[Federal Register Volume 87, Number 32 (Wednesday, February 16, 2022)]
[Notices]
[Pages 8901-8903]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-03281]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-94217; File No. SR-NYSE-2021-73]


Self-Regulatory Organizations; New York Stock Exchange LLC; Order 
Approving a Proposed Rule Change To Amend NYSE Rule 37 To Incorporate 
Standards of Conduct for the Exchange's Trading Floor

February 10, 2022.

I. Introduction

    On December 13, 2021, 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 (``Exchange Act'') \1\ and Rule 19b-4 
thereunder,\2\ a proposed rule change to amend NYSE Rule 37 to 
incorporate standards of conduct for the Exchange's Trading Floor. The 
proposed rule change was published for comment in the Federal Register 
on December 29, 2021.\3\ The Commission has received no comments on the 
proposed rule change. This order approves the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 93851 (Dec. 22, 
2021), 86 FR 74180 (Dec. 29, 2021) (``Notice'').
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II. Description of Proposed Rule Change

    The Exchange proposes to amend NYSE Rule 37 to incorporate 
standards of conduct for the Exchange's Trading Floor that are modeled 
on rules of the Exchange's affiliates NYSE American LLC and NYSE Arca, 
Inc., and to add amended NYSE Rule 37 to the list of minor rule 
violations in NYSE Rule 9217. Proposed NYSE Rule 37 would be 
administered by the Exchange's regulatory staff.

a. Proposed Amendments to NYSE Rule 37

    First, NYSE Rule 37 would be renamed ``Admission and Conduct on the 
Trading Floor'' similar to the NYSE American and NYSE Arca options 
rules, except that it would use the term ``Trading Floor.''
    Second, the existing text of NYSE Rule 37 governing admissions 
would be relocated to a new subsection (a) titled ``Admission,'' once 
again similar to the NYSE American and NYSE Arca options rules.\4\ The 
existing text of NYSE Rule 37 would be unchanged.
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    \4\ See, e.g., NYSE American Rule 902NY(e).
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    Third, the Exchange would adopt a new subsection (b) titled 
``Conduct on the Trading Floor'' that would be substantially similar to 
NYSE American Rule 902NY(b) and NYSE Arca Rule 6.2-O(b). The proposed 
rule would provide that while on the Trading Floor, all members are 
required to act in a manner consistent with a fair and orderly market 
and with the maintenance of public confidence in the Exchange.\5\ The 
proposed rule would further provide that upon the determination that a 
member's conduct on the Floor is such as to impair the maintenance of a 
fair and orderly market, or to impair public confidence in the 
operations of the Exchange, or that a member has otherwise violated the 
proposed rule, a member may be disciplined in accordance with the NYSE 
Rule 9000 Series, the Exchange's disciplinary rules. Proposed NYSE Rule 
37(b) would also apply to a member's failure to adequately supervise an 
employee or guest of the member to ensure compliance with the proposed 
rule. Unlike the NYSE American and NYSE Arca rules, proposed NYSE Rule 
37(b) would explicitly include as sanctionable conduct under the 
proposed rule the failure to adequately supervise the guest of a 
member. Because violations of proposed NYSE Rule 37 would be subject to 
discipline pursuant to the NYSE Rule 9000 Series, in paragraph (b) the 
Exchange proposes to include the phrase ``or that a member has 
otherwise violated this rule.'' Unlike the NYSE American and NYSE Arca 
rules, proposed NYSE 37(b) would not include text that: (1) States that 
fines imposed would not preclude further disciplinary action by the 
Exchange; or (2) refers to Exchange Trading Officials because, unlike 
their options market counterparts, they are not regulatory employees.
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    \5\ The first sentence of proposed NYSE Rule 37(b) would be 
based on NYSE American Rule 902NY(c) and NYSE Arca Rule 6.2-O(c).
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    Fourth, the Exchange proposes a new subsection (c) titled 
``Standards of Dress and Conduct'' that is also substantially similar 
to NYSE American Rule 902NY(c) and NYSE Arca Rule 6.2-O(c). Proposed 
NYSE Rule 37(c) would provide that all persons on the Floor must comply 
with the standards of dress and conduct set forth in proposed NYSE Rule 
37(c)(1)(A)-(C).
    Proposed NYSE Rule 37(c)(1) would be titled ``Standards of Dress'' 
and would provide that all persons on the Floor, whether members, 
employees of member organizations, or visitors, must at all times, 
whether prior to, during, or after trading sessions, be dressed in a 
manner appropriate for business purposes and in accordance with good 
taste and professional standards. Like the NYSE American and NYSE Arca 
rules, proposed NYSE Rule 37(c)(1) would provide that the term ``good 
taste'' will be interpreted in a conservative manner. In addition, 
proposed NYSE Rule 37(c)(1) would set forth the following requirements 
and prohibitions:
     Proposed NYSE Rule 37(c)(1)(A) would provide that personal 
attire must be neat, clean, and presentable.
     Proposed NYSE Rule 37(c)(1)(B) would provide that all 
members and employees of member organizations must wear trading jackets 
and/or suit or sport coats while present on the Floor.
     Proposed NYSE Rule 37(c)(1)(C) would provide that the 
Exchange may impose additional standards of dress or otherwise modify 
these standards of dress by means of a written policy that will be 
distributed to all members and member organizations.
    Proposed NYSE Rule 37(c)(2) would be titled ``Standards of 
Conduct.'' Proposed subsection (A) of NYSE Rule 37(c)(2) would provide 
that all persons on the Floor are required to conduct themselves in 
accordance with a seemly and professional standard of behavior. 
Specifically, the proposed Rule would specify that no person while on 
the Floor shall:
     Engage in any act or practice that may be detrimental to 
the interest or welfare of the Exchange (proposed NYSE Rule 
37(c)(2)(A)(i));
     engage in any act or practice that may serve to disrupt or 
hinder the ordinary and efficient conduct of business (proposed NYSE 
Rule 37(c)(2)(A)(ii));
     engage in any act or practice that may serve to jeopardize 
the safety or welfare of any other individual (proposed NYSE Rule 
37(c)(2)(A)(iii)); or
     act in a disorderly manner, which includes, but is not 
limited to, use of abusive or indecorous language and the display or 
circulation of written material or graphic images that are harassing, 
inappropriate, offensive, and/or lewd (proposed NYSE Rule 
37(c)(2)(A)(iv)).
    Proposed subsection (B) of NYSE Rule 37(c)(2) would provide that 
entry and

[[Page 8902]]

consumption of food or drink on the Trading Floor may be permitted at 
the discretion of the Exchange and that food or drink should only be 
consumed at the booth or post. Finally, proposed NYSE Rule 37(c)(2)(B) 
would provide that alcoholic beverages may not be consumed on the 
Trading Floor during business hours as defined in NYSE Rule 7.1 (Hours 
of Business). The proposed Rule differs slightly from the NYSE American 
and NYSE Arca rules, which prohibit consumption of alcoholic beverages 
at any time.
    Proposed subsection (C) of NYSE Rule 37(c)(2) would prohibit 
smoking in any form, any kind of tobacco use, or any expectorating on 
the Floor and clarify that this prohibition would apply at all times. 
The proposed Rule is identical to the NYSE American and NYSE Arca 
versions.
    Proposed subsection (D) of NYSE Rule 37(c)(2) would prohibit 
running on the Trading Floor, which the proposed Rule would define as 
any movement at a degree of speed which may disrupt other occupants of 
the Floor. Once again, the proposed Rule is identical to the NYSE 
American and NYSE Arca versions.
    Proposed subsection (E) of NYSE Rule 37(c)(2) would prohibit 
standing on chairs, furniture, booths, ladders, stools, and similar 
items. The proposed Rule is the same as NYSE American Rule 
902NY(c)(2)(E) and NYSE Arca Rule 6.2-O(c)(2)(E).
    Proposed subsection (F) of NYSE Rule 37(c)(2) would provide that no 
object of any kind may be placed in the trading post areas, including 
all chairs, stools, or other furniture, if it could obstruct the flow 
of people in or out of the Trading Floor. Unlike the NYSE American and 
NYSE Arca rules, NYSE Rule 37(c)(2)(F) would not include any references 
to the trading crowd.
    Fifth and finally, the Exchange proposes a new subsection (d) to 
NYSE Rule 37 titled ``Trading Floor Badges.'' NYSE Rule 303 (Limitation 
on Access to Floor) currently requires members on the Floor to be 
provided with a badge that must be worn while on the Floor.\6\ Proposed 
NYSE Rule 37(d) would supplement NYSE Rule 303 by specifying, similar 
to NYSE American Rule 902NY(d) and NYSE Arca Rule 6.2-O(d), that 
admission to the Floor will be by Exchange-issued badge only and that 
Exchange-issued badges must be appropriately displayed, with the photo 
visible, at all times while on the Floor. The proposed Rule would also 
specify that use of an Exchange-issued badge belonging to another 
member or Floor employee to enter or exit the Floor is prohibited. In 
addition, the proposed Rule would provide that authorized persons 
seeking admission to the Floor without a badge must show proper 
identification and obtain a temporary badge from the Security Office. 
Finally, proposed NYSE Rule 37(d) would provide that visitor's badges 
are not acceptable identification cards for Floor employees.
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    \6\ NYSE Rule 303(a) provides that members who execute orders on 
the Floor must be provided with an identification badge and must 
wear the same while on the Floor, and that every member's badge must 
contain his or her name and a number and the name of his or her 
member organization.
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b. Fines for Minor Rule Violations

    NYSE Rule 9217 sets forth the list of rules under which a member 
organization or covered person may be subject to a fine under NYSE Rule 
9216(b). NYSE Rule 9217 permits the Exchange to impose a fine of up to 
$5,000 on any member or covered person for a minor violation of an 
eligible rule.
    The Exchange proposes to amend NYSE Rule 9217 to add a reference to 
the proposed NYSE Rule 37 provisions governing floor decorum, 
disruptive actions involving physical contact while on the Floor, use 
of abusive language, rules on visitors, abuse of Exchange property, and 
misuse of Exchange-issued badge or identification to the list of rules 
in NYSE Rule 9217 eligible for disposition pursuant to a minor fine 
under NYSE Rule 9216(b). Violations of the similar provisions under 
NYSE American Rule 902NY and NYSE Arca Rule 6.2-O are eligible for 
minor rule fines under those markets' respective versions of NYSE Rule 
9217.\7\
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    \7\ See NYSE American Rule 9217(i)(14) (violation of rules 
related to floor decorum); (i)(15) (disruptive action involving 
physical contact while on the Trading Floor); NYSE American Rule 
9217(i)(16) (ATP Holder used abusive language on the trading floor); 
NYSE American Rule 9217(i)(20) (violation of rules on visitors to 
the options floor); NYSE American Rule 9217(i)(21) (misuse of ATP 
Holder badge or identification); and (i)(25) (abusing exchange 
property). See also NYSE Arca Rule 10.9217(e)(16) (violation of 
rules related to floor decorum); NYSE Arca Rule 10.9217(e)(17) 
(disruptive action involving physical contact while on the trading 
floor); NYSE Arca Rule 10.9217(e)(19) (OTP Holder used abusive 
language on the trading floor); NYSE Arca Rule 10.9217(e)(31) 
(violation of rules on visitors to the options floor); NYSE Arca 
Rule 10.9217(e)(32) (misuse of OTP Holder badge or OTP Firm 
identification); and NYSE Arca Rule 10.9217 (e)(36) (abusing 
exchange property).
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III. Discussion and Commission Findings

    After careful review, the Commission finds that the proposed rule 
change is consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities exchange.\8\ 
In particular, the Commission finds that the proposed rule change is 
consistent with Section 6(b)(5) of the Act,\9\ which requires that the 
rules of an exchange be designed 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. The Commission 
also finds that the proposal is consistent with Sections 6(b)(1) and 
6(b)(6) of the Act,\10\ which require that the rules of an exchange 
enforce compliance with, and provide appropriate discipline for, 
violations of Commission and Exchange rules. Finally, the Commission 
finds that the proposal is consistent with the public interest, the 
protection of investors, or otherwise in furtherance of the purposes of 
the Act, as required by Rule 19d-1(c)(2) under the Act,\11\ which 
governs minor rule violation plans.
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    \8\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \9\ 15 U.S.C. 78f(b)(5).
    \10\ 15 U.S.C. 78f(b)(1) and 78f(b)(6).
    \11\ 17 CFR 240.19d-1(c)(2).
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    As described in detail above, the Exchange proposes to amend NYSE 
Rule 37 to add provisions governing floor decorum, disruptive actions 
involving physical contact while on the Floor, use of abusive language, 
visitors to the Exchange, abuse of Exchange property, and misuse of 
Exchange-issued badge or identification, and to also add the proposed 
NYSE Rule 37 provisions to the list of rules in NYSE Rule 9217 that are 
eligible for disposition pursuant to a minor fine under NYSE Rule 
9216(b). This proposed rule change is modeled on rules of the 
Exchange's affiliates NYSE American and NYSE Arca.
    The Commission finds that adding the NYSE Rule 37 amendments to the 
list of rules in NYSE Rule 9217 that are eligible for disposition 
pursuant to a minor fine under NYSE Rule 9216(b) is consistent with the 
Act. This proposed rule change will align the Exchange's rules 
regarding Floor conduct and decorum with the rules of its affiliates 
that also have trading floors. Because this proposal is modeled on 
conduct that is subject to minor rule fines on NYSE American and NYSE 
Arca, it does not raise any novel issues for consideration. 
Specifically, the Commission believes that NYSE Rule 9217 provides a 
reasonable means of addressing rule violations that may not rise to the 
level of requiring formal disciplinary proceedings, while

[[Page 8903]]

providing greater flexibility to the Exchange in handling certain 
violations.
    The Commission, however, also believes that a violation of any 
self-regulatory organization's rules, or of Commission rules, is a 
serious matter. In approving this propose rule change, the Commission 
in no way minimizes the importance of compliance with the Exchange's 
rules and all other rules subject to fines under NYSE Rule 9217. The 
Commission expects that the Exchange will continue to conduct 
surveillance with due diligence and make a determination based on its 
findings, on a case-by-case basis, whether a fine of more or less than 
the recommended amount is appropriate for a violation under NYSE Rule 
9217 or whether a violation requires formal disciplinary action.

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the Act 
\12\ and Rule 19d-1(c)(2) thereunder,\13\ that the proposed rule change 
(SR-NYSE-2021-73) be, and hereby is, approved.
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    \12\ 15 U.S.C. 78s(b)(2).
    \13\ 17 CFR 240.19d-1(c)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-03281 Filed 2-15-22; 8:45 am]
BILLING CODE 8011-01-P


