[Federal Register Volume 88, Number 15 (Tuesday, January 24, 2023)]
[Notices]
[Pages 4252-4254]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-01277]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-96701; File No. SR-NYSE-2023-03]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Modify Rule 7.31
January 18, 2023.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on January 4, 2023, New York Stock Exchange LLC (``NYSE'' or the
``Exchange'') filed with the Securities and Exchange Commission (the
``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\ 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 7.31 regarding MPL-IOC Orders.
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.
[[Page 4253]]
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 Rule 7.31 regarding MPL-IOC Orders.
Rule 7.31(d)(3) defines a Mid-Point Liquidity Order (``MPL Order'')
as a Limit Order to buy (sell) that is not displayed and does not
route, with a working price at the lower (higher) of the midpoint of
the PBBO or its limit price. An MPL Order may be entered during any
Exchange trading session, is ranked Priority 3--Non-Display Orders, and
does not participate in auctions. An MPL Order to buy (sell) must be
designated with a limit price in the minimum price variation for the
security and will be eligible to trade at its working price.\3\ If
there is no PBB or PBO, or if the PBBO is locked or crossed, an
arriving or resting MPL Order will not be eligible to trade until the
PBBO is not locked or crossed. If a resting MPL Order to buy (sell)
trades with another MPL Order to sell (buy) after the PBBO is unlocked
or uncrossed, the MPL Order with the later working time will be the
liquidity-removing order.\4\
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\3\ See Rule 7.31(d)(3)(A).
\4\ See Rule 7.31(d)(3)(B).
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An Aggressing MPL Order to buy (sell) will trade at the working
price of resting orders to sell (buy) when such resting orders have a
working price at or below (above) the working price of the MPL Order.
Resting MPL Orders to buy (sell) will trade against all Aggressing
Orders to sell (buy) priced at or below (above) the working price of
the MPL Order.\5\
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\5\ See Rule 7.31(d)(3)(C).
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Currently, Rule 7.31(d)(3)(D) provides that an MPL Order may be
designated with an Immediate-or-Cancel (``IOC'') Modifier (an ``MPL-IOC
Order''). An MPL Order designated IOC will be traded in whole or in
part on the Exchange as soon as such order is received, and any
untraded quantity will be cancelled.\6\ Rule 7.31(d)(3)(D) further
provides that, subject to the IOC Modifier, an MPL-IOC Order follows
the same trading and priority rules as an MPL Order (as described
above), except that an MPL-IOC Order will be rejected if (i) the order
entry size is less than one round lot or (ii) there is no PBBO or the
PBBO is locked or crossed.
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\6\ See Rule 7.31(b)(2) (defining IOC Modifier).
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The Exchange proposes to modify Rule 7.31(d)(3)(D) to permit MPL-
IOC Orders to be entered in any size and thus proposes to eliminate
rule text currently providing that an MPL-IOC Order would be rejected
if entered in a quantity less than one round lot. The Exchange believes
that requiring MPL-IOC Orders to be entered in round lots is
unnecessary and that providing member organizations with the option to
enter MPL-IOC Orders in odd lots could increase liquidity and enhance
opportunities for order execution on the Exchange. The Exchange notes
that permitting odd-lot order quantities is not novel on the Exchange
or other cash equity exchanges and believes that this proposed change
would align the Exchange's handling of MPL-IOC Orders with the
treatment of equivalent order types on other cash equity exchanges.\7\
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\7\ See, e.g., Members Exchange Rules 11.8(c)(1) and (2)
(providing that a Midpoint Peg Order may be designated IOC and may
be entered as an odd lot, round lot, or mixed lot); Cboe EDGX
Exchange, Inc. Rules 11.8(d)(1) and (2) (providing that a MidPoint
Peg Order may have an IOC instruction and may be entered as an odd
lot, round lot, or mixed lot); Cboe EDGA Exchange, Inc. Rules
11.8(d)(1) and (2) (same). The Exchange also notes that the rules of
the Nasdaq Stock Market LLC (``Nasdaq''), Cboe BZX Exchange, Inc.
(``BZX''), and Cboe BYX Exchange, Inc. (``BYX'') appear to permit
orders, including orders analogous to MPL-IOC Orders, to be entered
in any size. See Nasdaq Rule 4703(b) (providing that an order may be
entered in any whole share size, except as otherwise provided); BZX
Rule 11.2 (providing that orders are eligible for odd-lot, round-
lot, and mixed-lot executions unless otherwise indicated); BYX Rule
11.2 (same).
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Because of the technology changes associated with this proposed
rule change, the Exchange will announce the implementation date by
Trader Update, which, subject to effectiveness of this proposed rule
change, will be in the first quarter of 2023.
2. Statutory Basis
The proposed rule change is consistent with Section 6(b) of the
Act,\8\ in general, and furthers the objectives of Section 6(b)(5),\9\
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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\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that the proposed change would 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 because it would provide
member organizations with the option to enter MPL-IOC Orders in odd-lot
sized orders, which could encourage order flow to the Exchange and
promote opportunities for order execution on the Exchange, to the
benefit of all market participants. The Exchange notes that the
proposed change would not otherwise impact the operation of MPL-IOC
Orders as provided under current Exchange rules. The Exchange also
believes that the proposed change would align Exchange rules with the
treatment of orders analogous to MPL-IOC Orders on other cash equity
exchanges, thereby removing impediments to, and perfecting the
mechanism of, a free and open market and a national market system.\10\
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\10\ See note 7, supra.
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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. As noted above, the Exchange
believes the proposed rule change would allow the Exchange to accept
MPL-IOC Orders of any size and align the Exchange's handling of such
orders with other cash equity exchanges' handling of similar order
types,\11\ thereby promoting competition among exchanges by offering
member organizations options available on other cash equity exchanges.
The Exchange also believes that, to the extent the proposed change
would increase opportunities for order execution, the proposed change
would promote competition by making the Exchange a more attractive
venue for order flow and enhancing market quality for all market
participants.
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\11\ Id.
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[[Page 4254]]
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
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)(iii) of the Act \12\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\13\
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\12\ 15 U.S.C. 78s(b)(3)(A)(iii).
\13\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires the Exchange 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) \14\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\15\ 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 to allow the
Exchange to implement the proposal as soon as possible. The Exchange
states that the proposed change would align the Exchange's treatment of
MPL-IOC Orders with treatment of similar order types on other cash
equity exchanges and allow the Exchange to accept MPL-IOC Orders of any
size as soon as the technology associated with the proposed change is
available, which is anticipated to be less than 30 days from the date
of this filing. The Commission believes that waiver of the 30-day
operative delay is consistent with the protection of investors and the
public interest because the proposal does not raise any new or novel
issues. Accordingly, the Commission hereby waives the 30-day operative
delay and designates the proposal operative upon filing.\16\
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\14\ 17 CFR 240.19b-4(f)(6).
\15\ 17 CFR 240.19b-4(f)(6)(iii).
\16\ 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 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 to
determine whether the proposed rule 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
Send an email to [email protected]. Please include
File Number SR-NYSE-2023-03 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-NYSE-2023-03. 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-NYSE-2023-03 and should be
submitted on or before February 14, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
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\17\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-01277 Filed 1-23-23; 8:45 am]
BILLING CODE 8011-01-P