[Federal Register Volume 84, Number 52 (Monday, March 18, 2019)]
[Notices]
[Pages 9854-9856]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-04949]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-85297; File No. SR-NYSECHX-2019-03]
Self-Regulatory Organizations; NYSE Chicago, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Adopt
Rules To Establish a Rule Numbering Framework in Connection With the
Migration of the Exchange to the NYSE Pillar Platform
March 12, 2019.
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 6, 2019, the NYSE Chicago, Inc. (the ``NYSE
Chicago'' or the ``Exchange'') filed with the Securities and Exchange
Commission (the ``Commission'') the proposed rule change as described
in Items I, II, and III 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 adopt rules to establish a rule numbering
framework in connection with the migration of the Exchange to the NYSE
Pillar platform. 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 adopt rules to establish a rule numbering
framework in connection with the migration of the Exchange to the NYSE
Pillar platform (``Pillar''). The Exchange proposes to establish this
framework in order to facilitate the amendment of its rule book as the
Exchange migrates to Pillar.
In July 2018, the Exchange and its direct parent company were
acquired by NYSE Group, Inc. (``Transaction'').\4\ As a result of the
Transaction, the Exchange became part of a corporate family including
five separate registered national securities exchanges.\5\ Following
the Transaction, the Exchange continued to operate as a separate self-
regulatory organization and with rules, membership rosters and listings
distinct from the rules, membership rosters and listings of the other
NYSE Exchanges.
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\4\ See Exchange Act Release No. 83635 (July 13, 2018), 83 FR
34182 (July 19, 2018) (SR-CHX-2018-004); see also Exchange Act
Release No. 83303 (May 22, 2018), 83 FR 24517 (May 29, 2018) (SR-
CHX-2018-004).
\5\ The Exchange has four registered national securities
exchange affiliates: New York Stock Exchange LLC (``NYSE''), NYSE
Arca, Inc. (``NYSE Arca''), NYSE National, Inc. (``NYSE National'')
and NYSE American LLC (``NYSE American'') (collectively, the
Exchange, NYSE, NYSE Arca, NYSE National, and NYSE American, the
``NYSE Exchanges'').
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In connection with the Transaction, the Exchange anticipates
migrating trading of equities to Pillar, which is an integrated trading
technology platform designed to use a single specification for
connecting to the equities and options markets operated by the NYSE
Exchanges, in the second half of 2019. To that end, the Exchange
proposes to adopt the rule numbering framework of the rules governing
the NYSE National equities market, which are based on the rule
numbering framework of the NYSE Arca equities market.\6\ The Exchange
believes that if it and its affiliates are operating on the same
trading platform, using the same rule numbering scheme across all
markets using the Pillar platform would make it easier for members, the
public and the Commission to navigate the rules of each exchange. The
Exchange therefore proposes to adopt a framework of rule numbering that
is based on the current rules governing the NYSE National equities
market: NYSE National Rules 0 through 13.
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\6\ See Securities Exchange Act Release No. 81782 (September 30,
2017), 82 FR 46586 (October 5, 2018) (SR-NYSENat-2017-04). NYSE and
NYSE American also filed rule changes to use this rule framework for
their equities Pillar rules. See Securities Exchange Act Release
Nos. 76803 (December 30, 2015), 81 FR 536 (January 6, 2016) (SR-
NYSE-2015-67) (Notice of filing and immediate effectiveness of
proposed rule change) and 79242 (November 5, 2016), 81 FR 79081
(November 10, 2016) (SR-NYSEMKT-2016-97) (Notice of filing and
immediate effectiveness of proposed rule change).
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As proposed, this framework would use the current rule numbering
scheme of the rules governing the NYSE National equities market, and
would consist of the following proposed rules:
RULE 0 REGULATION OF THE EXCHANGE AND PARTICIPANTS
RULE 1 DEFINITIONS
RULE 2 TRADING PERMITS
RULE 3 ORGANIZATION AND ADMINISTRATION
RULE 4 RESERVED
RULE 5 TRADING ON UNLISTED TRADING PRIVILEGES
RULE 6 ORDER AUDIT TRAIL
RULE 7 EQUITIES TRADING
RULE 8 RESERVED
RULE 9 RESERVED
RULE 10 DISCIPLINARY PROCEEDINGS, OTHER HEARINGS AND APPEALS
RULE 11 BUSINESS CONDUCT
RULE 12 ARBITRATION
RULE 13 LIABILITY OF DIRECTORS AND EXCHANGE
The Exchange proposes to establish this framework in order to
facilitate the amendment of its rule book.
[[Page 9855]]
Additionally, and as described in greater detail below, the Exchange
proposes to (i) relocate rules relating to compliance with National
Market System Plan Governing the Consolidated Audit Trail (the ``CAT
NMS Plan''),\7\ which are currently set forth in Article 23, Rules 1
through 12 (the ``Compliance Rules''), to proposed Rules 6.6800 through
6.6895, without any substantive changes to the current rules other than
updating cross references to reflect the proposed renumbered Compliance
Rules; and (ii) relocate rules relating to potential disputes related
to CAT Fees charged to Industry Members (``Fee Dispute Rule''), which
are currently set forth in Article 23, Rule 13, to proposed Rule
6.6900, without any substantive changes to the current rules other than
updating a cross reference to reflect the proposed renumbered Fee
Dispute Rule. None of these are novel rules and are simply renumbered
Exchange rules (the Compliance Rules and Fee Dispute Rule).
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\7\ The CAT NMS Plan is designed to create, implement and
maintain a consolidated audit trail (``CAT'') that would capture
customer and order event information for orders in NMS Securities
and OTC Equity Securities, across all markets, from the time of
order inception through routing, cancellation, modification, or
execution in a single consolidated data source. Each Participant of
the Plan is required to enforce compliance by its Industry Members,
as applicable, with the provisions of the Plan, by adopting a
Compliance Rule applicable to their Industry Members.
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Proposed Rule 6.6800 Series (Compliance Rules)
As noted above, the Exchange proposes to renumber its existing
Compliance Rules relating to the CAT NMS Plan under Rule 6 without any
substantive changes other than updating cross references to reflect the
proposed renumbered Compliance Rules. The Compliance Rules require
Industry Members to comply with the provisions of the CAT NMS Plan.\8\
The Compliance Rules include twelve rules covering the following areas:
(1) Definitions; (2) clock synchronization; (3) Industry Member data
reporting; (4) customer information reporting; (5) Industry Member
information reporting; (6) time stamps; (7) clock synchronization rule
violations; (8) connectivity and data transmission; (9) development and
testing; (10) recordkeeping; (11) timely, accurate and complete data;
and (12) compliance dates.
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\8\ Unless otherwise specified, capitalized terms used are
defined as set forth herein, the CAT Compliance Rule Series or in
the CAT NMS Plan.
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In moving the Compliance Rules to Rule 6, the Exchange proposes to
renumber Article 23, Rules 1 through 12, as proposed Rules 6.6800
through 6.6895, which is based in part on the NYSE National rule
numbering for its Compliance Rules, but not make any substantive
changes to those rules. The proposed sub-numbering for the Compliance
Rules (i.e., 6800-6895) mirrors the rule-numbering framework for the
CAT NMS Plan Compliance Rules on FINRA, NYSE, and NYSE National and
includes a sub-section rule heading of ``Rule 6.6800 Consolidated Audit
Trail Compliance Rule.''
Proposed Rule 6.6900 (Consolidated Audit Trail--Fee Dispute Resolution)
As noted above, the Exchange proposes to renumber its existing Fee
Dispute Rule relating to the CAT NMS Plan under Rule 6 without any
substantive changes other than updating a cross reference to reflect
the proposed renumbered Fee Dispute Rule.\9\ In moving the Fee Dispute
Rule to Rule 6, the Exchange proposes to renumber Article 23, Rule 13,
as proposed Rule 6.6900, which is based on the NYSE National rule
numbering for its Fee Dispute Rule. Proposed Rule 6.6900 establishes
the procedures for resolving potential disputes related to CAT Fees
charged to Industry Members. Section 11.5 of the CAT NMS Plan requires
participants to that plan to adopt rules requiring that disputes with
respect to fees charged to Industry Members pursuant to the CAT NMS
Plan be determined by the Operating Committee or Subcommittee. Section
11.5 of the CAT NMS Plan also states that decisions by the Operating
Committee or Subcommittee on such matters will be binding on Industry
Members, without prejudice to the right of any Industry Member to seek
redress from the SEC pursuant to SEC Rule 608 or in any other
appropriate forum. The Commission has approved industry-wide rules that
set forth such fee dispute procedures.\10\
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\9\ See Securities Exchange Act Release No. 81616 (September 14,
2017), 82 FR 44010 (September 20, 2017) (SR-CHX-2017-11; SR-FINRA-
2017-20) (Order Approving Proposed Rule Changes to Adopt a CAT Fee
Dispute Resolution Process).
\10\ See Securities Exchange Act Release No. 81500 (August 30,
2017), 82 FR 42143 (September 6, 2017) (SR-BatsBYX-2017-13; SR-
BatsBZX-2017-39; SR-BatsEDGA-2017-14; SR-BatsEDGX-2017-24; SR-BOX-
2017-19; SR-CBOE-2017-043; SR-IEX-2017-21; SR-ISE-2017-52; SR-MRX-
2017-08; SR-MIAX-2017-24; SR-NASDAQ-2017-059; SR-BX-2017-029; SR-
GEMX-2017-059; SR-PHLX-2017-47; SR-NYSE-2017-24; SR-NYSEArca-2017-
60; SR-NYSEMKT-2017-31) (Order Approving Proposed Rule Changes to
Adopt a CAT Fee Dispute Resolution Process).
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Proposed Rule 6.6900 sets forth the Exchange's procedures to
resolve disputes initiated by an Industry Member with respect to CAT
fees and is based on NYSE National Rule 6.6900 specifically, and the
rules of other exchanges generally, without any substantive
differences. The proposed sub-numbering for the Fee Dispute Rule (i.e.,
6900) mirrors the rule-numbering framework for the CAT NMS Plan Fee
Dispute Rule on FINRA, NYSE, and NYSE National.
2. Statutory Basis
The proposed rule change is consistent with Section 6(b) of the
Securities Exchange Act of 1934 (the ``Act''),\11\ in general, and
furthers the objectives of Section 6(b)(1),\12\ in particular, in that
it enables the Exchange to be so organized as to have the capacity to
be able to carry out the purposes of the Exchange Act and to comply,
and to enforce compliance by its members and persons associated with
its members, with the provisions of the Exchange Act, the rules and
regulations thereunder, and the rules of the Exchange.
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\11\ 15 U.S.C. 78f(b).
\12\ 15 U.S.C. 78f(b)(1).
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Specifically, the proposed rule change to adopt a rule numbering
framework is a non-substantive change that does not impact trading on
the Exchange. The Exchange believes that the proposed rule change would
enable the Exchange to continue to be so organized as to have the
capacity to carry out the purposes of the Exchange Act and comply and
enforce compliance with the provisions of the Exchange Act by its
members and persons associated with its members, because adopting a
common framework of rule numbers for the equity markets that operate on
the Pillar trading platform will better allow members, regulators, and
the public to navigate the Exchange's rulebook and better understand
how equity trading is conducted on the Exchange.
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 proposed rule change is
not designed to address any competitive issue but rather to adopt a new
rule numbering framework to support the Exchange's amendment of its
rule book as the Exchange migrate to the Pillar trading platform. The
Exchange believes that the proposed rule change would promote
consistency and transparency on both the Exchange and its affiliates,
the NYSE Exchanges, thus making the Exchange's rules easier to
navigate.
[[Page 9856]]
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 \13\ and Rule 19b-4(f)(6) thereunder.\14\
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 and Rule 19b-
4(f)(6)(iii) thereunder.
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\13\ 15 U.S.C. 78s(b)(3)(A)(iii).
\14\ 17 CFR 240.19b-4(f)(6).
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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 under
Section 19(b)(2)(B) \15\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\15\ 15 U.S.C. 78s(b)(2)(B).
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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-NYSECHX-2019-03 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-NYSECHX-2019-03. 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 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-NYSECHX-2019-03 and should be submitted
on or before April 8, 2019.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-04949 Filed 3-15-19; 8:45 am]
BILLING CODE 8011-01-P