price.’’ The Exchange will reject a QCT Cross Order if the cross price is not between the BBO, unless it meets Cross with Size requirements, in which case the cross price can be equal to the BB (BO). See Rule 7.31(g)(2). Other equities markets do not have a comparable QCT Cross Order type. 10 See PO 00000 Frm 00112 Fmt 4703 Sfmt 4703 All other aspects of the Brokerplex functionality would continue to operate as described in Article 17, Rule 5. Non-Substantive Conforming Changes The Exchange proposes to amend Article 17, Rule 5 to eliminate obsolete references to the Exchange’s Matching System. During its transition to the Pillar trading system, the Exchange defined ‘‘NYSE Chicago Marketplace’’ in Rule 1.1(p) to mean the electronic securities communications and trading facility of the Exchange through which orders are processed or are consolidated for execution and/or display. The definition was intended to replace references to the term ‘‘Matching System’’ following the transition to Pillar.13 Having transitioned to Pillar, ‘‘Matching System’’ is obsolete and the Exchange proposes to delete the phrase ‘‘Exchange’s Matching System or the’’ before ‘‘NYSE Chicago Marketplace’’ in each place that it appears in Article 17, Rule 5. The Exchange also proposes a non-substantive change in Article 17, Rule 5(e)(2) by replacing the word ‘‘Institutional Broker’’ with ‘‘IBR’’. Implementation The Exchange anticipates the technology changes associated with the proposed change to Article 17, Rule 5 relating to QCT Cross Orders to be implemented in the first quarter of 2023. The Exchange will announce the implementation date of this proposal via a Brokerplex Release Note. 2. Statutory Basis The proposed rule change is consistent with section 6(b) of the Act,14 in general, and furthers the objectives of section 6(b)(5),15 in particular, because it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, to remove impediments to, and perfect the mechanism of, a free and open market and a national market system and, in general, to protect investors and the public interest. The Exchange believes that the proposed change would promote just and equitable principles of trade and protect investors and the public interest by requiring that QCT Cross Orders entered into Brokerplex be sent to the Exchange for execution in the first instance. Currently, IBRs can send QCT Cross Orders entered into the Exchange13 See note 5, supra. U.S.C. 78f(b). 15 15 U.S.C. 78f(b)(5). 14 15 E:\FR\FM\19DEN1.SGM 19DEN1 tkelley on DSK125TN23PROD with NOTICE Federal Register / Vol. 87, No. 242 / Monday, December 19, 2022 / Notices provided Brokerplex order management system either to the Exchange or to an away trading center. As proposed, QCT Cross Orders entered into Brokerplex could only be sent to the Exchange in the first instance for execution. If there is no opportunity to execute on the Exchange, such orders would then be sent to another trading center, at the direction of the IBR. By requiring QCT Cross Orders entered into Brokerplex to be sent to the Exchange first rather than allowing IBRs to execute such QCT Cross Orders in away venues, the Exchange believes that the proposal would enhance the likelihood of QCT Cross Orders to be executed on the Exchange, thereby enabling the Exchange to better compete with other trading centers for the execution of such orders when those orders are entered into Exchange systems. As noted, although IBRs are not required to use Brokerplex to manage their orders, Brokerplex facilitates entry and execution of QCT Cross Orders by providing IBRs with a comprehensive recordkeeping solution for such orders, which contain both equities and options legs.16 To the extent that IBRs utilize Brokerplex in order to facilitate their QCT Cross Order business, the Exchange believes that such orders should be required to be executed on the Exchange. The current functionality permits IBRs that utilize Brokerplex to immediately send those orders to away venues. The Exchange believes that if IBRs utilize Brokerplex to facilitate QCT Cross Orders, it would be fair and consistent with just and equitable principles of trade for those orders to be executed on the Exchange. As noted above, a number of order types enumerated in Rule 7.31 currently interact with the Exchange’s order book first. Unlike those order types, which as noted are not eligible to be entered into Brokerplex, QCT Cross Orders entered into Brokerplex, do not automatically interact with the NYSE Chicago Marketplace. QCT Cross Orders, for the most part, are routed away for execution because they can trade through a protected quote. The Exchange therefore believes that it is just and equitable to require QCT Cross Orders entered into Brokerplex to be treated similarly to these other order types and sent to the Exchange for execution in the first instance. In addition, the Exchange believes that the proposed rule change is consistent with section 6(b) of the Act,17 in general, and with section 6(b)(1) 18 in Article 17, Rule 5(b). U.S.C. 78f(b). 18 15 U.S.C. 78f(b)(1). particular, in that it enables the Exchange to be so organized as to have the capacity to be able to carry out the purposes of the Exchange Act and to comply, and to enforce compliance by its exchange members and persons associated with its exchange members, with the provisions of the Exchange Act, the rules and regulations thereunder, and the rules of the Exchange. In particular, the Exchange believes that the proposed non-substantive conforming changes to delete the words ‘‘Matching System’’ throughout Article 17, Rule 5 and replacing the word ‘‘Institutional Broker’’ with ‘‘IBR’’ in Article 17, Rule 5(e)(2) would add clarity, consistency and transparency to the Exchange’s rules. The Exchange believes that adding such clarity, consistency and transparency would also be consistent with the public interest and the protection of investors because investors will not be harmed and in fact would benefit from increased transparency, thereby reducing potential confusion. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange believes that by requiring QCT Cross Orders entered into Brokerplex to be sent to the Exchange before other trading centers, the proposed rule change would increase opportunities for these orders to be executed on the Exchange, thereby improving the Exchange’s ability to compete with other trading centers for the execution of QCT Cross Orders. 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 19 and Rule 19b–4(f)(6) thereunder.20 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; and (iii) become operative 16 See 17 15 VerDate Sep<11>2014 19:38 Dec 16, 2022 19 15 20 17 Jkt 259001 PO 00000 U.S.C. 78s(b)(3)(A)(iii). CFR 240.19b–4(f)(6). Frm 00113 Fmt 4703 Sfmt 4703 77659 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 and Rule 19b–4(f)(6)(iii) 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) 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– NYSECHX–2022–31 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–NYSECHX–2022–31. 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 21 15 E:\FR\FM\19DEN1.SGM U.S.C. 78s(b)(2)(B). 19DEN1 77660 Federal Register / Vol. 87, No. 242 / Monday, December 19, 2022 / Notices 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–NYSECHX–2022–31 and should be submitted on or before January 9, 2023. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.22 Sherry R. Haywood, Assistant Secretary. [FR Doc. 2022–27383 Filed 12–16–22; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–96481; File No. SR–GEMX– 2022–12] Self-Regulatory Organizations; Nasdaq GEMX, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend FINRA Fees December 13, 2022. 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 7, 2022, Nasdaq GEMX, LLC (‘‘GEMX’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) the proposed rule change as described in Items I, II, and III, below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. tkelley on DSK125TN23PROD with NOTICE I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend GEMX’s Pricing Schedule at Options 7, Section 5, Legal & Regulatory, to reflect adjustments to FINRA Registration Fees and Fingerprinting Fees. 22 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 VerDate Sep<11>2014 19:38 Dec 16, 2022 Jkt 259001 While the changes proposed herein are effective upon filing, the Exchange has designated the additional processing of each initial or amended Form U4, Form U5 or Form BD and electronic Fingerprint Processing Fees to become operative on January 2, 2023. Additionally, the Exchange designates that the FINRA Annual System Processing Fee Assessed only during Renewals become operative on January 2, 2024.3 The amendments to the paper Fingerprint Fees are immediately effective. The text of the proposed rule change is available on the Exchange’s website at https://listingcenter.nasdaq.com/ rulebook/gemx/rules, 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 Exchange 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 Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose This proposal amends Options 7, Section 5, Legal & Regulatory, to reflect adjustments to FINRA Registration Fees and Fingerprinting Fees.4 The FINRA fees are collected and retained by FINRA via Web CRD for the registration of employees of GEMX Members that are not FINRA members (‘‘Non-FINRA members’’). The Exchange is merely listing these fees on its Pricing Schedule. The Exchange does not collect or retain these fees. The Exchange proposes to amend: (1) the $110 fee for the additional processing of each initial or amended 3 See Securities Exchange Act Release No. 90176 (October 14, 2020), 85 FR 66592 (October 20, 2020) (SR–FINRA–2020–032) (Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Adjust FINRA Fees To Provide Sustainable Funding for FINRA’s Regulatory Mission). 4 FINRA operates Web CRD, the central licensing and registration system for the U.S. securities industry. FINRA uses Web CRD to maintain the qualification, employment and disciplinary histories of registered associated persons of brokerdealers. PO 00000 Frm 00114 Fmt 4703 Sfmt 4703 Form U4, Form U5 or Form BD that includes the initial reporting, amendment, or certification or one or more disclosure events or proceedings to $155; (2) the $45 FINRA Annual System Processing Fee Assessed only during Renewals to $70; and (3) the $15 Second Submission (Electronic) Fingerprint Processing Fee to $20. Each of these fees are listed within GEMX Options 7, Section 5. These amendments are being made in accordance with a FINRA rule change to adjust to its fees.5 The Exchange also proposes to amend the following Fingerprint Fees: (1) the $29.50 Initial Submission (Electronic) fee to $31.25; 6 (2) the $44.50 Initial Submission (Paper) fee to $41.25; 7 (3) the $29.50 Third Submission (Electronic) fee to $31.25; 8 and (4) the $44.50 Third Submission (Paper) fee to $41.25.9 Specifically, today, the FBI fingerprint charge is $11.25 10 and the FINRA electronic Fingerprint Fee will increase from $15 to $20 in 2023.11 While FINRA did not amend the paper Fingerprint Fee, previously the FBI Fee was reduced from $14.50 to $11.25.12 The paper Fingerprint Fees are not currently reflecting the amount assessed by FINRA. The amendment to the paper Fingerprint Fees will conform these fees with those of FINRA. The FINRA Web CRD Fees are userbased and there is no distinction in the cost incurred by FINRA if the user is a FINRA member or a Non-FINRA member. Accordingly, the proposed fees mirror those currently assessed by FINRA. 2. Statutory Basis The Exchange believes that its proposal is consistent with section 6(b) 5 See note 4. FINRA noted in its rule change that it was adjusting its fees to provide sustainable funding for FINRA’s regulatory mission. 6 This fee includes a $20.00 FINRA fee and $11.25 FBI fee). See https://www.finra.org/registrationexams-ce/classic-crd/fingerprints/fingerprint-fees. 7 This fee includes a $30 FINRA Fee and a $11.25 FBI Fee. See https://www.finra.org/registrationexams-ce/classic-crd/fingerprints/fingerprint-fees. 8 This fee includes a $20.00 FINRA fee and $11.25 FBI fee). See https://www.finra.org/registrationexams-ce/classic-crd/fingerprints/fingerprint-fees. 9 This fee includes a $30 FINRA Fee and a $11.25 FBI Fee. See https://www.finra.org/registrationexams-ce/classic-crd/fingerprints/fingerprint-fees. 10 See Securities Exchange Act Release No. 67247 (June 25, 2012) 77 FR 38866 (June 29, 2012) (SR– FINRA–2012–030) (Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Sections 4 and 6 of Schedule A to the FINRA ByLaws Regarding Fees Relating to the Central Registration Depository) (‘‘2012 Rule Change’’) 11 See note 4. 12 See 2012 Rule Change at note 6. The FBI does not charge its fee on a second fingerprint transaction when it identifies the first set of fingerprints as illegible for the same individual. E:\FR\FM\19DEN1.SGM 19DEN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 87, Number 242 (Monday, December 19, 2022)]
[Notices]
[Pages 77657-77660]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-27383]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-96489; File No. SR-NYSECHX-2022-31]


Self-Regulatory Organizations; NYSE Chicago, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Amend 
Article 17, Rule 5

December 13, 2022.
    Pursuant to section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given 
that, on December 9, 2022, the NYSE Chicago, Inc. (``NYSE Chicago'' or 
the ``Exchange'') filed with the Securities and Exchange Commission 
(the ``Commission'') the proposed rule change as described in Items I 
and II below, which Items have been prepared by the self-regulatory 
organization. The Commission is publishing this notice to solicit 
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 amend Article 17, Rule 5 to (1) change how 
Qualified Contingent Trade (``QCT'') Cross Orders are handled in the 
Exchange's Brokerplex[supreg] order management system, and (2) make 
certain non-substantive conforming changes. 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 amend Article 17, Rule 5 (Brokerplex) in 
order to (1) change how QCT Cross Orders are handled in the Exchange's 
Brokerplex[supreg] order management system, and (2) make certain non-
substantive conforming changes.
Background and Proposed Rule Change
    The Exchange provides the Brokerplex order management system for 
use by Institutional Broker Representatives (``IBRs''),\4\ to receive, 
transmit and hold orders from their customers while seeking execution 
within the NYSE Chicago Marketplace \5\

[[Page 77658]]

or elsewhere in the National Market System. Brokerplex also can be used 
to record trade executions and send transaction reports to a Trade 
Reporting Facility (``TRF''), as defined in FINRA Rules 6300 et seq., 
as amended from time-to-time. Brokerplex can also be used to initiate 
clearing submissions to a Qualified Clearing Agency via the Exchange's 
reporting systems.
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    \4\ IBRs are also known as Institutional Brokers or ``IBs''. The 
term ``Institutional Broker'' is defined in Article 1, Rule 1(n) to 
mean a member of the Exchange who is registered as an Institutional 
Broker pursuant to the provisions of Article 17 and has satisfied 
all Exchange requirements to operate as an Institutional Broker on 
the Exchange.
    \5\ During the transition to Pillar, the Exchange added the 
phrase ``NYSE Chicago Marketplace, as applicable'' in Article 17, 
Rule 5 as an alternative to the term ``Matching System'' then used 
in the Exchange's rules. See Securities Exchange Act Release No. 
86709 (August 20, 2019), 84 FR 44654, 44663 (August 26, 2019) (SR-
NYSECHX-2019-08) (Notice of Filing of Proposed Rule Change for 
Trading Rules To Support the Transition of Trading to the Pillar 
Trading Platform). ``Matching System'' is defined in Article 1, Rule 
1(z) as one of the electronic or automated order routing, execution 
and reporting systems provided by the Exchange. As discussed below, 
the term became obsolete following the transition to Pillar and the 
Exchange now proposes to delete it from Article 17, Rule 5.
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    Orders may be entered into Brokerplex manually by an IBR or 
submitted by an Exchange-approved electronic connection. With certain 
enumerated exceptions,\6\ Brokerplex accepts and handles all of the 
order types, conditions and instructions accepted by the NYSE Chicago 
Marketplace pursuant to Rule 7.31. In addition to the order types 
accepted by the NYSE Chicago Marketplace, Brokerplex permits entry and 
processing of certain additional order types, conditions and 
instructions accepted by other market centers. Finally, Brokerplex 
accepts and processes certain specified order types, conditions and 
instructions set forth in Article 17, Rule 5(c)(3).
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    \6\ Brokerplex does not accept the following orders specified in 
Rule 7.31: Inside Limit Orders, Auction-Only Orders, MPL Orders, 
Tracking Orders, ISOs, Primary Only Orders, Primary Until 9:45 
Orders, Primary After 3:55 Orders, Directed Orders, Pegged Orders, 
Non-Display Remove Modifier, Proactive if Crossed Modifier, Self-
Trade Prevention Modifier, and Minimum Trade Size Modifier. See 
Article 17, Rule 5(c)(1).
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    As set forth in Rule 7.31(g), a QCT Cross Order is a Cross Order 
that is part of a transaction consisting of two or more component 
orders that qualifies for a Contingent Order Exemption to the Order 
Protection Rule pursuant to Rule 7.37(f)(5).\7\ QCT Cross Orders may 
thus trade through both manual and protected quotes but may not trade 
through the Exchange BBO.\8\
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    \7\ See Rule 7.31(g).
    \8\ See Rule 7.37(f)(5).
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    QCT Cross Orders are only available to IBRs. While IBRs are not 
required to use Brokerplex to manage their orders, including QCT Cross 
Orders, Brokerplex facilitates the execution of QCT Cross Orders by 
retaining the QCT Cross Order information submitted by the IBRs and 
providing such information to IBRs in a format that assists IBRs in 
processing orders and transactions, responding to request for 
information from customers and regulatory bodies and for other 
legitimate business purposes.\9\
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    \9\ See Article 17, Rule 5(b).
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    As noted, many of the order types specified in Rule 7.31 that would 
be sent directly to the matching engine cannot be entered into 
Brokerplex. As a practical matter, IBR business on the Exchange 
consists of facilitating crosses, the majority of which are QCT Cross 
Orders entered into Brokerplex via an Exchange-approved electronic 
connection or manually by an IBR. Because QCT Cross Orders are exempt 
from the Order Protection Rule, QCT Cross Orders entered into 
Brokerplex can be and usually are executed at venues away from the 
Exchange. The proposed rule change would require that QCT Cross Orders 
entered into Brokerplex be initially sent to execute on the Exchange.
Amendment of Article 17, Rule 5(e)
    Article 17, Rule 5(e) sets forth the Brokerplex order handling and 
transmission requirements. Currently, QCT Cross Orders entered into 
Brokerplex electronically or manually by an IBR can either be submitted 
(1) to the Exchange's Matching System or the NYSE Chicago Marketplace, 
as applicable, to execute and then, if they cannot be executed in the 
Exchange's Matching System or NYSE Chicago Marketplace, as applicable, 
to another destination according to the IBR's instructions,\10\ or (2) 
directly to another trading center.\11\
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    \10\ See Article 17, Rule 5(e)(1)(A).
    \11\ See Article 17, Rule 5(e)(1)(B).
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    The Exchange proposes to amend Article 17, Rule 5(e)(1) to change 
how QCT Cross Orders are handled in Brokerplex. As proposed, QCT Cross 
Orders entered into Brokerplex either electronically or manually would 
be sent to the NYSE Chicago Marketplace to execute in the first 
instance and then to other trading centers if the order cannot be 
executed in the NYSE Chicago Marketplace. In other words, IBRs would no 
longer have the ability to send QCT Cross Orders entered into 
Brokerplex directly to another trading center in the first instance as 
provided for in Article 17, Rule 5(e)(1)(B).\12\
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    \12\ As noted, the QCT Cross Order is a type of Cross Order that 
is only available to IBRs. Cross Orders are two-sided orders with 
instructions to match the identified buy-side with the identified 
sell-side at a specified price known as the ``cross price.'' The 
Exchange will reject a QCT Cross Order if the cross price is not 
between the BBO, unless it meets Cross with Size requirements, in 
which case the cross price can be equal to the BB (BO). See Rule 
7.31(g)(2). Other equities markets do not have a comparable QCT 
Cross Order type.
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    All other aspects of the Brokerplex functionality would continue to 
operate as described in Article 17, Rule 5.
Non-Substantive Conforming Changes
    The Exchange proposes to amend Article 17, Rule 5 to eliminate 
obsolete references to the Exchange's Matching System. During its 
transition to the Pillar trading system, the Exchange defined ``NYSE 
Chicago Marketplace'' in Rule 1.1(p) to mean the electronic securities 
communications and trading facility of the Exchange through which 
orders are processed or are consolidated for execution and/or display. 
The definition was intended to replace references to the term 
``Matching System'' following the transition to Pillar.\13\ Having 
transitioned to Pillar, ``Matching System'' is obsolete and the 
Exchange proposes to delete the phrase ``Exchange's Matching System or 
the'' before ``NYSE Chicago Marketplace'' in each place that it appears 
in Article 17, Rule 5. The Exchange also proposes a non-substantive 
change in Article 17, Rule 5(e)(2) by replacing the word 
``Institutional Broker'' with ``IBR''.
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    \13\ See note 5, supra.
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Implementation
    The Exchange anticipates the technology changes associated with the 
proposed change to Article 17, Rule 5 relating to QCT Cross Orders to 
be implemented in the first quarter of 2023. The Exchange will announce 
the implementation date of this proposal via a Brokerplex Release Note.
2. Statutory Basis
    The proposed rule change is consistent with section 6(b) of the 
Act,\14\ in general, and furthers the objectives of section 
6(b)(5),\15\ in particular, because it is designed to prevent 
fraudulent and manipulative acts and practices, to promote just and 
equitable principles of trade, to foster cooperation and coordination 
with persons engaged in facilitating transactions in securities, to 
remove impediments to, and perfect the mechanism of, a free and open 
market and a national market system and, in general, to protect 
investors and the public interest.
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78f(b).
    \15\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed change would promote just 
and equitable principles of trade and protect investors and the public 
interest by requiring that QCT Cross Orders entered into Brokerplex be 
sent to the Exchange for execution in the first instance. Currently, 
IBRs can send QCT Cross Orders entered into the Exchange-

[[Page 77659]]

provided Brokerplex order management system either to the Exchange or 
to an away trading center. As proposed, QCT Cross Orders entered into 
Brokerplex could only be sent to the Exchange in the first instance for 
execution. If there is no opportunity to execute on the Exchange, such 
orders would then be sent to another trading center, at the direction 
of the IBR. By requiring QCT Cross Orders entered into Brokerplex to be 
sent to the Exchange first rather than allowing IBRs to execute such 
QCT Cross Orders in away venues, the Exchange believes that the 
proposal would enhance the likelihood of QCT Cross Orders to be 
executed on the Exchange, thereby enabling the Exchange to better 
compete with other trading centers for the execution of such orders 
when those orders are entered into Exchange systems.
    As noted, although IBRs are not required to use Brokerplex to 
manage their orders, Brokerplex facilitates entry and execution of QCT 
Cross Orders by providing IBRs with a comprehensive recordkeeping 
solution for such orders, which contain both equities and options 
legs.\16\ To the extent that IBRs utilize Brokerplex in order to 
facilitate their QCT Cross Order business, the Exchange believes that 
such orders should be required to be executed on the Exchange. The 
current functionality permits IBRs that utilize Brokerplex to 
immediately send those orders to away venues. The Exchange believes 
that if IBRs utilize Brokerplex to facilitate QCT Cross Orders, it 
would be fair and consistent with just and equitable principles of 
trade for those orders to be executed on the Exchange. As noted above, 
a number of order types enumerated in Rule 7.31 currently interact with 
the Exchange's order book first. Unlike those order types, which as 
noted are not eligible to be entered into Brokerplex, QCT Cross Orders 
entered into Brokerplex, do not automatically interact with the NYSE 
Chicago Marketplace. QCT Cross Orders, for the most part, are routed 
away for execution because they can trade through a protected quote. 
The Exchange therefore believes that it is just and equitable to 
require QCT Cross Orders entered into Brokerplex to be treated 
similarly to these other order types and sent to the Exchange for 
execution in the first instance.
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    \16\ See Article 17, Rule 5(b).
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    In addition, the Exchange believes that the proposed rule change is 
consistent with section 6(b) of the Act,\17\ in general, and with 
section 6(b)(1) \18\ in particular, in that it enables the Exchange to 
be so organized as to have the capacity to be able to carry out the 
purposes of the Exchange Act and to comply, and to enforce compliance 
by its exchange members and persons associated with its exchange 
members, with the provisions of the Exchange Act, the rules and 
regulations thereunder, and the rules of the Exchange. In particular, 
the Exchange believes that the proposed non-substantive conforming 
changes to delete the words ``Matching System'' throughout Article 17, 
Rule 5 and replacing the word ``Institutional Broker'' with ``IBR'' in 
Article 17, Rule 5(e)(2) would add clarity, consistency and 
transparency to the Exchange's rules. The Exchange believes that adding 
such clarity, consistency and transparency would also be consistent 
with the public interest and the protection of investors because 
investors will not be harmed and in fact would benefit from increased 
transparency, thereby reducing potential confusion.
---------------------------------------------------------------------------

    \17\ 15 U.S.C. 78f(b).
    \18\ 15 U.S.C. 78f(b)(1).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. The Exchange believes that 
by requiring QCT Cross Orders entered into Brokerplex to be sent to the 
Exchange before other trading centers, the proposed rule change would 
increase opportunities for these orders to be executed on the Exchange, 
thereby improving the Exchange's ability to compete with other trading 
centers for the execution of QCT Cross Orders.

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 \19\ and Rule 19b-4(f)(6) thereunder.\20\ 
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; and (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 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.
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    \19\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \20\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    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).
---------------------------------------------------------------------------

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-NYSECHX-2022-31 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-NYSECHX-2022-31. 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

[[Page 77660]]

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-NYSECHX-2022-31 and should 
be submitted on or before January 9, 2023.

    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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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2022-27383 Filed 12-16-22; 8:45 am]
BILLING CODE 8011-01-P

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