[Federal Register Volume 85, Number 86 (Monday, May 4, 2020)]
[Notices]
[Pages 26508-26510]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-09372]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-88761; File No. SR-NYSEArca-2020-34]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend Rule 1.1 
To Modify the Definition of ``UTP Derivative Securities Product'' and 
Rule 5.1-E(a) To Incorporate the Modified Definition of ``UTP Exchange 
Traded Product''

April 28, 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 April 16, 2020, NYSE Arca, Inc. (``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 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 (1) Rule 1.1 to modify the 
definition of ``UTP Derivative Securities Product'' and (2) Rule 5.1-
E(a) to incorporate the definition of UTP Derivative Securities Product 
as set forth in revised Rule 1.1. The proposed rule change is available

[[Page 26509]]

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 (1) Rule 1.1 to modify the 
definition of ``UTP Derivative Securities Product'' and (2) Rule 5.1-
E(a) to incorporate the definition of UTP Derivative Securities Product 
as set forth in revised Rule 1.1.
Rule 1.1
    Rule 1.1(k) currently provides that the term ``Derivative 
Securities Product'' means a security that meets the definition of 
``derivative securities product'' in Rule 19b-4(e) under the Securities 
Exchange Act of 1934 and a ``UTP Derivative Securities Product'' means 
a Derivative Securities Product that trades on the Exchange pursuant to 
unlisted trading privileges. The Exchange proposes to amend the 
definition of ``UTP Derivative Securities Product'' to mean one of the 
following Derivative Securities Products that trades on the Exchange 
pursuant to unlisted trading privileges: Equity Linked Notes, 
Investment Company Units, Index-Linked Exchangeable Notes, Equity Gold 
Shares, Equity Index-Linked Securities, Commodity-Linked Securities, 
Currency-Linked Securities, Fixed-Income Index-Linked Securities, 
Futures-Linked Securities, Multifactor-Index-Linked Securities, Trust 
Certificates, Currency and Index Warrants, Portfolio Depository 
Receipts, Trust Issued Receipts, Commodity-Based Trust Shares, Currency 
Trust Shares, Commodity Index Trust Shares, Commodity Futures Trust 
Shares, Partnership Units, Paired Trust Shares, Trust Units, Managed 
Fund Shares, Managed Trust Securities, and Managed Portfolio Shares.
    This proposed change is based on NYSE National, Inc. (``NYSE 
National'') Rule 1.1(m) and NYSE Chicago, Inc. (``NYSE Chicago'') Rule 
1.1(k).\4\ This list is designed to align the rules of the Exchange 
with the rules of NYSE National and NYSE Chicago and to enumerate the 
types of Derivative Securities Products to which the Exchange would 
extend unlisted trading privileges (``UTP'').
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    \4\ NYSE National and NYSE Chicago have filed proposed rule 
changes for immediate effectiveness to amend their respective rules 
to add Managed Portfolio Shares to their definitions of UTP Exchange 
Traded Products. See SR-NYSENAT-2020-16 (filed April 16, 2020) and 
SR-NYSECHX-2020-13 (filed April 16, 2020).
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Rule 5.1-E(a)
    Rule 5.1-E(a)(1) provides that the Exchange may extend UTP to any 
security that is an NMS stock (as defined in Rule 600 of Regulation NMS 
under the Act) that is listed on another national securities exchange. 
Rule 5.1-E(a)(2) further specifies that a UTP Derivative Security, 
which is defined in that Rule as a ``new derivative securities 
product'' as defined in Rule 19b-4(e) under the Exchange Act and traded 
pursuant to Rule 19b-4(e) under the Act, would be subject to the 
additional rules enumerated in Rule 5.1-E(a)(2)(i)-(v).
    Because the Exchange proposes to modify the definition of UTP 
Derivative Securities Product in Rule 1.1(k) to conform to the rules of 
NYSE National and NYSE Chicago, the Exchange proposes to amend Rule 
5.1-E(a)(2) to eliminate redundant text and cross reference the term 
``UTP Derivative Securities Product'' as it is defined in Rule 1.1. 
This proposed change would also conform Rule 5.1-E(a) with the 
comparable NYSE National rule.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\5\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\6\ in particular, because it 
is designed to remove impediments to and perfect the mechanism of a 
free and open market, to promote just and equitable principles of 
trade, and, in general, to protect investors and the public interest.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(4) & (5).
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    The Exchange believes its proposed rule change ensures that Rule 
1.1 identifies and publicly states the complete list of Derivative 
Securities Products to which UTP may be extended for trading on the 
Exchange. The Exchange also believes that the proposed rule change 
removes impediments to and perfects the mechanism of a free and open 
market, promotes just and equitable principles of trade, and protects 
investors and the public interest by promoting consistency with the 
rules of the Exchange's affiliated markets and by providing additional 
specificity, clarity, and transparency in the Exchange's rules with 
respect to the Derivative Securities Products that may be traded on a 
UTP basis on the Exchange.
    The Exchange believes that its proposal to amend Rule 5.1-E(a)(2) 
also removes impediments to and perfects the mechanism of a free and 
open market, promotes just and equitable principles of trade, and 
protects investors and the public interest because it proposes to 
conform this rule governing the trading of UTP Derivative Securities 
Products with the comparable rule of the Exchange's affiliated market, 
NYSE National, which has been approved by the Commission.\7\ The 
proposed rule change would also remove impediments to and perfect the 
mechanism of a free and open market and a national market system and 
protect investors and the public interest by promoting continuity 
across affiliated exchanges.
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    \7\ In its Order approving the NYSE National rule on which this 
proposed change is based, the Commission found that the NYSE 
National rules set forth an ``appropriate framework for the trading 
of Exchange Traded Products on a UTP basis on the Exchange'' and are 
consistent with Section 6(b)(5) of the Act. See Securities and 
Exchange Act Release No. 83289 (May 17, 2018), 83 FR 23968 (May 23, 
2018), at 23975.
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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 proposed change would 
conform Exchange rules, as described herein, with the comparable rules 
of its affiliated exchanges, NYSE National and NYSE Chicago, and permit 
UTP trading of Derivative Securities Products on the Exchange in a 
manner consistent with its affiliated exchanges.

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 26510]]

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

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \8\ and Rule 19b-
4(f)(6) thereunder.\9\
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change, along 
with a brief description and text of the proposed rule change, at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) \10\ normally 
does not become operative for 30 days after the date of the filing. 
However, pursuant to Rule 19b-4(f)(6)(iii),\11\ 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 proposal 
may become operative immediately upon filing. The Commission notes that 
the Exchange's proposal would conform the Exchange's rules, as 
described herein, to the corresponding rules of its affiliated 
exchanges.\12\ Accordingly, the Commission believes that the proposal 
raises no new or novel regulatory issues and waiver of the 30-day 
operative delay is consistent with the protection of investors and the 
public interest. The Commission therefore waives the 30-day operative 
delay and designates the proposed rule change to be operative upon 
filing.\13\
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    \10\ 17 CFR 240.19b-4(f)(6).
    \11\ 17 CFR 240.19b-4(f)(6)(iii).
    \12\ See NYSE National Rules 1.1 and 5.1 and NYSE Chicago Rule 
1.1.
    \13\ For purposes only of waiving the 30-day operative delay, 
the Commission has also 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.

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-2020-34 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-2020-34. 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-2020-34 and should be submitted 
on or before May 26, 2020.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-09372 Filed 5-1-20; 8:45 am]
BILLING CODE 8011-01-P