[Federal Register Volume 88, Number 15 (Tuesday, January 24, 2023)]
[Notices]
[Pages 4263-4265]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-01259]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-96702; File No. SR-NYSEAMER-2023-03]


Self-Regulatory Organizations; NYSE American LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Change To Modify Rule 
7.31E

January 18, 2023.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on January 4, 2023, 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 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\ 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 modify Rule 7.31E regarding MPL-IOC 
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 Exchange proposes to amend Rule 7.31E regarding MPL-IOC Orders.
    Rule 7.31E(d)(3) defines a Mid-Point Liquidity Order (``MPL 
Order'') as a Limit Order to buy (sell) that is not displayed and does 
not route, with a working price at the lower (higher) of the midpoint 
of the PBBO or its limit price. An MPL Order may be entered during any 
Exchange trading session, is ranked Priority 3--Non-Display Orders, and 
does not participate in auctions. An MPL Order to buy (sell) must be 
designated with a limit price in the minimum price variation for the 
security and will be eligible to trade at its working price.\3\ If 
there is no PBB or PBO, or if the PBBO is locked or crossed, an 
arriving or resting MPL Order will not be eligible to trade until the 
PBBO is not locked or crossed. If a resting MPL Order to buy (sell) 
trades with another MPL Order to sell (buy) after the PBBO is unlocked 
or uncrossed, the MPL Order with the later working time will be the 
liquidity-removing order.\4\
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    \3\ See Rule 7.31E(d)(3)(A).
    \4\ See Rule 7.31E(d)(3)(B).
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    An Aggressing MPL Order to buy (sell) will trade at the working 
price of resting orders to sell (buy) when such resting orders have a 
working price at or below (above) the working price of the MPL Order. 
Resting MPL Orders to buy (sell) will trade against all Aggressing 
Orders to sell (buy) priced at or below (above) the working price of 
the MPL Order.\5\
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    \5\ See Rule 7.31E(d)(3)(C). The Exchange also proposes a non-
substantive conforming change to Rule 7.31E(d)(3)(C) to delete 
``that is eligible to trade'' from the rule text. The Exchange 
proposes to eliminate this text as extraneous and notes that the 
proposed change would harmonize the language of Rule 7.31E(d)(3)(C) 
with rules of the same number on its affiliated exchanges, New York 
Stock Exchange, LLC (``NYSE''); NYSE Arca, Inc. (``NYSE Arca''); 
NYSE Chicago, Inc. (``NYSE Chicago''); and NYSE National, Inc. 
(``NYSE National'') (collectively, the ``Affiliated Exchanges''). 
See NYSE Rule 7.31(d)(3)(C); NYSE Arca Rule 7.31-E(d)(3)(C); NYSE 
Chicago Rule 7.31(d)(3)(C); NYSE National Rule 7.31(d)(3)(C).
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    Currently, Rule 7.31E(d)(3)(D) provides that an MPL Order may be 
designated with an Immediate-or-Cancel (``IOC'') Modifier (an ``MPL-IOC 
Order''). An MPL Order designated IOC will be traded in whole or in 
part on the Exchange as soon as such order is received, and any 
untraded quantity will be cancelled.\6\ Rule 7.31E(d)(3)(D) further 
provides that, subject to the IOC Modifier, an MPL-IOC Order follows 
the same trading and priority rules as an MPL Order (as described 
above), except that an MPL-IOC Order will be rejected if (i) the order 
entry size is less than one round lot or (ii) there is no PBBO or the 
PBBO is locked or crossed.
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    \6\ See Rule 7.31E(b)(2) (defining IOC Modifier).
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    The Exchange proposes to modify Rule 7.31E(d)(3)(D) to permit MPL-
IOC Orders to be entered in any size and thus proposes to eliminate 
rule text currently providing that an MPL-IOC Order would be rejected 
if entered in a quantity less than one round lot. The Exchange believes 
that requiring MPL-IOC Orders to be entered in round lots is 
unnecessary and that providing ETP Holders with the option to enter 
MPL-IOC Orders in odd lots could increase liquidity and enhance 
opportunities for order execution on the Exchange. The Exchange notes 
that permitting odd-lot order quantities is not novel on the Exchange 
or other cash equity exchanges and believes that this proposed change 
would align the Exchange's handling of MPL-IOC Orders with the 
treatment of equivalent order types on other cash equity exchanges.\7\
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    \7\ See, e.g., Members Exchange Rules 11.8(c)(1) and (2) 
(providing that a Midpoint Peg Order may be designated IOC and may 
be entered as an odd lot, round lot, or mixed lot); Cboe EDGX 
Exchange, Inc. Rules 11.8(d)(1) and (2) (providing that a MidPoint 
Peg Order may have an IOC instruction and may be entered as an odd 
lot, round lot, or mixed lot); Cboe EDGA Exchange, Inc. Rules 
11.8(d)(1) and (2) (same). The Exchange also notes that the rules of 
the Nasdaq Stock Market LLC (``Nasdaq''), Cboe BZX Exchange, Inc. 
(``BZX''), and Cboe BYX Exchange, Inc. (``BYX'') appear to permit 
orders, including orders analogous to MPL-IOC Orders, to be entered 
in any size. See Nasdaq Rule 4703(b) (providing that an order may be 
entered in any whole share size, except as otherwise provided); BZX 
Rule 11.2 (providing that orders are eligible for odd-lot, round-
lot, and mixed-lot executions unless otherwise indicated); BYX Rule 
11.2 (same).
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    Because of the technology changes associated with this proposed 
rule change, the Exchange will announce the implementation date by 
Trader Update, which, subject to effectiveness of this proposed rule 
change, will be in the first quarter of 2023.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Act,\8\ in general, and furthers the objectives of Section 6(b)(5),\9\ 
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 facilitating transactions in securities, to remove 
impediments to, and perfect the

[[Page 4264]]

mechanism of, a free and open market and a national market system and, 
in general, to protect investors and the public interest.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed change would promote just 
and equitable principles of trade, remove impediments to, and perfect 
the mechanism of, a free and open market and a national market system, 
and protect investors and the public interest because it would provide 
ETP Holders with the option to enter MPL-IOC Orders in odd-lot sized 
orders, which could encourage order flow to the Exchange and promote 
opportunities for order execution on the Exchange, to the benefit of 
all market participants. The Exchange notes that the proposed change 
would not otherwise impact the operation of MPL-IOC Orders as provided 
under current Exchange rules. The Exchange also believes that the 
proposed change would align Exchange rules with the treatment of orders 
analogous to MPL-IOC Orders on other cash equity exchanges, thereby 
removing impediments to, and perfecting the mechanism of, a free and 
open market and a national market system.\10\
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    \10\ See note 7, supra.
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    The Exchange also believes that the proposed conforming change to 
Rule 7.31E(d)(3)(C) would promote just and equitable principles of 
trade, remove impediments to, and perfect the mechanism of, a free and 
open market and a national market system, and protect investors and the 
public interest by improving the clarity of Exchange rules and 
harmonizing the text of the rule with the Affiliated Exchanges' rules 
of the same number.

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. As noted above, the Exchange 
believes the proposed rule change would allow the Exchange to accept 
MPL-IOC Orders of any size and align the Exchange's handling of such 
orders with other cash equity exchanges' handling of similar order 
types,\11\ thereby promoting competition among exchanges by offering 
ETP Holders options available on other cash equity exchanges. The 
Exchange also believes that, to the extent the proposed change would 
increase opportunities for order execution, the proposed change would 
promote competition by making the Exchange a more attractive venue for 
order flow and enhancing market quality for all market participants. 
The Exchange further believes that the proposed conforming change to 
Rule 7.31E(d)(3)(C) would not impose any burden on competition, as the 
change is intended only to simplify the rule text and align it with 
rules of the same number on the Affiliated Exchanges.
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    \11\ Id.
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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

    Because the foregoing 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, it has become 
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \12\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\13\
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    \12\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \13\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires the Exchange 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.
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    A proposed rule change filed under Rule 19b-4(f)(6) \14\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\15\ 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 to allow the 
Exchange to implement the proposal as soon as possible. The Exchange 
states that the proposed change would align the Exchange's treatment of 
MPL-IOC Orders with treatment of similar order types on other cash 
equity exchanges and allow the Exchange to accept MPL-IOC Orders of any 
size as soon as the technology associated with the proposed change is 
available, which is anticipated to be less than 30 days from the date 
of this filing. The Exchange also states that the proposed conforming 
change to Rule 7.31E(d)(3)(C) is non-controversial and does not raise 
any novel issues, as it would clarify Exchange rules and align the text 
of the rule with the Affiliated Exchanges' rules of the same number. 
The Commission believes that waiver of the 30-day operative delay is 
consistent with the protection of investors and the public interest 
because the proposal does not raise any new or novel issues. 
Accordingly, the Commission hereby waives the 30-day operative delay 
and designates the proposal operative upon filing.\16\
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    \14\ 17 CFR 240.19b-4(f)(6).
    \15\ 17 CFR 240.19b-4(f)(6)(iii).
    \16\ 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 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 to 
determine whether the proposed rule 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. 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 [email protected]. Please include 
File Number SR-NYSEAMER-2023-03 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-2023-03. 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

[[Page 4265]]

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-2023-03 and 
should be submitted on or before February 14, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-01259 Filed 1-23-23; 8:45 am]
BILLING CODE 8011-01-P


