83 FR 179 - Self-Regulatory Organizations; NYSE American LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 991

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 83, Issue 1 (January 2, 2018)

[Federal Register Volume 83, Number 1 (Tuesday, January 2, 2018)]
[Notices]
[Pages 179-181]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-28229]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82402; File No. SR-NYSEAMER-2017-39]


Self-Regulatory Organizations; NYSE American LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Amend 
Rule 991

December 26, 2017.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that on December 12, 2017, NYSE American LLC (the ``Exchange'' or 
``NYSE American'') 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 991, regarding options 
communications, to conform with the rules of the Financial Industry 
Regulatory Authority, Inc. (``FINRA''). 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
    The purpose of this filing is to amend NYSE American Rule 991, 
regarding options communications, to conform with the rules of FINRA. 
Previously, the Exchange harmonized its then extant Rule 991 to FINRA 
Rule 2220.\4\ For the sake of consistency, and to further promote a 
more comprehensive and coordinated regulatory process for the review of 
communications, the Exchange now proposes to conform its rulebook to 
subsequent amendments by FINRA.\5\
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    \4\ See Securities Exchange Act Release No. 61499 (February 4, 
2010), 75 FR 6738 (February 10, 2010) (SR-NYSEAmex-2010-04). This 
proposed rule change would further conform the rule books of the 
Exchange and FINRA.
    \5\ See Securities Exchange Act Release No. 68650 (January 14, 
2013), 78 FR 4182 (January 18, 2013) (SR-FINRA-2013-001) and No. 
73576 (November 12, 2014), 79 FR 68731 (November 18, 2014) (SR-
FINRA-2014-045).
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    Pursuant to Rule 17d-2 under the Securities Exchange Act of 1934 
(the ``Act''), several exchanges, including the Exchange, entered into 
an agreement dated June 5, 2008 (the ``17d-2 Agreement'') to allocate 
regulatory responsibility for common rules.\6\ In order to continue 
this successful regulatory approach, the Exchange proposes to further 
harmonize Rule 991 (Options Communications) with the comparable FINRA 
rule, in furtherance of the 17d-2 Agreement and in order to continue to 
maintain substantial similarity with the relevant FINRA rules.
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    \6\ In addition to the Exchange, the other exchanges that 
entered into the 17d-2 Agreement were: The Boston Stock Exchange, 
Inc., the Chicago Board Options Exchange, Inc., the International 
Securities Exchange, LLC, FINRA, the NASDAQ Stock Market LLC, the 
New York Stock Exchange, LLC, NYSE Arca, Inc. and the Philadelphia 
Stock Exchange.
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    Rule 991 sets forth the regulatory standards applicable to options 
communications including inter alia the definitions of diverse 
categories of communications, and the standards and attendant review 
and approval processes for those categories of communications.
    Specifically, in order to continue to ensure a uniform regulatory 
approach, and to reduce any potential risks or inefficiencies in rules, 
the Exchange proposes to:
     Replace the definition of ``correspondence'' in Rules 
991(a)(1)(C)(i) and (ii) with the substantially similar though more 
succinct definition of ``correspondence'' in FINRA Rule 2210(a)(2), 
that in turn is referenced in FINRA Rule 2220(a)(1)(A); \7\
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    \7\ As FINRA Rule 2220 is the operative rule concerning options 
communications, for the sake of clarity and for ease of reference, 
the Exchange proposes to copy the text of the definition into new 
proposed Rule 991(a)(1)(A) in lieu of cross-referencing FINRA Rule 
2210(a)(2).
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     Replace the definition of ``institutional sales material'' 
in Rule 991(a)(1)(D) with the substantially similar though expanded 
definition of ``Institutional Communication'' in FINRA Rule 2210(a)(3) 
concerning options; \8\
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    \8\ FINRA's definition excludes a member's internal 
communications from this institutional category. In addition, given 
the distinction between institutional and retail investors, the 
Exchange believes that a cross-reference to FINRA Rule 2210(a)(3) in 
proposed Rule 991(a)(1)(B) is appropriate.
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     Add the definition of ``Retail Communication'' in FINRA 
Rule 2210(a)(5), that in turn is referenced in FINRA Rule 
2220(a)(1)(C), to Rule 991(a)(1)(C); \9\
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    \9\ As FINRA Rule 2220 is the operative rule concerning options 
communications, for the sake of clarity and for ease of reference, 
the Exchange proposes to copy the text of the definition into new 
proposed Rule 991(a)(1)(C) in lieu of cross-referencing FINRA Rule 
2210(a)(5).
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     Delete the now inapplicable individual definitions of 
``advertisement'', ``sales literature'', ``correspondence'', 
``institutional sales material'', ``public appearance'', and 
``independently prepared reprints'', as contained in Rule 991(a)(1)(A), 
Rule 991(a)(1)(B), Rule 991(a)(1)(C), Rule 991(a)(1)(D), Rule 
991(a)(1)(E), Rule 991(a)(1)(F), respectively;
     Replace the definition of ``existing retail customer'' in 
Rule 991(a)(2) with the definition of ``retail investor'' in FINRA Rule 
2210(a)(6), that in turn is

[[Page 180]]

referenced in the definition of ``Retail Communication'' supra; \10\
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    \10\ In connection with equities communications, the Exchange 
previously adopted the text of FINRA Rule 2210(a)(6), and the same 
definition of ``retail investor''. See NYSE American Rule 2210--
Equities. See also Securities Exchange Act Release No. 70963 
(November 29, 2013), 78 FR 73223 (December 5, 2013) (SR-NYSEMKT-
2013-95).
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     Replace the approval requirement of advertisements, sales 
literature and independently prepared reprints in Rule 991(b)(1) with 
the approval requirement of ``Retail Communications'' in FINRA Rule 
2220(b)(1); \11\
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    \11\ FINRA Rule 2210 (concerning communications) is premised 
upon three categories of communications--retail communications, 
correspondence, and institutional communications--that in turn 
categorize [sic] the approval and procedural requirements of FINRA 
Rule 2220(b)(1), (2) and (3) (concerning options communications) and 
the corresponding rule changes to Rules 991(b)(1), (2) and (3) 
proposed herein.
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     Replace the procedural supervisory and review requirements 
of correspondence in Rule 991(b)(2) with the substantially similar 
requirements in FINRA Rule 2220(b)(2), that in turn references the 
requirements of FINRA Rules 3110(b) and 3110.06 through .09; \12\
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    \12\ Ibid.
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     Replace the written procedural requirements of 
institutional sales material in Rule 991(b)(3) with the substantially 
similar requirements in FINRA Rule 2220(b)(3), that regards [sic] 
institutional communications written procedural requirements of FINRA 
Rule 2210(b)(3); \13\
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    \13\ Ibid.
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     Replace the reference to ``advertisements, sales 
literature, and independently prepared reprints'' in Rule 991(c)(1) 
with ``Retail Communications'', the current category of such 
communications;
     Replace the reference to the ``designated'' Advertising 
Regulation Department with the Advertising Regulation Department ``of 
FINRA'' in Rule 991(c)(1), for clarification and specificity; and
     Replace the reference to ``institutional sales material'' 
in Rule 991(d)(2)(B) with ``Institutional Communications'', the current 
category of such communications.
    The Exchange believes that the proposed rule change would 
structurally and procedurally align the Exchange's rule concerning 
options communications with FINRA rule concerning the same subject 
matter, and would further both the Exchange's self-regulatory 
responsibilities and FINRA's delegated responsibilities under the 17d-2 
Agreement.
    In addition, the Exchange proposes a non-substantive amendment to 
Rule 991 to replace the term ``member'' with the term ``ATP Holder'' 
throughout the rule. Rule 900.2NY defines ``ATP Holder'', and provides 
that ``references to `member', `member organization' and `86 Trinity 
Permit Holder' as those terms are used in the Rules of the Exchange 
should be deemed to be references to ATP Holders.'' Because the 
Exchange uses the term ``ATP Holder'' rather than ``member,'' the 
Exchange proposes to update this rule consistent with that terminology.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Securities Exchange Act of 1934 (the ``Act''),\14\ in 
general, and furthers the objectives of Section 6(b)(5) of the Act,\15\ 
in particular, in that 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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    \14\ 15 U.S.C. 78f(b).
    \15\ 15 U.S.C. 78f(b)(5).
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    Specifically, the Exchange believes that the proposed change would 
remove impediments to, and perfect the mechanisms of, a free and open 
market and a national market system and, in general, protect investors 
and the public interest because the proposed rule change would provide 
ATP Holders with a clearer, more consistent, and more comprehensive 
regulatory scheme by further harmonizing the NYSE American rule 
concerning options communications with the FINRA rule in the same 
subject matter. The proposed rule change would continue to ensure a 
uniform regulatory approach and would reduce any potential risks or 
inefficiencies in rules. Structurally and procedurally, harmonizing and 
aligning the Exchange's rule with the FINRA rule would further both the 
Exchange's self-regulatory responsibilities and FINRA's delegated 
responsibilities under the 17d-2 Agreement. The Exchange also believes 
that harmonizing definitions, categories of communications, and the 
standards and attendant review and approval processes of those 
categories of communications, would also foster cooperation and 
coordination with persons engaged in regulating, clearing, settling, 
processing information with respect to, and facilitating transactions 
in securities. The Exchange further notes that the proposed change are 
neither novel nor controversial and are modeled on existing and 
operative FINRA rules.
    The Exchange also believes that the proposal to use the term ``ATP 
Holder'' instead of ``member'' would remove impediments to, and perfect 
the mechanisms of, a free and open market and a national market system 
and, in general, protect investors and the public interest because the 
proposed change would update terminology in the Exchange's rulebook, 
reducing any potential ambiguity and providing clarification concerning 
options communications. The proposed use of the term ``ATP Holder'' 
would be consistent with the FINRA term ``member,'' as both terms refer 
to the broker-dealer members of a self-regulatory organization.

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 rule change is 
not designed to address any competitive issues. Rather, the proposed 
change is designed to further harmonize the Exchange's rule regarding 
options communications to the comparable FINRA rule, and to update the 
terms used in Exchanges rules.

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 \16\ and Rule 19b-4(f)(6) 
thereunder.\17\
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    \16\ 15 U.S.C. 78s(b)(3)(A).
    \17\ 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 met this requirement.

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[[Page 181]]

    A proposed rule change filed under Rule 19b-4(f)(6) \18\ normally 
does not become operative for 30 days after the date of filing. 
However, pursuant to Rule 19b-4(f)(6)(iii),\19\ 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 upon filing. The Commission believes that waiving 
the 30-day operative delay is consistent with the protection of 
investors and the public interest because it will allow the Exchange to 
immediately implement the proposed rule change to promote greater 
harmonization between the rules of FINRA and the Exchange and also to 
make clerical changes that may minimize potential investor confusion. 
Accordingly, the Commission hereby waives the 30-day operative delay 
requirement and designates the proposed rule change as operative upon 
filing.\20\
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    \18\ 17 CFR 240.19b-4(f)(6).
    \19\ 17 CFR 240.19b-4(f)(6)(iii).
    \20\ 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).
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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 under 
Section 19(b)(2)(B) \21\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \21\ 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 (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-NYSEAMER-2017-39 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-2017-39. 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-2017-39, and should be 
submitted on or before January 23, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\22\
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    \22\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2017-28229 Filed 12-29-17; 8:45 am]
BILLING CODE 8011-01-P