[Federal Register Volume 86, Number 66 (Thursday, April 8, 2021)]
[Notices]
[Pages 18368-18369]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-07199]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-91466; File No. SR-NYSEAMER-2021-16]


Self-Regulatory Organizations; NYSE American LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Amend 
Rule 985NY

April 2, 2021.
    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 March 29, 2021, NYSE American LLC (``NYSE American'' 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 been prepared by the Exchange. 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 985NY (Qualified Contingent 
Cross Trade) to clarify the permissible trading differentials for such 
orders. 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 purpose of this rule change is to amend Rule 985NY(Qualified 
Contingent Cross Trade) to clarify the permissible trading 
differentials for such orders.
    Rule 900.3NY(y) provides that a Qualified Contingent Cross or QCC 
Order must be comprised of an originating order to buy or sell at least 
1,000 contracts that is identified as being part of a qualified 
contingent trade, coupled with a contra-side order or orders to buy or 
sell an equal number of contracts.\4\ As Qualified Contingent Crosses, 
QCC Orders are automatically executed upon entry provided that the 
execution (i) is not at the same price as a Customer Order in the 
Consolidated Book and (ii) is at or between the NBBO.\5\ In addition, 
QCC Orders may only be entered in the regular trading increments 
applicable to the options class under Rule 960NY (Trading 
Differentials).\6\ Rule 960NY subsection (a) sets forth the minimum 
quoting increments for all options traded on the Exchange and 
subsection (b) sets forth the minimum trading increments of one cent 
($0.01) for all series of option contracts traded on the Exchange.\7\
---------------------------------------------------------------------------

    \4\ A ``qualified contingent trade'' is a transaction consisting 
of two or more component orders, executed as agent or principal, 
where: (i) At least one component must be an NMS Stock; (ii) all the 
components must be effected with a product price contingency that 
either has been agreed to by all the respective counterparties or 
arranged for by a broker-dealer as principal or agent; (iii) the 
execution of one component must be contingent upon the execution of 
all other components at or near the same time; (iv) the specific 
relationship between the component orders (e.g., the spread between 
the prices of the component orders) must be determined by the time 
the contingent order is placed; (v) the component orders must bear a 
derivative relationship to one another, represent different classes 
of shares of the same issuer, or involve the securities of 
participants in mergers or with intentions to merge that have been 
announced or cancelled; and (vi) the transaction must be fully 
hedged (without regard to any prior existing position) as a result 
of other components of the contingent trade. See Commentary .01 to 
Rule 900.3NY.
    \5\ See Rule 985NY. QCC Orders that cannot be executed when 
entered will automatically cancel. See Rule 985NY(1).
    \6\ See Rule 985NY(2).
    \7\ See Rule 960NY(a) and (b), respectively. Paragraph (2) to 
Rule 985NY provides that QCCs ``may only be entered in the regular 
trading increments applicable to the options class under Rule 
960NY.''
---------------------------------------------------------------------------

    The Exchange proposes to modify Rule 985NY(2) to add reference to 
paragraph (b) of Rule 960NY in the text of the rule, which would make 
clear that QCCs may be entered in minimum trading increments of one 
cent ($0.01).\8\ The Exchange believes this proposed change, which 
aligns with current functionality, would add clarity, transparency and 
internal consistency to Exchange rules.
---------------------------------------------------------------------------

    \8\ See proposed Rule 985NY(2) (``Qualified Contingent Cross 
Orders may only be entered in the regular trading increments 
applicable to the options class under Rule 960NY(b)'').
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Securities Exchange Act of 1934 (the ``Act''),\9\ in 
general, and furthers the objectives of Section 6(b)(5) of the Act,\10\ 
in particular, in that it is designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade, 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.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes that the proposed modification--to make clear 
that QCC Orders may be entered and traded in minimum trading increments 
of a penny would promote just and equitable principles of trade, as 
well as serve to remove impediments to and perfect the mechanism of a 
free and open market because the proposed change clarifies existing 
functionality. In addition, the Exchange believes that the proposed 
rule change is consistent with other options order types and 
functionalities that are not displayed in OPRA's quote feed. For 
example, electronic paired auctions, which are not displayed in OPRA's 
quote feed before they are executed, provide for penny trading 
increments, regardless of the quoting increment of the options 
class.\11\ As a result, the proposed change would not impact the 
protection of investors and the public interest.
---------------------------------------------------------------------------

    \11\ See, e.g., Rule 971.1NY(b)(7) (regarding the Customer Best 
Execution--or CUBE--auction and providing that ``CUBE Orders may be 
entered in $.01 increments regardless of the MPV of the series 
involved'').
---------------------------------------------------------------------------

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. Specifically, as discussed 
above, the Exchange believes that the proposed change would align the 
rule text with current functionality. Thus, the Exchange does not 
believe the proposal creates any significant impact on competition.

[[Page 18369]]

    Intramarket Competition. The proposed rule change would be 
applicable to all market participants that trade QCC Orders and 
therefore would not impose any burden on intra-market competition that 
is not necessary or appropriate in furtherance of the purposes of the 
Act.
    Intermarket Competition. The Exchange believes that this proposed 
rule change will not have an impact on intermarket 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

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \12\ and Rule 19b-4(f)(6) thereunder.\13\ 
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 \14\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\15\
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \13\ 17 CFR 240.19b-4(f)(6).
    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to give the Commission 
written 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. 
The Exchange has satisfied this requirement.
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) \16\ normally 
does not become operative prior to 30 days after the date of its 
filing. However, Rule 19b-4(f)(6)(iii) \17\ 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 asked 
the Commission to waive the 30-day operative delay so that the proposal 
may become operative upon filing. The Exchange believes a waiver is 
consistent with the protection of investors and the public interest 
because it would enable to Exchange to clarify current functionality 
for QCC Orders without delay. Accordingly, the Commission hereby waives 
the operative delay and designates the proposed rule change operative 
upon filing so that the benefits of this proposed rule change can be 
realized immediately.\18\
---------------------------------------------------------------------------

    \16\ 17 CFR 240.19b-4(f)(6).
    \17\ 17 CFR 240.19b-4(f)(6)(iii).
    \18\ For purposes only of waiving the 30-day operative delay, 
the Commission also has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
---------------------------------------------------------------------------

    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 under 
Section 19(b)(2)(B) \19\ to determine whether the proposed rule 
195change should be approved or disapproved.
---------------------------------------------------------------------------

    \19\ 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-NYSEAMER-2021-16 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-NYSEAMER-2021-16. 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-NYSEAMER-2021-16 and should be submitted 
on or before April 29, 2021.
---------------------------------------------------------------------------

    \20\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\20\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-07199 Filed 4-7-21; 8:45 am]
BILLING CODE 8011-01-P


