[Federal Register Volume 88, Number 163 (Thursday, August 24, 2023)]
[Notices]
[Pages 57980-57982]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-18189]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-98168; File No. SR-NYSEARCA-2023-55]


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

August 18, 2023.
    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 August 8, 2023, NYSE Arca, Inc. (``NYSE Arca'' 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 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 amend 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

[[Page 57981]]

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
    NYSE Arca Rule 7.44-E currently sets forth the Exchange's Retail 
Liquidity Program (the ``Program''), which is intended to attract 
retail order flow to the Exchange and allow such order flow to receive 
potential price improvement.\3\ Currently, Rule 7.44-E provides for a 
class of market participant called Retail Liquidity Providers 
(``RLPs'') who, along with 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'').\4\ 
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.\5\ 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.\6\ The segmentation in the Program 
is intended to allow retail order flow to receive potential price 
improvement as a result of their order flow being deemed more desirable 
by liquidity providers.
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    \3\ 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).
    \4\ See Rules 7.44-E(a)(1) (defining an RLP) and 7.44-E(a)(4) 
(defining RPI Order).
    \5\ See Rule 7.44-E(j).
    \6\ See Rule 7.44-E(a)(2) (defining RMO); Rules 7.44-E(a)(3) and 
7.44-E(k) (describing Retail Orders).
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    The Exchange has determined to discontinue the Program, as its 
affiliated exchange NYSE National, Inc. (``NYSE National'') is 
proposing to implement a similarly structured Retail Liquidity 
Program.\7\ Accordingly, the Exchange proposes to delete the text of 
Rule 7.44-E and designate the rule as Reserved. The Exchange notes that 
its affiliate New York Stock Exchange LLC (``NYSE'') also currently 
offers a similarly structured Retail Liquidity Program,\8\ and both the 
NYSE Retail Liquidity Program and the proposed NYSE National Retail 
Liquidity Program would be available to RMOs that currently participate 
in the Program. The Exchange further notes that several other equities 
exchanges currently offer retail price improvement programs as well.\9\
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    \7\ See SR-NYSENAT-2023-17. The Exchange proposes to 
decommission the Program in tandem with the introduction of the NYSE 
National Retail Liquidity Program in the third quarter of 2023, on a 
date to be announced via Trader Update.
    \8\ See NYSE Rule 7.44 (setting forth NYSE Retail Liquidity 
Program).
    \9\ See, e.g., Cboe BYX Exchange, Inc. (``BYX'') Rule 11.24 
(setting forth BYX's Retail Price Improvement Program); Nasdaq BX, 
Inc. (``BX'') Rule 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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    Subject to the effectiveness of this proposed rule change, the 
Exchange will implement this change in the third quarter of 2023 and 
announce the implementation date by Trader Update.
2. Statutory Basis
    The proposed rule change is consistent with section 6(b) of the 
Act,\10\ in general, and furthers the objectives of section 
6(b)(5),\11\ 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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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(5).
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    Specifically, the Exchange believes that the proposed designation 
of Rule 7.44-E as Reserved in conjunction with the decommissioning of 
the Program would remove impediments to and perfect the mechanism of a 
free and open market and a national market system by deleting rule text 
that would no longer have application, thereby promoting clarity, 
transparency, and consistency in the Exchange's rulebook. In addition, 
the proposed change would ensure that the Exchange's rules accurately 
reflect the functionality offered by the Exchange.
    The Exchange further believes that the proposed change would remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system and would not be inconsistent with the public 
interest or the protection of investors because the proposed change to 
designate Rule 7.44-E as Reserved would alleviate any potential 
confusion among market participants regarding the availability of the 
Program. The Exchange also believes that investors would not be harmed 
by the proposed change, as a similarly structured Retail Liquidity 
Program is offered on its affiliated exchange NYSE and is proposed to 
be offered on its affiliate NYSE National; in addition, several other 
equities exchanges also currently offer price improvement programs for 
retail order flow.\12\ The Exchange further notes that it is not under 
any requirement to offer the Program and that participation in the 
Program is voluntary.
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    \12\ See notes 8, 9 & 10, 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, multiple 
equities exchanges currently offer retail price improvement programs, 
and investors can readily choose to direct retail order flow to any of 
the other available programs (including the NYSE Retail Liquidity 
Program or the proposed NYSE National Retail Liquidity Program, both of 
which are structured similarly to the Program). Accordingly, the 
Exchange does not believe that the discontinuation of the Program would 
harm competition.

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

[[Page 57982]]

proposed rule change has become effective pursuant to section 
19(b)(3)(A) of the Act \15\ and Rule 19b-4(f)(6)(iii) thereunder.\16\
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    \13\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \14\ 17 CFR 240.19b-4(f)(6).
    \15\ 15 U.S.C. 78s(b)(3)(A).
    \16\ 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 
Exchange has satisfied this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) \17\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b4(f)(6)(iii),\18\ 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. As discussed above, the 
Exchange states that this proposed change would remove impediments to 
and perfect the mechanism of a free and open market and a national 
market system and would not be inconsistent with the public interest or 
the protection of investors because it would remove the Program from 
the rulebook of Exchange and prevent potential confusion among market 
participants regarding the availability of the Program. The Exchange 
also states that retiring the Program should not harm investors 
because: (1) NYSE, an affiliated exchange, will continue to offer a 
similarly structured Retail Liquidity Program, and (2) NYSE National, 
an affiliated exchange, proposes to introduce a Retail Liquidity 
Program concurrent with this Program's discontinuance. The Exchange 
further states that both its offering of the Program and participation 
therein by ETP Holders are voluntary. The Commission believes that 
waiver of the operative delay is consistent with the protection of 
investors and the public interest because it will reduce the likelihood 
of any potential confusion among market participants regarding the 
availability of the Program on the Exchange. Accordingly, the 
Commission hereby waives the 30-day operative delay and designates the 
proposal operative upon filing.\19\
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    \17\ 17 CFR 240.19b-4(f)(6).
    \18\ 17 CFR 240.19b-4(f)(6)(iii).
    \19\ 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 under 
section 19(b)(2)(B) \20\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \20\ 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 (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-NYSEARCA-2023-55 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-2023-55. 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 (https://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 
a.m. and 3 p.m. Copies of the filing also will be available for 
inspection and copying at the principal office of the Exchange. Do not 
include personal identifiable information in submissions; you should 
submit only information that you wish to make available publicly. We 
may redact in part or withhold entirely from publication submitted 
material that is obscene or subject to copyright protection. All 
submissions should refer to file number SR-NYSEARCA-2023-55 and should 
be submitted on or before September 14, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\21\
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    \21\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-18189 Filed 8-23-23; 8:45 am]
BILLING CODE 8011-01-P