Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 7.31, 78407-78410 [2023-25107]
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Federal Register / Vol. 88, No. 219 / Wednesday, November 15, 2023 / Notices
ddrumheller on DSK120RN23PROD with NOTICES1
prompt and accurate clearance and
settlement of securities transactions,
consistent with section 17A(b)(3)(F) of
the Act.44
Moreover, because the Proposed Rule
Change would continue to ensure that
FICC collects sufficient margin from
members, it should also help minimize
the likelihood that FICC would have to
access the Clearing Fund, thereby
limiting non-defaulting members’
exposure to mutualized losses. By
helping to limit the exposure of FICC’s
non-defaulting members to mutualized
losses, the Proposed Rule Change
should help FICC assure the
safeguarding of securities and funds
which are in its custody or control,
consistent with section 17A(b)(3)(F) of
the Act.45
Finally, the proposed clarifying
changes should help to ensure that
FICC’s Rules are clear to members.
When members better understand their
rights and obligations regarding the
Rules, members are more likely to act in
accordance with the Rules, which
should promote the prompt and
accurate clearance and settlement of
securities transactions. As such, the
proposed clarifying changes are
consistent with section 17A(b)(3)(F) of
the Act.46
B. Consistency With Rule 17Ad–22(e)(5)
Rule 17Ad–22(e)(5) under the Act 47
requires, in part, a covered clearing
agency to establish, implement,
maintain and enforce written policies
and procedures reasonably designed to
set and enforce appropriately
conservative haircuts and concentration
limits if the covered clearing agency
requires collateral to manage its or its
participants’ credit exposure. As
described in Part II supra, the proposed
changes to move the collateral haircuts
and concentration limits from FICC’s
Rules should provide FICC with more
flexibility to respond to changing
market conditions because adjustments
to the haircuts and concentration limits
would no longer require a rule change.
By being able to make appropriate and
timely adjustments to the haircuts and
concentration limits, FICC would have
the flexibility to respond to changing
market conditions more promptly.
Specifically, FICC would have the
ability to promptly set and enforce
conservative collateral haircuts and
concentration limits that are reflective
of the current market conditions. In this
way, the proposed changes to move the
collateral haircuts and concentration
limits from the Rules to the website
should help FICC set and enforce
appropriately conservative collateral
haircuts and concentration limits,
consistent with the requirements of Rule
17Ad–22(e)(5) under the Act.48
proposed rule change SR–FICC–2023–
014, be, and hereby is, approved.54
C. Consistency With Rule 17Ad–
22(e)(23)
[FR Doc. 2023–25106 Filed 11–14–23; 8:45 am]
Rule 17Ad–22(e)(23)(i) and
under the Act requires each covered
clearing agency to establish, implement,
maintain, and enforce written policies
and procedures reasonably designed to,
among other things, publicly disclose all
relevant rules and material procedures;
and provide sufficient information to
enable participants to identify and
evaluate the risks, fees, and other
material costs they incur by
participating in the covered clearing
agency. Based on its review of the
record, and for the reasons described
below, the Commission finds that the
proposed changes, taken together, are
consistent with the requirements of Rule
17Ad–22(e)(23)(i) and (ii).50
By adopting rules that require FICC to
provide prior notice through public
disclosures on its website relating to
information on collateral haircuts and
concentration limits, FICC’s Rules
would support the communication of
information that its members may use to
identify and evaluate the haircuts and
concentration limits resulting from
FICC’s processes. As such, the Proposed
Rule Change is consistent with publicly
disclosing all relevant rules and
material procedures; and providing
sufficient information to enable
participants to identify and evaluate the
risks, fees, and other material costs
incurred with participation in the
covered clearing agency. The
Commission finds, therefore, that the
Proposed Rule Change is consistent
with the requirements of Rule 17Ad–
22(e)(23)(i) and (ii) under the Act.51
U.S.C. 78q–1(b)(3)(F).
IV. Conclusion
On the basis of the foregoing, the
Commission finds that the Proposed
Rule Change is consistent with the
requirements of the Act and in
particular with the requirements of
section 17A of the Act 52 and the rules
and regulations promulgated
thereunder.
It is therefore ordered, pursuant to
section 19(b)(2) of the Act 53 that
48 Id.
51 Id.
46 Id.
47 17
CFR 240.17Ad–22(e)(23)(i) and (ii).
50 Id.
45 Id.
52 15
CFR 240.17Ad–22(e)(5).
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For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.55
Sherry R. Haywood,
Assistant Secretary.
BILLING CODE 8011–01–P
(ii) 49
49 17
44 15
78407
PO 00000
U.S.C. 78q–1.
U.S.C. 78s(b)(2).
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SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–98891; File No. SR–NYSE–
2023–40]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Amend Rule
7.31
November 8, 2023.
Pursuant to section 19(b)(1) 1 of the
Securities Exchange Act of 1934
(‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that on October
31, 2023, New York Stock Exchange
LLC (‘‘NYSE’’ or the ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III below, which Items
have been prepared by the selfregulatory organization. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend
Rule 7.31 to provide for the use of ALO
Reserve Orders. 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
54 In approving the Proposed Rule Change, the
Commission considered its impact on efficiency,
competition, and capital formation. 15 U.S.C. 78c(f).
55 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
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Federal Register / Vol. 88, No. 219 / Wednesday, November 15, 2023 / Notices
of those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend
Rule 7.31 to provide for the use of ALO
Reserve Orders.
ddrumheller on DSK120RN23PROD with NOTICES1
ALO Orders
Rule 7.31(e)(2) defines an ALO Order
as a Non-Routable Limit Order that,
unless it receives price improvement,
will not remove liquidity from the
Exchange Book. An ALO Order can be
designated to be cancelled if it would be
displayed at a price other than its limit
price for any reason. An ALO Order can
be designated as non-displayed.
As described in Rule 7.31(e)(2)(A), an
Aggressing ALO Order to buy (sell) will
trade if its limit price crosses the
working price of any displayed or nondisplayed orders to sell (buy) on the
Exchange Book priced equal to or below
(above) the PBO (PBB) of an Away
Market, in which case it will trade as
the liquidity taker with such orders.
As noted above, Rule 7.31(e)(2)
provides that an ALO Order may be
designated to cancel if it would be
displayed at a price other than its limit
price. If an ALO Order is not so
designated, any untraded quantity of
such order to buy (sell) is processed as
follows (Rules 7.31(e)(2)(B)(i) and (ii)):
• If the limit price of the ALO Order
locks the display price of any order to
sell (buy) ranked Priority 2—Display
Orders on the Exchange Book, it will
have a working price and display price
(if designated to display) one MPV
below (above) the price of the displayed
order on the Exchange Book.
• If the limit price of the ALO Order
locks or crosses the PBO (PBB) of an
Away Market, it will have a working
price equal to the PBO (PBB) of the
Away Market and a display price (if
designated to display) one MPV below
(above) the PBO (PBB) of the Away
Market.
Rule 7.31(e)(2)(C) provides that any
untraded quantity of an ALO Order to
buy (sell) will have a working price and
display price (if designated to display)
equal to its limit price if it locks nondisplayed orders to sell (buy) on the
Exchange Book. Rule 7.31(e)(2)(D)
provides that an ALO Order to buy (sell)
will not be assigned a working price or
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display price above (below) the limit
price of such order.
Once resting on the Exchange Book,
ALO Orders may be re-priced or trade,
or both, as described in Rule
7.31(e)(2)(E):
• If order(s) to sell (buy) ranked
Priority 2—Display Orders or the PBO
(PBB) of an Away Market re-prices
higher (lower), an ALO Order to buy
(sell) will trade or be priced, or both,
consistent with Rules 7.31(e)(2)(A),
(e)(2)(B)(i) and (ii), and (e)(2)(C).
• If the PBO (PBB) of an Away Market
re-prices lower (higher) to be equal to or
lower (higher) than its last display price
or if its limit price no longer locks or
crosses the PBO (PBB) of the Away
Market, an ALO Order to buy (sell) will
be priced pursuant to Rules
7.31(e)(1)(A)(ii)(c) and (d). If the PBO
(PBB) of an Away Market re-prices
lower (higher) than the working price of
a non-displayed ALO Order to buy
(sell), such order will have a working
price equal to the PBO (PBB) of the
Away Market.
Reserve Orders
Rule 7.31(d)(1) provides for Reserve
Orders, which are Limit or Inside Limit
Orders with a quantity of the size
displayed and with a reserve quantity
(‘‘reserve interest’’) of the size that is not
displayed. The displayed quantity of a
Reserve Order is ranked Priority 2—
Display Orders, and the reserve interest
is ranked Priority 3—Non-Display
Orders. Both the display quantity and
the reserve interest of an arriving
marketable Reserve Order are eligible to
trade with resting interest in the
Exchange Book or to route to Away
Markets. The working price of the
reserve interest of a resting Reserve
Order will be adjusted in the same
manner as a Non-Displayed Limit Order,
as provided for in Rule 7.31(d)(2)(A).
As described in Rule 7.31(d)(1)(A),
the display quantity of a Reserve Order
must be entered in round lots, and the
displayed portion of a Reserve Order
will be replenished when the display
quantity is decremented to below a
round lot. The replenish quantity will
be the minimum display size of the
order or the remaining quantity of the
reserve interest if it is less than the
minimum display quantity.
Rule 7.31(d)(1)(B) provides that each
time the display quantity of a Reserve
Order is replenished from reserve
interest, a new working time is assigned
to the replenished quantity (each
display quantity with a different time is
referred to as a ‘‘child’’ order), while the
reserve interest retains the working time
of the original order entry. In addition,
when a Reserve Order is replenished
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from reserve interest and already has
two child orders that equal less than a
round lot, the child order with the later
working time will rejoin the reserve
interest and be assigned the new
working time assigned to the next
replenished quantity. If a Reserve Order
is not routable, the replenish quantity
will be assigned a display and working
price consistent with the instructions
for the order.
Rule 7.31(d)(1)(C) provides that a
Reserve Order must be designated Day
and may only be combined with a D
Order, Non-Routable Limit Order, or
Primary Pegged Order. Rule
7.31(d)(1)(C) also currently provides
that a Reserve Order may not be
designated as an ALO Order.
Rule 7.31(d)(1)(D) provides that
routable Reserve Orders will be
evaluated for routing both on arrival and
each time their display quantity is
replenished.
Rule 7.31(d)(1)(E) provides that a
request to reduce the size of a Reserve
Order will cancel the reserve interest
before cancelling the display quantity,
and, if the Reserve Order has more than
one child order, the child order with the
latest working time will be cancelled
first.
Rule 7.31(d)(1)(F) provides that, if the
PBBO is crossed and the display
quantity of a Reserve Order to buy (sell)
that is a Non-Routable Limit Order is
decremented to less than a round lot,
the display price and working price of
such Reserve Order will not change and
the reserve interest that replenishes the
display quantity will be assigned a
display price one MPV below (above)
the PBO (PBB) and a working price
equal to the PBO (PBB). Rule
7.31(d)(1)(F) further provides that, when
the PBBO uncrosses, the display price
and working price will be adjusted as
provided for under Rule 7.31(e)(1)
relating to Non-Routable Limit Orders.
ALO Reserve Orders
The Exchange proposes to amend
Rule 7.31 to provide for the use of ALO
Reserve Orders. The proposed change is
not intended to introduce any new
functionality or modify any current
functionality, but rather to facilitate the
combination of two order types
currently offered by the Exchange. As
proposed, ALO Reserve Orders would,
except as otherwise noted, operate
consistent with current Rule 7.31(d)(1)
regarding Reserve Orders and current
Rule 7.31(e)(2) regarding ALO Orders.
To allow for the use of ALO Reserve
Orders, the Exchange first proposes to
amend Rule 7.31(d)(1)(C) to delete the
last sentence of such rule, which
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ddrumheller on DSK120RN23PROD with NOTICES1
Federal Register / Vol. 88, No. 219 / Wednesday, November 15, 2023 / Notices
currently provides that a Reserve Order
may not be designated as an ALO Order.
The proposed change is intended to
allow ALO Orders, as described in Rule
7.31(e)(2) and the paragraphs
thereunder,4 to have a displayed
quantity, along with non-displayed
reserve interest, as described in Rule
7.31(d)(1). The display quantity of an
ALO Reserve Order would be
replenished as provided in Rules
7.31(d)(1)(A) and (B). As ALO Reserve
Orders are non-routable, under Rule
7.31(d)(1)(B)(ii), the replenish quantity
of an ALO Reserve Order would be
assigned a display price and working
price consistent with the behavior of
ALO Orders as described in current
Exchange rules.
Aggressing ALO Reserve Orders
would trade in accordance with current
Rule 7.31(e)(2)(A). If an ALO Reserve
Order is designated to cancel, it will
cancel if it would be displayed at a price
other than its limit price for any reason,
as described in Rule 7.31(e)(2).
Otherwise, any untraded quantity of an
ALO Reserve Order would continue to
be processed as ALO Orders are
currently, as described in Rules
7.31(e)(2)(B) and (C). Similarly, the
working price of the reserve interest of
a resting ALO Reserve Order would be
adjusted as provided for in Rule
7.31(d)(1) (i.e., in accordance with Rule
7.31(d)(2)(A)). Rule 7.31(d)(1)(E) would
also apply to requests to reduce the size
of ALO Reserve Orders.
As described in Rule 7.31(d)(1)(F),
when the PBBO is crossed and the
display quantity of an ALO Reserve
Order to buy (sell) is decremented to
less than a round lot, the display price
and working price of the order would
not change, but the reserve interest that
replenishes the display quantity would
be assigned a display price one MPV
below (above) the PBO (PBB) and a
working price equal to the PBO (PBB).
The Exchange proposes to amend Rule
7.31(d)(1)(F) to add new rule text
describing how the display price and
working price of an ALO Reserve Order
would be adjusted when a previously
crossed PBBO uncrosses. Specifically,
the Exchange proposes to add text to the
last sentence of Rule 7.31(d)(1)(F)
providing that the display price and
working price of an ALO Reserve Order
would be adjusted in accordance with
Rule 7.31(e)(2)(E), which describes how
ALO Orders resting on the Exchange
Book are repriced and/or traded.
4 The Exchange does not propose to allow nondisplayed ALO Orders to be designated as Reserve
Orders, given that a Reserve Order must have both
displayed and non-displayed portions, and thus
proposes to amend Rule 7.31(e)(2) to specify
accordingly.
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Because ALO Orders behave differently
from other Non-Routable Limit Orders
and may only trade when they receive
price improvement, the Exchange
proposes to add text to Rule
7.31(e)(2)(F) clarifying that ALO Reserve
Orders would have their display price
and working price adjusted consistent
with the rules applicable to ALO Orders
when the PBBO uncrosses.
The proposed change is intended to
facilitate the combined use of two
existing order types available on the
Exchange, thereby providing member
organizations with enhanced flexibility
and optionality when trading on the
Exchange. The proposed change could
also promote increased liquidity and
trading opportunities on the Exchange,
to the benefit of all market participants.
The Exchange also believes the
proposed change would permit the
Exchange to offer functionality already
available on at least one other equities
exchange, thereby promoting
competition among equities exchanges.5
Because of the technology changes
associated with this proposed rule
change, the Exchange will announce the
implementation date by Trader Update,
which, subject to effectiveness of this
proposed rule change, will be in the
fourth quarter of 2023.
2. Statutory Basis
The proposed rule change is
consistent with section 6(b) of the Act,6
in general, and furthers the objectives of
section 6(b)(5),7 in particular, because it
is designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, to foster cooperation and
coordination with persons engaged in
facilitating transactions in securities, to
remove impediments to, and perfect the
mechanism of, a free and open market
and a national market system and, in
general, to protect investors and the
public interest.
The Exchange believes that the
proposed rule change is designed to
remove impediments to and perfect the
mechanism of a free and open market
because it would allow for the
combined use of two existing order
types available on the Exchange and
permit the Exchange to offer
functionality similar to that already
5 See, e.g., MEMX Rules 11.8(b)(4) and (7)
(providing that a Limit Order may include a reserve
quantity and may be designated with a Post Only
instruction); see also MEMX User Manual, available
at https://info.memxtrading.com/wp-content/
uploads/2023/03/MEMX-User-Manual-03.10.23.pdf,
at 9 (providing that a Limit Order designated Day
may have both reserve quantity and Post Only
instructions).
6 15 U.S.C. 78f(b).
7 15 U.S.C. 78f(b)(5).
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78409
available on at least one other equities
exchange.8 Member organizations
would be free to choose to use the
proposed ALO Reserve Order type or
not, and the proposed change would not
otherwise impact the operation of the
Reserve Order or ALO Order as
described in current Exchange rules.
The Exchange also believes that the
proposed rule change would remove
impediments to and perfect the
mechanism of a free and open market,
as well as protect investors and the
public interest, by expanding the
options available to member
organizations when trading on the
Exchange and promoting increased
liquidity and additional trading
opportunities for all market
participants.
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. In addition,
as noted above, Exchange believes the
proposed rule change would allow the
Exchange to offer functionality already
available on at least one other equities
exchange 9 and thus would promote
competition among equities exchanges.
The Exchange also believes that, to the
extent the proposed change increases
opportunities for order execution, the
proposed change would promote
competition by making the Exchange a
more attractive venue for order flow and
enhancing market quality for all market
participants.
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 10 and Rule
19b-4(f)(6) thereunder.11 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
8 See
note 5, supra.
id.
10 15 U.S.C. 78s(b)(3)(A)(iii).
11 17 CFR 240.19b-4(f)(6).
9 See
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Federal Register / Vol. 88, No. 219 / Wednesday, November 15, 2023 / Notices
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.12
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) 13 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
Paper Comments
ddrumheller on DSK120RN23PROD with NOTICES1
• 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–2023–40. 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
12 17 CFR 240.19b-4(f)(6)(iii). 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 five business
days prior to the date of filing of the proposed rule
change, or such shorter time as designated by the
Commission. The Exchange has satisfied this
requirement.
13 15 U.S.C. 78s(b)(2)(B).
17:49 Nov 14, 2023
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.14
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–25107 Filed 11–14–23; 8:45 am]
• 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–2023–40 on the subject line.
VerDate Sep<11>2014
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
a.m. and 3 p.m. Copies of the filing also
will be available for inspection and
copying at the principal office of the
Exchange. Do not include personal
identifiable information in submissions;
you should submit only information
that you wish to make available
publicly. We may redact in part or
withhold entirely from publication
submitted material that is obscene or
subject to copyright protection. All
submissions should refer to file number
SR–NYSE–2023–40 and should be
submitted on or before December 6,
2023.
Jkt 262001
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–98894; File No. SR–
NYSEARCA–2023–76]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Modify the NYSE Arca
Options Fee Schedule
November 9, 2023.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934
(‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on October
31, 2023, NYSE Arca, Inc. (‘‘NYSE
Arca’’ 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.
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to modify the
NYSE Arca Options Fee Schedule (‘‘Fee
Schedule’’) regarding certain Customer
incentives. The Exchange proposes to
implement the fee change effective
November 1, 2023. 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 purpose of this filing is to amend
the Fee Schedule to modify a
qualification basis applicable to the
Customer Penny Posting Credit Tiers,
Customer Posting Credits [sic] in NonPenny Issues, and Customer Incentive
Program. The Exchange proposes to
implement the rule change on
November 1, 2023.
The Fee Schedule provides for certain
incentive programs through which an
OTP Holder or OTP Firm (collectively,
‘‘OTP Holder’’) may earn credits on
posted interest. The Customer Penny
Posting Credit Tiers offers qualifying
OTP Holders tiered credits on electronic
executions of Customer posted interest
in Penny issues, and the Customer
Penny [sic] Posting Credit Tiers in NonPenny Issues offers qualifying OTP
Holders tiered credits on electronic
executions of Customer posted interest
in non-Penny issues.4 OTP Holders may
also qualify for the Customer Incentive
Program, which offers an additional
14 17
1 15
PO 00000
Frm 00128
Fmt 4703
Sfmt 4703
4 See Fee Schedule, CUSTOMER PENNY
POSTING CREDIT TIERS; CUSTOMER POSTING
CREDIT TIERS IN NON-PENNY ISSUES.
E:\FR\FM\15NON1.SGM
15NON1
]]>Agencies
[Federal Register Volume 88, Number 219 (Wednesday, November 15, 2023)]
[Notices]
[Pages 78407-78410]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-25107]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-98891; File No. SR-NYSE-2023-40]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend Rule 7.31
November 8, 2023.
Pursuant to section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that on October 31, 2023, New York Stock Exchange LLC (``NYSE'' or the
``Exchange'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I, II,
and III 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 Rule 7.31 to provide for the use of
ALO Reserve Orders. 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
[[Page 78408]]
of those statements may be examined at the places specified in Item IV
below. The Exchange has prepared summaries, set forth in sections A, B,
and C below, of the most significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend Rule 7.31 to provide for the use of
ALO Reserve Orders.
ALO Orders
Rule 7.31(e)(2) defines an ALO Order as a Non-Routable Limit Order
that, unless it receives price improvement, will not remove liquidity
from the Exchange Book. An ALO Order can be designated to be cancelled
if it would be displayed at a price other than its limit price for any
reason. An ALO Order can be designated as non-displayed.
As described in Rule 7.31(e)(2)(A), an Aggressing ALO Order to buy
(sell) will trade if its limit price crosses the working price of any
displayed or non-displayed orders to sell (buy) on the Exchange Book
priced equal to or below (above) the PBO (PBB) of an Away Market, in
which case it will trade as the liquidity taker with such orders.
As noted above, Rule 7.31(e)(2) provides that an ALO Order may be
designated to cancel if it would be displayed at a price other than its
limit price. If an ALO Order is not so designated, any untraded
quantity of such order to buy (sell) is processed as follows (Rules
7.31(e)(2)(B)(i) and (ii)):
If the limit price of the ALO Order locks the display
price of any order to sell (buy) ranked Priority 2--Display Orders on
the Exchange Book, it will have a working price and display price (if
designated to display) one MPV below (above) the price of the displayed
order on the Exchange Book.
If the limit price of the ALO Order locks or crosses the
PBO (PBB) of an Away Market, it will have a working price equal to the
PBO (PBB) of the Away Market and a display price (if designated to
display) one MPV below (above) the PBO (PBB) of the Away Market.
Rule 7.31(e)(2)(C) provides that any untraded quantity of an ALO
Order to buy (sell) will have a working price and display price (if
designated to display) equal to its limit price if it locks non-
displayed orders to sell (buy) on the Exchange Book. Rule 7.31(e)(2)(D)
provides that an ALO Order to buy (sell) will not be assigned a working
price or display price above (below) the limit price of such order.
Once resting on the Exchange Book, ALO Orders may be re-priced or
trade, or both, as described in Rule 7.31(e)(2)(E):
If order(s) to sell (buy) ranked Priority 2--Display
Orders or the PBO (PBB) of an Away Market re-prices higher (lower), an
ALO Order to buy (sell) will trade or be priced, or both, consistent
with Rules 7.31(e)(2)(A), (e)(2)(B)(i) and (ii), and (e)(2)(C).
If the PBO (PBB) of an Away Market re-prices lower
(higher) to be equal to or lower (higher) than its last display price
or if its limit price no longer locks or crosses the PBO (PBB) of the
Away Market, an ALO Order to buy (sell) will be priced pursuant to
Rules 7.31(e)(1)(A)(ii)(c) and (d). If the PBO (PBB) of an Away Market
re-prices lower (higher) than the working price of a non-displayed ALO
Order to buy (sell), such order will have a working price equal to the
PBO (PBB) of the Away Market.
Reserve Orders
Rule 7.31(d)(1) provides for Reserve Orders, which are Limit or
Inside Limit Orders with a quantity of the size displayed and with a
reserve quantity (``reserve interest'') of the size that is not
displayed. The displayed quantity of a Reserve Order is ranked Priority
2--Display Orders, and the reserve interest is ranked Priority 3--Non-
Display Orders. Both the display quantity and the reserve interest of
an arriving marketable Reserve Order are eligible to trade with resting
interest in the Exchange Book or to route to Away Markets. The working
price of the reserve interest of a resting Reserve Order will be
adjusted in the same manner as a Non-Displayed Limit Order, as provided
for in Rule 7.31(d)(2)(A).
As described in Rule 7.31(d)(1)(A), the display quantity of a
Reserve Order must be entered in round lots, and the displayed portion
of a Reserve Order will be replenished when the display quantity is
decremented to below a round lot. The replenish quantity will be the
minimum display size of the order or the remaining quantity of the
reserve interest if it is less than the minimum display quantity.
Rule 7.31(d)(1)(B) provides that each time the display quantity of
a Reserve Order is replenished from reserve interest, a new working
time is assigned to the replenished quantity (each display quantity
with a different time is referred to as a ``child'' order), while the
reserve interest retains the working time of the original order entry.
In addition, when a Reserve Order is replenished from reserve interest
and already has two child orders that equal less than a round lot, the
child order with the later working time will rejoin the reserve
interest and be assigned the new working time assigned to the next
replenished quantity. If a Reserve Order is not routable, the replenish
quantity will be assigned a display and working price consistent with
the instructions for the order.
Rule 7.31(d)(1)(C) provides that a Reserve Order must be designated
Day and may only be combined with a D Order, Non-Routable Limit Order,
or Primary Pegged Order. Rule 7.31(d)(1)(C) also currently provides
that a Reserve Order may not be designated as an ALO Order.
Rule 7.31(d)(1)(D) provides that routable Reserve Orders will be
evaluated for routing both on arrival and each time their display
quantity is replenished.
Rule 7.31(d)(1)(E) provides that a request to reduce the size of a
Reserve Order will cancel the reserve interest before cancelling the
display quantity, and, if the Reserve Order has more than one child
order, the child order with the latest working time will be cancelled
first.
Rule 7.31(d)(1)(F) provides that, if the PBBO is crossed and the
display quantity of a Reserve Order to buy (sell) that is a Non-
Routable Limit Order is decremented to less than a round lot, the
display price and working price of such Reserve Order will not change
and the reserve interest that replenishes the display quantity will be
assigned a display price one MPV below (above) the PBO (PBB) and a
working price equal to the PBO (PBB). Rule 7.31(d)(1)(F) further
provides that, when the PBBO uncrosses, the display price and working
price will be adjusted as provided for under Rule 7.31(e)(1) relating
to Non-Routable Limit Orders.
ALO Reserve Orders
The Exchange proposes to amend Rule 7.31 to provide for the use of
ALO Reserve Orders. The proposed change is not intended to introduce
any new functionality or modify any current functionality, but rather
to facilitate the combination of two order types currently offered by
the Exchange. As proposed, ALO Reserve Orders would, except as
otherwise noted, operate consistent with current Rule 7.31(d)(1)
regarding Reserve Orders and current Rule 7.31(e)(2) regarding ALO
Orders. To allow for the use of ALO Reserve Orders, the Exchange first
proposes to amend Rule 7.31(d)(1)(C) to delete the last sentence of
such rule, which
[[Page 78409]]
currently provides that a Reserve Order may not be designated as an ALO
Order.
The proposed change is intended to allow ALO Orders, as described
in Rule 7.31(e)(2) and the paragraphs thereunder,\4\ to have a
displayed quantity, along with non-displayed reserve interest, as
described in Rule 7.31(d)(1). The display quantity of an ALO Reserve
Order would be replenished as provided in Rules 7.31(d)(1)(A) and (B).
As ALO Reserve Orders are non-routable, under Rule 7.31(d)(1)(B)(ii),
the replenish quantity of an ALO Reserve Order would be assigned a
display price and working price consistent with the behavior of ALO
Orders as described in current Exchange rules.
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\4\ The Exchange does not propose to allow non-displayed ALO
Orders to be designated as Reserve Orders, given that a Reserve
Order must have both displayed and non-displayed portions, and thus
proposes to amend Rule 7.31(e)(2) to specify accordingly.
---------------------------------------------------------------------------
Aggressing ALO Reserve Orders would trade in accordance with
current Rule 7.31(e)(2)(A). If an ALO Reserve Order is designated to
cancel, it will cancel if it would be displayed at a price other than
its limit price for any reason, as described in Rule 7.31(e)(2).
Otherwise, any untraded quantity of an ALO Reserve Order would continue
to be processed as ALO Orders are currently, as described in Rules
7.31(e)(2)(B) and (C). Similarly, the working price of the reserve
interest of a resting ALO Reserve Order would be adjusted as provided
for in Rule 7.31(d)(1) (i.e., in accordance with Rule 7.31(d)(2)(A)).
Rule 7.31(d)(1)(E) would also apply to requests to reduce the size of
ALO Reserve Orders.
As described in Rule 7.31(d)(1)(F), when the PBBO is crossed and
the display quantity of an ALO Reserve Order to buy (sell) is
decremented to less than a round lot, the display price and working
price of the order would not change, but the reserve interest that
replenishes the display quantity would be assigned a display price one
MPV below (above) the PBO (PBB) and a working price equal to the PBO
(PBB). The Exchange proposes to amend Rule 7.31(d)(1)(F) to add new
rule text describing how the display price and working price of an ALO
Reserve Order would be adjusted when a previously crossed PBBO
uncrosses. Specifically, the Exchange proposes to add text to the last
sentence of Rule 7.31(d)(1)(F) providing that the display price and
working price of an ALO Reserve Order would be adjusted in accordance
with Rule 7.31(e)(2)(E), which describes how ALO Orders resting on the
Exchange Book are repriced and/or traded. Because ALO Orders behave
differently from other Non-Routable Limit Orders and may only trade
when they receive price improvement, the Exchange proposes to add text
to Rule 7.31(e)(2)(F) clarifying that ALO Reserve Orders would have
their display price and working price adjusted consistent with the
rules applicable to ALO Orders when the PBBO uncrosses.
The proposed change is intended to facilitate the combined use of
two existing order types available on the Exchange, thereby providing
member organizations with enhanced flexibility and optionality when
trading on the Exchange. The proposed change could also promote
increased liquidity and trading opportunities on the Exchange, to the
benefit of all market participants. The Exchange also believes the
proposed change would permit the Exchange to offer functionality
already available on at least one other equities exchange, thereby
promoting competition among equities exchanges.\5\
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\5\ See, e.g., MEMX Rules 11.8(b)(4) and (7) (providing that a
Limit Order may include a reserve quantity and may be designated
with a Post Only instruction); see also MEMX User Manual, available
at https://info.memxtrading.com/wp-content/uploads/2023/03/MEMX-User-Manual-03.10.23.pdf, at 9 (providing that a Limit Order
designated Day may have both reserve quantity and Post Only
instructions).
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Because of the technology changes associated with this proposed
rule change, the Exchange will announce the implementation date by
Trader Update, which, subject to effectiveness of this proposed rule
change, will be in the fourth quarter of 2023.
2. Statutory Basis
The proposed rule change is consistent with section 6(b) of the
Act,\6\ in general, and furthers the objectives of section 6(b)(5),\7\
in particular, because it is designed to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade, to foster cooperation and coordination with
persons engaged in facilitating transactions in securities, to remove
impediments to, and perfect the mechanism of, a free and open market
and a national market system and, in general, to protect investors and
the public interest.
---------------------------------------------------------------------------
\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The Exchange believes that the proposed rule change is designed to
remove impediments to and perfect the mechanism of a free and open
market because it would allow for the combined use of two existing
order types available on the Exchange and permit the Exchange to offer
functionality similar to that already available on at least one other
equities exchange.\8\ Member organizations would be free to choose to
use the proposed ALO Reserve Order type or not, and the proposed change
would not otherwise impact the operation of the Reserve Order or ALO
Order as described in current Exchange rules. The Exchange also
believes that the proposed rule change would remove impediments to and
perfect the mechanism of a free and open market, as well as protect
investors and the public interest, by expanding the options available
to member organizations when trading on the Exchange and promoting
increased liquidity and additional trading opportunities for all market
participants.
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\8\ See note 5, supra.
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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. In addition, as noted above,
Exchange believes the proposed rule change would allow the Exchange to
offer functionality already available on at least one other equities
exchange \9\ and thus would promote competition among equities
exchanges. The Exchange also believes that, to the extent the proposed
change increases opportunities for order execution, the proposed change
would promote competition by making the Exchange a more attractive
venue for order flow and enhancing market quality for all market
participants.
---------------------------------------------------------------------------
\9\ See id.
---------------------------------------------------------------------------
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 \10\ and Rule 19b-4(f)(6) thereunder.\11\
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
[[Page 78410]]
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.\12\
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\10\ 15 U.S.C. 78s(b)(3)(A)(iii).
\11\ 17 CFR 240.19b-4(f)(6).
\12\ 17 CFR 240.19b-4(f)(6)(iii). 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 five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
---------------------------------------------------------------------------
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) \13\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\13\ 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-NYSE-2023-40 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-2023-40. 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
a.m. and 3 p.m. Copies of the filing also will be available for
inspection and copying at the principal office of the Exchange. Do not
include personal identifiable information in submissions; you should
submit only information that you wish to make available publicly. We
may redact in part or withhold entirely from publication submitted
material that is obscene or subject to copyright protection. All
submissions should refer to file number SR-NYSE-2023-40 and should be
submitted on or before December 6, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-25107 Filed 11-14-23; 8:45 am]
BILLING CODE 8011-01-P
