Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Revise Rule 10.16, 38939-38941 [2024-10000]
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Federal Register / Vol. 89, No. 90 / Wednesday, May 8, 2024 / Notices
streamlined sanction guidelines for its
options marketplace based on NYSE
American LLC (‘‘NYSE American’’) Rule
601 and make certain conforming
changes.
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–100047; File No. SR–
NYSEARCA–2024–34]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Revise Rule 10.16
May 2, 2024.
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 April 23,
2024, NYSE Arca, Inc. (‘‘NYSE Arca’’ or
the ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the self-regulatory organization. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to revise Rule
10.16 to adopt streamlined sanction
guidelines for its options marketplace
based on NYSE American LLC Rule 601
and make certain 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.
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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 revise Rule
10.16 (NYSE Arca Sanctioning
Guidelines—Options) to adopt
1 15
U.S.C. 78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
2 15
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Background and Proposed Rule Change
The current Sanction Guidelines in
Rule 10.16 were adopted pursuant to the
provisions of Section IV.B.i of the
Commission’s September 11, 2000
Order Instituting Administrative
Proceedings Pursuant to Section
19(h)(1) of the Act (the ‘‘2000 Order’’),
which required the Exchange to adopt
rules establishing, or modifying
existing, sanctioning guidelines such
that they are reasonably designed to
effectively enforce compliance with
options order handling rules, including
the duty of best execution with respect
to the handling of orders after the
broker-dealer routes the order to such
respondent exchange, limit order
display, priority, firm quote, and trade
reporting rules.4 Like its affiliate NYSE
American, which also adopted sanction
guidelines in response to the 2000
Order,5 the Exchange incorporated fine
ranges in its sanctions guidelines for
specific rule violations. Unlike NYSE
American, the Exchange’s suggested
monetary sanctions are very broad
($10,000–$100,000 in four instances and
$10,000–$150,000 in two instances).
The current Exchange sanction
guidelines are otherwise similar to the
sanction guidelines adopted by NYSE
American in response to the 2000 Order.
Recently, NYSE American adopted a
new Rule 601 incorporating sanctions
guidelines similar to Cboe Exchange,
Inc. (‘‘Cboe’’) Rule 13.11,
Supplementary Material .01, in place of
those original sanction guidelines.6 The
4 See Securities Exchange Act Release Nos. 45416
(February 7, 2002), 67 FR 6777 (February 13, 2002)
(SR–PCX–2001–23) (Notice); 45567 (March 15,
2002), 67 FR 13392 (March 22, 2002) (SR–PCX–
2001–23) (Order). See generally Securities Exchange
Act Release No. 43268 (September 11, 2000),
Administrative Proceeding File No. 3–10282.
5 Other exchanges subject to the 2000 Order,
however, did not adopt specific fine ranges as part
of their sanction guidelines. See, e.g., Securities
Exchange Act Release Nos. 45427 (February 8,
2002), 67 FR 6958 (February 14, 2002) (Notice);
45571 (March 15, 2002), 67 FR 13382 (March 22,
2002) (SR–CBOE–2001–71) (Order Granting
Accelerated Approval of Proposed Rule Change and
Notice of Filing and Order Granting Accelerated
Approval of Amendment No. 1 Thereto by the
Chicago Board Options Exchange, Inc. To
Incorporate Certain Principal Considerations in
Determining Sanctions and To Incorporate in the
Exchange’s Minor Rule Violation Plan Violations of
the Exchange’s Order Handling Rules).
6 See Securities Exchange Act Release No. 98798
(October 25, 2023), 88 FR 74544 (October 31, 2023)
(SR–NYSEAMER–2023–49) (Notice of Filing and
Immediate Effectiveness of Proposed Change To
Delete Legacy Disciplinary Rules 475, 476, 476A,
and 477 and Make Conforming Changes to Rule 41,
PO 00000
Frm 00079
Fmt 4703
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38939
new, streamlined sanction guidelines
adopted by NYSE American eliminated
specific fine ranges for violations and
continued to reflect a principles-based
approach to sanctions guidelines
applicable to all options rules. The
Exchange believes that adopting the
same NYSE American sanction
guidelines that do not contain specific
recommended fine ranges for a subset of
rules would similarly modernize and
update Rule 10.16 in important respects
while continuing to provide flexible
guidelines for determining appropriate
remedial sanctions consistent with the
intention of the original rule.7 Further,
because both NYSE American Rule 601
and Cboe Rule 13.11 take a more
streamlined approach, the Exchange
believes the proposed rule would more
clearly and succinctly set forth current
relevant considerations regarding the
adjudication of disciplinary actions.
In addition, the Exchange believes
that the proposed rule would be
consistent with the 2000 Order. The
Exchange’s current sanction guidelines
are similar to the guidelines that NYSE
American replaced. Moreover, the text
of NYSE American Rule 601 was based
on Cboe Rule 13.11 that was also
adopted to satisfy the 2000 Order. As
proposed, the Exchange would
reproduce the text of NYSE American
Rule 601 almost verbatim. In addition,
by modernizing and updating the
Exchange’s sanctions guidelines, the
Exchange would further enhance its
disciplinary processes consistent with
the 2000 Order. Finally, the proposed
rule would promote regulatory
consistency across options exchanges in
determining appropriate remedial
sanctions for violations of options rules.
As is currently the case, proposed
Rule 10.16 would not apply to the
equities market.8 As such, proposed
Rule 10.16 would carry forward the
current practice whereby the various
bodies with responsibility for the
adjudication of disciplinary actions,
including Hearing Panels, Hearing
Officers, the Committee for Review
(‘‘CFR’’), and the Board of Directors
(‘‘Board’’), defined in the proposed Rule
collectively as ‘‘Adjudicatory Bodies,’’
would consider relevant Exchange
precedent or such other precedent as
they deem appropriate in determining
sanctions imposed against OTP Holders
or OTP Firms and their covered persons
as defined in Rule 10.9120(g) of the
Rules 8001, 8130(d), 8320(d), 9001, 9216(b)(1),
9810(a), and 781 of the Office Rules, Rules 2A, 12E,
3170(a)(3), 902NY and Adopt a New Rule 600 and
Make Conforming Changes to Rules 3170(C)(3), and
Adopt a New Rule 601).
7 See 67 FR at 6771.
8 See note 4 and accompanying text, supra.
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38940
Federal Register / Vol. 89, No. 90 / Wednesday, May 8, 2024 / Notices
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Exchange’s disciplinary rules. The
proposed definition of Adjudicatory
Bodies would be updated to reflect the
terms provided for in the current
disciplinary rules, including ‘‘Hearing
Panels’’ and ‘‘Extended Hearing Panels’’
in place of ‘‘Ethics and Business
Conduct Committee,’’ and ‘‘Committee
for Review’’ and ‘‘Chief Regulatory
Officer (‘‘CRO’’),’’ given the role of each
in the disciplinary and settlement
processes. In addition, for the avoidance
of doubt, the Exchange would include
the CRO’s delegees in the definition of
Adjudicatory Bodies, which
corresponds to the current definition of
Adjudicatory Bodies as inclusive of
Exchange regulatory staff. Similarly for
the avoidance of doubt, the Exchange
would add letters of acceptance, waiver
and consent to the list of ways a
disciplinary matter can be resolved as
well as summary sanctions in optionsrelated matters governed by Rule 10.13
and appeals of Floor citations and
summary sanctions governed by Rule
10.11, which are unique to the
Exchange.9 The remainder of the
proposed Rule would be identical to
NYSE American Rule 601.
Finally, the Exchange would conform
Rules 10.0 (Legacy Disciplinary
Proceedings, Other Hearings and
Appeals) and 10.9001 (Effective Date of
Rule 10.9000 Series) to reflect the
change in the title of Rule 10.16
replacing ‘‘Sanctioning’’ with
‘‘Sanctions.’’
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
Section 6(b)(5) of the Act,10 in that it is
designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, to foster cooperation and
coordination with persons engaged in
facilitating transactions in securities, to
remove impediments to and perfect the
mechanism of a free and open market
and a national market system and, in
general, to protect investors and the
public interest. In addition, the
Exchange believes that the proposed
rule change furthers the objectives of
Section 6(b)(7) of the Act,11 in
particular, in that it provides fair
procedures for the disciplining of
members and persons associated with
members, the denial of membership to
any person seeking membership therein,
9 For
the further avoidance of doubt, neither the
list of ways that a proposed disciplinary matter can
be resolved nor the persons and entities comprising
the definition of Adjudicatory Bodies in proposed
Rule 10.16 are intended to be exhaustive.
10 15 U.S.C. 78f(b)(5).
11 15 U.S.C. 78f(b)(7).
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17:03 May 07, 2024
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the barring of any person from becoming
associated with a member thereof, and
the prohibition or limitation by the
Exchange of any person with respect to
access to services offered by the
Exchange or a member thereof.
Specifically, the Exchange believes
that adopting sanction guidelines that
are substantively the same as NYSE
American Rule 601 would continue to
permit the Exchange to impose
sanctions consistently and fairly by
reference to a streamlined rule, thereby
continuing to provide fair procedures
for the disciplining of members and
persons associated with members, the
denial of membership to any person
seeking Exchange membership, the
barring of any person from becoming
associated with a member, and the
prohibition or limitation by the
Exchange of any person with respect to
access to services offered by the
Exchange or a member thereof pursuant
to Section 6(b)(7) 12 of the Act.
The proposed rule would provide
flexible and appropriate principlesbased guidelines applicable to all
options rules for determining remedial
sanctions consistent with the intention
of the Exchange’s current sanctions
guidelines rule.13 Moreover, the
Exchange believes that by adopting
NYSE American Rule 601’s more
streamlined approach to sanctions
guidelines, the Exchange believes the
proposed rule would more clearly and
succinctly set forth the current relevant
considerations regarding the
adjudication of disciplinary actions.
Further, the Exchange believes that the
proposed rule would also be consistent
with the 2000 Order because the
proposed rule is substantively the same
as NYSE American Rule 601, which was
in turn based on Cboe Rule 13.11 that
was adopted to satisfy the same
Commission order. Indeed, the
Exchange believes that by modernizing
and updating its sanctions guidelines,
proposed Rule 10.16 would further
enhance its disciplinary processes
consistent with the 2000 Order and
further ensure that the Exchange
implements the most appropriate
disciplinary mechanisms for violations
and a fair process in determining same.
Finally, the proposed rule would
promote regulatory consistency and
uniformity across options exchanges in
determining appropriate remedial
sanctions and the imposition of
penalties.
12 15
U.S.C. 78f(b)(7).
67 FR at 6771.
13 See
PO 00000
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Fmt 4703
Sfmt 4703
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 Exchange Act.
The proposed rule change is not
intended to address competitive issues
but rather is concerned solely with
adopting updated, streamlined sanction
guidelines based on the rules of the
Exchange’s affiliate that are consistent
with a previous Commission order and
continue to permit the Exchange to
impose sanctions consistently and
fairly.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing 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 for 30 days
from the date on which it was filed, or
such shorter time as the Commission
may designate, it has become effective
pursuant to Section 19(b)(3)(A) of the
Act and Rule 19b–4(f)(6) thereunder.14
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.
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:
14 17 CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6) requires a self-regulatory organization to give
the Commission written notice of its intent to file
the proposed rule change at least 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.
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Federal Register / Vol. 89, No. 90 / Wednesday, May 8, 2024 / Notices
Electronic Comments
SMALL BUSINESS ADMINISTRATION
• 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–
NYSEARCA–2024–34 on the subject
line.
[Disaster Declaration #20312 and #20313;
Ohio Disaster Number OH–20002
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
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All submissions should refer to file
number SR–NYSEARCA–2024–34. 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–NYSEARCA–2024–34 and should be
submitted on or before May 29, 2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.15
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2024–10000 Filed 5–7–24; 8:45 am]
Presidential Declaration of a Major
Disaster for the State of Ohio
U.S. Small Business
Administration.
ACTION: Notice.
AGENCY:
This is a Notice of the
Presidential declaration of a major
disaster for the State of Ohio (FEMA–
4777–DR), dated 05/02/2024.
Incident: Tornadoes.
Incident Period: 03/14/2024.
DATES: Issued on 05/02/2024.
Physical Loan Application Deadline
Date: 07/01/2024.
Economic Injury (EIDL) Loan
Application Deadline Date: 02/03/2025.
ADDRESSES: Visit the MySBA Loan
Portal at https://lending.sba.gov to
apply for a disaster assistance loan.
FOR FURTHER INFORMATION CONTACT:
Vanessa Morgan, Office of Disaster
Recovery & Resilience, U.S. Small
Business Administration, 409 3rd Street
SW, Suite 6050, Washington, DC 20416,
(202) 205–6734.
SUPPLEMENTARY INFORMATION: Notice is
hereby given that as a result of the
President’s major disaster declaration on
05/02/2024, applications for disaster
loans may be submitted online using the
MySBA Loan Portal https://
lending.sba.gov or other locally
announced locations. Please contact the
SBA disaster assistance customer
service center by email at
disastercustomerservice@sba.gov or by
phone at 1–800–659–2955 for further
assistance.
The following areas have been
determined to be adversely affected by
the disaster:
Primary Counties (Physical Damage and
Economic Injury Loans): Auglaize,
Crawford, Darke, Delaware,
Hancock, Licking, Logan, Mercer,
Miami, Richland, Union.
Contiguous Counties (Economic Injury
Loans Only):
Ohio: Allen, Ashland, Champaign,
Clark, Coshocton, Fairfield,
Franklin, Hardin, Henry, Huron,
Knox, Madison, Marion,
Montgomery, Morrow, Muskingum,
Perry, Preble, Putnam, Seneca,
Shelby, Van Wert, Wood, Wyandot
Indiana: Adams, Jay, Wayne,
Randolph
The Interest Rates are:
SUMMARY:
BILLING CODE 8011–01–P
Percent
15 17
For Physical Damage:
CFR 200.30–3(a)(12).
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17:03 May 07, 2024
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38941
Percent
Homeowners with Credit Available Elsewhere ......................
Homeowners without Credit
Available Elsewhere ..............
Businesses with Credit Available Elsewhere ......................
Businesses
without
Credit
Available Elsewhere ..............
Non-Profit Organizations with
Credit Available Elsewhere ...
Non-Profit Organizations without Credit Available Elsewhere .....................................
For Economic Injury:
Business and Small Agricultural
Cooperatives without Credit
Available Elsewhere ..............
Non-Profit Organizations without Credit Available Elsewhere .....................................
5.375
2.688
8.000
4.000
3.250
3.250
4.000
3.250
The number assigned to this disaster
for physical damage is 20312C and for
economic injury is 203130.
(Catalog of Federal Domestic Assistance
Number 59008)
Francisco Sa´nchez, Jr.,
Associate Administrator, Office of Disaster
Recovery & Resilience.
[FR Doc. 2024–10014 Filed 5–7–24; 8:45 am]
BILLING CODE 8026–09–P
DEPARTMENT OF STATE
[Public Notice: 12398]
Notice of Department of State
Sanctions Actions
ACTION:
Notice.
The U.S. Department of
State’s Office of Economic Sanctions
Policy and Implementation (SPI) is
publishing the name of an individual
who has been removed from the List of
Specially Designated Nationals and
Blocked Persons (SDN List) maintained
by the Office of Foreign Assets Control
(OFAC) and is consequently no longer
subject to the prohibitions imposed
pursuant to the Executive Order,
‘‘Blocking Property With Respect To
Specified Harmful Foreign Activities of
the Government of the Russian
Federation.’’
DATES: The actions described in this
notice were effective on September 14,
2023.
FOR FURTHER INFORMATION CONTACT:
Aaron P. Forsberg, Director, Office of
Economic Sanctions Policy and
Implementation, Bureau of Economic
and Business Affairs, Department of
State, Washington, DC 20520, tel.: (202)
647 7677, email: forsbergap@state.gov.
SUPPLEMENTARY INFORMATION:
SUMMARY:
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]]>Agencies
[Federal Register Volume 89, Number 90 (Wednesday, May 8, 2024)]
[Notices]
[Pages 38939-38941]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-10000]
[[Page 38939]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-100047; File No. SR-NYSEARCA-2024-34]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Revise Rule
10.16
May 2, 2024.
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 April 23, 2024, NYSE Arca, Inc. (``NYSE Arca'' or the
``Exchange'') filed with the Securities and Exchange Commission
(``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.
---------------------------------------------------------------------------
\1\ 15 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 revise Rule 10.16 to adopt streamlined
sanction guidelines for its options marketplace based on NYSE American
LLC Rule 601 and make certain 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 revise Rule 10.16 (NYSE Arca Sanctioning
Guidelines--Options) to adopt streamlined sanction guidelines for its
options marketplace based on NYSE American LLC (``NYSE American'') Rule
601 and make certain conforming changes.
Background and Proposed Rule Change
The current Sanction Guidelines in Rule 10.16 were adopted pursuant
to the provisions of Section IV.B.i of the Commission's September 11,
2000 Order Instituting Administrative Proceedings Pursuant to Section
19(h)(1) of the Act (the ``2000 Order''), which required the Exchange
to adopt rules establishing, or modifying existing, sanctioning
guidelines such that they are reasonably designed to effectively
enforce compliance with options order handling rules, including the
duty of best execution with respect to the handling of orders after the
broker-dealer routes the order to such respondent exchange, limit order
display, priority, firm quote, and trade reporting rules.\4\ Like its
affiliate NYSE American, which also adopted sanction guidelines in
response to the 2000 Order,\5\ the Exchange incorporated fine ranges in
its sanctions guidelines for specific rule violations. Unlike NYSE
American, the Exchange's suggested monetary sanctions are very broad
($10,000-$100,000 in four instances and $10,000-$150,000 in two
instances). The current Exchange sanction guidelines are otherwise
similar to the sanction guidelines adopted by NYSE American in response
to the 2000 Order.
---------------------------------------------------------------------------
\4\ See Securities Exchange Act Release Nos. 45416 (February 7,
2002), 67 FR 6777 (February 13, 2002) (SR-PCX-2001-23) (Notice);
45567 (March 15, 2002), 67 FR 13392 (March 22, 2002) (SR-PCX-2001-
23) (Order). See generally Securities Exchange Act Release No. 43268
(September 11, 2000), Administrative Proceeding File No. 3-10282.
\5\ Other exchanges subject to the 2000 Order, however, did not
adopt specific fine ranges as part of their sanction guidelines.
See, e.g., Securities Exchange Act Release Nos. 45427 (February 8,
2002), 67 FR 6958 (February 14, 2002) (Notice); 45571 (March 15,
2002), 67 FR 13382 (March 22, 2002) (SR-CBOE-2001-71) (Order
Granting Accelerated Approval of Proposed Rule Change and Notice of
Filing and Order Granting Accelerated Approval of Amendment No. 1
Thereto by the Chicago Board Options Exchange, Inc. To Incorporate
Certain Principal Considerations in Determining Sanctions and To
Incorporate in the Exchange's Minor Rule Violation Plan Violations
of the Exchange's Order Handling Rules).
---------------------------------------------------------------------------
Recently, NYSE American adopted a new Rule 601 incorporating
sanctions guidelines similar to Cboe Exchange, Inc. (``Cboe'') Rule
13.11, Supplementary Material .01, in place of those original sanction
guidelines.\6\ The new, streamlined sanction guidelines adopted by NYSE
American eliminated specific fine ranges for violations and continued
to reflect a principles-based approach to sanctions guidelines
applicable to all options rules. The Exchange believes that adopting
the same NYSE American sanction guidelines that do not contain specific
recommended fine ranges for a subset of rules would similarly modernize
and update Rule 10.16 in important respects while continuing to provide
flexible guidelines for determining appropriate remedial sanctions
consistent with the intention of the original rule.\7\ Further, because
both NYSE American Rule 601 and Cboe Rule 13.11 take a more streamlined
approach, the Exchange believes the proposed rule would more clearly
and succinctly set forth current relevant considerations regarding the
adjudication of disciplinary actions.
---------------------------------------------------------------------------
\6\ See Securities Exchange Act Release No. 98798 (October 25,
2023), 88 FR 74544 (October 31, 2023) (SR-NYSEAMER-2023-49) (Notice
of Filing and Immediate Effectiveness of Proposed Change To Delete
Legacy Disciplinary Rules 475, 476, 476A, and 477 and Make
Conforming Changes to Rule 41, Rules 8001, 8130(d), 8320(d), 9001,
9216(b)(1), 9810(a), and 781 of the Office Rules, Rules 2A, 12E,
3170(a)(3), 902NY and Adopt a New Rule 600 and Make Conforming
Changes to Rules 3170(C)(3), and Adopt a New Rule 601).
\7\ See 67 FR at 6771.
---------------------------------------------------------------------------
In addition, the Exchange believes that the proposed rule would be
consistent with the 2000 Order. The Exchange's current sanction
guidelines are similar to the guidelines that NYSE American replaced.
Moreover, the text of NYSE American Rule 601 was based on Cboe Rule
13.11 that was also adopted to satisfy the 2000 Order. As proposed, the
Exchange would reproduce the text of NYSE American Rule 601 almost
verbatim. In addition, by modernizing and updating the Exchange's
sanctions guidelines, the Exchange would further enhance its
disciplinary processes consistent with the 2000 Order. Finally, the
proposed rule would promote regulatory consistency across options
exchanges in determining appropriate remedial sanctions for violations
of options rules.
As is currently the case, proposed Rule 10.16 would not apply to
the equities market.\8\ As such, proposed Rule 10.16 would carry
forward the current practice whereby the various bodies with
responsibility for the adjudication of disciplinary actions, including
Hearing Panels, Hearing Officers, the Committee for Review (``CFR''),
and the Board of Directors (``Board''), defined in the proposed Rule
collectively as ``Adjudicatory Bodies,'' would consider relevant
Exchange precedent or such other precedent as they deem appropriate in
determining sanctions imposed against OTP Holders or OTP Firms and
their covered persons as defined in Rule 10.9120(g) of the
[[Page 38940]]
Exchange's disciplinary rules. The proposed definition of Adjudicatory
Bodies would be updated to reflect the terms provided for in the
current disciplinary rules, including ``Hearing Panels'' and ``Extended
Hearing Panels'' in place of ``Ethics and Business Conduct Committee,''
and ``Committee for Review'' and ``Chief Regulatory Officer
(``CRO''),'' given the role of each in the disciplinary and settlement
processes. In addition, for the avoidance of doubt, the Exchange would
include the CRO's delegees in the definition of Adjudicatory Bodies,
which corresponds to the current definition of Adjudicatory Bodies as
inclusive of Exchange regulatory staff. Similarly for the avoidance of
doubt, the Exchange would add letters of acceptance, waiver and consent
to the list of ways a disciplinary matter can be resolved as well as
summary sanctions in options-related matters governed by Rule 10.13 and
appeals of Floor citations and summary sanctions governed by Rule
10.11, which are unique to the Exchange.\9\ The remainder of the
proposed Rule would be identical to NYSE American Rule 601.
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\8\ See note 4 and accompanying text, supra.
\9\ For the further avoidance of doubt, neither the list of ways
that a proposed disciplinary matter can be resolved nor the persons
and entities comprising the definition of Adjudicatory Bodies in
proposed Rule 10.16 are intended to be exhaustive.
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Finally, the Exchange would conform Rules 10.0 (Legacy Disciplinary
Proceedings, Other Hearings and Appeals) and 10.9001 (Effective Date of
Rule 10.9000 Series) to reflect the change in the title of Rule 10.16
replacing ``Sanctioning'' with ``Sanctions.''
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b)(5) of the Act,\10\ in that it is designed to prevent
fraudulent and manipulative acts and practices, to promote just and
equitable principles of trade, to foster cooperation and coordination
with persons engaged in facilitating transactions in securities, to
remove impediments to and perfect the mechanism of a free and open
market and a national market system and, in general, to protect
investors and the public interest. In addition, the Exchange believes
that the proposed rule change furthers the objectives of Section
6(b)(7) of the Act,\11\ in particular, in that it provides fair
procedures for the disciplining of members and persons associated with
members, the denial of membership to any person seeking membership
therein, the barring of any person from becoming associated with a
member thereof, and the prohibition or limitation by the Exchange of
any person with respect to access to services offered by the Exchange
or a member thereof.
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\10\ 15 U.S.C. 78f(b)(5).
\11\ 15 U.S.C. 78f(b)(7).
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Specifically, the Exchange believes that adopting sanction
guidelines that are substantively the same as NYSE American Rule 601
would continue to permit the Exchange to impose sanctions consistently
and fairly by reference to a streamlined rule, thereby continuing to
provide fair procedures for the disciplining of members and persons
associated with members, the denial of membership to any person seeking
Exchange membership, the barring of any person from becoming associated
with a member, and the prohibition or limitation by the Exchange of any
person with respect to access to services offered by the Exchange or a
member thereof pursuant to Section 6(b)(7) \12\ of the Act.
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\12\ 15 U.S.C. 78f(b)(7).
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The proposed rule would provide flexible and appropriate
principles-based guidelines applicable to all options rules for
determining remedial sanctions consistent with the intention of the
Exchange's current sanctions guidelines rule.\13\ Moreover, the
Exchange believes that by adopting NYSE American Rule 601's more
streamlined approach to sanctions guidelines, the Exchange believes the
proposed rule would more clearly and succinctly set forth the current
relevant considerations regarding the adjudication of disciplinary
actions. Further, the Exchange believes that the proposed rule would
also be consistent with the 2000 Order because the proposed rule is
substantively the same as NYSE American Rule 601, which was in turn
based on Cboe Rule 13.11 that was adopted to satisfy the same
Commission order. Indeed, the Exchange believes that by modernizing and
updating its sanctions guidelines, proposed Rule 10.16 would further
enhance its disciplinary processes consistent with the 2000 Order and
further ensure that the Exchange implements the most appropriate
disciplinary mechanisms for violations and a fair process in
determining same. Finally, the proposed rule would promote regulatory
consistency and uniformity across options exchanges in determining
appropriate remedial sanctions and the imposition of penalties.
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\13\ See 67 FR at 6771.
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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 Exchange Act. The proposed rule
change is not intended to address competitive issues but rather is
concerned solely with adopting updated, streamlined sanction guidelines
based on the rules of the Exchange's affiliate that are consistent with
a previous Commission order and continue to permit the Exchange to
impose sanctions consistently and fairly.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing 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 for 30 days from the date on which it was
filed, or such shorter time as the Commission may designate, it has
become effective pursuant to Section 19(b)(3)(A) of the Act and Rule
19b-4(f)(6) thereunder.\14\
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\14\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least 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.
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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.
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:
[[Page 38941]]
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-NYSEARCA-2024-34 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-NYSEARCA-2024-34. 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-NYSEARCA-2024-34 and should
be submitted on or before May 29, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2024-10000 Filed 5-7-24; 8:45 am]
BILLING CODE 8011-01-P
