[Federal Register Volume 84, Number 109 (Thursday, June 6, 2019)]
[Notices]
[Pages 26462-26464]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-11799]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-85990; File No. SR-NYSE-2019-32]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing of Proposed Rule Change To Amend Rule 123D
May 31, 2019
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on May 24, 2019, New York Stock Exchange LLC (``NYSE'' or the
``Exchange'') filed with the Securities and Exchange Commission
(``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.
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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 amend Rule 123D to permit the Exchange to
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declare a regulatory halt in a security that traded in the over-the-
counter market prior to the initial pricing on the Exchange. 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
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend Rule 123D to permit the Exchange to
declare a regulatory halt in a security that traded in the over-the-
counter market prior to the initial pricing on the Exchange.
Proposed Rule Change
Current Rule 123D(d) permits the Exchange to declare a regulatory
halt in a security that is the subject of an initial pricing on the
Exchange of a security that has not been listed on a national
securities exchange or traded in the over-the-counter market pursuant
to FINRA Form 211 (the ``OTC market'') immediately prior to the initial
pricing. Accordingly, the Exchange has authority to declare a
regulatory halt for any initial listing that is not a transfer from
either another national securities exchange or the OTC market.
Regulatory halts under the rule terminate when the DMM opens the
security.
The Exchange proposes to delete the clause ``or traded in the over-
the-counter market pursuant to FINRA Form 211'' before ``immediately
prior to the initial pricing.'' The proposed amendment would thus
enable the Exchange to declare a regulatory halt for a security that is
having its initial listing on the Exchange that was traded in the OTC
market immediately prior to its initial pricing on the Exchange.
The Exchange believes that it would be consistent with the
protection of investors and the public interest for the Exchange, as a
primary listing exchange, to have to authority to declare a regulatory
halt for security that was previously traded in the OTC market prior to
its initial pricing on the Exchange. An OTC market security that will
be listed on a primary listing exchange will be removed from the OTC
trading list on the day prior to its initial pricing on the Exchange.
However, on the day of its initial listing, such security can trade on
an unlisted trading permit (``UTP'') basis before the first transaction
on the primary listing exchange. The Exchange believes that permitting
the Exchange to declare a regulatory halt in such securities before
trading on the Exchange begins would avoid potential price disparities
or anomalies that may occur during any UTP trading before the first
transaction on the primary listing exchange. More specifically, the
Exchange believes that quoting and trading in the pre-market of an OTC
transfer can be erratic and investors may be harmed if their securities
trade during this period. The Exchange believes that the proposed
limited authority to declare a regulatory halt in the hours prior to
the OTC transfer pricing on the Exchange would mitigate any potential
price disparities and contribute to a fair and orderly market once the
security opens on the Exchange. The Exchange believes that such
authority would be consistent with the protection of investors and the
public interest.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\3\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\4\ in particular, because it
is designed to prevent fraudulent and manipulative acts and practices,
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.
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\3\ 15 U.S.C. 78f(b).
\4\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that the proposed amendment to Rule 123D to
provide authority to declare a regulatory halt in a security that is an
OTC transfer would remove impediments to and perfect the mechanism of a
free and open market and a national market system by providing the
Exchange with authority to halt trading across all markets for a
security that has traded in the OTC market and not previously listed on
the Exchange, but for which a regulatory halt would promote fair and
orderly markets. The Exchange believes that permitting the Exchange to
declare a regulatory halt in such securities before trading on the
Exchange begins would avoid potential price disparities or anomalies
that may occur during any UTP trading before the first transaction on
the primary listing exchange. More specifically, the Exchange believes
that quoting and trading in the pre-market of an OTC transfer can be
erratic and investors may be harmed if their securities trade during
this period. The Exchange therefore believes that having the authority
to declare a regulatory halt for a security that is the subject of an
OTC transfer is consistent with the protection of investors and the
public interest and would promote fair and orderly markets by helping
to protect against volatility in pricing before the initial transaction
on the primary listing 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 Exchange believes that
the benefit to investors to halt trading in a security that transfers
from an OTC market to a primary listing exchange outweighs any burden
on competition that may result from a regulatory halt in such security
before the initial listing on the primary listing exchange. The
proposed rule change is consistent with existing authority for the
Exchange to declare a regulatory halt in trading of a security before
the initial pricing on the Exchange and would extend that authority to
a transfer from the OTC market.
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
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
[[Page 26464]]
(A) By order approve or disapprove the 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-NYSE-2019-32 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-NYSE-2019-32. 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-NYSE-2019-32, and should be submitted on
or before June 27, 2019.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\5\
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\5\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-11799 Filed 6-5-19; 8:45 am]
BILLING CODE 8011-01-P