[Federal Register Volume 89, Number 52 (Friday, March 15, 2024)]
[Notices]
[Pages 18979-18981]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-05485]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-99704; File No. SR-NYSEARCA-2024-21]


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

March 11, 2024.
    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 February 26, 2024, 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 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 modify Rule 7.31-E regarding Primary 
Pegged 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.

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-E regarding Primary Pegged 
Orders.
    Rule 7.31-E(h) defines a Pegged Order as a Limit Order that does 
not route with a working price that is pegged to a dynamic reference 
price. If the designated reference price is higher (lower) than the 
limit price of a Pegged Order to buy (sell), the working price will be 
the limit price of the order.
    Rule 7.31-E(h)(2) defines a Primary Pegged Order as a Pegged Order 
to buy (sell) with a working price that is pegged to the PBB (PBO), 
with no offset allowed. A Primary Pegged Order to buy (sell) will be 
rejected on arrival, or cancelled when resting, if there is no PBB 
(PBO) against which to peg. A Primary Pegged Order is eligible to 
participate in auctions at the limit price of the order, provided that, 
a Primary Pegged Order is not eligible to participate in the Closing 
Auction.
    Rule 7.31-E(h)(2)(A) currently provides that a Primary Pegged Order 
must include a minimum of one round lot displayed. Rule 7.31-E(h)(2)(A) 
further provides that the working price of a Primary Pegged Order 
equals the display price, the display quantity is ranked Priority 2--
Display Orders, and the reserve interest is ranked Priority 3--Non-
Display Orders.
    Rule 7.31-E(h)(2)(B) provides that a Primary Pegged Order will be 
rejected if the PBBO is locked or crossed. If the PBBO is locked or 
crossed when the display quantity of a Primary Pegged Reserve Order is 
replenished, the entire order will be cancelled. If after arrival, the 
PBBO becomes locked or crossed, the Primary Pegged Order will wait for 
a PBBO that is not locked or crossed before the display and working 
price are adjusted and remains eligible to trade at its current working 
price.
    The Exchange proposes to modify Rule 7.31-E(h)(2)(A) to permit 
Primary Pegged Orders to be entered in any size and thus proposes to 
eliminate rule text currently providing that a Primary Pegged Order 
must include a minimum of one round lot displayed. The Exchange 
believes that requiring Primary Pegged Orders to be entered in round 
lots is unnecessary and that providing ETP Holders with the option to 
enter Primary Pegged Orders in odd lots could increase liquidity and 
enhance opportunities for order execution on the Exchange. The Exchange 
notes that permitting odd-lot

[[Page 18980]]

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 Primary Pegged Orders with the treatment of 
equivalent order types on other cash equity exchanges.\4\
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    \4\ See, e.g., Members Exchange Rules 11.8(c)(2) (providing that 
a Primary Peg Order may be entered as an odd lot, round lot, or 
mixed lot). 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 Primary Pegged 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 2024.
2. Statutory Basis
    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),\6\ 
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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    \5\ 15 U.S.C. 78f(b).
    \6\ 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 
ETP Holders with the option to enter Primary Pegged 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 Primary 
Pegged 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 Primary Pegged 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.\7\
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    \7\ See note 4, 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 
Primary Pegged Orders of any size and align the Exchange's handling of 
such orders with other cash equity exchanges' handling of similar order 
types,\8\ thereby promoting competition among exchanges by offering ETP 
Holders 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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    \8\ 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 \9\ and Rule 19b-4(f)(6) thereunder.\10\ 
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.\11\
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    \9\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \10\ 17 CFR 240.19b-4(f)(6).
    \11\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file 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) \12\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b4(f)(6)(iii),\13\ 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 it to 
accept Primary Pegged Orders of any size as soon as the technology 
associated with the proposed change is available. The Exchange states 
that the proposal raises no novel issues and that waiver of the 
operative delay would allow the Exchange to more expeditiously offer 
increased flexibility to member organizations and promote additional 
trading opportunities for all market participants. The Commission finds 
that, because the proposal does not change the operation of Primary 
Pegged Orders, other than to expand their use to odd-lot orders, waiver 
of the 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.\14\
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    \12\ 17 CFR 240.19b-4(f)(6).
    \13\ 17 CFR 240.19b-4(f)(6)(iii).
    \14\ For purposes only of accelerating the operative date of 
this proposal, the Commission has considered the proposed rule's 
impact on efficiency, competition, and capital formation. 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) \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:

[[Page 18981]]

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-2024-21 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-SR-NYSEARCA-2024-
21. 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-SR-NYSEARCA-2024-21 and 
should be submitted on or before April 5, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-05485 Filed 3-14-24; 8:45 am]
BILLING CODE 8011-01-P