Self-Regulatory Organizations; NYSE National, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 7.19, 49250-49252 [2024-12688]
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Federal Register / Vol. 89, No. 113 / Tuesday, June 11, 2024 / Notices
Rule 15g–5 requires brokers and
dealers to disclose to customers the
amount of compensation to be received
by their sales agents in connection with
penny stock transactions. The purpose
of the rule is to increase the level of
disclosure to investors concerning
penny stocks generally and specific
penny stock transactions.
The Commission estimates that
approximately 170 broker-dealers will
spend an average of approximately 87
hours annually to comply with the rule.
Thus, the total time burden is
approximately 14,790 hours per year.
Written comments are invited on: (a)
whether the proposed collection of
information is necessary for the proper
performance of the functions of the
Commission, including whether the
information shall have practical utility;
(b) the accuracy of the Commission’s
estimates of the burden of the proposed
collection of information; (c) ways to
enhance the quality, utility, and clarity
of the information collected; and (d)
ways to minimize the burden of the
collection of information on
respondents, including through the use
of automated collection techniques or
other forms of information technology.
Consideration will be given to
comments and suggestions submitted by
August 12, 2024.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
under the PRA unless it displays a
currently valid OMB control number.
Please direct your written comments
to: David Bottom, Director/Chief
Information Officer, Securities and
Exchange Commission, c/o John
Pezzullo, 100 F Street NE, Washington,
DC 20549, or send an email to: PRA_
Mailbox@sec.gov.
(‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that on May 31,
2024, NYSE National, Inc. (‘‘NYSE
National’’ 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.
Dated: June 5, 2024.
Sherry R. Haywood,
Assistant Secretary.
1. Purpose
The Exchange proposes to amend
Rule 7.19 to make additional pre-trade
risk controls available to Entering Firms.
[FR Doc. 2024–12672 Filed 6–10–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
khammond on DSKJM1Z7X2PROD with NOTICES
[Release No. 34–100279; File No. SR–
NYSENAT–2024–17]
Self-Regulatory Organizations; NYSE
National, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend Rule 7.19
June 5, 2024.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934
1 15
U.S.C. 78s(b)(1).
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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 7.19 to make additional pre-trade
risk controls available to Entering Firms.
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
Background and Proposal
In 2020, in order to assist ETP
Holders’ efforts to manage their risk, the
Exchange amended its rules to add Rule
7.19 (Pre-Trade Risk Controls),4 which
established a set of optional pre-trade
risk controls by which Entering Firms
2 15
U.S.C. 78a.
CFR 240.19b–4.
4 See Securities Exchange Act Release No. 88905
(May 19, 2020), 85 FR 31582 (May 26, 2020) (SR–
NYSENAT–2020–17). Later, in 2023, the Exchange
amended its rules to make additional pre-trade risk
controls available to Entering Firms. See Securities
Exchange Act Release No. 96919 (February 14,
2023), 88 FR 10569 (February 21, 2023) (SR–
NYSENAT–2023–07).
3 17
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Fmt 4703
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and their designated Clearing Firms 5
could set credit limits and other pretrade risk controls for an Entering Firm’s
trading on the Exchange and authorize
the Exchange to take action if those
credit limits or other pre-trade risk
controls are exceeded.
The Exchange has recently received
several requests from market
participants to create an additional risk
control to restrict the overall rate of
orders. The Exchange notes that several
other exchanges—including the Cboe
equities exchanges, MEMX, and the
MIAX Pearl equities exchange (‘‘MIAX
Pearl’’) 6—currently offer risk controls
substantially similar to the one
proposed here. As such, market
participants are already familiar with
these risk checks, such that the ones
proposed by the Exchange in this filing
are not novel.
In light of these requests, the
Exchange proposes to amend Rule
7.19(b)(2) to add a new subparagraph
(G), which would provide that the
Single Order Risk Controls available to
Entering Firms would include ‘‘controls
to restrict the overall rate of orders.’’
As with the Exchange’s existing risk
controls, use of the pre-trade risk
controls proposed herein would be
optional. The Exchange proposes no
other changes to Rule 7.19 or its
Commentary.
Continuing Obligations of ETP Holders
Under Rule 15c3–5
The proposed Pre-Trade Risk Controls
described here are meant to supplement,
and not replace, the ETP Holders’ own
internal systems, monitoring, and
procedures related to risk management.
The Exchange does not guarantee that
these controls will be sufficiently
comprehensive to meet all of an ETP
Holder’s needs, the controls are not
designed to be the sole means of risk
management, and using these controls
will not necessarily meet an ETP
Holder’s obligations required by
Exchange or federal rules (including,
without limitation, the Rule 15c3–5
under the Act 7 (‘‘Rule 15c3–5’’)). Use of
the Exchange’s Pre-Trade Risk Controls
will not automatically constitute
compliance with Exchange or federal
rules and responsibility for compliance
5 The terms ‘‘Entering Firm’’ and ‘‘Clearing Firm’’
are defined in Rule 7.19.
6 See, e.g., Cboe BZX Equities Rule 11.13
Interpretations and Policies .01 paragraph (f); Cboe
BYX Equities Rule 11.13 Interpretations and
Policies .01 paragraph (f); Cboe EDGA Equities Rule
11.10 Interpretations and Policies .01 paragraph (f);
Cboe EDGX Equities Rule 11.10 Interpretations and
Policies .01 paragraph (f); MEMX Rule 11.10
Interpretations and Policies .01 paragraph (f); and
MIAX Pearl Equities Rule 2618(a)(1)(H).
7 See 17 CFR 240.15c3–5.
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Federal Register / Vol. 89, No. 113 / Tuesday, June 11, 2024 / Notices
with all Exchange and SEC rules
remains with the ETP Holder.8
Timing and Implementation
The Exchange anticipates
implementing the proposed change in
the second quarter of 2024 and, in any
event, will implement the proposed rule
change no later than the end of
September 2024. The Exchange will
announce the timing of such changes by
Trader Update.
2. Statutory Basis
khammond on DSKJM1Z7X2PROD with NOTICES
The Exchange believes that the
proposed rule change is consistent with
Section 6(b) of the Act,9 in general, and
furthers the objectives of Section 6(b)(5)
of the Act,10 in particular, because it is
designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, to foster cooperation and
coordination with persons engaged in
regulating, clearing, settling, processing
information with respect to, and
facilitating transactions in securities, to
remove impediments to and perfect the
mechanism of a free and open market
and a national market system, and, in
general, to protect investors and the
public interest, and because it is not
designed to permit unfair
discrimination between customers,
issuers, brokers, or dealers.
Specifically, the Exchange believes
that the proposed rule change will
remove impediments to and perfect the
mechanism of a free and open market
and a national market system because
the proposed additional Pre-Trade Risk
Control would provide Entering Firms
with enhanced abilities to manage their
risk with respect to orders on the
Exchange. The proposed additional PreTrade Risk Control is not novel; it is
based on existing risk settings already in
place on the Cboe, MEMX, and MIAX
Pearl exchanges and market participants
are already familiar with the types of
protections that the proposed risk
control affords.11 As such, the Exchange
believes that the proposed additional
Pre-Trade Risk Control would provide a
means to address potentially marketimpacting events, helping to ensure the
proper functioning of the market.
8 See also Commentary .01 to Rule 7.19, which
provides that ‘‘[t]he pre-trade risk controls
described in this Rule are meant to supplement, and
not replace, the ETP Holder’s own internal systems,
monitoring and procedures related to risk
management and are not designed for compliance
with Rule 15c3–5 under the Exchange Act.
Responsibility for compliance with all Exchange
and SEC rules remains with the ETP Holder.’’
9 15 U.S.C. 78f(b).
10 15 U.S.C. 78f(b)(5).
11 See supra note 6.
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In addition, the Exchange believes
that the proposed rule change will
protect investors and the public interest
because the proposed additional PreTrade Risk Control is a form of impact
mitigation that will aid Entering Firms
in minimizing their risk exposure and
reduce the potential for disruptive,
market-wide events. The Exchange
understands that ETP Holders
implement a number of different riskbased controls, including those required
by Rule 15c3–5. The controls proposed
here will serve as an additional tool for
Entering Firms to assist them in
identifying any risk exposure. The
Exchange believes the proposed
additional Pre-Trade Risk Control will
assist Entering Firms in managing their
financial exposure which, in turn, could
enhance the integrity of trading on the
securities markets and help to assure the
stability of the financial system.
Finally, the Exchange believes that
the proposed rule change does not
unfairly discriminate among the
Exchange’s ETP Holders because use of
the proposed additional Pre-Trade Risk
Control is optional and is not a
prerequisite for participation on the
Exchange.
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 fact, the
Exchange believes that the proposal will
have a positive effect on competition
because, by providing Entering Firms
additional means to monitor and control
risk, the proposed rule will increase
confidence in the proper functioning of
the markets. The Exchange believes the
proposed additional Pre-Trade Risk
Control will assist Entering Firms in
managing their financial exposure
which, in turn, could enhance the
integrity of trading on the securities
markets and help to assure the stability
of the financial system. As a result, the
level of competition should increase as
public confidence in the markets is
solidified.
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.
PO 00000
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49251
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 12 and Rule
19b–4(f)(6) thereunder.13 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 14 and Rule 19b–
4(f)(6) thereunder.15
A proposed rule change filed under
Rule 19b–4(f)(6) 16 normally does not
become operative prior to 30 days after
the date of the filing. However, pursuant
to Rule 19b–4(f)(6)(iii),17 the
Commission may designate a shorter
time if such action is consistent with the
protection of investors and the public
interest. The Exchange has requested
that the Commission waive the 30-day
operative delay so that the proposed
rule change may become effective and
operative upon filing with the
Commission. The Exchange states that
the proposed rule change is tied to a
technological release that the Exchange
plans to implement by the end of June
2024, that such release may be ready
before the 30-day operative delay has
elapsed, and the Exchange seeks to
implement the proposed rule change
without delay. The Exchange explains
that the proposed rule change will assist
Entering Firms in minimizing their risk
exposure, which could enhance the
integrity of trading on the securities
markets and help to assure the stability
of the financial system, and that the
proposed rule change is not novel as it
is based on existing risk settings already
in place on other exchanges. For these
reasons, and because the proposed rule
change does not raise any new or novel
regulatory issues, the Commission
believes that waiver of the 30-day
operative delay is consistent with the
protection of investors and the public
12 15
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6).
14 15 U.S.C. 78s(b)(3)(A).
15 17 CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6)(iii) requires a self-regulatory organization to
give the Commission written notice of its intent to
file the proposed rule change, along with a brief
description and text of the proposed rule change,
at least five business days prior to the date of filing
of the proposed rule change, or such shorter time
as designated by the Commission. The Exchange
has satisfied this requirement.
16 17 CFR 240.19b–4(f)(6).
17 17 CFR 240.19b–4(f)(6)(iii).
13 17
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49252
Federal Register / Vol. 89, No. 113 / Tuesday, June 11, 2024 / Notices
interest. Accordingly, the Commission
hereby waives the operative delay and
designates the proposed rule change
operative upon filing.18
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
change should be approved or
disapproved.
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–NYSENAT–2024–17 and should be
submitted on or before July 2, 2024.
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:
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.19
Sherry R. Haywood,
Assistant Secretary.
khammond on DSKJM1Z7X2PROD with NOTICES
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–
NYSENAT–2024–17 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–NYSENAT–2024–17. 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
18 For purposes only of waiving the 30-day
operative delay, the Commission also has
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
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[FR Doc. 2024–12688 Filed 6–10–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–100274; File No. SR–ICC–
2024–003]
Self-Regulatory Organizations; ICE
Clear Credit LLC; Order Approving
Proposed Rule Change Relating to the
ICC Collateral Risk Management
Framework
June 5, 2024.
I. Introduction
On April 16, 2024, ICE Clear Credit
LLC (‘‘ICC’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’), pursuant to Section
19(b)(2) of the Securities Exchange Act
of 1934 (the ‘‘Act’’) 1 and Rule19b–4
thereunder,2 a proposed rule change to
revise its Collateral Risk Management
Framework (‘‘CRMF’’). The proposed
rule change was published for comment
in the Federal Register on April 26,
2024.3 The Commission did not receive
comments regarding the proposed rule
change. For the reasons discussed
below, the Commission is approving the
proposed rule change.
19 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 Self-Regulatory Organizations; ICE Clear Credit
LLC; Notice of Filing of Proposed Rule Change
Relating to the ICC Collateral Risk Management
Framework; Exchange Act Release No. 100008 (Apr.
22, 2024), 89 FR 32496 (Apr. 26, 2024) (File No.
SR–ICC–2024–003) (‘‘Notice’’).
II. Description of the Proposed Rule
Change
ICC is registered with the Commission
as a clearing agency for the purpose of
clearing credit default swaps (‘‘CDS’’)
contracts. The CRMF describes ICC’s
risk management methodology for the
collateral it accepts from Clearing
Participants to collateralize their
individual credit exposure to ICC,
including a description of ICC’s
quantitative risk management approach
that accounts for the risk associated
with fluctuations of collateral asset
prices (i.e., ‘‘haircuts’’). Collateral used
to cover obligations are subject to a
‘‘haircut’’ assessment, where the assets
are priced and posted at a discount to
account for certain market risks. The
current CRMF contemplates two risk
measures for the haircut model
approach—a 2-day 99.9% Value-at-Risk
(‘‘VaR’’) and a 5-day Expected Shortfall
(‘‘ES’’)—and requires ICC to use the
measure that produces the more
conservative result. Based on a
comprehensive review of its risk
calculations and data, ICC has
determined that VaR has never
produced the more conservative
measurement and, therefore, ICC has
always used the ES measurement
instead of VaR.4 These risk calculations
and data also show that ES will
continue to produce more conservative
results compared to VaR in essentially
all circumstances going forward.
Based on these results, the purpose of
the proposed rule change is to amend
ICC’s CRMF to permit ICC to rely solely
on the ES to establish its haircut factors
for the purposes of pricing and posting
collateral. To do so, the proposed rule
change would remove all references to
the VaR from the CRMF.
The proposed rule change also would
remove, renumber, and revise certain
figures in the CRMF. The current CRMF
contains various charts, graphs, and
other figures (collectively, ‘‘Figures’’) by
which ICC displays the data used to
establish the relevant measurements,
including Figures relevant to both the
VaR and ES measurements. To
effectively remove all references to VaR
from the CRMF, the proposed rule
change also would remove and revise
certain Figures as necessary to effectuate
the removal of VaR from the CRMF.
Specifically, in connection with the
deletion of the 2-day 99.9% VaR risk
measure, the proposed rule change
1 15
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4 See Notice, supra note 3, at 32496. ICC has
provided responses to Commission requests for
collateral risk data and analysis as part of its
confidential Exhibit 3 to File No. SR–ICC–2024–
003. The confidential collateral risk data that ICC
provided to the Commission as part of this filing
shows the risk calculations conducted by ICC.
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]]>Agencies
[Federal Register Volume 89, Number 113 (Tuesday, June 11, 2024)]
[Notices]
[Pages 49250-49252]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-12688]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-100279; File No. SR-NYSENAT-2024-17]
Self-Regulatory Organizations; NYSE National, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Amend
Rule 7.19
June 5, 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 May 31, 2024, NYSE National, Inc. (``NYSE National'' 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 amend Rule 7.19 to make additional pre-
trade risk controls available to Entering Firms. 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 Rule 7.19 to make additional pre-
trade risk controls available to Entering Firms.
Background and Proposal
In 2020, in order to assist ETP Holders' efforts to manage their
risk, the Exchange amended its rules to add Rule 7.19 (Pre-Trade Risk
Controls),\4\ which established a set of optional pre-trade risk
controls by which Entering Firms and their designated Clearing Firms
\5\ could set credit limits and other pre-trade risk controls for an
Entering Firm's trading on the Exchange and authorize the Exchange to
take action if those credit limits or other pre-trade risk controls are
exceeded.
---------------------------------------------------------------------------
\4\ See Securities Exchange Act Release No. 88905 (May 19,
2020), 85 FR 31582 (May 26, 2020) (SR-NYSENAT-2020-17). Later, in
2023, the Exchange amended its rules to make additional pre-trade
risk controls available to Entering Firms. See Securities Exchange
Act Release No. 96919 (February 14, 2023), 88 FR 10569 (February 21,
2023) (SR-NYSENAT-2023-07).
\5\ The terms ``Entering Firm'' and ``Clearing Firm'' are
defined in Rule 7.19.
---------------------------------------------------------------------------
The Exchange has recently received several requests from market
participants to create an additional risk control to restrict the
overall rate of orders. The Exchange notes that several other
exchanges--including the Cboe equities exchanges, MEMX, and the MIAX
Pearl equities exchange (``MIAX Pearl'') \6\--currently offer risk
controls substantially similar to the one proposed here. As such,
market participants are already familiar with these risk checks, such
that the ones proposed by the Exchange in this filing are not novel.
---------------------------------------------------------------------------
\6\ See, e.g., Cboe BZX Equities Rule 11.13 Interpretations and
Policies .01 paragraph (f); Cboe BYX Equities Rule 11.13
Interpretations and Policies .01 paragraph (f); Cboe EDGA Equities
Rule 11.10 Interpretations and Policies .01 paragraph (f); Cboe EDGX
Equities Rule 11.10 Interpretations and Policies .01 paragraph (f);
MEMX Rule 11.10 Interpretations and Policies .01 paragraph (f); and
MIAX Pearl Equities Rule 2618(a)(1)(H).
---------------------------------------------------------------------------
In light of these requests, the Exchange proposes to amend Rule
7.19(b)(2) to add a new subparagraph (G), which would provide that the
Single Order Risk Controls available to Entering Firms would include
``controls to restrict the overall rate of orders.''
As with the Exchange's existing risk controls, use of the pre-trade
risk controls proposed herein would be optional. The Exchange proposes
no other changes to Rule 7.19 or its Commentary.
Continuing Obligations of ETP Holders Under Rule 15c3-5
The proposed Pre-Trade Risk Controls described here are meant to
supplement, and not replace, the ETP Holders' own internal systems,
monitoring, and procedures related to risk management. The Exchange
does not guarantee that these controls will be sufficiently
comprehensive to meet all of an ETP Holder's needs, the controls are
not designed to be the sole means of risk management, and using these
controls will not necessarily meet an ETP Holder's obligations required
by Exchange or federal rules (including, without limitation, the Rule
15c3-5 under the Act \7\ (``Rule 15c3-5'')). Use of the Exchange's Pre-
Trade Risk Controls will not automatically constitute compliance with
Exchange or federal rules and responsibility for compliance
[[Page 49251]]
with all Exchange and SEC rules remains with the ETP Holder.\8\
---------------------------------------------------------------------------
\7\ See 17 CFR 240.15c3-5.
\8\ See also Commentary .01 to Rule 7.19, which provides that
``[t]he pre-trade risk controls described in this Rule are meant to
supplement, and not replace, the ETP Holder's own internal systems,
monitoring and procedures related to risk management and are not
designed for compliance with Rule 15c3-5 under the Exchange Act.
Responsibility for compliance with all Exchange and SEC rules
remains with the ETP Holder.''
---------------------------------------------------------------------------
Timing and Implementation
The Exchange anticipates implementing the proposed change in the
second quarter of 2024 and, in any event, will implement the proposed
rule change no later than the end of September 2024. The Exchange will
announce the timing of such changes by Trader Update.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\9\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\10\ in particular, because it
is designed to prevent fraudulent and manipulative acts and practices,
to promote just and equitable principles of trade, to foster
cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, to remove impediments to and
perfect the mechanism of a free and open market and a national market
system, and, in general, to protect investors and the public interest,
and because it is not designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
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\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(5).
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Specifically, the Exchange believes that the proposed rule change
will remove impediments to and perfect the mechanism of a free and open
market and a national market system because the proposed additional
Pre-Trade Risk Control would provide Entering Firms with enhanced
abilities to manage their risk with respect to orders on the Exchange.
The proposed additional Pre-Trade Risk Control is not novel; it is
based on existing risk settings already in place on the Cboe, MEMX, and
MIAX Pearl exchanges and market participants are already familiar with
the types of protections that the proposed risk control affords.\11\ As
such, the Exchange believes that the proposed additional Pre-Trade Risk
Control would provide a means to address potentially market-impacting
events, helping to ensure the proper functioning of the market.
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\11\ See supra note 6.
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In addition, the Exchange believes that the proposed rule change
will protect investors and the public interest because the proposed
additional Pre-Trade Risk Control is a form of impact mitigation that
will aid Entering Firms in minimizing their risk exposure and reduce
the potential for disruptive, market-wide events. The Exchange
understands that ETP Holders implement a number of different risk-based
controls, including those required by Rule 15c3-5. The controls
proposed here will serve as an additional tool for Entering Firms to
assist them in identifying any risk exposure. The Exchange believes the
proposed additional Pre-Trade Risk Control will assist Entering Firms
in managing their financial exposure which, in turn, could enhance the
integrity of trading on the securities markets and help to assure the
stability of the financial system.
Finally, the Exchange believes that the proposed rule change does
not unfairly discriminate among the Exchange's ETP Holders because use
of the proposed additional Pre-Trade Risk Control is optional and is
not a prerequisite for participation on the Exchange.
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 fact, the Exchange
believes that the proposal will have a positive effect on competition
because, by providing Entering Firms additional means to monitor and
control risk, the proposed rule will increase confidence in the proper
functioning of the markets. The Exchange believes the proposed
additional Pre-Trade Risk Control will assist Entering Firms in
managing their financial exposure which, in turn, could enhance the
integrity of trading on the securities markets and help to assure the
stability of the financial system. As a result, the level of
competition should increase as public confidence in the markets is
solidified.
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 \12\ and Rule 19b-4(f)(6) thereunder.\13\
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 \14\ and Rule 19b-4(f)(6)
thereunder.\15\
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\12\ 15 U.S.C. 78s(b)(3)(A)(iii).
\13\ 17 CFR 240.19b-4(f)(6).
\14\ 15 U.S.C. 78s(b)(3)(A).
\15\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change, along
with a brief description and text of the proposed rule change, at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) \16\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\17\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has
requested that the Commission waive the 30-day operative delay so that
the proposed rule change may become effective and operative upon filing
with the Commission. The Exchange states that the proposed rule change
is tied to a technological release that the Exchange plans to implement
by the end of June 2024, that such release may be ready before the 30-
day operative delay has elapsed, and the Exchange seeks to implement
the proposed rule change without delay. The Exchange explains that the
proposed rule change will assist Entering Firms in minimizing their
risk exposure, which could enhance the integrity of trading on the
securities markets and help to assure the stability of the financial
system, and that the proposed rule change is not novel as it is based
on existing risk settings already in place on other exchanges. For
these reasons, and because the proposed rule change does not raise any
new or novel regulatory issues, the Commission believes that waiver of
the 30-day operative delay is consistent with the protection of
investors and the public
[[Page 49252]]
interest. Accordingly, the Commission hereby waives the operative delay
and designates the proposed rule change operative upon filing.\18\
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\16\ 17 CFR 240.19b-4(f)(6).
\17\ 17 CFR 240.19b-4(f)(6)(iii).
\18\ For purposes only of waiving the 30-day operative delay,
the Commission also has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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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. If the Commission
takes such action, the Commission shall institute proceedings 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 [email protected]. Please include
file number SR-NYSENAT-2024-17 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-NYSENAT-2024-17. 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-NYSENAT-2024-17 and should
be submitted on or before July 2, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
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\19\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-12688 Filed 6-10-24; 8:45 am]
BILLING CODE 8011-01-P
