[Federal Register Volume 90, Number 95 (Monday, May 19, 2025)]
[Notices]
[Pages 21369-21375]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-08852]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-103039; File No. SR-NYSETEX-2025-08]
Self-Regulatory Organizations; NYSE Texas, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Adopt Rule 7.35
and Amend Rule 7.31
May 13, 2025.
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 May 9, 2025, the NYSE Texas, Inc. (``NYSE Texas'' 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 Exchange. 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 adopt Rule 7.35 regarding auctions, amend
Rule 7.31 to provide for Imbalance Offset Orders and Q Orders, and make
other conforming changes. 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
In connection with the Exchange's recently filed proposed rule
change to adopt rules to permit the listing and trading of certain
Exchange Traded Products,\4\ the Exchange proposes to adopt rules
setting forth the conduct of auctions on the Exchange, including for
securities for which the Exchange is the primary listing market, and
providing for a new order type that could participate in certain
auctions. Similarly, in connection with the Exchange's recent proposed
rule change to provide for the operation of Market Makers on the
Exchange,\5\ the Exchange proposes to adopt rules providing for a new
order type that would be available specifically to Market Makers. The
Exchange also proposes certain conforming changes to reflect the
operation of auctions and Market Makers on the Exchange.
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\4\ See Securities Exchange Act Release No. 102957 (April 29,
2025) (SR-NYSECHX-2025-04) (Notice of Filing of Amendment No. 1, and
Order Granting Accelerated Approval of a Proposed Rule Change, as
Modified by Amendment No. 1, to Amend Exchange Rules 1.1, 5, 7.18, 8
and Exchange Article 22, Rules 24-27) (the ``Listing Rules
Filing'').
\5\ See Securities Exchange Act Release No. 102874 (April 16,
2025), 90 FR 16896 (April 22, 2025) (SR-NYSETEX-2025-05) (Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Amend
Rule 1.1, Reinstate Article 16, Rules 1 Through 4 and Relocate Them)
(the ``Market Maker Rules Filing'').
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The Exchange proposes to (1) adopt new Rule 7.35 to describe how it
would conduct auctions; (2) amend Rule 7.31 (Orders and Modifiers) to
provide for the Imbalance Offset Order (``IO Order'') and Q Order; and
(3) make conforming changes in Rules 1.1 (Definitions), 7.10 (Clearly
Erroneous Executions), 7.11 (Limit Up--Limit Down Plan and Trading
Pauses in Individual Securities Due to Extraordinary Market
Volatility), 7.16 (Short Sales), 7.17 (Firm Orders and Quotes), 7.18
(Halts), 7.20 (Registration of Market Makers), 7.31 (Orders and
Modifiers), and 7.34 (Trading Sessions) to reflect the auction process
and the availability of the IO Order and Q Order.\6\ As further
discussed below, the proposed changes are based on the rules of the
Exchange's affiliate NYSE Arca, Inc. (``NYSE Arca''), with only the
following non-substantive conforming changes:
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\6\ The Exchange recently filed a proposed rule change to adopt
Rule 11.30 governing the prevention of the misuse of material, non-
public information. See SR-NYSETEX-2025-06 (May 2, 2025), https://www.nyse.com/publicdocs/nyse/markets/nyse-texas/rule-filings/filings/2025/SR-NYSETEX-2025-06.pdf. The Exchange represents that it
will not list or trade any Exchange Traded Products until proposed
Rule 11.30 is operative.
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Replacement of references to ``NYSE Arca'' or ``NYSE Arca
Marketplace'' with references to ``NYSE Texas'' or the ``Exchange'';
[[Page 21370]]
Replacement of references to ``ETP Holder'' with
references to ``Participant''; and
Replacement of internal references to NYSE Arca rules with
references to NYSE Texas rules (e.g., Rule 7.36 rather than Rule 7.36-
E).
Rule 7.35 (Auctions)
Proposed Rule 7.35 describes how the Exchange would conduct
auctions. Proposed Rule 7.35 is based on NYSE Arca Rule 7.35-E, with
the non-substantive changes noted above to conform the language of the
rule to terminology used in NYSE Texas rules.
Proposed Rules 7.35(a)(1) through (14) would set forth definitions
for the following terms for purposes of this Rule: Auction-Eligible
Security, Auction Processing Period, Auction Imbalance Freeze, Auction
Imbalance Information, Auction NBBO, Auction Ranking, Imbalance,
Indicative Match Price, Matched Volume, Auction Collar, Book Clearing
Price, Far Clearing Price, Auction Indicator, and Imbalance Freeze
Indicator.
Proposed Rule 7.35(b) would describe how the Exchange conducts
Early Open Auctions. Early Open Auctions would be conducted at the
beginning of the Early Trading Session, and only Limit Orders in
Auction-Eligible Securities designated for the Early Trading Session
would be eligible to participate in an Early Open Auction. The
subparagraphs under proposed Rule 7.35(b) further provide for the
operation of an Early Open Auction, including the dissemination of
Early Open Auction Imbalance Information, the timing of the Early Open
Auction Imbalance Freeze, and the process for matching and trading
orders participating in the Early Open Auction.
Proposed Rule 7.35(c) would describe how the Exchange conducts Core
Open Auctions. Core Open Auctions would be conducted at the beginning
of the Core Trading Session. Orders eligible for participation in a
Core Open Auction are orders in Auction-Eligible Securities that are
designated for the Core Trading Session and eligible to participate in
auctions. The subparagraphs under proposed Rule 7.35(c) further provide
for the operation of a Core Open Auction, including the publication of
the Core Open Auction Imbalance Information, order processing during
the Core Open Auction Imbalance Freeze, and the process for matching
and trading orders participating in the Core Open Auction.
Proposed Rule 7.35(d) would describe how the Exchange conducts
Closing Auctions. Closing Auctions would be conducted at the end of the
Core Trading Session. Orders eligible for participation in a Closing
Auction are orders in Auction-Eligible Securities that are designated
for the Core Trading Session and eligible to participate in auctions.
The subparagraphs under proposed Rule 7.35(d) further provide for the
operation of the Closing Auction, including the publication of Closing
Auction Imbalance Information, order processing during the Closing
Auction Imbalance Freeze, and the process for matching and trading
orders participating in the Closing Auction.
Proposed Rule 7.35(e) would describe how the Exchange conducts
Trading Halt Auctions. A Trading Halt Auction would be conducted to re-
open trading in an Auction-Eligible Security following a halt or pause
of trading in that security in either the Early Trading Session, Core
Trading Session, or Late Trading Session, as applicable. Orders
eligible for participation in a Trading Halt Auction are orders in
Auction-Eligible Securities that are designated for the Core Trading
Session and eligible to participate in auctions. The subparagraphs
under proposed Rule 7.35(e) further provide for the operation of a
Trading Halt Auction, including publication of Trading Halt Auction
Imbalance Information, dissemination of the estimated Re-Opening Time,
the process for matching and trading orders participating in the
Trading Halt Auction, the circumstances under which the Re-Opening Time
could be extended, the applicability of Auction Collars, and order
processing during the Trading Halt Auction Imbalance Freeze.
Proposed Rule 7.35(f) would describe how the Exchange conducts IPO
Auctions. An IPO Auction would be conducted during the Core Trading
Session on the first day of trading for any security for which NYSE
Texas is the primary listing market, excluding transfers. An IPO
Auction would follow the processing rules of a Core Open Auction, with
certain differences set forth in the subparagraphs under proposed Rule
7.35(f).
Proposed Rule 7.35(g) would provide for order processing by the
Exchange during an Auction Processing Period.
Proposed Rule 7.35(h) would describe how the Exchange would
transition to continuous trading following an auction. After auction
processing concludes, including if there is no Matched Volume and an
auction is not conducted or when transitioning from one trading session
to another, the Exchange will transition to continuous trading
following an auction or when transitioning from one trading session to
another. The subparagraphs under proposed Rule 7.35(h) would further
provide for the transition to continuous trading, including the
expiration of orders no longer eligible to trade following the
transition and the processing of orders and order instructions during
the transition.
Proposed Rule 7.35(i) would provide that the Exchange may adjust
the timing of or suspend auctions as described in this Rule 7.35
whenever, in the judgment of the Exchange, the interests of a fair and
orderly market so require.
Proposed Rule 7.35(j) would provide that, for purposes of Rule
611(b)(3) of Regulation NMS, the Early Open Auction, Core Open Auction,
Closing Auction, Trading Halt Auction, and IPO Auction are single-
priced opening, reopening, or closing transactions and may trade
through any other Away Market's Manual or Protected Quotations.
Finally, proposed Commentary .01 to Rule 7.35 would provide that,
during a Short Sale Period as defined in Rule 7.16(f), for purposes of
pricing an auction and ranking orders for allocation in an auction,
sell short Market Orders that are adjusted to a Permitted Price (as
defined in Rule 7.16(f)) will be processed as Limit Orders ranked
Priority 2--Display Orders and will not be included in the Market
Imbalance. In addition, sell short orders that are included in Auction
Imbalance Information will be adjusted to a Permitted Price as the NBB
moves both up and down.
IO Orders
The Exchange proposes new Rule 7.31(c)(5) to provide for IO Orders.
This proposed rule is based on NYSE Arca Rule 7.31-E(c)(5), without any
substantive changes. Consistent with the proposed adoption of Rule 7.35
to provide for auctions, the Exchange proposes to amend its rules to
provide for IO Orders, which participate in Trading Halt Auctions.
Proposed Rule 7.31(c)(5) would define the Imbalance Offset or IO
Order as a Limit Order to buy (sell) that is to be traded only in a
Trading Halt Auction. An IO Order will be accepted only during a
trading halt or pause, including any extensions. An IO Order will
participate in a Trading Halt Auction only if there is an imbalance in
the security on the opposite side of the market from the IO Order after
taking into account all other orders eligible to trade at the
Indicative Match Price and the limit price of the IO Order to buy
(sell) is at or above (below) the Indicative Match Price. The working
price of an IO Order to buy (sell) will be adjusted to be equal to the
Indicative Match Price, provided that the working
[[Page 21371]]
price of the IO Order will not be higher (lower) than its limit price.
An IO Order that participates in a Trading Halt Auction will be ranked
in time priority among IO Orders after all other orders eligible to
participate in the auction have been allocated.
Q Orders
The Exchange proposes new Rule 7.31(j) to provide for the Q Order.
This proposed rule is based on NYSE Arca Rule 7.31-E(j), without any
substantive changes. Further to the Exchange's recent proposed rule
change to provide for Market Makers on the Exchange,\7\ the Exchange
proposes to provide for the Market Maker-specific Q Order, which would
conform the Exchange's rules with those of NYSE Arca.
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\7\ See Market Maker Rules Filing, note 5, supra.
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Proposed Rule 7.31(j) would define a Q Order as a Limit Order
submitted to the Exchange by a Market Maker, and designated by a Market
Maker as a ``Q Order'' through such means as the Exchange will specify.
Q Orders entered by Participants that are not registered in that
security as a Market Maker will be rejected. Proposed Rule 7.31(j)(1)
would provide that a Q Order must have a minimum of one round lot
displayed on entry, must be designated Day, and does not route. In
addition, a Q Order to buy (sell) will be rejected if it has limit
price at or above (below) the PBO (PBB) or it is designated as a Non-
Routable Limit Order, ALO Order, or ISO. Proposed Rule 7.31(j)(2) would
provide that Market Makers must enter Q Orders in securities in which
they are registered in accordance with Rule 7.23, beginning at the
start of the Core Trading Session and continuing until the end of the
Core Trading Session. Market Makers are not obligated to but may enter
Q Orders in securities in which they are registered during the Early
and Late Trading Sessions. Nothing in proposed Rule 7.31(j)(2) will be
construed to relieve a Market Maker of any of its obligations pursuant
to Rule 7.23.
Other Conforming Changes
The Exchange proposes the following conforming changes to reflect
the adoption of Rule 7.35 regarding auctions and the availability of
the IO Order and Q Order.
In Rule 1.1, which sets forth definitions of terms that
are used throughout the Exchange rules, the Exchange proposes to amend
subparagraph (t) to define ``Official Closing Price.'' \8\ The proposed
definition of Official Closing Price would provide that the term means
the reference price to determine the closing price in a security for
purposes of Rule 7 and describe how the Exchange would calculate the
Official Closing Price for a security under various scenarios. This
definition is based on the definition of Official Closing Price in NYSE
Arca Rule 1.1 (Official Closing Price), without any substantive
changes.
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\8\ To accommodate the addition of this definition, the Exchange
also proposes to adjust the lettering in Rule 1.1. Specifically,
current Rule 1.1(m) defining ``Protected Bid, Protected Offer,
Protected Quotation'' would become Rule 1.1(u), current Rule 1.1(u)
defining ``Security'' would become Rule 1.1(v), and so forth, with
no changes to the substance of the definitions. The Exchange notes
that this filing reflects the numbering in Rule 1.1 as modified by
the Market Maker Rules Filing, which is expected to be operative on
May 14, 2025.
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In Rule 7.10 (Clearly Erroneous Executions), which relates
to the Exchange's review of ``clearly erroneous'' transactions, the
Exchange proposes to add a new sentence at the end of Rule 7.10(a) to
provide that executions as a result of a Trading Halt Auction are not
eligible for a request to review as clearly erroneous under paragraph
(b) of this Rule. This proposed change reflects the operation of
auctions as described in proposed Rule 7.35 (and, specifically, Trading
Halt Auctions) and is based on NYSE Arca Rule 7.10-E(a) without any
substantive changes.
In Rule 7.11 (Limit Up--Limit Down Plan and Trading Pauses
in Individual Securities Due to Extraordinary Market Volatility), which
relates to the requirements of the Limit Up-Limit Down Plan and
procedures to address extraordinary volatility in NMS Stocks, the
Exchange proposes the following changes:
[cir] First, the Exchange proposes to adopt new text in Rule
7.11(a)(5)(D), which is currently designated as Reserved. The Exchange
proposes that Rule 7.11(a)(5)(D) would provide that Incoming Q Orders
to buy (sell) with a limit price above (below) the Upper (Lower) Price
Band will be rejected. If Price Bands move and the limit price of a
resting Q Order to buy (sell) is above (below) the updated Upper
(Lower) Price Band, the Q Order will be cancelled. This proposed change
addresses the handling of Q Orders, further to the proposed change to
Rule 7.31 to provide for Q Orders described above, and is based on NYSE
Arca Rule 7.11-E(a)(5)(D) without any substantive changes.
[cir] The Exchange also proposes to amend Rule 7.11(b), relating to
the re-opening of trading following a trading pause. The Exchange
proposes to adopt new rule text providing that, at the end of the
Trading Pause, the Exchange will re-open the security in accordance
with the procedures set forth in Rule 7.35 for a Trading Halt Auction.
Any interest repriced pursuant to paragraph (a)(6) of this Rule will
return to its original order instructions for purposes of the re-
opening transaction following a Trading Pause. The Exchange also
proposes to add new Rule 7.11(b)(1), which would provide that if a
Trading Pause is triggered under this Rule or if the Exchange is unable
to reopen trading at the end of the Trading Pause due to a systems or
technology issue, the Exchange will immediately notify the single plan
processor responsible for consolidation of information for the security
pursuant to Rule 603 of Regulation NMS under the Securities Exchange
Act of 1934. The Exchange further proposes that the current language of
Rule 7.11(b), which provides that if a primary listing market issues a
Trading Pause, the Exchange will resume trading as provided for in Rule
7.18, be renamed as Rule 7.11(b)(2) and that the reference to Rule 7.18
be updated to Rule 7.18(a). These proposed changes reflect the
operation of auctions as described in proposed Rule 7.35 (and,
specifically, Trading Halt Auctions) and are based on NYSE Arca Rule
7.11-E(b) without any substantive changes.
In Rule 7.16 (Short Sales), relating to compliance with
Regulation SHO, the Exchange proposes the following changes:
[cir] The Exchange first proposes to adopt new rule text in Rule
7.16(f)(3), which is currently designated as Reserved, to describe the
process for determining the Trigger Price. Proposed Rule 7.16(f)(3)
would provide that, for covered securities for which NYSE Texas is the
listing market, Exchange systems will determine whether the short sale
price test restrictions of Rule 201 of Regulation SHO have been
triggered (i.e., whether a transaction in a covered security has
occurred at a Trigger Price) and will immediately notify the single
plan processor responsible for consolidation of information for the
covered security pursuant to Rule 603(b) of Regulation NMS. The
Exchange will not calculate the Trigger Price of a covered security
until after the Core Open Auction for that security. This proposed
change reflects that, pursuant to the Listing Rules Filing, the
Exchange may be the listing market for some securities and is based on
NYSE Arca Rule 7.16-E(f)(3) without any substantive changes.
[cir] The Exchange proposes to add new Rule 7.11(f)(8), which would
provide that, notwithstanding subparagraph (f)(6) of this Rule, with
respect to the execution of short sale orders in a
[[Page 21372]]
covered security in any auction during the Short Sale Period, the
Exchange will adjust the working price and display price of such short
sale orders in a covered security to a Permitted Price before such
auction. If such a short sale order is not executed in the applicable
auction and is eligible to trade, it will be priced consistent with
paragraph (f)(5)(A) of this Rule. This proposed change reflects the
operation of auctions as described in proposed Rule 7.35 and is based
on NYSE Arca Rule 7.16-E(f)(8) without any substantive changes.
In Rule 7.17 (Firm Orders and Quotes), relating to the
requirement that Participants submit orders at stated prices and sizes
and firm quotes, the Exchange proposes to add a parenthetical in the
first sentence of Rule 7.17(a) concerning orders at stated prices and
size to clarify that Q Orders are included in the orders referenced in
this rule. This proposed change reflects the proposed change to Rule
7.31 to provide for Q Orders, as described above, and is based on NYSE
Arca Rule 7.17-E(a) without any substantive changes.
In Rule 7.18 (Halts), which sets forth rules relating to
halts in trading, the Exchange proposes the following changes, which
reflect the operation of auctions as described in proposed Rule 7.35
and are based on sections of the same number in NYSE Arca Rule 7.18-E
without any substantive changes:
[cir] In Rule 7.18(b), which describes how the Exchange will handle
orders during a UTP Regulatory Halt, the Exchange proposes to replace
the reference to a ``reopening auction'' with a reference to a
``Trading Halt Auction.'' This proposed change is based on NYSE Arca
Rule 7.18-E(b) without any substantive changes.
[cir] In Rule 7.18(b)(5), the Exchange proposes to add Auction-Only
Orders to the list of orders that would be accepted and routed to the
primary listing market during a UTP Regulatory Halt. This proposed
change is based on NYSE Arca Rule 7.18-E(b)(5) without any substantive
changes.
[cir] The Exchange proposes to add text in Rule 7.18(c), including
subparagraphs (1) through (6) thereunder, to describe how the Exchange
will process new and existing orders in securities listed on the
Exchange during a halt, suspension, or pause. This proposed change is
based on NYSE Arca Rule 7.18-E(c) and subparagraphs (1) through (6)
thereunder, with conforming changes to reflect only the order types
that are available on the Exchange. In addition, to reflect this
change, the Exchange proposes to renumber current Rule 7.18(c)
regarding halts in Exchange Traded Products as Rule 7.18(d).
[cir] The Exchange proposes to adopt new Rule 7.18(e), which would
provide that the Exchange will halt trading in a security for which the
Exchange is the Primary Listing Market before the end of the Late
Trading Session on the day immediately before the market effective date
of a reverse stock split. Trading in the security will resume with a
Trading Halt Auction at 9:00 a.m. ET on the effective date of the
reverse stock split. This proposed change is based on NYSE Arca Rule
7.18-E(e) without any substantive changes.
In Rule 7.20 (Registration of Market Makers),\9\ which
sets forth requirements for the registration of Market Makers, the
Exchange proposes to amend the first sentence of current Rule 7.20(a)
to add a parenthetical clarifying the applicability of the rule to
Market Makers' entry of Q Orders. This proposed change reflects the
proposed change to Rule 7.31 to provide for Q Orders, as described
above, and is based on NYSE Arca Rule 7.20-E(a) without any substantive
changes.
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\9\ Rule 7.20 was proposed in the Market Maker Rules Filing and
is expected to be operative on May 14, 2025.
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In Rule 7.31 (Orders and Modifiers), the Exchange proposes
the following changes, which are intended to reflect the operation of
auctions as described in proposed Rule 7.35 and are based on sections
of the same number in NYSE Arca Rule 7.31-E without any substantive
changes:
[cir] The Exchange proposes to amend Rule 7.31(a)(2)(B)(iii)
relating to Limit Order Price Protection to provide that a Limit Order
entered before the Core Trading Session that is designated for the Core
Trading Session only will become subject to Limit Order Price
Protection after the Core Open Auction and that a Limit Order in an
Auction-Eligible Security entered during a trading halt or pause will
not be subject to Limit Order Price Protection. This proposed change is
based on NYSE Arca Rule 7.31-E(a)(2)(B)(iii) without any substantive
changes.
[cir] The Exchange proposes to amend Rule 7.31(b)(2), which defines
the Immediate-or-Cancel Modifier, to add a sentence providing that a
Limit Order designated IOC is not eligible to participate in any
auctions. This proposed change is based on NYSE Arca Rule 7.31-E(b)(2)
without any substantive changes.
[cir] The Exchange proposes to amend Rule 7.31(c) describing
Auction-Only Orders as follows, to reflect the operation of auctions on
the Exchange as described in proposed Rule 7.35:
[ssquf] The Exchange proposes to amend Rule 7.31(c) to define an
Auction-Only Order as a Limit or Market Order that is to be traded only
within an auction pursuant to Rule 7.35 (further to the proposed change
to adopt Rule 7.35) or routed pursuant to Rule 7.34. Rule 7.31(c), as
proposed, would also provide that any quantity of an Auction-Only Order
that is not traded in the designated auction will be cancelled. This
proposed change is based on NYSE Arca Rule 7.31-E(c) without any
substantive changes.
[ssquf] The Exchange proposes to amend Rule 7.31(c)(1), defining a
Limit-on-Open Order (``LOO Order''), to provide that a LOO Order is a
Limit Order that is to be traded only during the Core Open Auction or a
Trading Halt Auction (rather than during an opening or re-opening
auction of the primary listing market). Rule 7.31(c)(1), as proposed,
would also provide that LOO Orders intended for a Trading Halt Auction
will be accepted only during trading halts, which may occur in any
trading session. This proposed change is based on NYSE Arca Rule 7.31-
E(c)(1) without any substantive changes.
[ssquf] The Exchange proposes to amend Rule 7.31(c)(2), defining a
Market-on-Open Order (``MOO Order''), to provide that a MOO Order is a
Market Order that is to be traded only during the Core Open Auction or
a Trading Halt Auction (rather than during an opening or re-opening
auction of the primary listing market). Rule 7.31(c)(2), as proposed,
would also provide that MOO Orders intended for a Trading Halt Auction
will be accepted only during trading halts that occur during the Core
Trading Session. This proposed change is based on NYSE Arca Rule 7.31-
E(c)(2) without any substantive changes.
[ssquf] The Exchange proposes to amend Rules 7.31(c)(3) and (4)
relating to Limit-on-Close Orders and Market-on-Close Orders,
respectively, to replace references to ``a closing auction of the
primary listing market'' with ``the Closing Auction.'' These proposed
changes are based on NYSE Arca Rules 7.31-E(c)(3) and (4),
respectively.
[cir] The Exchange proposes to amend Rules 7.31(d)(2) relating to
Non-Displayed Limit Orders,\10\ 7.31(d)(3)
[[Page 21373]]
relating to Mid-Point Liquidity Orders, and 7.31(h)(1) relating to
Market Pegged Orders to reflect the proposed operation of auctions on
the Exchange pursuant to proposed Rule 7.35. Specifically, the Exchange
proposes to amend these rules to specify that Non-Displayed Limit
Orders, Mid-Point Liquidity Orders, and Market Pegged Orders do not
participate in auctions. These proposed changes are based on NYSE Arca
Rules 7.31-E(d)(2), 7.31-E(d)(3), and 7.31-E(h)(1).
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\10\ The Exchange also proposes a non-substantive conforming
change in Rule 7.31(d)(2). The second sentence of Rule 7.31(d)(2)
currently provides that a ``Limit Non-Displayed Order is ranked
Priority 3--Non-Display Orders.'' The Exchange proposes to amend
this sentence to replace ``Limit Non-Displayed Order'' with ``Non-
Displayed Limit Order'' to promote consistency in the use of
terminology in Exchange rules.
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[cir] The Exchange proposes to amend Rule 7.31(e)(2), relating to
ALO Orders, to add new subparagraph (G) providing that the ALO
designation will be ignored for ALO Orders that participate in an
auction. This proposed change is based on NYSE Arca Rule 7.31-
E(e)(2)(G).
[cir] The Exchange proposes to amend Rule 7.31(f)(4) relating to
Directed Orders. Specifically, the Exchange proposes that Rule
7.31(f)(4)(B) would provide that a Directed Order in a security that is
having its initial listing on the Exchange will be rejected if received
before the IPO Auction concludes. This proposed change reflects the
availability of auctions on the Exchange, pursuant to proposed Rule
7.35, and is based on NYSE Arca Rule 7.31-E(f)(4)(B) without any
substantive changes. In addition, to reflect this change, the Exchange
proposes to rename current Rules 7.31(f)(4)(B) and (C) as Rules
7.31(f)(4)(C) and (D), respectively.
[cir] The Exchange proposes to amend Rule 7.31(h)(2) relating to
Primary Pegged Orders to add a sentence specifying that a Primary
Pegged Order is eligible to participate in an auction at its limit
price, except that it is not eligible to participate in a Closing
Auction. This proposed change reflects the operation of auctions on the
Exchange pursuant to proposed Rule 7.35 and is based on NYSE Arca Rule
7.31-E(h)(2) without any substantive changes.
[cir] The Exchange proposes to amend Rule 7.31(i)(2) relating to
the Self Trade Prevention Modifier to add a sentence specifying that
orders marked with such modifier will not be prevented from interacting
during any auction. This proposed change reflects the operation of
auctions on the Exchange pursuant to proposed Rule 7.35 and is based on
NYSE Arca Rule 7.31-E(i)(2) without any substantive changes
In Rule 7.34 (Trading Sessions), which describes the
trading sessions conducted on the Exchange, the Exchange proposes the
following changes to reflect the operation of auctions as described in
proposed Rule 7.35. These proposed changes are based on sections of the
same number in NYSE Arca Rule 7.34-E without any substantive changes.
[cir] In Rule 7.34(a)(1) describing the Early Trading Session, the
Exchange proposes to add a new sentence specifying that the Early Open
Auction will begin the Early Trading Session to reflect the operation
of the Early Open Auction, as described in proposed Rule 7.35. This
proposed change is based on NYSE Arca Rule 7.34-E(a)(1) without any
substantive changes.
[cir] In Rule 7.34(a)(2) describing the Core Trading Session, the
Exchange proposes to add new text to specify that the Core Trading
Session will begin for each security at 9:30 a.m. and end at the
conclusion of Core Trading Hours or the Core Closing Auction, whichever
comes later, and that the Core Open Auction will begin the Core Trading
Session. This proposed change reflects the operation of the Closing
Auction, as described in proposed Rule 7.35, and is based on NYSE Arca
Rule 7.34-E(a)(2) without any substantive changes.
[cir] The Exchange proposes to adopt new rule text in Rule
7.34(c)(1)(B), which is currently designated as Reserved. Proposed Rule
7.34(c)(1)(B) would provide that Limit Orders designated IOC are not
eligible to participate in the Early Open Auction and will be rejected
if entered before the Early Open Auction concludes. This proposed
change reflects the operation of the Early Open Auction, as described
in proposed Rule 7.35, and is based on NYSE Arca Rule 7.34-E(c)(1)(B)
without any substantive changes.\11\
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\11\ The Exchange also proposes a conforming change in Rule
7.34(c)(1) to replace the reference to ``subparagraphs (c)(1)(A)-
(E)'' with ``subparagraphs (c)(1)(A)-(F)'' to accurately reflect the
number of subparagraphs below Rule 7.34(c)(1).
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[cir] The Exchange proposes to amend Rule 7.34(c)(1)(C) so that the
rule provides that Limit Orders designated IOC and Cross Orders entered
before or during the Early Trading Session and designated for the Core
Trading Session will be rejected if entered before the Auction
Processing Period for the Core Open Auction (instead of before the Core
Trading Session). This proposed change reflects the operation of the
Core Open Auction, as described in proposed Rule 7.35, and is based on
NYSE Arca Rule 7.34-E(c)(1)(C) without any substantive changes.
[cir] The Exchange proposes to amend Rule 7.34(c)(1)(D) to add new
text at the beginning of the first sentence of the rule to clarify that
the rule applies to securities that are not eligible for an auction on
the Exchange. This proposed change reflects the operation of auctions,
as described in proposed Rule 7.35, and is based on NYSE Arca Rule
7.34-E(c)(1)(D) without any substantive changes.
[cir] The Exchange proposes to amend Rule 7.34(c)(1)(F) so that it
provides that Non-Displayed Limit Orders, MPL Orders, and Tracking
Orders entered before the Auction Processing Period for the Early Open
Auction (instead of before the Early Trading Session) will be rejected.
This proposed change reflects the operation of the Early Open Auction,
as described in proposed Rule 7.35, and is based on NYSE Arca Rule
7.34-E(c)(1)(F) without any substantive changes.
[cir] The Exchange proposes to amend Rule 7.34(c)(2)(A) so that it
provides that Market Orders in securities that are not eligible for the
Core Open Auction will be routed to the primary listing market until
the first opening print of any size on the primary listing market or
10:00 a.m. Eastern Time, whichever is earlier. This proposed change
reflects the operation the Early Open Auction, as described in proposed
Rule 7.35, and is based on NYSE Arca Rule 7.34-E(c)(2)(A) without any
substantive changes.
[cir] The Exchange proposes to amend Rule 7.34(c)(2)(B) so that it
provides that Auction-Only Orders in securities that are not eligible
for an auction on the Exchange will be accepted and routed directly to
the primary listing market. This proposed change reflects the operation
of auctions, as described in proposed Rule 7.35, and is based on NYSE
Arca Rule 7.34-E(c)(2)(B) without any substantive changes.
The Exchange proposes to amend Rule 7.34(c)(2)(C) so that it
provides that Limit Orders designated IOC and Cross Orders entered
before or during the Core Trading Session and designated for the Late
Trading Session will be rejected if entered before the Auction
Processing Period for the Closing Auction (instead of before the Late
Trading Session). This proposed change reflects the operation of the
Closing Auction, as described in proposed Rule 7.35, and is based on
NYSE Arca Rule 7.34-E(c)(2)(C) without any substantive changes.
2. Statutory Basis
The proposed rule change is consistent with Section 6(b) of the
Securities Exchange Act of 1934,\12\ in general, and furthers the
objectives of Section 6(b)(5),\13\ 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
[[Page 21374]]
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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\12\ 15 U.S.C. 78f(b).
\13\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that the proposed changes would promote just
and equitable principles of trade, 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 the proposed
rules are based on the rules of the Exchange's affiliated market, NYSE
Arca, that have been approved by the Commission. Accordingly, the
proposed rule changes would facilitate the Exchange's ability to
conduct auctions under the same rules as on the Exchange's affiliated
market and offer order types similarly available on the Exchange's
affiliated market. The Exchange also believes that the proposed rule
change would remove impediments to and perfect the mechanism of a free
and open market and a national market system by promoting consistency
across the rules of affiliated exchanges, as well as continuity that
would enable market participants to participate in auctions and use
order types pursuant to the same rules. The proposed rule change also
removes impediments to and perfects the mechanism of a free and open
market and a national market system by facilitating the operation of
auctions on the Exchange (including for securities for which the
Exchange is the primary listing market) and the activities of Market
Makers on the Exchange, in alignment with the Exchange's recent
filings.\14\ Finally, 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 promote competition by facilitating
price discovery and liquidity through auctions on another primary
listing market and offering additional order types to market
participants.
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\14\ See Listing Rules Filing, note 4, supra; Market Maker Rules
Filing, note 5, 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
sets forth rules governing the operation of auctions and defining
certain new order types, which rules are based on the approved rules of
its affiliate, NYSE Arca. The Exchange believes that the proposed rules
would promote competition because they would provide for auctions on
another primary listing market and offer additional order types to
Participants (including Market Makers), facilitating additional trading
opportunities for all market participants. The Exchange further
believes that the proposed rules would not impose any burden on
competition that is not necessary or appropriate because they are
designed to support the operation of auctions on another primary
listing venue and could instead encourage competition by promoting
price discovery and liquidity for the benefit of 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.
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 \15\ and Rule 19b-4(f)(6) thereunder.\16\
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 \17\ and Rule
19b-4(f)(6)(iii) thereunder.\18\
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\15\ 15 U.S.C. 78s(b)(3)(A)(iii).
\16\ 17 CFR 240.19b-4(f)(6).
\17\ 15 U.S.C. 78s(b)(3)(A)(iii).
\18\ 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) \19\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\20\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has
requested that the Commission waive the 30-day operative delay so that
the proposal may become operative immediately upon filing. The Exchange
believes that waiver of the 30-day operative delay would allow the
Exchange to implement the proposed changes as soon as the technology
associated with the proposed changes is available, which is anticipated
to be less than 30 days from the date of this filing.\21\ The
Commission believes that waiver of the operative delay would be
consistent with the protection of investors and the public interest
because the proposed changes present no novel issues and would permit
the Exchange to promptly begin facilitating auctions and offering
additional order types as soon as the technology for such changes could
be implemented. Accordingly, the Commission hereby waives the 30-day
operative delay and designates the proposed rule change as operative
upon filing.\22\
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\19\ 17 CFR 240.19b-4(f)(6).
\20\ 17 CFR 240.19b-4(f)(6)(iii).
\21\ See note 6, supra.
\22\ For purposes only of waiving the 30-day operative delay,
the Commission also has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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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. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule should be approved or disapproved.
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-NYSETEX-2025-08 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange
[[Page 21375]]
Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to file number SR-NYSETEX-2025-08. 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-NYSETEX-2025-08 and should
be submitted on or before June 9, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\23\
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\23\ 17 CFR 200.30-3(a)(12), (59).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-08852 Filed 5-16-25; 8:45 am]
BILLING CODE 8011-01-P