2018-10974. Self-Regulatory Organizations; NYSE American LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 7.4E To Reflect the Standard Settlement Cycle of Two Business Days After the Trade Date  

  • Start Preamble May 17, 2018.

    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 11, 2018, NYSE American LLC (“Exchange” or “NYSE American”) filed with the Securities and Exchange Commission (“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.

    I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change

    The Exchange proposes to amend Rule 7.4E to reflect the standard settlement cycle of two business days after the trade date (“T+2”) in Securities Exchange Act Rule 15c6-1(a). 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.Start Printed Page 23949

    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

    The Exchange proposes to amend Rule 7.4E to reflect the standard T+2 settlement cycle in Securities Exchange Act (the “Act”) Rule 15c6-1(a) (“Rule 15c6-1(a)”).

    Background

    On September 28, 2016, the Securities and Exchange Commission (“SEC”) proposed amendments to Rule 15c6-1(a) under the Act [4] to shorten the standard settlement cycle from three business days after the trade date (“T+3”) to T+2.[5] The amendment was adopted on March 22, 2017, with a compliance date of September 5, 2017.[6]

    In response, the Exchange adopted new rules with the modifier “T” to reflect a T+2 settlement cycle but retained versions of rules reflecting T+3 settlement because the Exchange would not implement the new rules until after the final implementation of T+2.[7]

    Rule 7.4E (Ex-Dividend or Ex-Right Dates), which establishes the ex-dividend and ex-rights dates for stocks traded regular way in connection with the implementation of Pillar on the Exchange, was approved in May 2017.[8] The Exchange began trading on the Pillar platform on July 24, 2017.

    In connection with the September 5, 2017 compliance date for shortening of the standard settlement cycle from T+3 to T+2, the Exchange deleted the rules reflecting the T+3 settlement cycle and implemented the new rules reflecting the T+2 settlement cycle. The Exchange, however, inadvertently did not update Rule 7.4E to reflect T+2 settlement, which it currently proposes to do.

    To effectuate the proposed change, the Exchange proposes to delete the word “second” so the reference would be to the “business day” preceding the record date. The current Rule further provides that if the record date or closing of transfer books occurs upon a day other than a business day, the Rule shall apply for the third preceding business day. The Exchange also proposes to change “third preceding business day” to “second preceding business day.”

    2. Statutory Basis

    The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act,[9] in general, and further the objectives of Section 6(b)(5) of the Act,[10] in particular, because it is designed to prevent fraudulent and manipulative acts and practices, 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, in general, to protect investors and the public interest.

    The proposed change is consistent with the SEC's amendment to Rule 15c6-1(a) requiring standard settlement no later than T+2. The Exchange believes that removing obsolete references to T+3 settlement from the Exchange's rulebook removes impediments to and perfects the mechanism of a free and open market, thereby reducing potential confusion, making the Exchange's rules easier to navigate. The Exchange believes that eliminating obsolete material would not be inconsistent with the public interest and the protection of investors because investors will not be harmed and in fact would benefit from increased transparency, thereby reducing potential confusion.

    B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change would 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 promote clarity and consistency, thereby reducing burdens on the marketplace and facilitating investor protection.

    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 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 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) of the Act [11] and Rule 19b-4(f)(6) thereunder.[12]

    A proposed rule change filed under Rule 19b-4(f)(6) [13] normally does not become operative for 30 days after the date of filing. However, pursuant to Rule 19b-4(f)(6)(iii),[14] 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 become operative immediately upon filing. The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest. Waiving the operative delay will allow the Exchange to immediately conform its rule to Rule 15c6-1(a) under the Act, that has a standard settlement cycle of T+2, and eliminate outdated references to the T+3 settlement cycle. Accordingly, the Commission hereby waives the 30-day operative delay requirement and Start Printed Page 23950designates the proposed rule change as operative upon filing.[15]

    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

    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-2018-21. 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-2018-21, and should be submitted on or before June 13, 2018.

    Start Signature

    For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.[16]

    Eduardo A. Aleman,

    Assistant Secretary.

    End Signature End Preamble

    Footnotes

    5.  See Securities Exchange Act Release No. 78962 (September 28, 2016), 81 FR 69240 (October 5, 2016) (File No. S7-22-16).

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    6.  See Securities Exchange Act Release No. 80295 (March 22, 2017), 82 FR 15564 (March 29, 2017) (File No. S7-22-16).

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    7.  See Securities Exchange Act Release No. 80020 (February 10, 2017), 82 FR 10940 (February 16, 2017) (SR-NYSEMKT-2016-119).

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    8.  See Securities Exchange Act Release Nos. 80590 (May 4, 2017), 82 FR 21843 (May 10, 2017) (Approval Order) and 79993 (February 9, 2017), 82 FR 10814,10815-16 (February 15, 2017) (SR-NYSEMKT-2017-01) (Notice). Pillar is an integrated trading technology platform designed to use a single specification for connecting to the equities and options markets operated by the Exchange and its affiliates, NYSE Arca, Inc. and New York Stock Exchange LLC.

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    12.  17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) requires the Exchange to give the Commission written notice of the Exchange's 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 satisfied this requirement.

    Back to Citation

    14.  17 CFR 240.19b-4(f)(6)(iii).

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    15.  For purposes only of waiving the 30-day operative delay, the Commission has also considered the proposed rule's impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f).

    Back to Citation

    [FR Doc. 2018-10974 Filed 5-22-18; 8:45 am]

    BILLING CODE 8011-01-P

Document Information

Published:
05/23/2018
Department:
Securities and Exchange Commission
EntryType:
Notice
Document Number:
2018-10974
Pages:
23948-23950 (3 pages)
Docket Numbers:
Release No. 34-83273, File No. SR-NYSEAMER-2018-21
E.O. Citation:
of 5/17/2018
SectionNoes:
PDF File:
2018-10974.pdf