[Federal Register Volume 89, Number 67 (Friday, April 5, 2024)]
[Notices]
[Pages 24049-24051]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-07220]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-99872; File No. SR-NYSEAMER-2024-23]


Self-Regulatory Organizations; NYSE American LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Change To Amend Rules 
7.4E, 64, 236, and 257, as Well as Sections 510, 512, and 521 of the 
NYSE American LLC Company Guide

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, 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 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 Rules 7.4E, 64, 236, and 257, as 
well as Sections 510, 512, and 521 of the NYSE American LLC Company 
Guide, 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:
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    \3\ See Securities Exchange Act Release No. 96930, 88 FR 13872 
(March 6, 2023) (``T+1 Adopting Release'').

 Rule 7.4E (Ex-Dividend or Ex-Rights Dates)
 Rule 64 (Equities. Bonds, Rights and 100-Share-Unit Stocks)
 Rule 236 (Equities.Ex-Warrants)
 Rule 257 (Equities. Deliveries After `Ex' Date)
 Section 510 of the NYSE American LLC Company Guide (Two Day 
Delivery Plan)
 Section 512 of the NYSE American LLC Company Guide (Ex-
Dividend Procedure)
Proposed Rule Change
    The Exchange proposes the following changes to reflect a T+1 
settlement cycle.
     Rule 7.4E currently provides that transactions in stocks 
traded regular way are generally ``ex-dividend'' or ``ex-rights'' on 
the business day preceding the record date or the date of the closing 
of transfer books, or else on the second preceding business day when 
the record date or closing of transfer books occurs on a non-business 
day. To reflect settlement on T+1 rather than T+2, the Exchange 
proposes to amend this rule to provide that transactions would be ex-
dividend or ex-rights on the record date or date of the closing of 
transfer books, or on the preceding business day when the record date 
or closing of transfer books occurs on a non-business day.
     Current Rule 64(a)(i) defines regular way delivery as 
occurring on the second business day following the day of the contract. 
To conform with the transition to a T+1 settlement cycle, the Exchange 
proposes to amend Rule 64(a)(i) to delete the word ``second,'' such 
that the rule would provide that regular way delivery occurs on the 
business day following the day of the contract.\4\
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    \4\ The Exchange also proposes to delete the obsolete 
parenthetical reference to Rule 14 in current Rule 64(a)(i), as Rule 
14 is not applicable to trading on the Pillar platform. See 
Securities Exchange Act Release No. 82212 (December 4, 2017), 82 FR 
58036 (December 8, 2017) (SR-NYSEAMER-2017-34) (Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change To Amend Exchange 
Rules To Delete Obsolete Cash Equities Rules That Are Not Applicable 
to Trading on the Pillar Trading Platform and To Delete Other 
Obsolete Rules). The Exchange further proposes to delete Rules 
64(a)(ii), 64(b), and 64(c), as the non-regular way settlement 
options described in such rules are no longer available on the 
Exchange. See id. The Exchange also proposes non-substantive 
conforming changes in Rule 64(a) to reflect the deletion of Rules 
64(a)(ii), 64(b), and 64(c).
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     Current Rule 236 \5\ provides that ex-warrant trading will 
begin on the business day preceding the date of expiration of the 
warrants, except 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

[[Page 24050]]

expiration occurs on a non-business day.\6\
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    \5\ The Exchange also proposes to amend the section header above 
Rule 236 to conform it with the current title and substance of Rule 
236.
    \6\ The Exchange also proposes to delete the parenthetical 
reference to Rule 14 because, as noted above, Rule 14 is no longer 
applicable to trading on the Exchange. See note 4, supra.
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     Current Rule 257 provides that when a security is sold 
before it is ex-dividend or ex-rights and delivery is made too late to 
enable the buyer to obtain transfer in time to become a holder of 
record to receive the distribution to be made with respect to such 
security, the seller shall pay or deliver the distribution to the buyer 
as set forth in this rule. In the case of stock dividends or rights to 
subscribe, the seller must deliver to the buyer within two days after 
the record date either the dividend or rights (or due-bill for the 
same). In the case of cash dividends, the seller must deliver to the 
buyer within two days after the record date a due-bill-check for the 
amount of the dividend. The Exchange proposes to amend Rule 257 to 
replace the references to ``two days after the record date'' with 
references to ``one day after the record date,'' to conform with the 
transition to a T+1 settlement cycle.\7\
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    \7\ The Exchange further proposes to delete the reference to 
Rule 14 because, as noted above, Rule 14 is no longer applicable to 
trading on the Exchange. See note 4, supra.
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     Section 510 of the NYSE American LLC Company Guide 
provides that transactions effected regular way on the Exchange are due 
for settlement in two business days. To conform with the transition 
from T+2 to T+1 settlement, the Exchange proposes to amend Section 510 
to provide that transactions on the Exchange will be settled in one 
business day and are due for settlement on the business day after the 
transaction date. The Exchange further proposes to amend the days of 
the week in the example provided in Section 510 from Tuesday to Monday 
and from Wednesday to Tuesday, to reflect the shortened settlement 
cycle.
     Section 512 of the NYSE American LLC Company Guide 
currently provides that transactions are ex-dividend on the business 
day preceding the record date, except that if the record date is not a 
business day, the transaction would be ex-dividend on the second 
preceding business day. To conform with T+1 settlement, the Exchange 
proposes to amend Section 512 to provide that transactions would be ex-
dividend on the record date or, if the record date is a non-business 
day, on the preceding business day.\8\
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    \8\ The Exchange also proposes to delete references to cash 
transactions in Section 521 as obsolete. See note 4, supra.
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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.\9\ 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:
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    \9\ See note 3, supra.

------------------------------------------------------------------------
                Record date                       Ex-dividend date
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May 24, 2024..............................  May 23, 2024.
May 28, 2024..............................  May 24, 2024.
May 29, 2024..............................  May 29, 2024.
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    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.\10\ 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.
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    \10\ See note 3, supra.
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    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,\11\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\12\ 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.
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    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(5).
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    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 24051]]

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.\13\
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    \13\ See note 3, supra.
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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

    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-NYSEAMER-2024-23 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-2024-23. 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-2024-23 and should 
be submitted on or before April 26, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2024-07220 Filed 4-4-24; 8:45 am]
BILLING CODE 8011-01-P