
[Federal Register Volume 82, Number 170 (Tuesday, September 5, 2017)]
[Notices]
[Pages 42008-42010]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-18659]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81494; File No. SR-NYSE-2017-32]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing of Proposed Rule Change To Amend Section 202.06 of the 
NYSE Listed Company Manual To Prohibit Listed Companies From Issuing 
Material News After the Official Closing Time for the Exchange's 
Trading Session Until the Earlier of Publication of Such Company's 
Official Closing Price on the Exchange or Five Minutes After the 
Official Closing Time

August 29, 2017.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that, on August 17, 2017, New York Stock Exchange LLC (``NYSE'' 
or the ``Exchange'') filed with the Securities and Exchange Commission 
(the ``Commission'') the proposed rule change as described in Items I, 
II, and III below, which Items have been prepared by the self-
regulatory organization. The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Section 202.06 of the NYSE Listed 
Company Manual (the ``Manual'') to limit the issuance of material news 
by listed companies in the period immediately after the official 
closing time for the Exchange's trading session. The proposed rule 
change is available on the Exchange's Web site 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 Section 202.06 of the Manual to 
limit the issuance of material news by listed companies in the period 
immediately after the official closing time for the Exchange's trading 
session.
    Continuous trading on the Exchange ends at the Exchange's official 
closing time of 4:00 p.m. Eastern Time (except that on certain days the 
official closing time occurs early at 1:00 p.m. Eastern Time), which is 
when the Exchange stops accepting new orders, including orders 
designated for the closing auction, and requests to cancel orders.\4\ 
The Designated Market Maker (``DMM'') registered in a security 
facilitates the close of trading after continuous trading ends at the 
official closing time of 4:00

[[Page 42009]]

p.m.\5\ Up to 4:00 p.m., the Exchange publishes Order Imbalance 
Information, which includes real-time order imbalance information and 
information indicating the price at which closing interest may be 
executed in full and the price at which Exchange Book and closing-only 
interest may be executed in full.\6\
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    \4\ Pursuant to NYSE Rule 123C(2), orders designated for the 
close, including Market on Close (``MOC'') and Limit on Close 
(``LOC'') Orders can be entered after 3:45 p.m. to offset a 
published Mandatory MOC/LOC Imbalance Publication. Closing Offset 
(``CO'') Orders can be entered on both sides of the market up to 
4:00 p.m. regardless of whether there is a published imbalance.
    \5\ Pursuant to NYSE Rule 104(a)(3), a DMM has a responsibility 
and duty to facilitate the close of trading for each of the 
securities in which the DMM is registered as required by Exchange 
rules, which may include supplying liquidity as needed.
    \6\ See NYSE Rule 123C(6) (describing the Order Imbalance 
Information Data Feed).
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    The DMM-facilitated closing process is manual, however, a DMM can 
choose to automate the process.\7\ Because of the manual nature of how 
the close is facilitated, the DMM cannot begin the process until order 
entry acceptance has ended, i.e., after 4:00 p.m. A DMM therefore 
facilitates a closing auction based on an order imbalance established 
before 4:00 p.m., and on orders entered with information available 
before 4:00 p.m.
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    \7\ See NYSE Rule 123C, which establishes the Exchange's Closing 
Procedures, including that closings may be effectuated manually or 
electronically by the DMM (Supplementary Material .10 to Rule 123C). 
In particular, see Rule 123C(7) for the order of execution on the 
close, including which orders are guaranteed to participate in the 
closing transaction, and in which order and Rule 123C(8) for how 
closing transactions are to be effectuated if there is an imbalance 
of shares to buy over shares to sell in MOC and/or marketable LOC 
orders, or vice versa.
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    Because there is trading after 4:00 p.m. Eastern Time on other 
exchange and non-exchange venues, if a listed company releases material 
news immediately after 4:00 p.m., but before the closing auction on the 
NYSE is completed, there can be a significant price difference in 
nearly contemporaneous trades on other markets and the closing price on 
the Exchange.\8\ As the discrepancy between the NYSE closing price and 
trading prices on other markets can cause confusion to investors, the 
Exchange previously added advisory text in Section 202.06 of the Manual 
requesting that listed companies intending to release material news 
after the close of trading on the Exchange wait until the earlier of 
the publication of their security's official closing price on the 
Exchange or 15 minutes after the scheduled closing time on the 
Exchange.
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    \8\ The price of the closing auction is based in large part on 
the order imbalance established before 4:00 p.m.; if material news 
is issued after 4:00 p.m., but before the closing auction, market 
participants can neither enter nor cancel orders intended for the 
close on the NYSE.
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    Notwithstanding this advisory text, the Exchange has continued to 
experience situations where material news released shortly after 4:00 
p.m. has caused significant investor confusion. Specifically, when a 
listed company releases material news shortly after 4:00 p.m., but 
before the DMM has been able to complete the closing auction, the news 
release can cause the company's stock to trade on other markets at 
materially different prices than the price of the NYSE's closing 
auction.
    The Exchange now proposes to amend Section 202.06 to prohibit 
listed companies from issuing material news after the official closing 
time for the Exchange's trading session until the earlier of 
publication of such company's official closing price on the Exchange or 
five minutes after the official closing time. In the Exchange's 
experience, DMMs are able to complete the closing auctions for the 
securities assigned to a DMM in almost all cases within five minutes of 
the Exchange's official closing time, so the proposed amendment 
utilizes that timeframe as it would make it unlikely that a listed 
company would ever issue material news between the official closing 
time and the completion of the closing auction.\9\ This prohibition 
would mitigate the risk of market disruption and investor confusion 
associated with the occurrence of significant news-related price 
volatility on other markets during the brief period between the NYSE's 
official closing time and the completion of the closing auction. While 
the Exchange notes the importance of the requirement of Section 202.05 
of the Manual that listed companies issue material news as quickly as 
possible, it believes that the brief delay mandated by the proposed 
amendment is desirable in light of the benefit of the reduced 
likelihood of the occurrence investor confusion associated with the 
issuance of material news prior to the completion of the closing 
auction.
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    \9\ To avoid market disruptions when the closing auction is 
delayed more than five minutes, the amended rule will continue to 
include advisory text asking companies to avoid issuing material 
news until the earlier of publication of the official closing price 
or 15 minutes after the NYSE's official closing time.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) \10\ of the Act, in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\11\ in particular in that it 
is designed 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 is not designed to permit unfair discrimination between customers, 
issuers, brokers, or dealers. In particular, the proposed amendment is 
designed to promote just and equitable principles of trade by ensuring 
that participants in the closing auction at the Exchange do not have 
their trades executed at a price that is inconsistent with 
contemporaneous trading prices on other markets that reflect material 
news that was released after the NYSE's official closing time.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(5).
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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 purpose of the Exchange Act. The purpose of the 
proposed amendment is not to affect competition, but rather to ensure 
that participants in the closing auction at the Exchange do not have 
their trades executed at a price that is inconsistent with 
contemporaneous trading prices on other markets that reflect material 
news that was released after the NYSE's official closing time. 
Therefore, the proposed rule change will not impose any burden on 
competition.

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

    Within 45 days of the date of publication of this notice in the 
Federal Register or up to 90 days (i) as the Commission may designate 
if it finds such longer period to be appropriate and publishes its 
reasons for so finding or (ii) as to which the self-regulatory 
organization consents, the Commission will:
    (A) By order approve or disapprove the proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule 
change should be disapproved.

[[Page 42010]]

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 (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-NYSE-2017-32 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSE-2017-32. 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 Web site (http://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 Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549 on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-NYSE-2017-32 and should be 
submitted on or before September 26, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-18659 Filed 9-1-17; 8:45 am]
 BILLING CODE 8011-01-P


