[Federal Register Volume 89, Number 186 (Wednesday, September 25, 2024)]
[Notices]
[Pages 78416-78418]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-21875]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-101104; File No. SR-NYSEARCA-2024-78]


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

September 19, 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 September 9, 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 amend Rule 7.31-E regarding the Minimum 
Trade Size Modifier. 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.

[[Page 78417]]

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 the Minimum 
Trade Size (``MTS'') Modifier.
    Rule 7.31-E(i)(3) provides that a Limit IOC Order, Non-Displayed 
Limit Order, MPL Order, or Tracking Order may be designated with an MTS 
Modifier. Rule 7.31-E(i)(3)(A) currently provides that an MTS must be a 
minimum of a round lot and that an order with an MTS Modifier will be 
rejected if the MTS is less than a round lot or if the MTS is larger 
than the size of the order. The Exchange proposes to amend Rule 7.31-
E(i)(3)(A) to provide that an MTS may be an odd lot quantity and thus 
proposes to eliminate rule text currently providing that an MTS must be 
a minimum of a round lot and that an order with an MTS of less than one 
round lot would be rejected. The Exchange believes that restricting the 
use of the MTS Modifier to round lot sizes only is unnecessary and that 
providing ETP Holders with the option to use the MTS Modifier with an 
odd lot quantity could increase liquidity and enhance opportunities for 
order execution on the Exchange. The Exchange notes that permitting 
odd-lot order quantities is not novel on the Exchange or other equity 
exchanges and believes that this proposed change is consistent with 
other equity exchanges' approaches to the use of instructions similar 
to the MTS Modifier.\4\
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    \4\ The rules of Cboe EDGA Exchange, Inc. (``EDGA''), Cboe EDGX 
Exchange, Inc. (``EDGX''), and Members Exchange (``MEMX'') appear to 
permit the use of instructions comparable to the MTS Modifier in any 
size. See EDGA Rules 11.2 (providing that orders are eligible for 
odd-lot, round-lot, and mixed-lot executions unless otherwise 
indicated) and 11.6(h) (defining Minimum Execution Quantity 
instruction); EDGX Rules 11.2 and 11.6(h) (same); MEMX Rules 11.2 
and 11.6(f) (same). See also, e.g., IEX Rule 1190(b)(3) (providing 
that a non-displayed order may be a Minimum Quantity Order and may 
be an odd lot order).
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    The Exchange also proposes to amend Rule 7.31-E(i)(3) to include 
the Discretionary Pegged Order and non-displayed ALO Order as order 
types that could be designated with an MTS Modifier. This clarifying 
change is intended only to reflect current behavior, by providing a 
complete list of the order types that may be designated with an MTS 
Modifier. The Exchange notes that inclusion of the Discretionary Pegged 
Order would align Rule 7.31-E(i)(3) with the rules of its affiliate, 
NYSE American LLC (``NYSE American''), which already provide that a 
Discretionary Pegged Order may be designated with an MTS Modifier,\5\ 
thereby promoting consistency in the rules of affiliated exchanges as 
to the same order type. The Exchange also believes that the inclusion 
of the non-displayed ALO Order \6\ as an order type that may be 
designated with an MTS Modifier is consistent with the existing use of 
the MTS Modifier with non-displayed order types such as Non-Displayed 
Limit Orders and MPL Orders (including MPL-ALO Orders). Moreover, 
although the non-displayed ALO Order is a Limit Order that is non-
displayed, the Exchange believes that specifically including the non-
displayed ALO Order in the text of Rule 7.31-E(i)(3) would reduce 
ambiguity as to the order types that may be designated with an MTS 
Modifier.
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    \5\ See NYSE American Rule 7.31E(i)(3) (``A Limit IOC Order, 
Non-Displayed Limit Order, MPL Order, Tracking Order, Non-Displayed 
Primary Pegged Order, or Discretionary Pegged Order may be 
designated with an MTS Modifier.'').
    \6\ An ALO Order is a Non-Routable Limit Order that, unless it 
receives price improvement, will not remove liquidity from the NYSE 
Arca Book; an ALO Order may be designated as non-displayed. See Rule 
7.31-E(e)(2).
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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 no later than in the fourth quarter of 2024.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Act,\7\ in general, and furthers the objectives of Section 6(b)(5),\8\ 
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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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
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    The Exchange 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 protect investors and the public 
interest because it would provide ETP Holders with the option to use 
the MTS Modifier with odd lot quantities, 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 proposed 
change would also clarify that the MTS Modifier may be used in 
conjunction with Discretionary Pegged Orders and non-displayed ALO 
Orders, thereby removing impediments to, and perfecting the mechanism 
of, a free and open market and a national market system by updating 
Exchange rules to ensure that they reflect the current availability of 
the MTS Modifier and promoting consistency and specificity in Exchange 
rules as to the use of such modifier with non-displayed order types, as 
well as consistency with the rules of an affiliated exchange with 
respect to the Discretionary Pegged Order. The Exchange notes that the 
proposed change would not otherwise impact the operation of the MTS 
Modifier as provided under current Exchange rules. The Exchange also 
believes that the proposed change would align Exchange rules with the 
use of instructions similar to the MTS Modifier on other equity 
exchanges, thereby removing impediments to, and perfecting the 
mechanism of, a free and open market and a national market system.\9\
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    \9\ 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. The proposed change would 
allow the optional MTS Modifier to be used with an odd lot quantity and 
accurately reflect the order types that may be designated with an MTS 
Modifier. The Exchange believes that the proposed change would promote 
competition among exchanges by offering ETP Holders options available 
on other equity exchanges and, to the extent the proposed change would 
increase opportunities for order execution, promote competition by 
making the Exchange a more attractive venue for order flow and 
enhancing market quality for all market participants.

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.

[[Page 78418]]

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 \10\ and Rule 19b-4(f)(6) thereunder.\11\ 
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)(iii) of the Act \12\ and Rule 
19b-4(f)(6)(iii) thereunder.\13\
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    \10\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \11\ 17 CFR 240.19b-4(f)(6).
    \12\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \13\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to give the Commission 
written notice of its 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 fulfilled this requirement.
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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. The Exchange has asked 
the Commission to waive the 30-day operative delay so that the proposal 
may take effect as soon as the technology associated with the proposed 
change is available, which is anticipated to be less than 30 days from 
the date of this filing. The Commission believes that waiver of the 
operative delay is consistent with the protection of investors and the 
public interest because the proposal raises no novel issues and would 
allow use of the MTS Modifier with odd lot quantities without delay and 
promote clarity in Exchange rules as to the order types that may be 
designated with an MTS Modifier. Accordingly, the Commission hereby 
waives the 30-day operative delay and designates the proposal operative 
upon filing.\16\
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    \14\ 17 CFR 240.19b-4(f)(6).
    \15\ 17 CFR 240.19b-4(f)(6)(iii).
    \16\ 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) \17\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \17\ 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-2024-78 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-2024-78. 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-2024-78 and should 
be submitted on or before October 16, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Vanessa A. Countryman,
Secretary.
[FR Doc. 2024-21875 Filed 9-24-24; 8:45 am]
BILLING CODE 8011-01-P