[Federal Register Volume 85, Number 22 (Monday, February 3, 2020)]
[Notices]
[Pages 6005-6006]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-01909]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-88058; File No. SR-NYSE-2020-04]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend Rule 104(f)(5) To Extend the Operative Date of the Requirements 
of Rules 104(f)(2) and (3) to Exchange Traded Products

January 28, 2020.
    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 January 17, 2020, New York Stock Exchange LLC (``NYSE'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``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.
---------------------------------------------------------------------------

    \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 104(f)(5) to extend the 
operative date of the requirements of Rules 104(f)(2) and (3) to 
Exchange Traded Products (``ETPs'') to no later than eighteen weeks 
after ETPs listed on the Exchange pursuant to Rules 5P and 8P begin 
trading. 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 104(f)(5) to extend the 
operative date of the requirements of Rules 104(f)(2) and (3) to ETPs 
to no later than eighteen weeks after ETPs listed on the Exchange 
pursuant to Rules 5P and 8P begin trading.
    Rule 104(f) imposes an affirmative obligation on Designated Market 
Makers (``DMM'') to maintain, insofar as reasonably practicable, a fair 
and orderly market on the Exchange in assigned securities, including 
maintaining price continuity with reasonable depth and trading for the 
DMM's own account when lack of price continuity, lack of depth, or 
disparity between supply and demand exists or is reasonably to be 
anticipated. The Exchange supplies DMMs with suggested Depth Guidelines 
for each security in which a DMM is registered, and DMMs are expected 
to quote and trade with reference to those Depth Guidelines.\4\
---------------------------------------------------------------------------

    \4\ See Rule 104(f)(3).
---------------------------------------------------------------------------

    The Exchange amended Rule 104 to specify DMM requirements for ETPs 
listed on the Exchange pursuant to Rules 5P and 8P.\5\ In that filing, 
the Exchange added subsection (5) to Rule 104(f) providing that, for 
those ETPs in which they are registered, DMM units are responsible for 
the affirmative obligation of maintaining a fair and orderly market, 
including maintaining price continuity with reasonable depth for their 
registered ETPs in accordance with Depth Guidelines published by the 
Exchange. To provide the Exchange time to collect trading data adequate 
to calculate appropriate Depth Guidelines for listed ETPs, the Exchange 
proposed that Rule 104(f)(2) and (3) would not be operative until 
eighteen weeks after the approval of the proposed rule change by the 
Commission.\6\ The Commission approved the rule filing on September 23, 
2019. Rules 104(f)(2) and (3) would accordingly be operative for ETPs 
on January 27, 2020.
---------------------------------------------------------------------------

    \5\ See Securities Exchange Act Release No. 87056 (September 23, 
2019), 84 FR 51205 (September 27, 2019) (SR-NYSE-2019-34).
    \6\ See id., 84 FR at 51207.
---------------------------------------------------------------------------

    To date, no ETPs have listed on the Exchange. In order to provide 
the Exchange with adequate time to calculate the appropriate Depth 
Guidelines for ETPs based on actual trading data, the Exchange proposes 
to specify in Rule 104(f)(5) that the outside date for the requirements 
Rule 104(f)(2) and (3) to be operative with respect to ETPs would be no 
later than eighteen weeks after ETPs listed on the Exchange pursuant to 
Rules 5P and 8P begin trading.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with Section 
6(b) of the Act,\7\ in general, and furthers the objectives of Sections 
6(b)(5) of the Act,\8\ 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 mechanisms 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.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    In particular, the Exchange believes that delaying implementation 
of Depth Guidelines no later than eighteen weeks after ETPs listed on 
the Exchange pursuant to Rules 5P and 8P begin trading would remove 
impediments to

[[Page 6006]]

and perfect the mechanism of a free and open market and a national 
market system by allowing the Exchange time to develop Depth Guidelines 
tailored for how ETPs actually trade on the Exchange, thereby 
facilitating market making by DMMs in listed ETPs and maintaining the 
Exchange's current structure to trade listed securities. The proposed 
rule change is therefore consistent with the existing delayed 
implementation of Depth Guidelines. Because the purpose of the original 
delayed implementation was to provide time to develop Depth Guidelines 
tailored for how ETPs listed on the Exchange would trade, the Exchange 
believes that beginning the delayed implementation period from the 
start of trading of ETPs listed under Rules 5P and 8P would serve the 
same goal, which is to provide time for the Exchange to develop Depth 
Guidelines tailored for how ETPs listed on the Exchange will trade.
    The Exchange further believes that the proposal would not be 
inconsistent with the public interest and the protection of investors. 
The proposal would not eliminate or reduce the Rule 104 requirements 
applicable to DMMs trading ETPs on the Exchange that transactions be 
effected in a reasonable and orderly manner in relation to the 
condition of the general market and the market in the particular stock. 
Rather, the Exchange proposes that implementation of these obligations 
would be delayed no later than eighteen weeks following the start of 
ETP trading so that the Exchange can calculate Depth Guidelines based 
on actual trading data. As noted, the Exchange believes that delayed 
implementation of Depth Guidelines will allow it to develop more 
appropriately tailored guidelines that should improve the DMM units' 
ability to maintain a fair and orderly market and also the broader 
market for those securities here on the Exchange and on other 
markets.\9\
---------------------------------------------------------------------------

    \9\ See Securities Exchange Act Release Nos. 62479 (July 9, 
2010), 75 FR 41264, 41265 (July 15, 2010) (SR-NYSEAmex-2010-31).
---------------------------------------------------------------------------

    For the foregoing reasons, the Exchange believes that the proposal 
is consistent with the Act.

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

    In accordance with Section 6(b)(8) of the Act,\10\ the Exchange 
believes that the proposed rule change would not impose any burden on 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act. The Exchange believes that the proposed change 
would promote competition by facilitating the trading of Exchange-
listed ETPs by DMMs and promoting the display of liquidity on an 
exchange, which would benefit all market participants, which would 
enable the Exchange to further compete with unaffiliated exchange 
competitors that also trade ETPs.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------

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 \11\ and Rule 19b-4(f)(6) thereunder.\12\ 
Because the proposed rule change does not: (i) Significantly affect the 
protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative prior to 
30 days from the date on which it was filed, or such shorter time as 
the Commission may designate, if consistent with the protection of 
investors and the public interest, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \12\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of such proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings under 
Section 19(b)(2)(B) \13\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \13\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-NYSE-2020-04 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-2020-04. 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 (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 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. All comments 
received will be posted without change. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions.
    You should submit only information that you wish to make available 
publicly. All submissions should refer to File Number SR-NYSE-2020-04 
and should be submitted on or before February 24, 2020.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
---------------------------------------------------------------------------

    \14\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-01909 Filed 1-31-20; 8:45 am]
BILLING CODE 8011-01-P


