[Federal Register Volume 85, Number 80 (Friday, April 24, 2020)]
[Notices]
[Pages 23083-23085]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-08701]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-88700; File No. SR-NYSE-2020-01]


Self-Regulatory Organizations; New York Stock Exchange LLC; Order 
Instituting Proceedings To Determine Whether To Approve or Disapprove a 
Proposed Rule Change To Amend the NYSE Rule 6800 Series, the Exchange's 
Compliance Rule Regarding the National Market System Plan Governing the 
Consolidated Audit Trail

April 20, 2020.

I. Introduction

    On January 3, 2020, New York Stock Exchange LLC (``NYSE'' or ``the 
Exchange'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to amend the Exchange's compliance rules regarding 
the National Market System Plan Governing the Consolidated Audit Trail 
(``CAT NMS Plan'').\3\ The proposed rule change was published for 
comment in the Federal Register on January 23, 2020.\4\ On March 5, 
2020, the Commission extended the time period within which to approve 
the proposed rule change, disapprove the proposed rule change, or 
institute proceedings to determine whether to approve or disapprove the 
proposed rule change, to April 22, 2020.\5\ The Commission received no 
comments on the proposal. This order institutes proceedings pursuant to 
Exchange Act Section 19(b)(2)(B) to determine whether to approve or 
disapprove File No. SR-NYSE-2020-01.\6\
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ The CAT NMS Plan was approved by the Commission, as 
modified, on November 15, 2016. See Securities Exchange Act Release 
No79318 (November 15, 2016), 81 FR 84696 (November 23, 2016).
    \4\ See Securities Exchange Act Release No. 87990 (January 16, 
2020), 85 FR 3963 (``Notice'').
    \5\ See Securities Exchange Act Release No. 88329, 85 FR 14265 
(March 11, 2020).
    \6\ 15 U.S.C. 78(s)(b)(2)(B).
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II. Description of the Proposed Rule Change

    The Exchange proposes to amend the NYSE Rule 6800 Series 
(``Compliance Rule''), which sets forth rules regarding Industry Member 
\7\ compliance with the CAT NMS Plan. Specifically, the proposed rule 
change would make the following changes to the Compliance Rule to be 
consistent with certain proposed amendments to and exemption requests 
submitted by the Participants \8\ of the CAT NMS Plan: (1) Revise data 
reporting requirements for the Firm Designated ID \9\ based on a 
proposed amendment to the CAT NMS Plan filed with the Commission; \10\ 
(2) amend the dates for required testing and reporting in the 
Compliance Rule for Industry Member reporting; \11\ (3) amend the rules 
to require Industry Members to submit trade reports for executions and 
cancellations for cancelled trades to the FINRA's Trade Reporting 
Facilities, FINRA's OTC Reporting Facility or FINRA's Alternative 
Display Facility; \12\ (4) revise the timestamp granularity requirement 
to require Industry Members with order handling or execution systems 
that utilize time stamps in increments finer than milliseconds to 
report timestamps up to nanoseconds when reporting Industry Member data 
\13\ to the Central

[[Page 23084]]

Repository; \14\ (5) revise the reporting requirements for 
circumstances in which an Industry Member uses an established trading 
relationship for an individual Customer, instead of an account, on the 
order reported to CAT; \15\ and (6) revise the CAT reporting 
requirements so Industry Members would not be required to report to the 
Central Repository dates of birth, social security numbers, or account 
numbers for individuals.\16\
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    \7\ Industry Member means a member of a national securities 
exchange or a member of a national securities association. See CAT 
NMS Plan, supra note 3, at Section 1.1. See also proposed NYSE Rule 
6810(s).
    \8\ The Participants include BOX Exchange LLC, Cboe BYX 
Exchange, Inc., Cboe BZX Exchange, Inc., Cboe C2 Exchange, Inc., 
Cboe EDGA Exchange, Inc., Cboe EDGX Exchange, Inc., Cboe Exchange, 
Inc., Financial Industry Regulatory Authority, Inc., Investors' 
Exchange LLC, Long-Term Stock Exchange, Inc., Miami International 
Securities Exchange LLC, MIAX Emerald, LLC, MIAX PEARL, LLC, Nasdaq 
BX, Inc., Nasdaq GEMX, LLC, Nasdaq ISE, LLC, Nasdaq MRX, LLC, Nasdaq 
PHLX LLC, The Nasdaq Stock Market LLC, New York Stock Exchange LLC, 
NYSE American LLC, NYSE Arca, Inc., NYSE Chicago, Inc., and NYSE 
National, Inc.
    \9\ As proposed, ``Firm Designated ID'' would mean a unique and 
persistent identifier for each trading account designated by 
Industry Members for purposes of providing data to the Central 
Repository, where each such identifier is unique among all 
identifiers from any given Industry Member; provided, however, such 
identifier may not be the account number for such trading account if 
the trading account is not a proprietary account. See proposed NYSE 
Rule 6810(r).
    \10\ See Notice, supra note 4, at 3964. See also Letter to 
Vanessa Countryman, Secretary, SEC, from Michael Simon, CAT NMS Plan 
Operating Committee Chair re: Notice of Filing of Amendment to the 
National Market System Plan Governing the Consolidated Audit Trail 
(April 14, 2020). The Commission has not approved or disapproved the 
changes proposed in this amendment.
    \11\ See Notice, supra note 4, at 3967-72. On February 19, 2020, 
the Participants submitted a request for exemptive relief from the 
reporting dates required by the CAT NMS Plan. See Letter to Vanessa 
Countryman, Secretary, SEC, from Michael Simon, CAT NMS Plan 
Operating Committee Chair, re: Request for Exemption from Provisions 
of the National Market System Plan Governing the Consolidated Audit 
Trail related to Industry Member Reporting Dates (Feb. 19, 2020).
    \12\ See Notice, supra note 4, at 3972. On February 12, 2020, 
the Participants submitted a request for exemptive relief from the 
requirement in Sections 6.4(d)(ii)(A)(2) and (B) of the CAT NMS Plan 
to require Industry Members to record and report, if an order is 
executed, the SRO-Assigned Market Participant Identifier of the 
clearing broker, and if a trade is cancelled, the cancelled trade 
indicator. See Letter to Vanessa Countryman, Secretary, SEC, from 
Michael Simon, CAT NMS Plan Operating Committee Chair, re: Request 
for Exemption from Certain Provisions of the National Market System 
Plan Governing the Consolidated Audit Trail related to FINRA 
Facility Data Linkage (Feb. 12, 2020). If granted, the exemptive 
relief would revise CAT reporting requirements regarding cancelled 
trades and SRO-Assigned Market Participant Identifiers of clearing 
brokers, if applicable, in connection with order executions, as such 
information would be available from FINRA's trade reports submitted 
to CAT.
    \13\ See Notice, supra note 4, at 3972-73. On February 3, 2020, 
the Participants filed a request for exemptive relief from the 
current CAT NMS Plan requirement to record and report Industry 
Member Data with time stamps consistent with their system, a 
requirement from which the Exchange requests an exemption. See 
Letter to Vanessa Countryman, Secretary, SEC, from Michael Simon, 
CAT NMS Plan Operating Committee Chair, re: Request for Exemption 
from Certain Provisions of the National Market System Plan Governing 
the Consolidated Audit Trail related to Granularity of Timestamps 
and Relationship Identifiers (Feb. 3, 2020). On April 8, 2020, the 
Commission granted the exemptive relief for timestamp granularity. 
See Securities Exchange Act Release No. 88608 (April 8, 2020), 85 FR 
20743 (April 14, 2020).
    \14\ The Central Repository, as defined in the CAT NMS Plan, 
means ``the repository responsible for the receipt, consolidation, 
and retention of all information reported to the CAT pursuant to SEC 
Rule 613 and this Agreement.'' See CAT NMS Plan, supra note 3, at 
Section 1.1.
    \15\ See Notice, supra note 4, at 3973. On February 3, 2020, the 
Participants filed a request for exemptive relief from the CAT NMS 
Plan requirement that Participants, through their Compliance Rules, 
require Industry Members to record and report to the Central 
Repository the account number, the date account opened, and the 
account type for individual customers in circumstances in which an 
Industry Member uses an established trading relationship for the 
individual customer. Instead, the Participant would require Industry 
Members to record and report to the Central Repository for the 
original receipt or origination of an order: (i) The relationship 
identifier instead of the account number, (ii) the ``account type'' 
as a ``relationship'', and (3) the account effective date instead of 
the ``date account opened.'' See Letter to Vanessa Countryman, 
Secretary, SEC, from Michael Simon, CAT NMS Plan Operating Committee 
Chair, re: Request for Exemption from Certain Provisions of the 
National Market System Plan Governing the Consolidated Audit Trail 
related to Granularity of Timestamps and Relationship Identifiers 
(Feb. 3, 2020).
    \16\ See Notice, supra note 4, at 3973. The Participants 
requested and have received exemptive relief from the requirement of 
Section 6.4(d)(ii)(C) of the CAT NMS Plan for the Participants, in 
their Compliance Rules, to require their members to provide dates of 
birth, account numbers and social security numbers for individuals 
to the CAT. See Securities Exchange Act Release No. 88393 (March 17, 
2020), 85 FR 16152 (March 20, 2020). See also Letter to Vanessa 
Countryman, Secretary, SEC, from Michael Simon, CAT NMS Plan 
Operating Committee Chair, re: Request for Exemptive Relief from 
Certain Provisions of the CAT NMS Plan related to Social Security 
Numbers, Dates of Birth and Account Numbers (Jan. 29, 2020).
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    The Exchange also proposes to amend the Exchange's Compliance Rule 
to facilitate the retirement of certain existing regulatory systems, 
specifically the Financial Industry Regulatory Authority, Inc.'s 
(``FINRA'') Order Audit Trail System, by adding additional data 
elements to the CAT reporting requirements for Industry Members,\17\ 
additional reporting requirements for alternative trading systems,\18\ 
and additional data elements related to OTC Equity Securities \19\ that 
FINRA currently receives from alternative trading systems that trade 
OTC Equity Securities.\20\
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    \17\ See Notice, supra note 4, at 3965-67.
    \18\ See Notice, supra note 4, at 3964-65.
    \19\ OTC Equity Security, as defined in the CAT NMS Plan, means 
any equity security, other than an NMS Security, subject to prompt 
last sale reporting rules of a registered national securities 
association and reported to one of such association's equity trade 
reporting facilities. See CAT NMS Plan, supra note 3, at Section 
1.1.
    \20\ Id. at 3967.
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III. Proceedings To Determine Whether To Approve or Disapprove the 
Proposed Rule Change

    The Commission is instituting proceedings pursuant to Section 
19(b)(2)(B) of the Act \21\ to determine whether the proposed rule 
change should be approved or disapproved. Institution of proceedings 
does not indicate that the Commission has reached any conclusions with 
respect to any of the issues involved. Rather, the Commission seeks and 
encourages interested persons to provide additional comment on the 
proposed rule change to inform the Commission's analysis of whether to 
approve or disapprove the proposed rule change.
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    \21\ 15 U.S.C. 78s(b)(2)(B).
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    Pursuant to Section 19(b)(2)(B) of the Act,\22\ the Commission is 
providing notice of the grounds for possible disapproval under 
consideration. The Commission is instituting proceedings to allow for 
additional analysis of the proposed rule change's consistency with 
Section 6(b)(5) of the Act,\23\ which requires, among other things, 
that the rules of a national securities exchange be ``designed to 
prevent fraudulent and manipulative acts and practices, to promote just 
and equitable principles of trade,'' and ``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.'' \24\ The Commission believes that several of the proposed 
rule changes are not consistent with the CAT NMS Plan or exemptive 
relief that has been granted as of the date of this Order.
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    \22\ 15 U.S.C. 78s(b)(2)(B).
    \23\ 15 U.S.C. 78f(b)(5).
    \24\ 15 U.S.C. 78f(b)(5).
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IV. Commission's Solicitation of Comments

    The Commission requests that interested persons provide written 
submissions of their views, data, and arguments with respect to the 
issues identified above, as well as any other concerns they may have 
with the proposal. In particular, the Commission invites the written 
views of interested persons concerning whether the proposal is 
consistent with Section 6(b)(5) \25\ or any other provision of the Act, 
or the rules and regulations thereunder. Although there do not appear 
to be any issues relevant to approval or disapproval that would be 
facilitated by an oral presentation of views, data, and arguments, the 
Commission will consider, pursuant to Rule 19b-4 under the Act,\26\ any 
request for an opportunity to make an oral presentation.\27\
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    \25\ 15 U.S.C. 78f(b)(5).
    \26\ 17 CFR 240.19b-4.
    \27\ Section 19(b)(2) of the Exchange Act, as amended by the 
Securities Act Amendments of 1975, Public Law 94-29 (June 4, 1975), 
grants the Commission flexibility to determine what type of 
proceeding--either oral or notice and opportunity for written 
comments--is appropriate for consideration of a particular proposal 
by a self-regulatory organization. See Securities Act Amendments of 
1975, Senate Comm. on Banking, Housing & Urban Affairs, S. Rep. No. 
75, 94th Cong., 1st Sess. 30 (1975).
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    Interested persons are invited to submit written data, views, and 
arguments regarding whether the proposal should be approved or 
disapproved by May 15, 2020. Any person who wishes to file a rebuttal 
to any other person's submission must file that rebuttal by May 29, 
2020. 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 Numbers SR-NYSE-2020-01 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-2020-01. 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

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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-2020-01 and should be 
submitted on or before May 15, 2020 Rebuttal comments should be 
submitted by May 29, 2020.
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    \28\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\28\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-08701 Filed 4-23-20; 8:45 am]
 BILLING CODE 8011-01-P


