[Federal Register Volume 85, Number 103 (Thursday, May 28, 2020)]
[Notices]
[Pages 32059-32062]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-11474]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-88933; File No. SR-NYSE-2020-47]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Extend the Temporary Period for Specified Commentaries to Rules 7.35, 
7.35A, 7.35B, and 7.35C

May 22, 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 May 20, 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 and 
II below, which Items have been prepared by the self-regulatory 
organization. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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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 extend the temporary period for specified 
Commentaries to Rules 7.35, 7.35A, 7.35B, and 7.35C to end on the 
earlier of a full reopening of the Trading Floor facilities to DMMs or 
after the Exchange closes on June 30, 2020. 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.

[[Page 32060]]

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 extend the temporary period for specified 
Commentaries to Rules 7.35, 7.35A, 7.35B, and 7.35C to end on the 
earlier of a full reopening of the Trading Floor facilities to DMMs or 
after the Exchange closes on June 30, 2020. The current temporary 
period that these Rules are in effect ends on the earlier of the 
reopening of the Trading Floor facilities or after the Exchange closes 
on May 22, 2020.
Background
    To slow the spread of COVID-19 through social-distancing measures, 
on March 18, 2020, the CEO of the Exchange made a determination under 
Rule 7.1(c)(3) that, beginning March 23, 2020, the Trading Floor 
facilities located at 11 Wall Street in New York City would close and 
the Exchange would move, on a temporary basis, to fully electronic 
trading.\4\ On May 14, 2020, the CEO of the Exchange made a 
determination under Rule 7.31(c)(3) to reopen the Trading Floor on a 
limited basis on May 26, 2020 to a subset of Floor brokers, subject to 
safety measures designed to prevent the spread of COVID-19.\5\
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    \4\ Pursuant to Rule 7.1(e), the CEO notified the Board of 
Directors of the Exchange of this determination. The Exchange's 
current rules establish how the Exchange will function fully-
electronically. The CEO also closed the NYSE American Options 
Trading Floor, which is located at the same 11 Wall Street 
facilities, and the NYSE Arca Options Trading Floor, which is 
located in San Francisco, CA. See Press Release, dated March 18, 
2020, available here: https://ir.theice.com/press/press-releases/all-categories/2020/03-18-2020-204202110.
    \5\ See Trader Update, available here: https://www.nyse.com/trader-update/history#110000251588. Pursuant to Rule 7.1(e), the CEO 
notified the Board of Directors of the Exchange of this 
determination. All Floor broker firms are being provided the 
opportunity for a subset of their staff to return to the Trading 
Floor.
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    With this partial reopening, beginning May 26, 2020, Floor brokers 
present on the Trading Floor will have access to Floor-based trading 
systems and, thus, be able to enter orders on behalf of their customers 
as provided for under Exchange rules, including D Orders,\6\ Opening 
and Closing D Orders,\7\ Pegged Orders,\8\ and orders with a Yielding 
Modifier,\9\ and have access to Closing Auction Imbalance Information, 
as provided for in Rule 7.35B(e)(1)(B).
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    \6\ See Rule 7.31(d)(4).
    \7\ See Rules 7.31(c)(1)(C) and (c)(2)(C).
    \8\ See Rule 7.31(h).
    \9\ See Rule 7.31(i)(5).
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    DMMs will continue to be provided access to the Trading Floor on 
trading days when an IPO Auction or Core Open Auction for a post-IPO 
public offering is scheduled.\10\ Floor brokers present on the Trading 
Floor will be able to interact with DMMs in connection with such 
Auctions. DMMs will continue to otherwise be absent from the Trading 
Floor and, thus, all intra-day trading and other Auctions will be 
conducted remotely by the DMM \11\ and Floor brokers will not be able 
to enter orders that require DMM involvement.\12\
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    \10\ On March 25, 2020, the CEO of the Exchange made a 
determination to partially reopen the Trading Floor on trading days 
when there is an IPO Auction to allow a DMM on the Trading Floor for 
the limited purpose of effecting such IPO Auction manually. See 
Securities Exchange Act Release Nos. 88488 (March 26, 2020), 85 FR 
18286 (April 1, 2020) (SR-NYSE-2020-23) (Notice of filing and 
immediate effectiveness of proposed rule change). On April 1, 2020, 
the CEO of the Exchange made a determination to partially reopen the 
Trading Floor on trading days when a Core Open Auction is scheduled 
in connection with a listed company's post-IPO public offering to 
allow a DMM on the Trading Floor for the limited purpose of 
effecting such Core Open Auctions manually. See Securities Exchange 
Act Release No. 88546 (April 2, 2020), 85 FR 19782 (April 8, 2020) 
(SR-NYSE-2020-28) (Notice of filing and immediate effectiveness of 
proposed rule change).
    \11\ If a DMM is unable to facilitate an Auction electronically, 
the Exchange would facilitate such Auction pursuant to Rule 7.35C.
    \12\ See, e.g., Rules 76 (describing crossing orders) and 
7.35B(a)(1) (describing Floor broker interest that is verbally 
represented by a Floor broker by the end of Core Trading Hours, 
which must be electronically accepted by the DMM before it can 
participate in the Closing Auction).
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Proposed Rule Change
    For the period while the Trading Floor has been temporarily closed, 
the Exchange has modified the rules governing Auctions to add 
Commentaries to Rules 7.35, 7.35A, 7.35B, and 7.35C \13\ that are in 
effect until the earlier of the reopening of the Trading Floor 
facilities or after the Exchange closes on May 22, 2020.\14\
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    \13\ See Securities Exchange Act Release Nos. 88413 (March 18, 
2020), 85 FR 16713 (March 24, 2020) (SR-NYSE-2020-19) (amending Rule 
7.35C to add Commentary .01); 88444 (March 20, 2020), 85 FR 17141 
(March 26, 2020) (SR-NYSE-2020-22) (amending Rules 7.35A to add 
Commentary .01, 7.35B to add Commentary .01, and 7.35C to add 
Commentary .02); 88488 (March 26, 2020), 85 FR 18286 (April 1, 2020) 
(SR-NYSE-2020-23) (amending Rule 7.35A to add Commentary .02); 88546 
(April 2, 2020), 85 FR 19782 (April 8, 2020) (SR-NYSE-2020-28) 
(amending Rule 7.35A to add Commentary .03); 88562 (April 3, 2020), 
85 FR 20002 (April 9, 2020) (SR-NYSE-2020-29) (amending Rule 7.35C 
to add Commentary .03); 88705 (April 21, 2020), 85 FR 23413 (April 
27, 2020) (SR-NYSE-2020-35) (amending Rule 7.35A to add Commentary 
.04); 88725 (April 22, 2020), 85 FR 23583 (April 28, 2020) (SR-NYSE-
2020-37) (amending Rule 7.35 to add Commentary .01); and 88829 (May 
6, 2020), 85 FR 28115 (May 12, 2020) (SR-NYSE-2020-41) (amending 
Rule 7.35B to add Commentary .02 to Rule 7.35B).
    \14\ See Securities Exchange Act Release No. 88891 (May 15, 
2020) (SR-NYSE-2020-45) (Notice of filing and immediate 
effectiveness of proposed rule change to extend the temporary period 
for Commentaries to Rules 7.35, 7.35A, 7.35B, and 7.35C to end on 
the earlier of the reopening of the Trading Floor facilities or 
after the Exchange closes on May 22, 2020).
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    Because DMM access to the Trading Floor will not change with the 
partial reopening on May 26, 2020, the Exchange is proposing to extend 
the following Commentaries related to the absence of DMMs from the 
Trading Floor, until such time that there is a full reopening of the 
Trading Floor facilities to DMMs:
     Commentary .01 to Rule 7.35; \15\
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    \15\ Although a subset of Floor brokers will be on the Trading 
Floor after May 26, 2020, an IPO Auction may still be conducted by a 
DMM remotely as provided for in Commentary .04 to Rule 7.35A. If a 
DMM chooses to conduct an IPO Auction remotely, Floor brokers on the 
Trading Floor will not have access to IPO Auction imbalance 
information. For this reason, the Exchange is proposing to extend 
the temporary rule providing for the dissemination of Auction 
Imbalance Information for IPO Auctions.
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     Commentaries .01, .02, .03, and .04 to Rule 7.35A;
     Commentary .01 to Rule 7.35B; \16\ and
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    \16\ The Exchange is not proposing to extend the effective date 
of Commentary .02 to Rule 7.35B.
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     Commentaries .01, .02, and .03 to Rule 7.35C
    To reflect that the Trading Floor facilities will continue to be 
closed to DMMs after May 22, 2020, except on trading days when there is 
an IPO or post-IPO public offering scheduled to allow a DMM on the 
Trading Floor for the limited purpose of effecting such IPO Auction or 
Core Open Auction manually, the Exchange proposes to extend the end 
date of each of the above Commentaries to provide that such Rules would 
be in effect for the temporary period that ends on the earlier of a 
full reopening of the Trading Floor facilities to DMMs or after the 
Exchange closes on June 30, 2020.
    The Exchange is not proposing any substantive changes to these 
Rules.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Act,\17\ in general, and furthers the objectives of Section 6(b)(5) of 
the Act,\18\ in particular, in that 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, and to 
remove

[[Page 32061]]

impediments to and perfect the mechanism of a free and open market and 
a national market system.
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    \17\ 15 U.S.C. 78f(b).
    \18\ 15 U.S.C. 78f(b)(5).
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    To reduce the spread of COVID-19, the CEO of the Exchange made a 
determination under Rule 7.1(c)(3) that beginning March 23, 2020, the 
Trading Floor facilities located at 11 Wall Street in New York City 
would close and the Exchange would move, on a temporary basis, to fully 
electronic trading. In connection with such temporary closure of the 
Trading Floor, the Exchange adopted Commentaries to Rules 7.35, 7.35A, 
7.35B, and 7.35C, which are in effect until May 22, 2020. On May 14, 
2020, the CEO made a determination under Rule 7.1(c)(3) that, beginning 
May 26, 2020, the Trading Floor would be partially reopened to allow a 
subset of Floor brokers to return to the Trading Floor. DMM access to 
the Trading Floor will not change after May 22, 2020.
    The Exchange believes that the proposed rule change would remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system because DMM access to the Trading Floor will 
not change after May 22, 2020. Accordingly, the Exchange believes that 
the temporary rule changes in effect pursuant to the Commentaries to 
Rules 7.35, 7.35A, 7.35B, and 7.35C (other than Commentary .02 to Rule 
7.35B), which are intended to be in effect during the temporary period 
while the Trading Floor is closed to DMMs, should be extended until 
such time that there is a full reopening of the Trading Floor 
facilities to DMMs. The Exchange is not proposing any substantive 
changes to these Rules.
    The Exchange believes that, by clearly stating that this relief 
will be in effect through the earlier of a full reopening of the 
Trading Floor facilities to DMMs or the close of the Exchange on June 
30, 2020, market participants will have advance notice of the temporary 
period during which the Commentaries to Rules 7.35, 7.35A, 7.35B, and 
7.35C will be in effect, including that Commentary .02 to Rule 7.35B 
will sunset on May 22, 2020.

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

    The Exchange does not believe that the proposed rule change would 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. The proposed rule change is 
not designed to address any competitive issues but rather would extend 
the period during which Commentary .01 to Rule 7.35; Commentaries .01, 
.02, .03, and .04 to Rule 7.35A; Commentary .01 to Rule 7.35B; and 
Commentaries .01, .02, and .03 to Rule 7.35C will be in effect. These 
Commentaries are intended to be in effect during the temporary period 
while the Trading Floor is closed to DMMs and currently expire on May 
22, 2020. Because the Trading Floor will remain temporarily closed to 
DMMs past May 22, 2020, the Exchange proposes to extend the temporary 
period for these Commentaries to end on the earlier of a full reopening 
of the Trading Floor facilities to DMMs or after the Exchange closes on 
June 30, 2020.

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 \19\ and Rule 19b-4(f)(6) thereunder.\20\ 
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 for 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 \21\ and Rule 19b-
4(f)(6) thereunder.\22\
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    \19\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \20\ 17 CFR 240.19b-4(f)(6).
    \21\ 15 U.S.C. 78s(b)(3)(A).
    \22\ 17 CFR 240.19b-4(f)(6). 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) \23\ normally 
does not become operative for 30 days after the date of the filing. 
However, pursuant to Rule 19b-4(f)(6)(iii),\24\ the Commission may 
designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay so that the proposal 
may become operative immediately upon filing. The proposal would extend 
the temporary period during which Commentary .01 to Rule 7.35; 
Commentaries .01, .02, .03, and .04 to Rule 7.35A; Commentary .01 to 
Rule 7.35B; and Commentaries .01, .02, and .03 to Rule 7.35C will be in 
effect to end on the earlier of a full reopening of the Trading Floor 
facilities to DMMs or after the Exchange closes on June 30, 2020.\25\ 
The proposal would not make any substantive changes to these 
Commentaries. The Exchange has represented that these Commentaries are 
intended to be in effect during the temporary period while the Trading 
Floor is closed to DMMs and currently expire on May 22, 2020. According 
to the Exchange, while the Trading Floor will partially reopen to a 
subset of Floor brokers on May 26, 2020, DMM access to the Trading 
Floor will not change after May 22, 2020.\26\ The Commission notes 
that, without a waiver of the operative delay, these Commentaries would 
cease to apply while the Exchange's Trading Floor facilities are still 
temporary closed to DMMs.\27\ For these reasons, the Commission 
believes that waiver of the 30-day operative delay is consistent with 
the protection of investors and the public interest. Accordingly, the 
Commission hereby waives the 30-day operative delay and designates the 
proposal operative upon filing.\28\
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    \23\ 17 CFR 240.19b-4(f)(6).
    \24\ 17 CFR 240.19b-4(f)(6)(iii).
    \25\ Commentary .02 to Rule 7.35B will sunset on May 22, 2020.
    \26\ According to the Exchange, the Trading Floor facilities 
will continue to be closed to DMMs, except on trading days when an 
IPO Auction or Core Open Auction for a post-IPO public offering is 
scheduled to allow a DMM on the Trading Floor for the limited 
purpose of effecting such IPO Auction or Core Open Auction manually.
    \27\ See supra note 26 and accompanying text.
    \28\ For purposes only of waiving the 30-day operative delay, 
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. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule change should be approved or 
disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act.

[[Page 32062]]

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-2020-47 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-2020-47. 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-2020-47, and should be submitted on 
or before June 18, 2020.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\29\
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    \29\ 17 CFR 200.30-3(a)(12), (59).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-11474 Filed 5-27-20; 8:45 am]
BILLING CODE 8011-01-P


