[Federal Register Volume 89, Number 60 (Wednesday, March 27, 2024)]
[Notices]
[Pages 21308-21310]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-06455]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-99828; File No. SR-NYSEAMER-2024-19]


Self-Regulatory Organizations; NYSE American LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Change To Amend Rule 41 
of the General Rules

March 21, 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 March 20, 2024, NYSE American LLC (``NYSE American'' 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 amend Rule 41 of the General Rules to 
permit direct debiting of undisputed or final fees or other sums due 
the Exchange by member organizations with one or more equity trading 
licenses and each applicant for an equities trading license. 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 41 of the General Rules 
(Failure to Pay Exchange Fees) to permit direct debiting of undisputed 
or final fees or other sums due to the Exchange by member organizations 
with one or more equity trading licenses and each applicant for an 
equities trading license.
    Rule 41 currently governs failure to pay Exchange fees, other than 
fines or monetary sanctions which are governed by Rule 8320 of the 
Exchange's disciplinary rules.
    The Exchange proposes to require member organizations that hold an 
equities trading license, and each applicant for an equities trading 
license, to provide one or more clearing account numbers that 
correspond to an account(s) at the National Securities Clearing 
Corporation (``NSCC'') for purposes of permitting the Exchange to 
collect through direct debit any undisputed or final fees and/or other 
sums due to the Exchange. The Exchange would, however, permit a member 
organization or applicant for a trading license to opt-out of the 
requirement to provide NSCC clearing account numbers and establish 
alternative payment arrangements. As proposed, the rule would be 
inapplicable to ATP Holders.\4\ In addition, consistent with current 
Rule 41, the proposed change would not apply to disciplinary fines or 
monetary sanctions governed by Rule 8320. The proposed rule would also 
not apply to regulatory fees related to the Central Registration 
Depository (``CRD system''), which are collected by the Financial 
Industry Regulatory Authority, Inc. (``FINRA'').\5\ The proposed change 
is based on the rules of other exchanges.\6\
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    \4\ Pursuant to Rule 900.2NY(5), ``ATP'' refers to an American 
Trading Permit issued by the Exchange for effecting approved 
securities transactions on the Exchange's Trading Facilities. ``ATP 
Holder'' in turn refers to a natural person, sole proprietorship, 
partnership, corporation, limited liability company or other 
organization in good standing that has been issued an ATP. 
References to ``member'' and ``member organization'' as those terms 
are used in the Exchange's rules are also deemed to be references to 
ATP Holders.
    \5\ The CRD system is the central licensing and registration 
system for the U.S. securities industry. The CRD system enables 
individuals and firms seeking registration with multiple states and 
self-regulatory organizations to do so by submitting a single form, 
fingerprint card and a combined payment of fees to FINRA. Through 
the CRD system, FINRA maintains the qualification, employment and 
disciplinary histories of registered associated persons of broker-
dealers. Certain of the regulatory fees provided in the Price List 
are collected and retained by FINRA via the CRD system for the 
registration of employees of member organizations of the Exchange 
that are not FINRA members. These fees would be excluded from direct 
debiting.
    \6\ See, e.g., MEMX LLC (``MEMX'') Rule 15.3(a) (Collection of 
Exchange Fees and Other Claims and Billing Policy) requires each 
MEMX member and all applicants for registration as members are 
required to provide one or more clearing account numbers that 
correspond to an account(s) at the NSCC for purposes of permitting 
the Exchange to debit certain fees, fines, charges and/or other 
monetary sanctions or other monies due to the Exchange. As noted, 
Rule 41 does not apply to disciplinary fines or monetary sanctions, 
and the proposal does not propose to change this. The MEMX rule also 
requires members to submit billing disputes within a certain time 
period. The Exchange currently has a similar policy set forth under 
``I'' of the General section in its Equities Price List, available 
at https://www.nyse.com/publicdocs/nyse/markets/nyse-american/NYSE_America_Equities_Price_List.pdf. See generally note 7, infra.
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    Under the proposal, the Exchange would send a monthly invoice to 
each equities member organization, generally on the 5th business day of 
each month as is currently the practice, for the debit amount due to 
the Exchange for the prior month. The Exchange would also send files to 
NSCC each month by the 11th business day of the month in order to 
initiate the debit of the amount due to the Exchange as provided for in 
the prior month's invoice. The Exchange anticipates that NSCC will 
process the debits on the day it receives the file or the following 
business day. Because member organizations would be provided with an 
invoice approximately

[[Page 21309]]

1 week before the debit date, member organizations will have adequate 
time to contact the Exchange with any questions concerning the invoice. 
If a member organization disagrees with the invoice in whole or in 
part, the Exchange would not commence the debit for the disputed amount 
until the dispute is resolved. Specifically, the Exchange would not 
include the disputed amount (or the entire invoice if it is not 
feasible to identify the disputed amounts) in the NSCC debit amount 
where the member organization provides written notification of the 
dispute to the Exchange by the later of the 15th of the month, or the 
following business day if the 15th is not a business day, and the 
amount in dispute is at least $10,000 or greater.
    Following receipt of the file from the Exchange, NSCC would proceed 
to debit the amounts indicated from the account of the member 
organization that clears the applicable transactions (``Clearing Member 
Organization,'' i.e., either a member organization that is self-
clearing or another member organization that provides clearing services 
on behalf of the member organization) and disburse such amounts to the 
Exchange. Where a member organization clears through another member 
organization, the Exchange understands that the estimated transaction 
fees owed to the Exchange are typically debited by the Clearing Member 
Organization on a daily basis using daily transaction detail reports 
provided by the Exchange to the Clearing Member Organization in order 
to ensure adequate funds have been escrowed. The Exchange notes that it 
is proposing to permit a member organization to designate one or more 
clearing account numbers that correspond to an account(s) at NSCC to 
permit member organizations that clear through multiple different 
clearing accounts to set up the billing process with the Exchange in a 
manner that is most efficient for internal reconciliation and billing 
purposes of the member organization.
    The Exchange believes that the proposed debiting process would 
provide an efficient method of collecting undisputed or final fees and/
or sums due to the Exchange consistent with the practice on other 
exchanges.\7\ Moreover, the Exchange believes that it is reasonable to 
permit member organizations and applicants for equities trading 
licenses to opt-out of the requirement to provide an NSCC account 
number to permit direct debiting and instead establish alternative 
payment arrangements. Finally, the Exchange believes that it is also 
reasonable to provide for a $10,000 limitation on pre-debit billing 
disputes since it would be inefficient to delay a direct debit for a de 
minimis amount. Member organizations would still be able to dispute 
billing amounts that are less than $10,000 pursuant to the billing 
policy set forth in the Price List.\8\
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    \7\ See note 6, supra. In addition to MEMX, IEX, Nasdaq, Nasdaq 
BX, and Nasdaq Phlx all provide for collection of fees and fines 
through direct debits. See IEX Rule 15.120; Nasdaq Rule Equity 7, 
Section 70; Nasdaq BX Rule Equity 7, Section 111; & Nasdaq Phlx Rule 
Equity 7, Section 2.
    \8\ See note 6, supra.
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    To effectuate this change, the Exchange would add ``Collection of 
and'' before ``Failure to Pay Exchange Fees'' in the heading of Rule 
41. The Exchange would also add the following new subsection (a) to 
Rule 41 (italicized):

    (a) Collection of Exchange Fees. Each member organization that 
has one or more equity trading licenses, and each applicant for an 
equities trading license, shall be required to provide one or more 
clearing account numbers that correspond to an account(s) at the 
National Securities Clearing Corporation (``NSCC'') for purposes of 
permitting the Exchange to collect through direct debit any 
undisputed or final fees and/or other sums due to the Exchange; 
provided, however, that a member organization or applicant may 
request to opt-out of the requirement to provide an NSCC clearing 
account number and establish alternative payment arrangements. If a 
member organization disputes an invoice, the Exchange will not 
include the disputed amount in the debit if the member has disputed 
the amount in writing to the Exchange by the 15th of the month, or 
the following business day if the 15th is not a business day, and 
the amount in dispute is at least $10,000 or greater. The Exchange 
will not debit fees related to the CRD system set forth in the Price 
List, which are collected and retained by FINRA.

    The current two paragraphs of Rule 41 would become new subsection 
(b), which would be titled ``Failure to Pay Exchange Fees.''
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. Specifically, the Exchange believes that the 
proposed direct debit process would provide member organizations with 
an efficient process to pay undisputed or final fees and/or sums due to 
the Exchange.
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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 that the proposal to debit NSCC accounts 
directly is reasonable because it would ease the administrative burden 
on member organizations of paying monthly invoices and avoiding overdue 
balances, and would provide efficient collection from all member 
organizations who owe monies to the Exchange. Moreover, the Exchange 
believes that the minimum time frame provided to member organizations 
to dispute invoices is reasonable and adequate to enable member 
organizations to identify potentially erroneous charges. In addition, 
the Exchange believes that the $10,000 limitation on pre-debit billing 
disputes is reasonable because it would be inefficient to delay a 
direct debit for a de minimis amount. The same $10,000 limitation is in 
place on exchanges that have adopted direct debit rules.\11\ Member 
organizations will still be able to dispute billing amounts that are 
less than $10,000 pursuant to the Exchange's Price List. Finally, the 
Exchange believes that it is reasonable to permit member organizations 
or applicants to request to opt-out of the requirement to provide NSCC 
account information and instead establish alternative payment 
arrangements with the Exchange.
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    \11\ 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. The proposed rule change 
would apply uniformly to all member organizations that have one or more 
trading licenses and to all applicants for equities trading licenses, 
and will not disproportionately burden or otherwise impact any single 
member organization.
    The Exchange does not believe that the proposal will create an 
intermarket burden on competition since the Exchange will only debit 
fees (other than de minimis fees below $10,000) that are undisputed by 
the member organization and member organizations will have a reasonable 
opportunity to dispute the fees both before and after the direct debit 
process. In addition, member organizations will have a reasonable 
opportunity to opt-out of the requirement to provide clearing account

[[Page 21310]]

information and instead adopt alternative payment arrangements.
    The Exchange also does not believe that the proposal will create an 
intramarket burden on competition, since the proposed direct debit 
process will be applied equally to all member organizations. Moreover, 
other exchanges utilize a similar process which the Exchange believes 
is generally familiar to member organizations. Consequently, the 
Exchange does not believe that the proposal raises any new or novel 
issues that have not been previously considered by the Commission in 
connection with direct debit and billing policies of other exchanges. 
Further, this proposal is expected to provide a cost savings to the 
Exchange in that it would alleviate administrative processes related to 
the collection of monies owed to the Exchange. In addition, the 
debiting process would mitigate against member organization accounts 
becoming overdue.

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 \12\ and Rule 19b-4(f)(6) thereunder.\13\ 
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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    \12\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \13\ 17 CFR 240.19b-4(f)(6).
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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 19b4(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.
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    \14\ 17 CFR 240.19b-4(f)(6).
    \15\ 17 CFR 240.19b-4(f)(6)(iii).
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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) \16\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \16\ 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-NYSEAMER-2024-19 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-NYSEAMER-2024-19. 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-NYSEAMER-2024-19 and should 
be submitted on or before April 17, 2024.

    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. 2024-06455 Filed 3-26-24; 8:45 am]
BILLING CODE 8011-01-P