Self-Regulatory Organizations; NYSE Chicago, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Article 7, Rule 11, 50395-50398 [2024-12889]

Download as PDF lotter on DSK11XQN23PROD with NOTICES1 Federal Register / Vol. 89, No. 115 / Thursday, June 13, 2024 / Notices discounts; and 535 participants would expect no change in costs. The proposed fee structure is likely to reduce the gap in trade reporting fees between participants predominantly reporting as an Executing Party and those predominantly reporting as a Contra Party. Across all participants, the effective cost per Executing Party trade report would increase by 52 percent, from 0.053 cents to 0.080 cents per report. The effective cost per Contra Party trade report would decline by one percent, from 0.415 cents to 0.412 cents per report. In 2023, a Contra Party, on average, paid approximately eight times as much ($0.00415/$0.00053) as an Executing Party for each trade report. If the proposed fee structure were in effect in 2023, the ratio would have been approximately five times ($0.00412/ $0.00080). Besides the fees that are measurable, the proposed fee structure could potentially deliver long term economic benefits for its participants that cannot easily be estimated. Specifically, the proposed fee structure would allow Nasdaq to more effectively cover the rising operating costs associated with increased volumes, as well as improve the functionality and service of the reporting facility, such as potentially better processing speed to enable quicker transmission and dissemination of trade reports. FINRA cannot estimate whether the proposed fee structure would deliver a net benefit or cost to participants and investors in the long term, as some of the economic benefits discussed above are not quantifiable. Additionally, FINRA notes that the proposed fee and fee cap changes occur within the context of a competitive environment in which multiple trade reporting facilities vie for market share. If any existing or prospective participant in either FINRA/ Nasdaq TRF determines that the new fees or fee cap thresholds are too high or are unfavorable relative to fees and fee cap programs applicable to the FINRA/NYSE TRF, such participants may choose to report to the FINRA/ NYSE TRF or the ADF in lieu of the FINRA/Nasdaq TRF. Firms would continue reporting to FINRA/Nasdaq TRFs to the extent that they find the net cost of reporting to FINRA/Nasdaq TRF relative to reporting to other facilities preferable. FINRA does not know how the proposed rule change would affect competing facilities, which in part determines market competition and prices for trade reporting in the long run. Should the long-run equilibrium cost of reporting off-exchange trades to any available facility, including the VerDate Sep<11>2014 19:28 Jun 12, 2024 Jkt 262001 FINRA/Nasdaq TRF, the FINRA/NYSE TRF or the ADF, rise in a competitive market, firms could potentially choose to pass the costs to investors. Alternatives Considered No other alternatives were considered for the proposed rule change. 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. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective pursuant to section 19(b)(3)(A) of the Act 26 and paragraph (f)(2) of Rule 19b–4 thereunder.27 At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: 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– FINRA–2024–009 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–FINRA–2024–009. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s internet website (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for website viewing and printing in the Commission’s Public Reference Room, 100 F Street NE, Washington, DC 20549 on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. 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–FINRA–2024–009, and should be submitted on or before July 5, 2024. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.28 Sherry R. Haywood, Assistant Secretary. [FR Doc. 2024–12890 Filed 6–12–24; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–100297; File No. SR– NYSECHX–2024–22] Self-Regulatory Organizations; NYSE Chicago, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Article 7, Rule 11 June 7, 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 June 4, 2024, the NYSE Chicago, Inc. (‘‘NYSE Chicago’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have 28 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 15 U.S.C. 78a. 3 17 CFR 240.19b–4. 1 15 26 15 27 17 PO 00000 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(2). Frm 00143 Fmt 4703 Sfmt 4703 50395 E:\FR\FM\13JNN1.SGM 13JNN1 50396 Federal Register / Vol. 89, No. 115 / Thursday, June 13, 2024 / Notices 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 amend Article 7, Rule 11 (Fixing and Paying Fees and Charges) to permit direct debiting of undisputed or final fees or other sums due the Exchange by Participants and Participant Firms with one or more Trading Permits and each applicant for a Trading Permit. 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 lotter on DSK11XQN23PROD with NOTICES1 1. Purpose The Exchange proposes to amend Article 7, Rule 11 (Fixing and Paying Fees and Charges) to permit direct debiting of undisputed or final fees or other sums due the Exchange by Participants and Participant Firms with one or more Trading Permits and each applicant for a Trading Permit. Article 7, Rule 11 currently provides that the Exchange may fix the fees and other charges payable by a Participant in such amount as the Exchange deems necessary. Article 7, Rule 11 further provides that fees and charges shall be payable in accordance with the Exchange’s schedule of fees and charges. The Exchange proposes to require that Participants and Participant Firms that hold a Trading Permit, and each applicant for a Trading Permit, provide one or more clearing account numbers that correspond to an account(s) at the VerDate Sep<11>2014 19:28 Jun 12, 2024 Jkt 262001 National Securities Clearing Corporation (‘‘NSCC’’) for purposes of permitting the Exchange to collect through direct debit any undisputed or final fees and/or other sums due to the Exchange. The Exchange would, however, permit a Participant, Participant Firm or applicant for a Trading Permit to opt-out of the requirement to provide NSCC clearing account numbers and establish alternative payment arrangements. In addition, consistent with current Article 7, Rule 12, the proposed change would not apply to disciplinary fines or monetary sanctions governed by Rule 10.8320. The proposed rule would also not apply to regulatory fees related to the Central Registration Depository (‘‘CRD system’’), which are collected by the Financial Industry Regulatory Authority, Inc. (‘‘FINRA’’).4 The proposed change is based on the rules of the Exchange’s affiliate NYSE American LLC (‘‘NYSE American’’) and other exchanges.5 Under the proposal, the Exchange would send a monthly invoice to each Participant and Participant Firm, generally on the 5th business day of each month as is currently the practice, for the debit amount due to the Exchange for the prior month. The Exchange would also send files to NSCC each month by the 11th business day of the month in order to initiate the debit of the amount due to the Exchange as provided for in the prior month’s 4 The CRD system is the central licensing and registration system for the U.S. securities industry. The CRD system enables individuals and firms seeking registration with multiple states and selfregulatory organizations to do so by submitting a single form, fingerprint card and a combined payment of fees to FINRA. Through the CRD system, FINRA maintains the qualification, employment and disciplinary histories of registered associated persons of broker-dealers. Certain of the regulatory fees provided in the Fee Schedule are collected and retained by FINRA via the CRD system for the registration of employees of Participants and Participant Firms of the Exchange that are not FINRA members. These fees would be excluded from direct debiting. 5 See NYSE American Rule 41 (Collection of and Failure to Pay Exchange Fees). See also, e.g., MEMX LLC (‘‘MEMX’’) Rule 15.3(a) (Collection of Exchange Fees and Other Claims and Billing Policy) requires each MEMX member and all applicants for registration as members are required to provide one or more clearing account numbers that correspond to an account(s) at the NSCC for purposes of permitting the Exchange to debit certain fees, fines, charges and/or other monetary sanctions or other monies due to the Exchange. As noted, the proposed rule would not apply to disciplinary fines or monetary sanctions, and the proposal does not propose to change this. The MEMX rule also requires members to submit billing disputes within a certain time period. The Exchange’s current billing disputes policy is set forth under section ‘‘P’’ of the Fee Schedule, available at https:// www.nyse.com/publicdocs/nyse/NYSE_Chicago_ Fee_Schedule.pdf, and provides that all fee disputes must be submitted no later than sixty days after receipt of a billing invoice. PO 00000 Frm 00144 Fmt 4703 Sfmt 4703 invoice. The Exchange anticipates that NSCC will process the debits on the day it receives the file or the following business day. Because Participants and Participant Firms would be provided with an invoice approximately 1 week before the debit date, Participants and Participant Firms will have adequate time to contact the Exchange with any questions concerning the invoice. If a Participant or Participant Firm disagrees with the invoice in whole or in part, the Exchange would not commence the debit for the disputed amount until the dispute is resolved. Specifically, the Exchange would not include the disputed amount (or the entire invoice if it is not feasible to identify the disputed amounts) in the NSCC debit amount where the Participant or Participant Firm provides written notification of the dispute to the Exchange by the later of the 15th of the month, or the following business day if the 15th is not a business day, and the amount in dispute is at least $10,000 or greater. Following receipt of the file from the Exchange, NSCC would proceed to debit the amounts indicated from the account of the Participant or Participant Firm that clears the applicable transactions (‘‘Clearing Participant,’’ i.e., either a Participant or Participant Firm that is self-clearing or another Participant or Participant Firm that provides clearing services on behalf of the Participant or Participant Firm) and disburse such amounts to the Exchange. Where a Participant or Participant Firm clears through another a Participant or Participant Firm, the Exchange understands that the estimated transaction fees owed to the Exchange are typically debited by the Clearing Participant on a daily basis using daily transaction detail reports provided by the Exchange to the Clearing Participant in order to ensure adequate funds have been escrowed. The Exchange notes that it is proposing to permit a Participant or Participant Firm to designate one or more clearing account numbers that correspond to an account(s) at NSCC to permit Participants and Participant Firms that clear through multiple different clearing accounts to set up the billing process with the Exchange in a manner that is most efficient for internal reconciliation and billing purposes of the Participant or Participant Firm. The Exchange believes that the proposed debiting process would provide an efficient method of collecting undisputed or final fees and/ or sums due to the Exchange consistent E:\FR\FM\13JNN1.SGM 13JNN1 Federal Register / Vol. 89, No. 115 / Thursday, June 13, 2024 / Notices with the practice on other exchanges.6 Moreover, the Exchange believes that it is reasonable to permit a Participant, Participant Firm and applicants for Trading Permit to opt-out of the requirement to provide an NSCC account number to permit direct debiting and instead establish alternative payment arrangements. Finally, the Exchange believes that it is also reasonable to provide for a $10,000 limitation on pre-debit billing disputes since it would be inefficient to delay a direct debit for a de minimis amount. A Participant or Participant Firm would still be able to dispute billing amounts that are less than $10,000 pursuant to the billing policy set forth in the Fee Schedule.7 To effectuate this change, the Exchange would add the following text to Article 7, Rule 11(a) (italicized): The Exchange shall fix the fees and other charges payable by a Participant in such amount as the Exchange deems necessary. Fees and charges shall be payable in accordance with the Exchange’s Fee [s]Schedule[ of fees and charges]. Each Participant and Participant Firm that has one or more equity Trading Permits, and each applicant for a Trading Permit, shall be required to provide one or more clearing account numbers that correspond to an account(s) at the National Securities Clearing Corporation (‘‘NSCC’’) for purposes of permitting the Exchange to collect through direct debit any undisputed or final fees and/ or other sums due to the Exchange; provided, however, that a Participant, Participant Firm or applicant may request to opt-out of the requirement to provide an NSCC clearing account number and establish alternative payment arrangements. If a Participant or Participant Firm disputes an invoice, the Exchange will not include the disputed amount in the debit if the Participant or Participant Firm has disputed the amount in writing to the Exchange by the 15th of the month, or the following business day if the 15th is not a business day, and the amount in dispute is at least $10,000 or greater. The Exchange will not debit fees related to the CRD system set forth in the Fee Schedule, which are collected and retained by FINRA. The remaining provisions of the current rule would remain unchanged. 2. Statutory Basis lotter on DSK11XQN23PROD with NOTICES1 The proposed rule change is consistent with section 6(b) of the Act,8 in general, and furthers the objectives of 6 See note 5, supra. In addition to MEMX, IEX, Nasdaq, Nasdaq BX, and Nasdaq Phlx all provide for collection of fees and fines through direct debits. See IEX Rule 15.120; Nasdaq Rule Equity 7, Section 70; Nasdaq BX Rule Equity 7, Section 111; and Nasdaq Phlx Rule Equity 7, Section 2. 7 See note 5, supra. The Exchange would also change ‘‘schedule of fees and charges’’ in Article 7, Rule 11(a) to ‘‘Fee Schedule.’’ 8 15 U.S.C. 78f(b). VerDate Sep<11>2014 19:28 Jun 12, 2024 Jkt 262001 section 6(b)(5),9 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. Specifically, the Exchange believes that the proposed direct debit process would provide Participants and Participant Firms with an efficient process to pay undisputed or final fees and/or sums due to the Exchange. The Exchange believes that the proposal to debit NSCC accounts directly is reasonable because it would ease the administrative burden on Participants and Participant Firms of paying monthly invoices and avoiding overdue balances, and would provide efficient collection from all Participants and Participant Firms who owe monies to the Exchange. Moreover, the Exchange believes that the minimum time frame provided to Participants and Participant Firms to dispute invoices is reasonable and adequate to enable Participants and Participant Firms to identify potentially erroneous charges. In addition, the Exchange believes that the $10,000 limitation on pre-debit billing disputes is reasonable because it would be inefficient to delay a direct debit for a de minimis amount. The same $10,000 limitation is in place on exchanges that have adopted direct debit rules.10 Participants and Participant Firms will still be able to dispute billing amounts that are less than $10,000 pursuant to the Exchange’s Fee Schedule. Finally, the Exchange believes that it is reasonable to permit Participants, Participant Firms or applicants to request to opt-out of the requirement to provide NSCC account information and instead establish alternative payment arrangements with 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. The proposed rule change would apply uniformly to all Participants and Participant Firms that have one or more Trading Permits and to all applicants for Trading Permits, and will not 9 15 U.S.C. 78f(b)(5). notes 6 & 7, supra. PO 00000 Frm 00145 Fmt 4703 disproportionately burden or otherwise impact any single Participant or Participant Firm. The Exchange does not believe that the proposal will create an intermarket burden on competition since the Exchange will only debit fees (other than de minimis fees below $10,000) that are undisputed by the Participant or Participant Firm and Participants and Participant Firms will have a reasonable opportunity to dispute the fees both before and after the direct debit process. In addition, Participants and Participant Firms will have a reasonable opportunity to opt-out of the requirement to provide clearing account information and instead adopt alternative payment arrangements. The Exchange also does not believe that the proposal will create an intramarket burden on competition, since the proposed direct debit process will be applied equally to all Participants and Participant Firms. Moreover, other exchanges utilize a similar process which the Exchange believes is generally familiar to Participants and Participant Firms. Consequently, the Exchange does not believe that the proposal raises any new or novel issues that have not been previously considered by the Commission in connection with direct debit and billing policies of other exchanges. Further, this proposal is expected to provide a cost savings to the Exchange in that it would alleviate administrative processes related to the collection of monies owed to the Exchange. In addition, the debiting process would mitigate against Participant and Participant Firm accounts becoming overdue. 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 foregoing rule change has become effective pursuant to section 19(b)(3)(A) of the Act 11 and Rule 19b–4(f)(6) 12 thereunder because the proposal does not: (i) significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) by its terms, become operative for 30 days from the date on which it was filed, or such 11 15 10 See 12 17 Sfmt 4703 50397 E:\FR\FM\13JNN1.SGM U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(6). 13JNN1 50398 Federal Register / Vol. 89, No. 115 / Thursday, June 13, 2024 / Notices lotter on DSK11XQN23PROD with NOTICES1 shorter time as the Commission may designate if consistent with the protection of investors and the public interest, provided that the Exchange has given the Commission 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.13 A proposed rule change filed under Rule 19b–4(f)(6) normally may not become operative prior to 30 days after the date of filing. However, Rule 19b– 4(f)(6)(iii) 14 permits the Commission to 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 period. The Commission believes that waiver of the 30-day operative delay period is consistent with the protection of investors and the public interest. Specifically, the proposal would permit the direct debiting of Exchange invoices comparable to the process in place at other exchanges.15 Waiver of the operative delay would allow the Exchange to implement the direct debiting process for the billing cycle starting in July. For these reasons, the Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest, and designates the proposed rule change to be operative upon filing with the Commission.16 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.17 If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule 13 In addition, Rule 19b–4(f)(6)(iii) requires the Exchange to give the Commission written notice of the Exchange’s 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. 14 17 CFR 240.19b–4(f)(6)(iii). 15 See supra note 5. 16 For purposes only of waiving the operative delay for this proposal, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 17 15 U.S.C. 78s(b)(3)(C). VerDate Sep<11>2014 19:28 Jun 12, 2024 Jkt 262001 change should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include file number SR– NYSECHX–2024–22 on the subject line. Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549–1090. All submissions should refer to file number SR–NYSECHX–2024–22. 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–NYSECHX–2024–22 and should be submitted on or before July 5, 2024. PO 00000 Frm 00146 Fmt 4703 Sfmt 4703 For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.18 Sherry R. Haywood, Assistant Secretary. [FR Doc. 2024–12889 Filed 6–12–24; 8:45 am] BILLING CODE 8011–01–P SMALL BUSINESS ADMINISTRATION Reporting and Recordkeeping Requirements Under OMB Review Small Business Administration. 30-Day notice. AGENCY: ACTION: The Small Business Administration (SBA) is seeking approval from the Office of Management and Budget (OMB) for the information collection described below. In accordance with the Paperwork Reduction Act and OMB procedures, SBA is publishing this notice to allow all interested member of the public an additional 30 days to provide comments on the proposed collection of information. DATES: Submit comments on or before July 15, 2024. ADDRESSES: Written comments and recommendations for this information collection request should be sent within 30 days of publication of this notice to www.reginfo.gov/public/do/PRAMain. Find this particular information collection request by selecting ‘‘Small Business Administration’’; ‘‘Currently Under Review,’’ then select the ‘‘Only Show ICR for Public Comment’’ checkbox. This information collection can be identified by title and/or OMB Control Number. FOR FURTHER INFORMATION CONTACT: You may obtain a copy of the information collection and supporting documents from the Agency Clearance Office at Curtis.Rich@sba.gov; (202) 205–7030, or from www.reginfo.gov/public/do/ PRAMain. SUPPLEMENTARY INFORMATION: This collection is essential to the Agency’s mission because if SBA designates an area as a Governor-designated covered area, based on the information provided by the State Governor, additional small businesses may become eligible for certification as HUBZone small business concerns, which in turn will provide them with more contracting opportunities. These additional contracting opportunities create incentives for individuals to start small businesses and allow existing small businesses to grow. SBA has taken all SUMMARY: 18 17 E:\FR\FM\13JNN1.SGM CFR 200.30–3(a)(12). 13JNN1

Agencies

[Federal Register Volume 89, Number 115 (Thursday, June 13, 2024)]
[Notices]
[Pages 50395-50398]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-12889]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-100297; File No. SR-NYSECHX-2024-22]


Self-Regulatory Organizations; NYSE Chicago, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Amend 
Article 7, Rule 11

June 7, 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 June 4, 2024, the NYSE Chicago, Inc. (``NYSE Chicago'' or the 
``Exchange'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I and II 
below, which Items have

[[Page 50396]]

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 Article 7, Rule 11 (Fixing and 
Paying Fees and Charges) to permit direct debiting of undisputed or 
final fees or other sums due the Exchange by Participants and 
Participant Firms with one or more Trading Permits and each applicant 
for a Trading Permit. The proposed rule change is available on the 
Exchange's website at www.nyse.com, at the principal office of the 
Exchange, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of those statements may be examined at 
the places specified in Item IV below. The Exchange has prepared 
summaries, set forth in sections A, B, and C below, of the most 
significant parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend Article 7, Rule 11 (Fixing and 
Paying Fees and Charges) to permit direct debiting of undisputed or 
final fees or other sums due the Exchange by Participants and 
Participant Firms with one or more Trading Permits and each applicant 
for a Trading Permit.
    Article 7, Rule 11 currently provides that the Exchange may fix the 
fees and other charges payable by a Participant in such amount as the 
Exchange deems necessary. Article 7, Rule 11 further provides that fees 
and charges shall be payable in accordance with the Exchange's schedule 
of fees and charges.
    The Exchange proposes to require that Participants and Participant 
Firms that hold a Trading Permit, and each applicant for a Trading 
Permit, provide one or more clearing account numbers that correspond to 
an account(s) at the National Securities Clearing Corporation 
(``NSCC'') for purposes of permitting the Exchange to collect through 
direct debit any undisputed or final fees and/or other sums due to the 
Exchange. The Exchange would, however, permit a Participant, 
Participant Firm or applicant for a Trading Permit to opt-out of the 
requirement to provide NSCC clearing account numbers and establish 
alternative payment arrangements. In addition, consistent with current 
Article 7, Rule 12, the proposed change would not apply to disciplinary 
fines or monetary sanctions governed by Rule 10.8320. The proposed rule 
would also not apply to regulatory fees related to the Central 
Registration Depository (``CRD system''), which are collected by the 
Financial Industry Regulatory Authority, Inc. (``FINRA'').\4\ The 
proposed change is based on the rules of the Exchange's affiliate NYSE 
American LLC (``NYSE American'') and other exchanges.\5\
---------------------------------------------------------------------------

    \4\ The CRD system is the central licensing and registration 
system for the U.S. securities industry. The CRD system enables 
individuals and firms seeking registration with multiple states and 
self-regulatory organizations to do so by submitting a single form, 
fingerprint card and a combined payment of fees to FINRA. Through 
the CRD system, FINRA maintains the qualification, employment and 
disciplinary histories of registered associated persons of broker-
dealers. Certain of the regulatory fees provided in the Fee Schedule 
are collected and retained by FINRA via the CRD system for the 
registration of employees of Participants and Participant Firms of 
the Exchange that are not FINRA members. These fees would be 
excluded from direct debiting.
    \5\ See NYSE American Rule 41 (Collection of and Failure to Pay 
Exchange Fees). See also, e.g., MEMX LLC (``MEMX'') Rule 15.3(a) 
(Collection of Exchange Fees and Other Claims and Billing Policy) 
requires each MEMX member and all applicants for registration as 
members are required to provide one or more clearing account numbers 
that correspond to an account(s) at the NSCC for purposes of 
permitting the Exchange to debit certain fees, fines, charges and/or 
other monetary sanctions or other monies due to the Exchange. As 
noted, the proposed rule would not apply to disciplinary fines or 
monetary sanctions, and the proposal does not propose to change 
this. The MEMX rule also requires members to submit billing disputes 
within a certain time period. The Exchange's current billing 
disputes policy is set forth under section ``P'' of the Fee 
Schedule, available at https://www.nyse.com/publicdocs/nyse/NYSE_Chicago_Fee_Schedule.pdf, and provides that all fee disputes 
must be submitted no later than sixty days after receipt of a 
billing invoice.
---------------------------------------------------------------------------

    Under the proposal, the Exchange would send a monthly invoice to 
each Participant and Participant Firm, generally on the 5th business 
day of each month as is currently the practice, for the debit amount 
due to the Exchange for the prior month. The Exchange would also send 
files to NSCC each month by the 11th business day of the month in order 
to initiate the debit of the amount due to the Exchange as provided for 
in the prior month's invoice. The Exchange anticipates that NSCC will 
process the debits on the day it receives the file or the following 
business day. Because Participants and Participant Firms would be 
provided with an invoice approximately 1 week before the debit date, 
Participants and Participant Firms will have adequate time to contact 
the Exchange with any questions concerning the invoice. If a 
Participant or Participant Firm disagrees with the invoice in whole or 
in part, the Exchange would not commence the debit for the disputed 
amount until the dispute is resolved. Specifically, the Exchange would 
not include the disputed amount (or the entire invoice if it is not 
feasible to identify the disputed amounts) in the NSCC debit amount 
where the Participant or Participant Firm provides written notification 
of the dispute to the Exchange by the later of the 15th of the month, 
or the following business day if the 15th is not a business day, and 
the amount in dispute is at least $10,000 or greater.
    Following receipt of the file from the Exchange, NSCC would proceed 
to debit the amounts indicated from the account of the Participant or 
Participant Firm that clears the applicable transactions (``Clearing 
Participant,'' i.e., either a Participant or Participant Firm that is 
self-clearing or another Participant or Participant Firm that provides 
clearing services on behalf of the Participant or Participant Firm) and 
disburse such amounts to the Exchange. Where a Participant or 
Participant Firm clears through another a Participant or Participant 
Firm, the Exchange understands that the estimated transaction fees owed 
to the Exchange are typically debited by the Clearing Participant on a 
daily basis using daily transaction detail reports provided by the 
Exchange to the Clearing Participant in order to ensure adequate funds 
have been escrowed. The Exchange notes that it is proposing to permit a 
Participant or Participant Firm to designate one or more clearing 
account numbers that correspond to an account(s) at NSCC to permit 
Participants and Participant Firms that clear through multiple 
different clearing accounts to set up the billing process with the 
Exchange in a manner that is most efficient for internal reconciliation 
and billing purposes of the Participant or Participant Firm.
    The Exchange believes that the proposed debiting process would 
provide an efficient method of collecting undisputed or final fees and/
or sums due to the Exchange consistent

[[Page 50397]]

with the practice on other exchanges.\6\ Moreover, the Exchange 
believes that it is reasonable to permit a Participant, Participant 
Firm and applicants for Trading Permit to opt-out of the requirement to 
provide an NSCC account number to permit direct debiting and instead 
establish alternative payment arrangements. Finally, the Exchange 
believes that it is also reasonable to provide for a $10,000 limitation 
on pre-debit billing disputes since it would be inefficient to delay a 
direct debit for a de minimis amount. A Participant or Participant Firm 
would still be able to dispute billing amounts that are less than 
$10,000 pursuant to the billing policy set forth in the Fee 
Schedule.\7\
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    \6\ See note 5, supra. In addition to MEMX, IEX, Nasdaq, Nasdaq 
BX, and Nasdaq Phlx all provide for collection of fees and fines 
through direct debits. See IEX Rule 15.120; Nasdaq Rule Equity 7, 
Section 70; Nasdaq BX Rule Equity 7, Section 111; and Nasdaq Phlx 
Rule Equity 7, Section 2.
    \7\ See note 5, supra. The Exchange would also change ``schedule 
of fees and charges'' in Article 7, Rule 11(a) to ``Fee Schedule.''
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    To effectuate this change, the Exchange would add the following 
text to Article 7, Rule 11(a) (italicized):

    The Exchange shall fix the fees and other charges payable by a 
Participant in such amount as the Exchange deems necessary. Fees and 
charges shall be payable in accordance with the Exchange's Fee 
[s]Schedule[ of fees and charges]. Each Participant and Participant 
Firm that has one or more equity Trading Permits, and each applicant 
for a Trading Permit, shall be required to provide one or more 
clearing account numbers that correspond to an account(s) at the 
National Securities Clearing Corporation (``NSCC'') for purposes of 
permitting the Exchange to collect through direct debit any 
undisputed or final fees and/or other sums due to the Exchange; 
provided, however, that a Participant, Participant Firm or applicant 
may request to opt-out of the requirement to provide an NSCC 
clearing account number and establish alternative payment 
arrangements. If a Participant or Participant Firm disputes an 
invoice, the Exchange will not include the disputed amount in the 
debit if the Participant or Participant Firm has disputed the amount 
in writing to the Exchange by the 15th of the month, or the 
following business day if the 15th is not a business day, and the 
amount in dispute is at least $10,000 or greater. The Exchange will 
not debit fees related to the CRD system set forth in the Fee 
Schedule, which are collected and retained by FINRA.

    The remaining provisions of the current rule would remain 
unchanged.
2. Statutory Basis
    The proposed rule change is consistent with section 6(b) of the 
Act,\8\ in general, and furthers the objectives of section 6(b)(5),\9\ 
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. Specifically, the Exchange believes that the 
proposed direct debit process would provide Participants and 
Participant Firms with an efficient process to pay undisputed or final 
fees and/or sums due to the Exchange.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposal to debit NSCC accounts 
directly is reasonable because it would ease the administrative burden 
on Participants and Participant Firms of paying monthly invoices and 
avoiding overdue balances, and would provide efficient collection from 
all Participants and Participant Firms who owe monies to the Exchange. 
Moreover, the Exchange believes that the minimum time frame provided to 
Participants and Participant Firms to dispute invoices is reasonable 
and adequate to enable Participants and Participant Firms to identify 
potentially erroneous charges. In addition, the Exchange believes that 
the $10,000 limitation on pre-debit billing disputes is reasonable 
because it would be inefficient to delay a direct debit for a de 
minimis amount. The same $10,000 limitation is in place on exchanges 
that have adopted direct debit rules.\10\ Participants and Participant 
Firms will still be able to dispute billing amounts that are less than 
$10,000 pursuant to the Exchange's Fee Schedule. Finally, the Exchange 
believes that it is reasonable to permit Participants, Participant 
Firms or applicants to request to opt-out of the requirement to provide 
NSCC account information and instead establish alternative payment 
arrangements with the Exchange.
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    \10\ See notes 6 & 7, supra.
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. The proposed rule change 
would apply uniformly to all Participants and Participant Firms that 
have one or more Trading Permits and to all applicants for Trading 
Permits, and will not disproportionately burden or otherwise impact any 
single Participant or Participant Firm.
    The Exchange does not believe that the proposal will create an 
intermarket burden on competition since the Exchange will only debit 
fees (other than de minimis fees below $10,000) that are undisputed by 
the Participant or Participant Firm and Participants and Participant 
Firms will have a reasonable opportunity to dispute the fees both 
before and after the direct debit process. In addition, Participants 
and Participant Firms will have a reasonable opportunity to opt-out of 
the requirement to provide clearing account information and instead 
adopt alternative payment arrangements.
    The Exchange also does not believe that the proposal will create an 
intramarket burden on competition, since the proposed direct debit 
process will be applied equally to all Participants and Participant 
Firms. Moreover, other exchanges utilize a similar process which the 
Exchange believes is generally familiar to Participants and Participant 
Firms. Consequently, the Exchange does not believe that the proposal 
raises any new or novel issues that have not been previously considered 
by the Commission in connection with direct debit and billing policies 
of other exchanges. Further, this proposal is expected to provide a 
cost savings to the Exchange in that it would alleviate administrative 
processes related to the collection of monies owed to the Exchange. In 
addition, the debiting process would mitigate against Participant and 
Participant Firm accounts becoming overdue.

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 foregoing rule change has become effective pursuant to section 
19(b)(3)(A) of the Act \11\ and Rule 19b-4(f)(6) \12\ thereunder 
because the proposal does not: (i) significantly affect the protection 
of investors or the public interest; (ii) impose any significant burden 
on competition; and (iii) by its terms, become operative for 30 days 
from the date on which it was filed, or such

[[Page 50398]]

shorter time as the Commission may designate if consistent with the 
protection of investors and the public interest, provided that the 
Exchange has given the Commission 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.\13\
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6).
    \13\ In addition, Rule 19b-4(f)(6)(iii) requires the Exchange to 
give the Commission written notice of the Exchange's 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) normally may 
not become operative prior to 30 days after the date of filing. 
However, Rule 19b-4(f)(6)(iii) \14\ permits the Commission to 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 period. The Commission 
believes that waiver of the 30-day operative delay period is consistent 
with the protection of investors and the public interest. Specifically, 
the proposal would permit the direct debiting of Exchange invoices 
comparable to the process in place at other exchanges.\15\ Waiver of 
the operative delay would allow the Exchange to implement the direct 
debiting process for the billing cycle starting in July. For these 
reasons, the Commission believes that waiving the 30-day operative 
delay is consistent with the protection of investors and the public 
interest, and designates the proposed rule change to be operative upon 
filing with the Commission.\16\
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    \14\ 17 CFR 240.19b-4(f)(6)(iii).
    \15\ See supra note 5.
    \16\ For purposes only of waiving the operative delay for this 
proposal, the Commission 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.\17\ If the 
Commission takes such action, the Commission shall institute 
proceedings to determine whether the proposed rule change should be 
approved or disapproved.
---------------------------------------------------------------------------

    \17\ 15 U.S.C. 78s(b)(3)(C).
---------------------------------------------------------------------------

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-NYSECHX-2024-22 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to file number SR-NYSECHX-2024-22. 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-NYSECHX-2024-22 and should 
be submitted on or before July 5, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-12889 Filed 6-12-24; 8:45 am]
BILLING CODE 8011-01-P
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