[Federal Register Volume 87, Number 206 (Wednesday, October 26, 2022)]
[Notices]
[Pages 64830-64831]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-23238]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-96111; File No. SR-NYSEARCA-2022-70]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Modify Rule 
7.44-E

October 20, 2022.
    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 October 11, 2022, 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, 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 modify 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 modify 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 provides for a class of market participant called Retail 
Liquidity Providers (``RLPs''), and 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 Program is currently limited to trades in 
NYSE Arca-listed securities and securities traded on the Exchange 
pursuant to unlisted trading privileges (``UTP Securities''), except 
for NYSE-listed securities.\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). The Exchange notes that the change 
proposed in this filing has no substantive impact under the Sub-
Penny Rule and thus does not require an update or revision to the 
exemptive relief previously granted by the Commission.
    \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 Rule 7.44-E(a)(4).
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    The Exchange now proposes to modify Rule 7.44-E to expand the 
Program's availability to all securities traded on the Exchange. Rule 
7.44-E(a)(4) currently defines an RPI Order as consisting of ``non-
displayed interest in NYSE Arca-listed securities and UTP Securities, 
excluding NYSE-listed (Tape A) securities, that would trade at prices 
better than the PBB or PBO by at least $0.001 and that is identified as 
such.'' To expand the program to permit RPI Orders in all securities 
traded on the Exchange (including NYSE-listed securities), the Exchange 
proposes to modify Rule 7.44-E(a)(4) such that the rule would provide 
that an RPI Order is ``non-displayed interest that would trade at 
prices better than the PBB or PBO by at least $0.001 and that is 
identified as such.''
    Subject to the effectiveness of this proposed rule change, the 
Exchange will implement this change in the fourth quarter of 2022 and 
announce the implementation date by Trader Update.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Act,\9\ in general, and furthers the objectives of Section 6(b)(5),\10\ 
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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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes expanding the Program's availability to all 
securities traded on the Exchange would remove impediments to, and 
perfect the mechanism of, a free and open market and a national market 
system and, in

[[Page 64831]]

general, protect investors and the public interest by enabling RPI 
Orders in all securities to participate in the Program and receive 
potential price improvement. The Exchange believes that this expansion 
of the Program would benefit retail investors by providing increased 
opportunities for price improvement in all securities traded on the 
Exchange, including NYSE-listed securities. The Exchange also believes 
that the proposed change would allow it to compete with other exchanges 
that operate retail price improvement programs that are available to 
all securities traded on such exchanges.\11\
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    \11\ See, e.g., Cboe BYX Exchange, Inc. (``BYX'') Rule 11.24 
(setting forth BYX's Retail Price Improvement Program, with Retail 
Price Improvement Order defined in Rule 11.24(a)(3)); Nasdaq BX, 
Inc. (``BX'') Rules 4702(b)(5)(A) (defining ``Retail Price Improving 
Order'') and 4780 (setting forth BX's Retail Price Improvement 
Program); Investors Exchange LLC (``IEX'') Rule 11.232 (setting 
forth IEX's Retail Price Improvement Program).
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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 permitting RPI Orders 
in all securities traded on the Exchange, thereby supporting price 
improvement opportunities for retail investors. The Exchange further 
believes that the proposed expansion of the Program to include all 
securities traded on the Exchange would promote competition between the 
Exchange and other exchanges that offer retail price improvement 
programs for which all securities traded on such exchanges are eligible 
to participate.\12\
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    \12\ See id.
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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.

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-NYSEARCA-2022-70 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-2022-70. 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-2022-70 and should be submitted 
on or before November 16, 2022.
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    \16\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-23238 Filed 10-25-22; 8:45 am]
BILLING CODE 8011-01-P