[Federal Register Volume 88, Number 19 (Monday, January 30, 2023)]
[Notices]
[Pages 5948-5952]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-01743]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-96741; File No. SR-NYSEARCA-2023-06]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
of Proposed Rule Change To Amend Rule 7.44-E Relating to the Retail 
Liquidity Program

January 24, 2023.
    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 January 10, 2023, NYSE Arca, Inc. (``NYSE Arca'' 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\ 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 amend Rule 7.44-E relating to the Retail 
Liquidity Program. 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 7.44-E, which sets forth the 
Exchange's Retail Liquidity Program (the ``Program'').\4\ The purpose 
of the Program is to attract retail order flow to the Exchange and 
allow such order flow to receive potential price improvement. Rule 
7.44-E currently provides for a class of market participant called 
Retail Liquidity Providers (``RLPs'') who, along with non-RLP ETP 
Holders, are able to provide potential price improvement to retail 
investor orders in the form of a non-displayed order that is priced 
better than the best protected bid or offer, called a Retail Price 
Improvement Order (``RPI Order'').\5\ When there is an RPI Order in a 
particular security, the Exchange disseminates an indicator, known as 
the Retail Liquidity Identifier, that such interest exists.\6\ Retail 
Member Organizations (``RMOs'') can submit a Retail Order to the 
Exchange, which interacts, to the extent possible, with available 
contra-side RPI Orders and then may interact with other liquidity on 
the Exchange or elsewhere, depending on the Retail Order's 
instructions.\7\ The segmentation in the Program allows retail order 
flow to receive potential price improvement as a result of their order 
flow being deemed more desirable by liquidity providers. The Exchange 
recently modified the Program to be available for all securities traded 
on the Exchange.\8\
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    \4\ The Program was established on a pilot basis in 2013 and was 
approved by the Commission to operate on a permanent basis in 2019. 
See Securities Exchange Act Release No. 87350 (October 18, 2019), 84 
FR 57106 (October 24, 2019) (SR-NYSEArca-2019-63). In connection 
with the Commission's approval of the Program on a pilot basis, the 
Commission granted the Exchange's request for exemptive relief from 
Rule 612 of Regulation NMS, 17 CFR 242.612 (the ``Sub-Penny Rule''), 
which, among other things, prohibits a national securities exchange 
from accepting or ranking orders priced greater than $1.00 per share 
in an increment smaller than $0.01. See Securities Exchange Act 
Release No. 71176 (December 23, 2013), 78 FR 79524 (December 30, 
2013) (SR-NYSEArca-2013-107).
    \5\ See Rules 7.44-E(a)(1) (defining an RLP) and 7.44-E(a)(4) 
(defining RPI Order).
    \6\ See Rule 7.44-E(j).
    \7\ See Rule 7.44-E(a)(2) (defining RMO); Rules 7.44-E(a)(3) and 
7.44-E(k) (describing Retail Orders).
    \8\ See Securities Exchange Act Release No. 96111 (October 20, 
2022), 87 FR 64830 (October 26, 2022) (SR-NYSEARCA-2022-70) (Notice 
of Filing and Immediate Effectiveness of Proposed Rule Change to 
Modify Rule 7.44-E).
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    As described in further detail below, the Exchange now proposes to 
substantively amend the Program to (1) modify the Program to provide 
Retail Orders with price improvement at the midpoint or better by 
proposing that both RPI Orders and Retail Orders would function as Mid-
Point Liquidity Orders (``MPL Orders'') and (2) eliminate the role of 
RLPs.\9\
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    \9\ The Exchange notes that, with the proposed modification of 
the Program to provide Retail Orders with price improvement at the 
midpoint or better, the Exchange would no longer accept and rank RPI 
Orders in increments smaller than $0.01, as ordinarily prohibited by 
the Sub-Penny Rule. Accordingly, the operation of the Program, as 
proposed, would no longer be dependent on the exemptive relief from 
the Sub-Penny Rule previously granted by the Commission in 
connection with its original approval of the Program.
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Proposed Midpoint Program
    The Exchange proposes to modify the Program to provide Retail 
Orders with price improvement at the midpoint or better, which change 
the Exchange believes would further the purpose of the Program to offer 
price improvement opportunities to retail order flow. The Exchange 
believes that the proposed change would provide more deterministic 
price improvement opportunities for Retail Orders and could attract 
additional retail order flow to the Exchange.
RPI Orders
    Rule 7.44-E(a)(4) currently provides that an RPI Order consists of 
non-displayed interest that would trade at prices better than the PBB 
or PBO by at least $0.001 and that is identified as

[[Page 5949]]

such.\10\ RPI Orders are non-displayed and are ranked Priority 3--Non-
Display Orders.\11\ Currently, Exchange systems monitor whether RPI buy 
or sell interest is eligible to trade with incoming Retail Orders, and 
an RPI Order to buy (sell) with a limit price at or below (above) the 
PBB (PBO) or at or above (below) the PBO (PBB) will not be eligible to 
trade with incoming Retail Orders to sell (buy), and such an RPI will 
cancel if a Retail Order to sell (buy) trades with all displayed 
liquidity at the PBB (PBO) and then attempts to trade with the RPI. If 
not cancelled, an RPI to buy (sell) with a limit price that is no 
longer at or below (above) the PBB (PBO) or at or above (below) the PBO 
(PBB) will again be eligible to trade with incoming Retail Orders.\12\ 
An RPI Order may be an odd lot, round lot, or mixed lot, may be 
designated as either a Limit Non-Displayed Order or an MPL Order, and 
will not interact with Type 2--Retail Orders resting on the NYSE Arca 
Book.\13\
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    \10\ Rule 7.44-E(a)(4)(C) currently provides that an RLP may 
only enter an RPI in its RLP capacity for securities to which it is 
assigned and is permitted, but not required, to submit RPIs for 
securities to which it is not assigned (and would be treated as a 
non-RLP ETP Holder with respect to those securities). As discussed 
below, the Exchange proposes to delete current Rule 7.44-E(a)(4)(C) 
in connection with the proposed elimination of the RLP function.
    \11\ See Rule 7.44-E(a)(4)(A).
    \12\ See Rule 7.44-E(a)(4)(B).
    \13\ See Rule 7.44-E(a)(4)(D).
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    To effect the proposed change that the Program would function to 
provide Retail Orders with price improvement at the midpoint or better, 
the Exchange proposes to modify RPI Orders to function only as MPL 
Orders. An MPL Order is defined in Rule 7.31-E(d)(3) 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.\14\ The Exchange believes that modifying RPI Orders to function 
as MPL Orders would increase the potential pool of midpoint-eligible 
liquidity with which a Retail Order could interact. In addition, 
because all RPI Orders would be priced at the midpoint, the Retail 
Liquidity Identifier would provide more deterministic information about 
the potential liquidity available to interact with Retail Orders at the 
midpoint.
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    \14\ An MPL Order may be entered during any Exchange trading 
session, is ranked Priority 3--Non-Display Orders, and does not 
participate in auctions. See Rule 7.31-E(d)(3). 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. See Rule 7.31-E(d)(3)(A). 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. See Rule 7.31-E(d)(3)(B). 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. See 
Rule 7.31-E(d)(3)(C).
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    To effect this change, the Exchange first proposes to modify 
current Rule 7.44-E(a)(4) (which, as discussed below, would be 
renumbered as 7.44-E(a)(3)) and to combine current Rule 7.44-E(a)(4)(A) 
into new Rule 7.44-E(a)(3), with non-substantive changes to improve the 
clarity of the rule text. Rule 7.44-E(a)(3), as proposed, would thus 
define an RPI Order as an MPL Order that is eligible to trade only with 
incoming Retail Orders submitted by an RMO. The Exchange also proposes 
to add text to new Rule 7.44-E(a)(3) to clarify that an RPI Order may 
not be designated IOC, ALO, or with a Minimum Trade Size (``MTS'') 
Modifier.\15\ In addition, the Exchange proposes to delete current 
Rules 7.44-E(a)(4)(B) and 7.44-E(a)(4)(D) because the text of those 
rules would no longer be necessary.\16\ Specifically, the provisions of 
Rule 7.44-E(a)(4)(B) would no longer apply in light of the Exchange's 
proposal to modify RPI Orders to function as MPL Orders and the 
provisions of Rule 7.44-E(a)(4)(D) are either duplicative of proposed 
Rule 7.44-E(a)(3) (as renumbered) or no longer applicable based on the 
proposed elimination Type 2 Retail Orders (as further discussed 
below).\17\
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    \15\ See Rules 7.31-E(b)(2) (providing that an order with an IOC 
Modifier will be traded in whole or in part on the NYSE Arca 
Marketplace as soon as such order is received, with any untraded 
quantity cancelled); 7.31-E(e)(2) (providing that an ALO Order is a 
Non-Routable Limit Order that, unless it receives price improvement, 
will not remove liquidity from the NYSE Arca Book); 7.31-E(i)(3) 
(providing that the MTS Modifier designates an order with a minimum 
trade size and an order with an MTS Modifier will be rejected if the 
MTS is less than a round lot or if the MTS is larger than the size 
of the order).
    \16\ The proposed deletion of Rule 7.44-E(a)(4)(C) is discussed 
below in connection with the proposed elimination of RLPs.
    \17\ The Exchange also proposes to delete text in Rule 7.44-
E(a)(4)(D) providing that an RPI Order may be an odd lot, round lot, 
or mixed lot as extraneous, because Exchange rules provide that 
orders are accepted in any size unless otherwise provided. See Rule 
7.38-E(a). The Exchange further proposes a conforming change to Rule 
7.38-E(a) to delete its reference to Rule 7.44-E, as Rule 7.44-E 
does not specify that an order may not be entered as an odd lot or 
mixed lot.
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    The Exchange also proposes to modify current Rule 7.44-E(j) (to be 
renumbered as Rule 7.44-E(e), as discussed below), which describes the 
Retail Liquidity Identifier that is currently disseminated via the 
Consolidated Quotation System or the UTP Quote Data Feed, as 
applicable, when RPI interest priced at least $0.001 better than the 
PBB or PBO for a particular security is available in Exchange systems. 
Consistent with the proposed change to modify RPI Orders to operate as 
MPL Orders only, the Exchange proposes that new Rule 7.44-E(e) would 
provide that the Retail Liquidity Identifier would be disseminated when 
RPI interest is eligible to trade at the midpoint of the PBBO. The 
dissemination of the Retail Liquidity Identifier would thus alert RMOs 
to the availability of trading opportunities at the midpoint of the 
PBBO.
Retail Orders
    Current Rule 7.44-E(a)(3), which as described below would be 
renumbered as Rule 7.44-E(a)(2), defines a Retail Order as an agency 
order or a riskless principal order that meets the criteria of FINRA 
Rule 5320.03 that originates from a natural person and is submitted to 
the Exchange by an RMO, provided that no change is made to the terms of 
the order with respect to price or side of market and the order does 
not originate from a trading algorithm or any other computerized 
methodology. Current Rule 7.44-E(a)(3) also provides that a Retail 
Order will operate in accordance with Rule 7.44-E(k) and may be an odd 
lot, round lot, or mixed lot.\18\
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    \18\ Consistent with the proposed change to Rule 7.44-E(a)(4)(D) 
regarding odd lots, round lots, or mixed lots, see id., the Exchange 
also proposes to delete the similar provision in current Rule 7.44-
E(a)(3) for the same reasons.
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    Rule 7.44-E(k) currently describes how RMOs can designate how a 
Retail Order would interact with available contra-side interest and 
provides for Type 1--Retail Orders and Type 2--Retail Orders. Type 1--
Retail Orders are Limit IOC Orders to buy (sell) that will trade only 
with available RPI Orders to sell (buy) and all other orders to sell 
(buy) with a working price below (above) the PBO (PBB) on the NYSE Arca 
Book and will not route. The quantity of a Type 1--Retail Order to buy 
(sell) that does not trade with eligible orders to sell (buy) will be 
immediately and automatically cancelled. Type 2--Retail Orders may be 
Limit Orders designated IOC or Day or Market Orders. A Type 2--Retail 
Order IOC is a Limit IOC Order to buy (sell) that will trade first with 
available RPI Orders to sell (buy) and all other orders to sell (buy) 
with a working price below (above) the PBO (PBB) on the NYSE Arca Book. 
Any remaining quantity of the Retail Order will trade with orders to 
sell (buy) on the NYSE Arca Book at prices equal to or above

[[Page 5950]]

(below) the PBO (PBB) and will be traded as a Limit IOC Order and will 
not route. A Type 2--Retail Order Day is a Limit Order to buy (sell) 
that will trade first with available RPI Orders to sell (buy) and all 
other orders to sell (buy) with a working price below (above) the PBO 
(PBB) on the NYSE Arca Book. Any remaining quantity of the Retail 
Order, if marketable, will trade with orders to sell (buy) on the NYSE 
Arca Book or route, and if non-marketable, will be ranked in the NYSE 
Arca Book as a Limit Order. Finally, a Type 2--Retail Order Market is a 
Market Order that will trade first with available RPI Orders to sell 
(buy) and all other orders to sell (buy) with a working price below 
(above) the NBO (NBB). Any remaining quantity of the Retail Order will 
function as a Market Order.
    To effect the change that Retail Orders in the Program would be 
eligible to trade at the midpoint or better, the Exchange proposes to 
amend Rule 7.44-E(k) (which is proposed to be renumbered as Rule 7.44-
E(f)). In new Rule 7.44-E(f), the Exchange proposes to both rename the 
section ``Retail Order Operation'' rather than ``Retail Order 
Designation'' and reflect the Exchange's proposal to offer only one 
type of Retail Order, which, as noted above, would function as an MPL 
Order.\19\ The Exchange proposes to delete text in current Rule 7.44-
E(k) providing that an RMO may designate how a Retail Order would trade 
with contra-side interest, as such text would no longer apply with only 
one type of Retail Order. The Exchange also proposes to move text in 
current Rule 7.44-E(k)(1) into new Rule 7.44-E(f) and to modify the 
description of a Type 1 Retail Order in current Rule 7.44-E(k)(1) to 
describe the only Retail Order that would be available, as proposed.
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    \19\ See note 14, supra and accompanying text.
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    New Rule 7.44-E(f) would thus provide that a Retail Order to buy 
(sell) would be an MPL IOC Order with a working price at the lower 
(higher) of the midpoint of the PBBO or its limit price and that will 
trade only with available RPI Orders to sell (buy) and all other orders 
to sell (buy) with a working price below (above) or equal to the 
midpoint of the PBBO on the NYSE Arca Book and will not route. New Rule 
7.44-E(f) would also continue to provide that the quantity of a Retail 
Order to buy (sell) that does not trade with eligible orders to sell 
(buy) will be immediately and automatically cancelled. The Exchange 
proposes to delete references to Type 1 Retail Orders in current Rule 
7.44-E(k)(1), as the proposed change would result in only one type of 
Retail Order. The Exchange also proposes to update the remainder of 
current Rule 7.44-E(k)(1) such that new Rule 7.44-E(f) would provide 
that the quantity of a Retail Order to buy (sell) that does not trade 
with eligible orders to sell (buy) will be rejected on arrival if there 
is no PBBO or the PBBO is locked or crossed. The Exchange believes this 
proposed change would simplify the Program by offering only one type of 
Retail Order and, similar to the proposed change to RPI Orders, would 
modify the Program to provide price improvement opportunities for 
Retail Orders priced at the midpoint or better.
    The Exchange further proposes to add new text to new Rule 7.44-E(f) 
to provide additional options to ETP Holders with respect to Retail 
Orders. First, the Exchange proposes to add text to new Rule 7.44-E(f) 
providing that a Retail Order may be designated with an MTS Modifier, 
at the ETP Holder's option.\20\ The Exchange also proposes to add text 
to new Rule 7.44-E(f) to introduce a new ``No Retail Modifier'' for use 
at an ETP Holder's discretion. Proposed Rule 7.44-E(f) would provide 
that the No Retail Modifier is available for use with MPL Orders and 
MPL-ALO Orders only, and orders designated with the No Retail Modifier 
would not trade with Retail Orders.\21\ Specifically, as proposed, an 
incoming Retail Order would not interact with an MPL Order or MPL-ALO 
Order designated with the No Retail Modifier and may trade through such 
MPL Order or MPL-ALO Order.
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    \20\ Consistent with this proposed change, the Exchange proposes 
to delete text in Rule 7.44-E(k) currently providing that a Retail 
Order may not be designated with a minimum trade size.
    \21\ The Exchange also proposes to modify Rule 7.31-E(d)(3), 
which defines MPL Orders, to add new subparagraph (G) regarding the 
No Retail Modifier. Subparagraph (G) would, consistent with the 
proposed addition to new Rule 7.44-E(f), provide that MPL Orders and 
MPL-ALO Orders may be designated with a No Retail Modifier and that 
orders so designated would not trade with Retail Orders. The 
Exchange proposes to offer the No Retail Modifier to provide ETP 
Holders with the ability to designate their MPL Orders and MPL-ALO 
Orders to not interact with Retail Orders, which some ETP Holders 
may choose to do based on their desired trading strategy.
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    The Exchange also proposes to delete current Rule 7.44-E(k)(2), 
which currently describes Type 2 Retail Orders, as such order types 
would no longer be offered, as proposed.\22\
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    \22\ The Exchange also proposes a conforming change in the final 
paragraph of new Rule 7.44-E(g) to reflect the proposed elimination 
of Type 2 Retail Orders. The Exchange proposes to delete the second 
sentence in the final paragraph of current Rule 7.44-E(l), which 
relates to Type 2 Market Retail Orders, as such rule text would no 
longer have application following the elimination of Type 2 Retail 
Orders.
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    Finally, the Exchange proposes to modify Rule 7.44-E(l) (proposed 
to be renumbered as Rule 7.44-E(g)), which currently describes priority 
and order allocation of RPI Orders and Retail Orders, to reflect the 
changes described above. Under current Rule 7.44-E(l), RPI Orders in 
the same security will be ranked together with all other interest 
ranked as Priority 3--Non-Display Orders. Odd-lot orders ranked as 
Priority 2--Display Orders will have priority over orders ranked 
Priority 3--Non-Display Orders at each price. Any remaining unexecuted 
RPI interest will remain available to trade with other incoming Retail 
Orders. Currently, any remaining unfilled quantity of the Retail Order 
will cancel, execute, or post to the NYSE Arca Book in accordance with 
Rule 7.44-E(k).
    The Exchange proposes to delete text from the last sentence of the 
first paragraph under current Rule 7.44-E(l) referring to an unfilled 
quantity of a Retail Order executing or posting to the NYSE Arca Book. 
The Exchange proposes to eliminate this text because Retail Orders 
would, as proposed, function as IOC orders only, and any remaining 
unfilled quantity of a Retail Order would thus be cancelled. The 
Exchange also proposes to delete the examples currently provided in 
Rule 7.44-E(l) to illustrate priority and order allocation of RPI 
Orders and Retail Orders. With the changes proposed in this filing to 
modify RPI Orders and Retail Orders to function only as MPL Orders and 
to offer only one type of Retail Order, RPI Orders and Retail Orders 
would simply trade according to price/time priority as described in 
Rule 7.36-E. The Exchange thus believes that new Rule 7.44-E(g) clearly 
describes the ranking and priority of RPI Orders and Retail Orders and 
that no examples are needed to further illustrate how such orders would 
trade. The Exchange believes that removing unnecessary examples from 
current Rule 7.44-E(l) would improve the clarity of the rule.
Proposed Elimination of Retail Liquidity Providers
    NYSE Arca Rules 7.44-E(a)(1), 7.44-E(a)(4)(C), and 7.44-E(c) 
through (i) currently set forth rules pertaining to RLPs:
     Rule 7.44-E(a)(1) provides that RLPs are ETP Holders that 
are approved by the Exchange and required to submit RPIs.
     Rule 7.44-E(a)(4)(C) describes how RLPs may enter RPIs for 
their assigned and non-assigned securities.
     Rule 7.44-E(c) describes how an ETP Holder may qualify to 
become an RLP.

[[Page 5951]]

     Rule 7.44-E(d) sets forth the process by which an ETP 
Holder may apply to become an RLP, subject to the Exchange's approval 
of such application.
     Rule 7.44-E(e) provides for an RLP's voluntary withdrawal 
from RLP status.
     Rule 7.44-E(f) sets forth an RLP's obligations with 
respect to entering RPIs.
     Rule 7.44-E(g) describes action the Exchange may take with 
respect to an RLP that fails to meet the requirements of Rule 7.44-E.
     Rule 7.44-E(i) describes the process through which an ETP 
Holder may appeal the Exchange's decision to disapprove or disqualify 
it as an RLP.
    The Exchange proposes to modify the Program to eliminate the role 
of RLPs, as there are no ETP Holders currently registered as RLPs. 
Accordingly, the Exchange does not believe that modifying Rule 7.44-E 
to remove text providing for the RLP function would impact the 
effectiveness of the Program and notes that other exchanges currently 
operate retail price improvement programs that do not include an RLP 
function.\23\ To effect this change, the Exchange proposes to delete 
Rules 7.44-E(a)(1), 7.44-E(a)(4)(C), and 7.44-E(c) through (g) in their 
entirety and to modify Rule 7.44-E(i) to remove text relating to the 
disapproval or disqualification of an RLP.\24\ The Exchange also 
proposes to renumber current Rules 7.44-E(a)(2) through (4) as Rules 
7.44-E(a)(1) through (3) to reflect the deletion of current Rule 7.44-
E(a)(1) and to renumber Rules 7.44-E(h) through (l) as Rules 7.44-E(c) 
through (g) to reflect the proposed deletion of current Rules 7.44-E(c) 
through (g).\25\ The Exchange believes that the proposed change would 
simplify and add clarity to its Rules by removing the description of an 
unutilized aspect of the Program.
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    \23\ See, e.g., Investors Exchange LLC (``IEX'') Rule 11.232 
(describing IEX Retail Price Improvement Program); Nasdaq BX, Inc. 
(``Nasdaq BX'') Rule 4780 (describing Nasdaq BX Retail Price 
Improvement Program).
    \24\ In Rule 7.44-E(i) (which is proposed to be renumbered as 
Rule 7.44-E(d)), the Exchange proposes to delete references to Rules 
7.44-E(d) and 7.44-E(g), which currently provide for the process by 
which an ETP Holder may apply to become an RLP and actions the 
Exchange may take with respect to an RLP that fails to meet the 
requirements of Rule 7.44-E, respectively. The Exchange also 
proposes a conforming change to replace the reference to Rule 7.44-
E(h) with a reference to Rule 7.44-E(c) to reflect the proposed 
renumbering of Rules 7.44-E(h) through (l). The Exchange also 
proposes to delete current Rule 7.44-E(i)(1)(A) (which describes the 
reassignment of securities from an RLP that has been disqualified) 
because the rule would no longer have application. The Exchange 
further proposes to delete the defined term ``appellant'' in current 
Rule 7.44-E(i)(1), as such term would no longer be used following 
the elimination of Rule 7.44-E(i)(1)(A).
    \25\ The Exchange also proposes conforming changes to renumbered 
Rules 7.44-E(a)(2) (Retail Order) and 7.44-E(g) (Priority and Order 
Allocation) to update references to Rule 7.44-E(k) to refer instead 
to Rule 7.44-E(f), to account for the proposed renumbering described 
above in connection with the elimination of RLPs.
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    Subject to approval of this proposed rule change, the Exchange will 
implement this change no later than in the second quarter of 2023 and 
announce the implementation date by Trader Update.
2. Statutory Basis
    The proposed rule change is consistent with section 6(b) of the 
Act,\26\ in general, and furthers the objectives of section 
6(b)(5),\27\ 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 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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    \26\ 15 U.S.C. 78f(b).
    \27\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed changes to both Retail 
Orders and RPI Orders in the Program would promote just and equitable 
principles of trade and remove impediments to, and perfect the 
mechanism of, a free and open market and a national market system 
because modifying RPI Orders and Retail Orders to function as MPL 
Orders would further the purpose of the Program by providing Retail 
Orders with price improvement opportunities at the midpoint or better. 
The Exchange believes that providing more deterministic price 
improvement opportunities for Retail Orders would attract additional 
retail order flow to the Exchange. The Exchange also believes that the 
proposed change to the Program would allow it to compete with other 
exchanges that operate retail price improvement programs that are 
priced at the midpoint.\28\ The Exchange believes that the proposed 
change to streamline how Retail Orders function would also promote just 
and equitable principles of trade and remove impediments to, and 
perfect the mechanism of, a free and open market and a national market 
system by simplifying the operation of the Program.
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    \28\ See, e.g., IEX Rule 11.232 (providing for Retail Price 
Improvement Program with Retail Order defined as a Discretionary Peg 
order or Midpoint Peg order with a Time-in-Force of IOC or FOK, that 
is only eligible to trade at a price between the NBB and the 
Midpoint Price (for bids) or between the NBO and the Midpoint Price 
(for offers)).
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    The Exchange also believes that the proposed change to eliminate 
RLPs as a class under the Program 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 there are no ETP Holders 
currently registered as RLPs and, accordingly, deleting rule text 
providing for RLPs would not have any impact on any existing ETP 
Holders. Moreover, because any ETP Holder may enter RPI Orders, 
eliminating RLPs as a class would not impact the ability of ETP Holders 
to enter RPI Orders on the Exchange. The Exchange further notes that 
other exchanges currently operate retail price improvement programs 
that do not include RLPs.\29\
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    \29\ See note 23, supra.
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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. The Exchange believes that 
the proposed change could promote competition by modifying RPI Orders 
and Retail Orders to function as MPL Orders, thereby encouraging 
additional trading opportunities at the midpoint and supporting price 
improvement opportunities at the midpoint of the PBBO or better for 
retail investors. The Exchange also believes that the proposed change 
to eliminate the RLP function would not impose any burden on 
competition, as no ETP Holders are currently registered as RLPs. The 
Exchange further believes that the proposed change could promote 
competition between the Exchange and other exchanges that offer retail 
price improvement programs, including an exchange that operates a 
retail price improvement program intended to provide additional trading 
opportunities at the midpoint.\30\
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    \30\ See note 28, supra; see also, e.g., Nasdaq BX Rule 4780 
(describing BX's Retail Price Improvement Program); Cboe BYX 
Exchange, Inc. (``BYX'') Rule 11.24 (describing BYX's Retail Price 
Improvement Program).
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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.

[[Page 5952]]

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the Exchange consents, the Commission shall:
    (A) by order approve or disapprove such proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule 
change should be 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-NYSEARCA-2023-06 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-NYSEARCA-2023-06. 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-NYSEARCA-2023-06 and should be submitted 
on or before February 21, 2023.
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    \31\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\31\
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-01743 Filed 1-27-23; 8:45 am]
BILLING CODE 8011-01-P


