[Federal Register Volume 90, Number 80 (Monday, April 28, 2025)]
[Notices]
[Pages 17655-17656]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-07222]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-102912; File No. SR-NYSENAT-2025-05]
Self-Regulatory Organization; NYSE National, Inc.; Order
Approving a Proposed Rule Change To Amend NYSE National Rules 7.37 and
7.44
April 22, 2025.
I. Introduction
On March 12, 2025, NYSE National, Inc. (``NYSE National'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change to amend NYSE National rules 7.37 and 7.44. The
proposed rule change was published for comment in the Federal Register
on March 20, 2025.\3\ The Commission has received no comment letters on
the proposed rule change. This order approves the proposed rule change.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 102683 (March 14,
2025), 90 FR 13231.
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II. Description of the Proposal
The Exchange has proposed to amend NYSE National rules 7.37 (Order
Execution and Routing) and 7.44 (Retail Liquidity Program) to adopt the
Retail Price Improvement Seeking routing strategy, an optional routing
strategy available for Type 1 Retail Orders.
First, the Exchange proposed to amend NYSE National rule
7.44(f)(1), which defines a Type 1 Retail Order. The Exchange operates
a Retail Liquidity Program that is intended to attract retail order
flow to the Exchange and allow such order flow to receive potential
price improvement at the midpoint or better.\4\ A Retail Order, as
defined in NYSE National rule 7.44(a)(2), is an agency order or
riskless principal order that meets the criteria of FINRA rule 5320.03,
originating from a natural person, and that is submitted to the
Exchange by a Retail Member Organization (``RMO''), provided that no
change is made to the terms of the order with respect to price or side
of market and the order does not originate from a trading algorithm or
any other computerized methodology.\5\ NYSE National rule 7.44(f)(1)
defines a Type 1 Retail Order to buy (sell) as an MPL IOC Order with a
working price at the lower (higher) of the midpoint of the PBBO or its
limit price that trades only with available Retail Price Improvement
Orders \6\ to sell (buy) and all other orders to sell (buy) with a
working price below (above) or equal to the midpoint of the PBBO on the
Exchange Book. A Type 1 Retail Order does not route (except as
specified in NYSE National rule 7.44(f)(1)), and the quantity of a Type
1 Retail Order to buy (sell) that does not trade with eligible orders
to sell (buy) will be immediately and automatically cancelled. A Type 1
Retail Order is cancelled on arrival if there is
[[Page 17656]]
no PBBO or the PBBO is locked or crossed.
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\4\ See NYSE National rule 7.44 (Retail Liquidity Program).
\5\ To qualify as an RMO, an ETP Holder must conduct a retail
business or route retail orders on behalf of another broker-dealer.
See NYSE National rule 7.44(b)(1). To become an RMO, an ETP Holder
must submit an application form, supporting documentation to confirm
that the RMO applicant's order flow would meet the requirements of
the Retail Order definition, and an attestation that substantially
all orders submitted as Retail Orders will qualify as such. See NYSE
National rule 7.44(b)(2).
\6\ A Retail Price Improvement Order is an MPL Order that is
eligible to trade only with incoming Retail Orders submitted by an
RMO. See NYSE National rule 7.44(a)(3).
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The last sentence of NYSE National rule 7.44(f)(1) provides that a
Type 1 Retail Order may be designated with the Retail Midpoint Ping
routing strategy, and that a Type 1 Retail Order designated with such
routing strategy will be accepted and routed pursuant to such strategy
even if there is no PBBO or the PBBO is locked or crossed. The Exchange
has proposed to amend this sentence to provide that a Type 1 Retail
Order may also be designated with a Retail Price Improvement Seeking
routing strategy.
Second, the Exchange proposed to amend NYSE National rule
7.37(b)(9) to add new subparagraph (C) providing for the Retail Price
Improvement Seeking routing strategy. NYSE National rule 7.37(b)(9)(C)
will provide that the Retail Price Improvement Seeking routing strategy
would be available for Type 1 Retail Orders. A Type 1 Retail Order
designated with the Retail Price Improvement Seeking routing strategy
would first check the Exchange Book for available shares. Any remaining
quantity of the order will then route as a Retail Order \7\ to the New
York Stock Exchange, LLC (``NYSE''). Any shares that remain unexecuted
after routing to NYSE will be cancelled. The Retail Price Improvement
Seeking routing strategy is intended to offer any remaining quantity of
Type 1 Retail Orders, after executing against interest on the Exchange
Book, the opportunity to access liquidity on the NYSE, which also
operates a retail liquidity program.\8\ Type 1 Retail Orders routed to
the NYSE with the Retail Price Improvement Seeking routing strategy
will be able to interact with Retail Price Improvement Orders \9\ and
other interest on the NYSE book as a Retail Order in the NYSE retail
liquidity program.\10\ Type 1 Retail Orders designated with the Retail
Price Improvement Seeking routing strategy will be routed to the NYSE
by the Exchange's routing broker, Archipelago Securities LLC
(``ArcaSec''), on behalf of the NYSE National RMOs that originally
submitted such orders, and, according to the Exchange, ArcaSec will be
qualified as an NYSE RMO under NYSE rule 7.44(b) for purposes of
routing such orders.\11\
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\7\ The requirements and obligations for NYSE National RMOs are
the same as those for NYSE RMOs, as are the definitions of Retail
Order on NYSE National and NYSE. See NYSE rules 7.44(a)(2) (defining
RMO); 7.44(a)(3) (defining Retail Order); 7.44(b) and 7.44(h)
(describing RMO qualifications).
\8\ See NYSE rule 7.44.
\9\ See NYSE rule 7.44(a)(4).
\10\ As proposed, Type 1 Retail Orders (which are MPL IOC
Orders) routed pursuant to the Retail Price Improvement Seeking
routing strategy will be converted to Limit IOC Orders to comport
with the definition of Retail Order in the NYSE Retail Liquidity
Program. See NYSE rule 7.44(k) (``A Retail Order to buy (sell) is a
Limit IOC Order that will trade only with available Retail Price
Improvement Orders to sell (buy) and all other orders to sell (buy)
with a working price below (above) the PBO (PBB) on the Exchange
Book. . . .'').
\11\ According to the Exchange, ArcaSec will rely on
representations made by NYSE National RMOs with respect to their
Retail Orders.
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III. Discussion and Commission Findings
After careful review, the Commission finds that the proposed rule
change is consistent with the requirements of the Act and the rules and
regulations thereunder applicable to a national securities
exchange.\12\ In particular, the Commission finds that the proposed
rule change is consistent with Section 6(b)(5) of the Act,\13\ which
requires, among other things, that the rules of a national securities
exchange be 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 regulating,
clearing, settling, processing information with respect to, and
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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\12\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
\13\ 15 U.S.C. 78f(b)(5).
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The Commission finds that the proposed rule change is reasonably
designed to remove impediments to and perfect the mechanism of a free
and open market and a national market system because the proposed
Retail Price Improvement Seeking routing strategy for Type 1 Retail
Orders offers investors who submit NYSE National Type 1 Retail Orders
the opportunity for additional price improvement on the NYSE. The
Commission believes that the proposed rule change furthers the Retail
Liquidity Program's goal of promoting competition for retail order flow
among execution venues and provides benefits to retail investors by
creating additional price improvement opportunities for their order
flow.
Based on the foregoing, the Commission finds that the proposed rule
change is consistent with the requirements of the Act.
IV. Conclusion
It is therefore ordered that pursuant to Section 19(b)(2) of the
Act,\14\ the proposed rule change (SR-NYSENAT-2025-05) be, and it
hereby is, approved.
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\14\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-07222 Filed 4-25-25; 8:45 am]
BILLING CODE 8011-01-P