[Federal Register Volume 85, Number 59 (Thursday, March 26, 2020)]
[Notices]
[Pages 17141-17146]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-06290]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-88444; File No. SR-NYSE-2020-22]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend Rules 7.35A, 7.35B, and 7.35C for a Temporary Period
March 20, 2020.
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 March 20, 2020, New York Stock Exchange LLC (``NYSE'' or
``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\ 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 Rules 7.35A, 7.35B, and 7.35C for a
temporary period that begins March 23, 2020, and ends on the earlier of
the reopening of the Trading Floor facilities or after the Exchange
closes on May 15, 2020. 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.
[[Page 17142]]
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes, for a temporary period that begins March 23,
2020, when the Trading Floor facilities will have been closed pursuant
to Rule 7.1(c)(3), and ends on the earlier of the reopening of the
Trading Floor facilities or after the Exchange closes on May 15, 2020,
to:
Suspend the current price and volume parameters set forth
in Rules 7.35A and 7.35B restricting DMMs from effecting a Core Open,
Trading Halt, or Closing Auction;
widen the percentage price parameters for when a DMM may
effect a Core Open, Trading Halt, or Closing Auction electronically to
10%;
suspend the requirement to publish pre-opening
indications; and
establish the Auction Collars for an Exchange-facilitated
Trading Halt Auction following a Level 1 or Level 2 market-wide circuit
breaker halt \4\ at the greater of 10% or $0.15.
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\4\ Rule 7.12 sets forth when the Exchange would halt trading
due to extraordinary trading volatility. Under Rule 7.12, a ``Level
1 Market Decline'' means a decline in the price of the S&P 500 Index
of 7% from the closing price of that index, and a ``Level 2 Market
Decline'' means a decline in the price of the S&P 500 Index of 13%
from the closing price of that index. If there is a Level 1 or Level
2 Market Decline, the Exchange halts trading in all stocks for 15
minutes (a ``MWCB Halt'').
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Current rules already provide for DMMs to effect Auctions
electronically without any price or volume limitations, but only on a
temporary basis for the trading day on which the suspension was
declared. The Exchange is proposing these changes only for the period
when the NYSE Trading Floor has temporarily closed as a precautionary
measure to reduce the spread of COVID-19.
The Exchange also proposes a non-substantive amendment to correct
rule cross references in Rule 7.35B(j)(1)(A) and (B).
Background
NYSE Trading Floor Temporarily Closes March 23, 2020
Since March 9, 2020, markets worldwide are experiencing
unprecedented market-wide declines and volatility because of the
ongoing spread of COVID-19. In the U.S. equity markets, Level 1 MWCB
Halts have been triggered under Rule 7.12 on March 9, 2020, March 12,
2020, March 16, 2020, and March 18, 2020.
Beginning on March 16, 2020, to slow the spread of COVID-19 through
social-distancing measures, significant limitations were placed on
large gatherings throughout the country. For example, in New York City,
which is where the NYSE Trading Floor is located, public and private
schools, universities, churches, restaurants, bars, movie theaters, and
other commercial establishments where large crowds can gather have been
closed.
On March 18, 2020, the CEO of the Exchange made a determination
under Rule 7.1(c)(3) that beginning March 23, 2020, the Trading Floor
facilities located at 11 Wall Street in New York City would close and
the Exchange would move, on a temporary basis, to fully electronic
trading.\5\ Pursuant to Rule 7.1(e), the CEO notified the Board of
Directors of the Exchange of this determination.
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\5\ The Exchange's current rules establish how the Exchange will
function fully-electronically. The CEO also closed the NYSE American
Options Trading Floor, which is located at the same 11 Wall Street
facilities, and the NYSE Arca Options Trading Floor, which is
located in San Francisco, CA. See Press Release, dated March 18,
2020, available here: https://ir.theice.com/press/press-releases/all-categories/2020/03-18-2020-204202110.
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Because the Trading Floor facilities will be closed, Floor brokers
will not be able to enter orders on the Trading Floor.\6\ As a result,
there will not be any Floor Broker Participants in allocations and
there will not be any order types unique to Floor brokers, such as D
Orders.\7\ In addition, because DMMs will not be on the Trading Floor,
DMMs will not engage in any manual actions, such as facilitating an
Auction manually or publishing pre-opening indications before a Core
Open or Trading Halt Auction. As they do today, DMMs will be able to
participate electronically both intraday and for Auctions.
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\6\ An order entered by a Floor broker is eligible to be
included in the Floor Broker Participant for allocation purposes
only if it is entered by a Floor broker while on the Trading Floor.
See Rule 7.36(a)(5)(A).
\7\ The following order types are available only to Floor
brokers and would not participate when the Exchange is trading in a
fully-electronic mode: Opening D Order (Rule 7.31(c)(1)(C)); Closing
D Order (Rule 7.31(c)(2)(C)); D Order (Rule 7.31(d)(4)); Pegged
Orders (Rule 7.31(h)); Yielding Modifier (Rule 7.31(i)(5)); and
Crossing Orders (Rule 76).
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Because DMMs would not be physically present on the Trading Floor,
DMMs would facilitate Auctions electronically as provided for in Rules
7.35A and 7.35B. If a DMM does not facilitate an Auction electronically
pursuant to the parameters specified in those rules, the Exchange would
facilitate the Auction pursuant to Rule 7.35C.
DMM-Facilitated Core Open and Trading Halt Auctions
Rule 7.35A(c)(1) sets forth the circumstances when a DMM may not
effect a Core Open or Trading Halt Auction electronically. Relevant to
this proposed rule change, a DMM cannot electronically effect a Core
Open or Trading Halt Auction:
If the Core Open or Trading Halt Auction Price would be
more than 4% away from the Consolidated Last Sale Price (See Rule
7.35A(c)(1)(G)).
If the paired volume for that Auction would be more than:
(i) 1,500 round lots for securities with an average opening volume of
1,000 round lots or fewer in the previous calendar quarter; or (ii)
5,000 round lots for securities with an average opening volume of over
1,000 round lots in the previous calendar quarter (See Rule
7.35A(c)(1)(H)).
Under current rules, the DMM may effect a Core Open or Trading Halt
Auction electronically if the Auction Price will be up to 8% away from
the Consolidated Last Sale and without any volume limitations under the
following circumstances:
If as of 9:00 a.m., the E-mini S&P 500 Futures are +/-2%
from the prior day's closing price of the E-mini S&P 500 Futures, or
If the Exchange determines that it is necessary or
appropriate for the maintenance of a fair and orderly market.
In addition, if the CEO of the Exchange or his or her designee
determines that a Floor-wide event is likely to have an impact on the
ability of DMMs to arrange for a fair and orderly Core Open or Trading
Halt Auction and that, absent relief, the operation of the Exchange is
likely to be impaired, the CEO or his or her designee can temporarily
suspend the prohibition on a DMM opening a security electronically if
the Core Open or Trading Halt Auction Price will be more than the price
or volume parameters specified in Rule 7.35A(c)(1)(G) and (H).\8\
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\8\ See Rule 7.35A(j)(1)(A). A temporary suspension under this
Rule is in effect only for the trading day on which it was declared
and the Exchange must inform Commission staff as promptly as
practicable of the temporary suspension.
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Publishing Pre-Opening Indications
Rule 7.35A(d) requires the DMM to publish a pre-opening indication
before a security opens or reopens if the Core Open or Trading Halt
Auction Price is anticipated to be a change of more than the
``Applicable Price Range,'' as specified in Rule 7.35A(d)(3) from the
[[Page 17143]]
``Indication Reference Price,'' as specified in Rule 7.35A(d)(2). The
standard Applicable Price Range is 5% for securities with an Indication
Reference Price over $3.00 and $0.15 for securities with an Indication
Reference Price equal to or lower than $3.00.
Under current rules, the Applicable Price Range is 10% for
securities with an Indication Reference Price over $3.00 and $0.30 for
securities with an Indication Reference Price equal to or lower than
$3.00 under the following circumstances:
If, as of 9:00 a.m., the E-mini S&P 500 Futures are +/-2%
from the prior day's closing price of the E-mini S&P 500 Futures,
when reopening trading following a MWCB Halt, or
if the Exchange determines that it is necessary or
appropriate for the maintenance of a fair and orderly market.\9\
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\9\ See Rule 7.35A(d)(3)(B).
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In addition, the requirement to publish a pre-opening indication
prior to opening or reopening a security following a MWCB Halt can be
temporarily suspended if the CEO of the Exchange or his or designee
determines that a Floor-wide event is likely to have an impact on the
ability of DMMs to arrange for a fair and orderly Core Open or Trading
Halt Auction and that, absent relief, the operation of the Exchange is
likely to be impaired.\10\
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\10\ See Rule 7.35A(j)(1)(B). A suspension under this Rule is in
effect only for the trading day on which it was declared and the
Exchange must notify Commission staff as promptly as practicable of
the temporary suspension.
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DMM-Facilitated Closing Auctions
Rule 7.35B(c)(1) sets forth the circumstances when a DMM may not
effect a Closing Auction electronically. Relevant to this proposed rule
change, a DMM cannot electronically effect a Closing Auction:
If the Closing Auction Price will be more than a
designated percentage away from the Exchange Last Sale Price (See Rule
7.35B(c)(1)(G)), as follows:
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Designated
Exchange last sale price percentage
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$25.00 and below........................................ 5
$25.01 to $50.00........................................ 4
Above $50.00............................................ 2
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If the paired volume for that Auction would be more than
1,000 round lots for such security (See Rule 7.35B(c)(1)(H)).
Under current rules, if the CEO of the Exchange or his or her
designee determines that a Floor-wide event is likely to have an impact
on the ability of DMMs to arrange for a fair and orderly Closing
Auction and that, absent relief, the operation of the Exchange is
likely to be impaired, the CEO of the Exchange or his or her designee
may temporarily suspend the prohibition on a DMM closing a security
electronically if the Closing Auction Price would be more than the
price or volume parameters specified in Rules 7.35B(c)(1)(G) and (H) of
this Rule.\11\
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\11\ See Rule 7.35B(j)(1)(A). A suspension under this Rule is in
effect only for the trading day on which it was declared and the
Exchange must inform Commission staff as promptly as practicable of
the temporary suspension. Rule 7.35B(j)(1)(A) and (B) cross
references incorrect sub-paragraph numbers that do not correspond to
the price and volume limitations applicable to Closing Auctions,
which are described in Rules 7.35B(c)(1)(G) and (H), not Rules
7.35B(c)(1)(F) and (G).
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Exchange-Facilitated Auctions
If a DMM cannot electronically facilitate an Auction for one or
more securities in which the DMM is registered, the Exchange will
conduct the Auction for such security or securities, as provided for in
Rule 7.35C.\12\ Before facilitating such an Exchange-facilitated
auction, Rule 7.35C(d) requires the Exchange to provide the DMM with
the opportunity to electronically facilitate an Auction.\13\
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\12\ See Rule 7.35C(a). This functionality was introduced in
2015, and is designed to allow the Exchange to electronically open
and close securities when a DMM is unable to do so because of
business continuity disruptions, such as the physical closing of the
Exchange Trading Floor or equipment or connectivity breakdowns. See
Securities Exchange Act Release No. 76290 (October 28, 2015), 80 FR
67822, 67823 n.3 (November 3, 2015) (SR-NYSE-2015-49) (Notice of
filing and immediate effectiveness of proposed rule change to
specify that Exchange systems may open one or more securities
electronically if a DMM cannot facilitate the opening of trading).
See also Securities Exchange Act Release No. 74006 (January 6,
2015), 80 FR 1567, 1568 n.3 (January 12, 2015) (SR-NYSE-2014-74)
(Notice of filing and immediate effectiveness of proposed rule
change to specify that Exchange systems may close one or more
securities electronically). See also Securities Exchange Act Release
No. 85962 (May 29, 2015), 84 FR 26188, 26217 (June 5, 2019)
(Approval Order of Pillar Auction Rules).
\13\ As the Exchange does every day when the Trading Floor is
open, the Exchange sends electronic messages in all securities to
the DMMs to open, reopen, or close their assigned securities at
scheduled times, e.g., 9:30 a.m. for the Core Open Auction, and the
DMM's algorithms can choose to respond to that message within a set
time period and electronically-facilitate an Auction by selecting
the Auction Price and submitting DMM Auction Liquidity, as defined
in Rule 7.35(a)(8)(A). When the Trading Floor is open, if a DMM's
algorithm chooses not to respond, the DMM on the Trading Floor will
proceed to facilitate the Auction manually. When the Trading Floor
is closed, the Exchange will continue to send such electronic
messages in all securities to the DMMs to electronically open,
reopen, or close their assigned securities at the same scheduled
times. If the DMMs do not electronically-facilitate an Auction
within a set time period, because the DMM cannot facilitate the
Auction manually when the Trading Floor is closed, the Exchange will
facilitate such Auction.
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Unlike a DMM-facilitated Auction, an Exchange-facilitated Auction
is subject to Auction Collars. The Auction Collar for the Core Open and
the Closing Auction is based on a price that is greater than $0.15 or
10% away from the Auction Reference Price for the applicable
Auction.\14\ The Auction Collar for the Trading Halt Auction is based
on a price that is the greater of $0.15 or 5% away from the Auction
Reference Price for the Trading Halt Auction.\15\ Market Orders and
Limit Orders better-priced than the Auction Price and that were not
executed in the Exchange-facilitated Auction will be cancelled.\16\
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\14\ See Rule 7.35C(b)(3)(A)(i).
\15\ See Rule 7.35C(b)(3)(A)(ii).
\16\ See Rule 7.35C(g)(1).
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Before facilitating an Auction under Rule 7.35C, the Exchange will
provide the DMM with the opportunity to electronically facilitate an
Auction pursuant to Rules 7.35A or 7.35B.\17\ If the Exchange
facilitates an Auction, DMM Interest does not participate and any
previously-entered DMM Interest will be cancelled.\18\
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\17\ See Rule 7.35C(d). As provided for in Rule 7.35A(c)(1)(E),
a DMM cannot electronically facilitate a Trading Halt Auction if it
is a reopening following a regulatory halt issued under Section 2 of
the Listed Company Manual. Accordingly, in such case, the Exchange
would not provide the DMM with the opportunity to reopen
electronically, and will facilitate such reopening pursuant to Rule
7.35C.
\18\ See Rule 7.35C(a)(1).
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The Exchange has tested the above-described functionality under
Rule 7.35C, most recently in an industry-wide test on March 7, 2020.
Specifically, the Exchange tested a scenario where the Trading Floor
was unavailable and DMMs electronically facilitated Auctions in their
assigned securities electronically, and for any Auctions not
facilitated electronically by the DMM, the Exchange facilitated the
balance of the Auctions pursuant to Rule 7.35C. In addition, on March
19, 2020, two DMM firms implemented their own business continuity plans
and removed staff from the Trading Floor. For Auctions on March 19 and
March 20, 2020 in the securities assigned to those DMMs, consistent
with Rule 7.35C, the Exchange provided the DMMs with the opportunity to
electronically facilitate both the Core Open and Closing Auctions
before an Exchange-facilitated auction under Rule 7.35C Auctions. For
the 16 Core Open Auctions and 19 Closing Auctions that the Exchange
facilitated on March 19, 2020, all interest was able to participate
within the Auction Collars and no orders were cancelled after the
Auctions.
[[Page 17144]]
Proposed Rule Change
The Exchange proposes temporary changes to Rules 7.35A, 7.35B, and
7.35C related to DMM electronically- facilitated Auctions beginning
March 23, 2020 and ending on the earlier of the reopening of the
Trading Floor facilities or after the Exchange closes on May 15,
2020.\19\
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\19\ If the Trading Floor remains closed past May 15, 2020, the
Exchange will file a separate proposed rule change to extend the
relief.
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For the Core Open and Trading Halt Auction, the Exchange proposes
to suspend:
The percentage price parameters in Rule 7.35A(c)(1)(G) and
(c)(2) and not allow a DMM to effect a Core Open or Trading Halt
Auction electronically if the Core Open or Trading Halt Auction Price
would be more than 10% away from the Consolidated Last Sale Price; \20\
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\20\ See proposed Commentary .01(a) to Rule 7.35A. During this
period, the Exchange could still determine to invoke temporary
relief under Rule 7.35A(j)(1) to further widen the percentage
parameters for a trading day for which the relief is declared.
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The volume parameters in Rule 7.35A(c)(1)(H); \21\
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\21\ See proposed Commentary .01(b) to Rule 7.35A.
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The requirement to publish a pre-opening indication
pursuant to Rule 7.35A(d) either before a Core Open or Trading Halt
Auction.\22\
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\22\ See proposed Commentary .01(c) to Rule 7.35A.
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For the Closing Auction, the Exchange proposes to suspend:
The percentage price parameters in Rule 7.35B(c)(1)(G) and
not allow a DMM to effect a Closing Auction electronically if the
Closing Auction Price would be more than 10% away from the Exchange
Last Sale Price.\23\
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\23\ See proposed Commentary .01(a) to Rule 7.35B. During this
period, the Exchange could still determine to invoke temporary
relief under Rule 7.35B(j)(1) to further widen the percentage
parameters for a trading day for which the relief is declared.
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The volume requirements in Rule 7.35B(c)(1)(H).\24\
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\24\ See proposed Commentary .01(b) to Rule 7.35B.
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The Exchange believes that these proposed measures are consistent
with our current rules, as described above. Pursuant to either Rule
7.35A(j)(1) or 7.35B(j)(1), the CEO of the Exchange or his or her
designee can determine to take one or more of the above actions for the
trading day on which it is declared. The Exchange believes that closing
the Trading Floor, combined with the current high volatility in the
markets, would otherwise warrant invoking such temporary relief.
Specifically, the Exchange believes that by eliminating volume
restrictions and widening the percentage parameters for all Auctions to
10% during the this temporary period when the Trading Floor is closed,
DMMs would be able to facilitate more Auctions electronically and enter
their own interest to participate in such Auctions, reducing the need
for the Exchange to facilitate Auctions, which would not include DMM
interest. Similarly, because it will not be feasible for DMMs to
publish pre-opening indications, which is a Floor-based manual action,
during this temporary period when the Trading Floor is closed, the
Exchange believes it would promote clarity and transparency in Exchange
rules to specify that the requirement to publish such indications would
be suspended.
The Exchange believes that it would promote clarity and
transparency for DMMs, the Commission and the public to specify in
Commentary to both Rule 7.35A and 7.35B the price and volume parameters
that would be applicable to when a DMM could facilitate an Auction
electronically during this temporary period of time.
In addition to amending Rules 7.35A and 7.35B, the Exchange
proposes to amend Rule 7.35C to provide that, the Auction Collar for a
Trading Halt Auction following either a Level 1 or Level 2 MWCB Halt
would be the greater of $0.15 or 10% away from the Auction Reference
Price.\25\ The Exchange recently filed a separate proposed rule change
to widen, until May 15, 2020, the Auction Collars for such Exchange-
facilitated Auctions in the same manner if a security was not reopened
by a DMM following a MWCB Halt by 3:30 p.m.\26\ With the Trading Floor
closed, the Exchange could potentially facilitate a Trading Halt
Auction following a MWCB Halt before 3:30 p.m. Therefore, the Exchange
proposes to extend the widened Auction Collars to any Exchange-
facilitated MWCB Halt reopenings, regardless of time of day.
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\25\ See proposed Commentary .01(a) to Rule 7.35C
\26\ See Securities Exchange Act Release No. 88413 (March 18,
2020) (SR-NYSE-2020-19) (Notice of filing and immediate
effectiveness of proposed rule change) (``MWCB Reopen Filing'').
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The Exchange also proposes to amend current Commentary .01, which
was added in the MWCB Reopen Filing, and renumber it Commentary .02.
Because the relief described in the MWCB Reopen Filing is moot during
the temporary period when the Trading Floor is closed, the Exchange
proposes to amend when that Commentary would be applicable to provide
that it would be in effect if the Trading Floor facilities reopen
through trading on May 15, 2020. The Exchange also proposes non-
substantive amendments to this Commentary to move a defined term to
proposed Commentary .01(a) to Rule 7.35C.
Finally, the Exchange also proposes a non-substantive amendment to
correct rule cross references in Rule 7.35B(j)(1)(A) and (B), which
currently cross reference Rules 7.35B(c)(1)(F) and (G). As noted above,
these rule cross references should be Rules 7.35B(c)(1)(G) and (H),
which correspond to the price and volume parameters applicable to
Closing Auctions.
As noted above, the Exchange has previously tested Exchange-
facilitated Auctions when the Trading Floor is closed, and has
implemented them in production beginning on March 19, 2020. The
Exchange proposes to test the changes described above in an industry
test scheduled for Saturday, March 21, 2020, before the Trading Floor
closes on March 23, 2020.
The Exchange would be able to implement the proposed rule change
immediately upon effectiveness of this proposed rule change.
2. Statutory Basis
The proposed rule change is consistent with Section 6(b) of the
Act,\27\ in general, and furthers the objectives of Section 6(b)(5) of
the Act,\28\ in particular, in that 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, and to
remove impediments to and perfect the mechanism of a free and open
market and a national market system.
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\27\ 15 U.S.C. 78f(b).
\28\ 15 U.S.C. 78f(b)(5).
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As a result of uncertainty related to the ongoing spread of COVID-
19, the U.S. equities markets are experiencing unprecedented market
volatility. In addition, social-distancing measures have been
implemented throughout the country, including in New York City, to
reduce the spread of COVID-19. Directly related to such social-
distancing measures, the CEO of the Exchange made a determination under
Rule 7.1(c)(3) that beginning March 23, 2020, the Trading Floor
facilities located at 11 Wall Street in New York City would close and
the Exchange would move, on a temporary basis, to fully electronic
trading.
The Exchange believes that the proposed rule change would remove
impediments to and perfect the mechanism of a free and open market
[[Page 17145]]
and a national market system because it would promote fair and orderly
Auctions on the Exchange by allowing DMMs to open, reopen, or close
more securities electronically. Since March 9, 2020, the Exchange has
been implementing the proposed relief under current Rules on a day-by-
day basis. Accordingly, the Exchange believes that the changes that
would be described in the proposed Commentary to Rules 7.35A and 7.35B
are consistent with our current rules.
The Exchange believes that by clearly stating that this relief will
be in effect through the earlier of the reopening of the Trading Floor
facilities or the close of the Exchange on May 15, 2020, DMMs will have
more certainty regarding what limitations would be applicable during
this period when they are unable to manually facilitate Auctions.
Because they would no longer need to respond to relief that is invoked
on a same-day basis, DMMs would be able to better manage their Auction
processes, which the Exchange believes would remove impediments to and
perfect the mechanism of a free and open market and a national market
system.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change would
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 issues but rather is designed
to ensure fair and orderly Auctions on the Exchange by allowing DMMs to
open, reopen, or close more securities electronically during a
temporary period when the Exchange Trading Floor has been closed in
response to social-distancing measures designed to reduce the spread of
the COVID-19 virus.
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 \29\ and Rule 19b-4(f)(6) thereunder.\30\
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 for 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 \31\ and Rule 19b-
4(f)(6) thereunder.\32\
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\29\ 15 U.S.C. 78s(b)(3)(A)(iii).
\30\ 17 CFR 240.19b-4(f)(6).
\31\ 15 U.S.C. 78s(b)(3)(A).
\32\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires the Exchange to give the Commission written notice of the
Exchange's 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
Commission has waived that requirement for this proposed rule
change.
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A proposed rule change filed under Rule 19b-4(f)(6) \33\ normally
does not become operative for 30 days after the date of the filing.
However, pursuant to Rule 19b-4(f)(6)(iii),\34\ 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 so that the proposed
rule change may become operative immediately. The Exchange represents
that the proposed rule change is designed to ensure fair and orderly
Auctions on the Exchange by allowing DMMs to open, reopen, or close
more securities electronically during a temporary period when the
Exchange Trading Floor has been closed in response to social-distancing
measures designed to reduce the spread of the COVID-19 virus. The
Exchange also believes that the proposed changes are consistent with
the type of relief that the Exchange can invoke on a temporary basis
pursuant to Rules 7.35A(j)(1) and 7.35B(j)(2). According to the
Exchange, the relief being requested has already been implemented on a
day-by-day basis to respond to the ongoing market volatility that the
markets have experienced since March 9, 2020, meaning that the proposed
relief is consistent with relief already available under Exchange
rules. In the Exchange's view, implementing the proposed rule change
would eliminate the need to invoke these measures on a daily basis, and
would provide advance notice and greater certainty to DMMs regarding
what parameters would be applicable to whether they can facilitate an
Auction electronically during the temporary period when the Trading
Floor is closed. The Exchange states that it is able to implement these
proposed rule changes immediately, that it will have tested such
measures on March 21, 2020, and that waiver of the 30-day operative
delay would provide the DMMs with greater ability to facilitate
Auctions electronically during the temporary period when the Trading
Floor is closed. The Commission notes that since March 9, 2020, the
Exchange has been implementing the proposed relief under current
Exchange rules on a day-by-day basis. The Commission also notes that by
clearly stating that this relief will be in effect through the earlier
of the reopening of the Trading Floor facilities or the close of the
Exchange on May 15, 2020, DMMs will have more certainty regarding what
limitations would be applicable during this period when they are unable
to manually facilitate Auctions, and thus should able to better manage
their Auction processes. Finally, The Commission notes that the
proposal is a temporary measure designed to respond to current,
unprecedented market conditions. For these reasons, the Commission
believes that waiver of the 30-day operative delay is consistent with
the protection of investors and the public interest. Accordingly, the
Commission hereby waives the 30-day operative delay and designates the
proposal operative upon filing.\35\
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\33\ 17 CFR 240.19b-4(f)(6).
\34\ 17 CFR 240.19b-4(f)(6)(iii).
\35\ 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 the 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 change 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
[[Page 17146]]
Send an email to [email protected]. Please include
File Number SR-NYSE-2020-22 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-2020-22. 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-2020-22, and should be submitted on
or before April 16, 2020.\36\
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\36\ 17 CFR 200.30-3(a)(12), (59).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-06290 Filed 3-25-20; 8:45 am]
BILLING CODE 8011-01-P