[Federal Register Volume 85, Number 40 (Friday, February 28, 2020)]
[Notices]
[Pages 12035-12037]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-04071]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-88269; File No. SR-NYSEAMER-2020-11]
Self-Regulatory Organizations; NYSE American LLC; Notice of
Filing and Order Granting Accelerated Approval of a Proposed Rule
Change for Certain Conforming Changes to Rule 9217
February 24, 2020.
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 February 11, 2020, 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 and
approving the proposal on an accelerated basis.
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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 certain conforming changes to Rule 9217 in
order to more closely align the Exchange's rule with that of its
affiliates. 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
[[Page 12036]]
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
The Exchange proposes certain conforming changes to Rule 9217 in
order to more closely align the Exchange's rule with that of its
affiliates.
Rule 9217 sets forth the list of rules under which a member
organization or covered person may be subject to a fine under a minor
rule violation plan as described in proposed [sic] Rule 9216(b). The
Exchange proposes the following amendments to Rule 9217.
First, the Exchange proposes to add the following paragraph to the
introduction to Rule 9217:
Nothing in this Rule shall require the Exchange to impose a fine
for a violation of any rule under this Minor Rule Plan. If the
Exchange determines that any violation is not minor in nature, the
Exchange may, at its discretion, proceed under the Rule 9000 Series
rather than under this Rule.
The language is based on the rules of the Exchange's affiliates New
York Stock Exchange LLC (``NYSE'') and NYSE Arca, Inc. (``NYSE
Arca'').\4\
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\4\ See NYSE Rule 9217 & NYSE Arca Rule 10.9217.
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Second, the Exchange proposes to add subsections (a), (b)(1) and
(b)(5) of Rule 3110--Equities to the list of rules in Rule 9217
eligible for disposition pursuant to a fine under Rule 9216(b).
Rule 3110--Equities is the Exchange's supervision rule for equities
trading. Rule 3110(a)--Equities governs supervisory systems and
requires member organizations to establish and maintain a system to
supervise the activities of each associated person that is reasonably
designed to achieve compliance with applicable securities laws and
regulations, and with applicable Exchange rules.
Subsection (b)(1) governs written procedures and requires member
organizations to establish, maintain, and enforce written procedures to
supervise the types of business in which it engages and the activities
of its associated persons that are reasonably designed to achieve
compliance with applicable securities laws and regulations, and with
applicable Exchange rules.
Subsection (b)(5) requires a member organization's supervisory
procedures to include procedures to capture, acknowledge, and respond
to all written (including electronic) customer complaints.
Rule 3110--Equities is substantially similar to NYSE Rule 3110.
Subsections (a), (b)(1) and b(5) of NYSE Rule 3110 are each separately
eligible for a minor rule fine under NYSE Rule 9217.\5\
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\5\ See NYSE Rules 3110 (Supervision) & 9217.
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Finally, the Exchange proposes to correct a typographical error in
Rule 9217(ii)(7)(b), which refers to ensuring compliance with, among
other things, NYSE Arca Rules. The correct reference should be to the
NYSE American Rules.
2. Statutory Basis
The proposed rule change is consistent with Section 6(b) of the
Act,\6\ in general, and furthers the objectives of Section 6(b)(5),\7\
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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\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(5).
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Minor rule fines provide a meaningful sanction for minor or
technical violations of rules. The Exchange believes that the proposed
rule change will strengthen the Exchange's ability to carry out its
oversight and enforcement responsibilities in cases where full
disciplinary proceedings are unwarranted in view of the minor nature of
the particular violation. Specifically, the proposed rule change is
designed to prevent fraudulent and manipulative acts and practices
because it will provide the Exchange the ability to issue a minor rule
fine for violations of its rules governing supervision requirements in
situations where either a cautionary action letter or a more formal
disciplinary action may not be warranted or appropriate.
In addition, the Exchange believes that adding rules based on the
rules of its affiliate to the Exchange's minor rule plan would promote
fairness and consistency in the marketplace by permitting the Exchange
to issue a minor rule fine for violations of substantially similar
rules that are eligible for minor rule treatment on the Exchange's
affiliate, thereby harmonizing minor rule plan fines across affiliated
exchanges for the same conduct. As noted above, Rule 3110--Equities is
substantially similar to NYSE Rule 3110. Subsections (a), (b)(1) and
b(5) of NYSE Rule 3110 are each separately eligible for a minor rule
fine under NYSE Rule 9217.\8\
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\8\ See NYSE Rules 3110 (Supervision) & 9217.
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The Exchange further believes that the proposed amendments to Rule
9217 are consistent with Section 6(b)(6) of the Act,\9\ which provides
that members and persons associated with members shall be appropriately
disciplined for violation of the provisions of the rules of the
exchange, by expulsion, suspension, limitation of activities,
functions, and operations, fine, censure, being suspended or barred
from being associated with a member, or any other fitting sanction. As
noted, the proposed rule change would provide the Exchange ability to
sanction minor or technical violations pursuant to the Exchange's
rules.
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\9\ 15 U.S.C. 78f(b)(6).
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Finally, the Exchange also believes that correction of a
typographical error would remove impediments to and perfect the
mechanism of a free and open market by ensuring that persons subject to
the Exchange's jurisdiction, regulators, and the investing public can
more easily navigate and understand the Exchange's rulebook.
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 update the
Exchange's rules to strengthen the Exchange's ability to carry out its
oversight and enforcement functions and deter potential violative
conduct.
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. 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.
[[Page 12037]]
Comments may be submitted by any of the following methods:
Electronic Comments
Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-NYSEAMER-2020-11 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-2020-11. 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 (http://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 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-NYSEAMER-2020-11 and should be submitted
on or before March 20, 2020.
IV. Commission's Findings and Order Granting Accelerated Approval of
Proposed Rule Change
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.\10\ In
particular, the Commission finds that the proposed rule change is
consistent with Section 6(b)(5) of the Act,\11\ which requires that the
rules of an exchange be designed to promote just and equitable
principles of trade, to remove impediments and to perfect the mechanism
of a free and open market and a national market system, and, in
general, to protect investors and the public interest. The Commission
also believes that the proposal is consistent with Sections 6(b)(1) and
6(b)(6) of the Act \12\ which require that the rules of an exchange
enforce compliance with, and provide appropriate discipline for,
violations of Commission and Exchange rules. Finally, the Commission
finds that the proposal is consistent with the public interest, the
protection of investors, or otherwise in furtherance of the purposes of
the Act, as required by Rule 19d-1(c)(2) under the Act,\13\ which
governs minor rule violation plans.
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\10\ 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).
\11\ 15 U.S.C. 78f(b)(5).
\12\ 15 U.S.C. 78f(b)(1) and 78f(b)(6).
\13\ 17 CFR 240.19d-1(c)(2).
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As stated above, the Exchange proposes to add to its list of
equities rule violations rules that are identical to those of its
affiliated exchange. The Commission believes that the proposed rule
provides a reasonable means of addressing violations that do not rise
to the level of requiring formal disciplinary proceedings, while
providing greater flexibility in handling certain violations. However,
the Commission expects, as suggested by the Exchange's proposed
introduction to its Rule 9217, that the Exchange will continue to
conduct surveillance with due diligence and make determinations based
on its findings, on a case-by-case basis, regarding whether a sanction
under the rule is appropriate, or whether a violation requires formal
disciplinary action. The Commission further notes that, as before, the
Exchange must give the Commission prompt notice of any violation with
sanction over $2,500, in accordance with Securities Exchange Act Rule
19d-1(c).\14\ Accordingly, the Commission believes the proposal raises
no novel or significant issues.
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\14\ See 17 CFR 240.19d-1(c).
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For the same reasons discussed above, the Commission finds good
cause, pursuant to Section 19(b)(2) of the Act,\15\ for approving the
proposed rule change prior to the thirtieth day after the date of
publication of the notice of the filing thereof in the Federal
Register. The proposal merely adds rules and language from affiliated
exchanges. Accordingly, the Commission believes that a full notice-and-
comment period is not necessary before approving the proposal.
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\15\ 15 U.S.C. 78s(b)(2).
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V. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the Act
\16\ and Rule 19d-1(c)(2) thereunder,\17\ that the proposed rule change
(SR-NYSEAMER-2020-11) be, and hereby is, approved and declared
effective on an accelerated basis.
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\16\ 15 U.S.C. 78s(b)(2).
\17\ 17 CFR 240.19d-1(c)(2).
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\18\
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\18\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-04071 Filed 2-27-20; 8:45 am]
BILLING CODE 8011-01-P