[Federal Register Volume 89, Number 67 (Friday, April 5, 2024)]
[Notices]
[Pages 24062-24064]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-07219]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-99871; File No. SR-NYSE-2024-19]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend Dealings and Settlements, Rule 235, and Rule 236, Sections 
204.12, 703.02, and 703.03 of the Listed Company Manual

April 1, 2024.
    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 March 25, 2024, 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Dealings and Settlements, Rule 235, 
and Rule 236, as well as Sections 204.12, 703.02 (part 2), and 703.03 
of the Listed Company Manual, to conform to amendments to Rule 15c6-
1(a) of the Act to shorten the standard settlement cycle for most 
broker-dealer transactions from two business days after the trade date 
(``T+2'') to one business day after the trade date (``T+1''). 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
    On March 6, 2023, the Commission adopted amendments to Rule 15c6-
1(a) of the Act to shorten the standard settlement cycle for most 
broker-dealer transactions from T+2 to T+1.\3\ Accordingly, the 
Exchange proposes to amend the rules identified below to conform with 
the amendments to Rule 15c6-1(a) and reflect a standard settlement 
cycle of T+1:
---------------------------------------------------------------------------

    \3\ See Securities Exchange Act Release No. 96930, 88 FR 13872 
(March 6, 2023) (``T+1 Adopting Release'').

 Dealings and Settlements
 Rule 235 (Ex-Dividend, Ex-Rights)
 Rule 236 (Ex-Warrants)
 Section 204.12 of the Listed Company Manual (Dividends and 
Stock Distributions)
 Section 703.02 (part 2) of the Listed Company Manual (Stock 
Split/Stock Rights/Stock Dividend Listing Process)
 Section 703.03 of the Listed Company Manual (Short Term Rights 
Offerings Relating to Listed Securities Listing Process)
Proposed Rule Change
    The Exchange proposes the following changes to reflect a T+1 
settlement cycle.
     Under Dealings and Settlements, Delivery Dates on Exchange 
Contracts currently provides that a ``Regular Way'' contract for sale 
of securities is due on the second business day following the day of 
the contract. The Exchange proposes to delete the word ``second'' from 
this rule to reflect settlement on T+1, rather than T+2.\4\
---------------------------------------------------------------------------

    \4\ The Exchange further proposes to modify the table that 
appears under Delivery Dates on Exchange Contracts to delete the 
rows describing ``Cash'' delivery and ``Seller's Option'' delivery, 
as the Exchange discontinued non-regular way settlement in 2017 and 
such options are no longer offered. See Securities Exchange Act 
Release No. 81176 (July 20, 2017), 82 FR 34728 (July 26, 2017) (SR-
NYSE-2017-33) (Notice of Filing and Immediate Effectiveness of 
Proposed Rule Change To Eliminate Non-Regular Way Trading on the 
Exchange).
---------------------------------------------------------------------------

     Current Rule 235 provides that transactions in stocks 
shall be ex-dividend or ex-rights on the business day preceding the 
record date fixed by the corporation or the date of the closing of 
transfer books. The Exchange proposes to delete the phrase ``the 
business day preceding,'' such that the rule would provide that these 
transactions would be ex-dividend or ex-rights on the record date. The 
current rule further provides that if the record date or closing of 
transfer books occurs upon a day other than a business day, Rule 235 
shall apply for the second preceding business day. The Exchange 
proposes to delete the word ``second'' from this portion of the rule to 
conform to a T+1 settlement cycle.\5\
---------------------------------------------------------------------------

    \5\ The Exchange further proposes to delete the parenthetical 
sentence at the end of Rule 235 as obsolete, given that Rule 118 has 
been deleted from the Exchange's rulebook. See Securities Exchange 
Act Release No. 76649 (December 15, 2015), 80 FR 79365 (December 21, 
2015) (SR-NYSE-2015-60) (Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change To Amend Rule 13 To Eliminate 
Good til Cancelled (``GTC'') Orders and Stop Orders, and Make 
Conforming Changes to Rules 49, 61, 70, 104, 109, 115A, 116, 118, 
123, 123A, 123C, 123D, 1000, 1004 and 6140).
---------------------------------------------------------------------------

     Current Rule 236 provides that ex-warrant trading will 
begin on the business day preceding the date of expiration of the 
warrants, expect that when expiration occurs on a non-business day, it 
will begin on the second business day preceding expiration. To conform 
with a T+1 settlement cycle, the Exchange proposes to delete the phrase 
``the business day preceding,'' such that the rule would provide that 
these transactions would be ex-warrants on the date of expiration, and 
the word ``second,'' such that the rule would provide for expiration on 
the business day preceding expiration when expiration occurs on a non-
business day.
     Current Section 204.12 of the Listed Company Manual 
(Dividends and Stock Distributions) requires the Exchange to arrange 
for and give advance notice of changes in dealings in the stock to an 
``ex-dividend'' basis, which is generally

[[Page 24063]]

two business days prior to the record date. The Exchange proposes to 
amend Section 204.12 to provide that an ``ex-dividend'' basis would 
generally be on the record date to reflect a T+1 settlement cycle.
     Current Section 703.02 (part 2) of the Listed Company 
Manual (Stock Split/Stock Rights/Stock Dividend Listing Process) 
provides that a distribution of less than 25% of a company's common 
stock is traded ``ex'' on and after the business day prior to the 
record date based on the Exchange's two-day delivery rule, pursuant to 
which contracts made on the Exchange for the purchase and sale of 
securities are generally settled by delivery on the second business day 
after the contract is made. Given the change to a T+1 settlement cycle, 
the Exchange proposes to amend the first sentence of Section 703.02 
(part 2) to reflect that a distribution of less than 25% of a company's 
common stock is traded ``ex'' on the record date. The Exchange also 
proposes to amend the second sentence of Section 703.02 (part 2) to 
instead refer to the Exchange's one-day delivery rule pursuant to which 
contracts made on the Exchange for the purchase and sale of securities 
are settled by delivery on the business day after the contract is made. 
Finally, the Exchange proposes to amend the table in Section 703.02 
(part 2) setting forth a schedule of record dates and corresponding 
normal ex-dividend dates to reflect a shortened T+1 settlement 
cycle.\6\
---------------------------------------------------------------------------

    \6\ The Exchange also proposes to add Juneteenth National 
Independence Day (June 19) to the list of holidays affecting ex-
dividend dates set forth in Section 703.02 (part 2). This proposed 
change would ensure that Section 703.02 is consistent with NYSE Rule 
7.2, which sets forth the holidays on which the Exchange is not open 
for business and was amended in 2021 to include Juneteenth National 
Independence Day. See Securities Exchange Act Release No. 93183 
(September 30, 2021), 86 FR 55068 (October 5, 2021) (SR-NYSE-2021-
56) (Notice of Filing and Immediate Effectiveness of Proposed Rule 
Change To Amend NYSE Rule 7.2).
---------------------------------------------------------------------------

     Current Section 703.03 of the Listed Company Manual (Short 
Term Rights Offerings Relating to Listed Securities Listing Process) 
provides that registration under the Securities Act of 1933 of 
securities to be offered should become effective at least six business 
days prior to the record date so that a listed security may trade ex-
rights in a normal fashion on the second business day prior to the 
record date. The Exchange proposes to amend Section 703.03 to provide 
that registration of listed securities should become effective at least 
six business days prior to the record date in order for such securities 
to be traded ex-rights on the record date.
Implementation
    The Exchange proposes that the operative date of this proposed rule 
change will be Tuesday, May 28, 2024, which is the compliance date 
specified in the T+1 Adopting Release, or such later date as may be 
announced by the Commission for compliance with the amendments to Rule 
15c6-1(a) set forth in the T+1 Adopting Release.\7\ With the 
implementation of the T+1 settlement cycle and as described in the 
proposed changes outlined above, the ex-dividend date for ``normal'' 
distributions will be the same business day as the record date. 
Accordingly, the Exchange proposes that Wednesday, May 29, 2024 would 
be the first date to which the proposed rules described herein would 
apply (i.e., the first record date to which the new ex-dividend date 
rationale will be applied). During the implementation of the T+1 
settlement cycle, the Exchange proposes that the ex-dividend dates will 
be as follows:
---------------------------------------------------------------------------

    \7\ See note 3, supra.

------------------------------------------------------------------------
                Record date                       Ex-dividend date
------------------------------------------------------------------------
May 24, 2024..............................  May 23, 2024.
May 28, 2024..............................  May 24, 2024.
May 29, 2024..............................  May 29, 2024.
------------------------------------------------------------------------

    A record date of Friday, May 24, 2024 would be a date prior to the 
effective date of the amendments to Rule 15c6-1(a) of the Act to 
shorten the standard settlement cycle for most broker-dealer 
transactions from T+2 to T+1.\8\ The rules described above would apply 
to this record date in their current form and, thus, the ``ex-dividend 
date'' would be the first business day preceding the record date or 
Thursday, May 23, 2024. Monday, May 27, 2024 is Memorial Day, which is 
an Exchange holiday; accordingly, there would be no record date on a 
holiday. A record date of Tuesday, May 28, 2024 would also fall under 
the Exchange's current rules, and the first business day preceding such 
record date would be Friday, May 24, 2024. On Wednesday, May 29, 2024, 
the proposed rules described above would apply, such that, for the 
record date of May 29, 2024, the ``ex-dividend date'' would be the same 
business day.
---------------------------------------------------------------------------

    \8\ See note 3, supra.
---------------------------------------------------------------------------

    The Exchange will issue a Trader Notice regarding the 
implementation of the proposed rule change and T+1 settlement cycle, 
which date would correspond with the industry-led transition to a T+1 
standard settlement, and the compliance date of the Commission's 
amendment of Rule 15c6-1(a) of the Act to require standard settlement 
no later than T+1.
2. Statutory Basis
    The Exchange believes that 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) of the Act,\10\ in particular, because it 
is designed to prevent fraudulent and manipulative acts and practices, 
promote just and equitable principles of trade, to foster cooperation 
and coordination with persons engaged in regulating, clearing, 
settling, processing information with respect to, and 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.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    In particular, the proposed rule change would amend the Exchange's 
rules to reflect a standard settlement cycle of T+1, in support of the 
industry-led initiative to shorten the settlement cycle to one business 
day. Moreover, the proposed rule change is consistent with the 
Commission's amendments to Rule 15c6-1(a) of the Act to require 
standard settlement no later than T+1. The Exchange believes that the 
proposed rule change would provide regulatory certainty to facilitate 
the industry-led move to a T+1 settlement cycle. The Exchange further 
believes that, by shortening the time period for settlement of most 
securities transactions, the proposed rule change would protect 
investors and the public interest by reducing the number of unsettled 
trades in the clearance and settlement system at any given time, 
thereby reducing the risk inherent in settling securities transactions 
to clearing corporations, their members, and public investors.

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 change is not 
designed to address any competitive issue, but rather to support the 
industry's transition to a T+1 regular-way settlement cycle in 
conformity with the Commission's amendment of Rule 15c6-1(a). The 
proposed change amends the Exchange's rules pertaining to securities 
settlement, which rules would apply uniformly to all contracts for the 
purchase or sale of a security (other than exempted securities) that 
provide for payment of funds and delivery of securities that occur on 
the Exchange or

[[Page 24064]]

other self-regulatory organizations, and is intended to facilitate the 
industry-wide transition to a T+1 settlement cycle. The Exchange also 
believes that the proposed rule change will serve to promote clarity 
and consistency in its rules, thereby reducing burdens on the 
marketplace and facilitating investor protection. Accordingly, the 
Exchange believes that the proposed changes do not impose any burden on 
competition other than that necessary to implement the amendments to 
Rule 15c6-1(a) of the Act as set forth in the T+1 Adopting Release.\11\
---------------------------------------------------------------------------

    \11\ See note 3, supra.
---------------------------------------------------------------------------

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) of the Act and Rule 
19b-4(f)(6) thereunder.
    At any time within 60 days of the filing of the 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.

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-NYSE-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-NYSE-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-NYSE-2024-19 and should be 
submitted on or before April 26, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
---------------------------------------------------------------------------

    \12\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2024-07219 Filed 4-4-24; 8:45 am]
BILLING CODE 8011-01-P