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Federal Register / Vol. 86, No. 143 / Thursday, July 29, 2021 / Notices
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set forth in Rule 7.35Ca2 relating to Floor Broker Interest that provides that Floor Broker Interest that has been electronically accepted by the DMM and that has not been cancelled as provided for in Rule 7.35Ba1C will be eligible to participate in an Exchange-facilitated Closing Auction. The Exchange proposes to designate that subparagraph as Reserved. 25
In addition, the Exchange proposes to delete Rule 46B and amend Rule 47b.
Under Rule 47, Floor Officials have the authority to supervise and regulate active openings and unusual situations that may arise in connection with the making of bids, offers or transactions on the Floor. The Exchange recently amended its rules to add Regulatory Trading Officials RTO, which are defined in Rule 46B.26 As described in the RTO Approval Order, unusual situations that may arise in connection with Floor Broker Interest for the Closing Auction could be if the Floor broker hand-held device malfunctions or ceases to work or if a Floor broker is physically impeded, as a result of a crowd condition beyond that of normal traffic flow on the Exchanges trading Floor or some other circumstance beyond the Floor brokers control, in his or her ability to be present at a post before the DMM closes the security. 27
The Exchange amended Rule 47 to add subparagraph b, which provides that RTOs, instead of Floor Officials, would be responsible for supervising and regulating situations regarding whether a verbal bid or verbal offer is eligible for inclusion in the Closing Auction by the DMM.
Because the Exchange proposes to eliminate verbal bids or verbal offers for the Closing Auction, the Exchange proposes to delete the last clause of Rule 47a and subparagraph b to Rule 47.28
As proposed, Rule 47 would revert to the rule text in effect prior to the RTO
Approval Order and would provide that Floor Officials shall have power to supervise and regulate active openings and unusual situations that may arise in connection with the making of bids, offers or transactions on the Floor.
25 The Exchange has a pending proposed rule change to amend Rule 7.35Ca. See SRNYSE
202089.
26 See Securities Exchange Act Release No. 88765
April 29, 2020, 85 FR 26771 May 5, 2020 SR
NYSE202003 RTO Approval Order.
27 Id. at 26772.
28 RTOs were approved when the Trading Floor was temporarily closed. Id. Because Commentary .03 to Rule 7.35B was implemented when DMMs returned to the Trading Floor, there has not been any Floor Broker Interest for Closing Auctions since RTOs were created and therefore RTOs have not had to perform the functions as described in Rule 46b.

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With this proposed change, RTOs would no longer have a role under Exchange rules. Therefore, the Exchange proposes to delete Rule 46B.
The Exchange also proposes to delete Commentary .02 to Rule 7.35B. This Commentary is obsolete because it has not been in effect since May 22, 2020.
2. Statutory Basis The Exchange believes that the proposal is consistent with Section 6b of the Act,29 in general, and furthers the objectives of Sections 6b5 of the Act,30 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 regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, to remove impediments to, and perfect the mechanisms of, a free and open market and a national market system and, in general, to protect investors and the public interest and because it is not designed to permit unfair discrimination between customers, issuers, brokers, or dealers.
Proposed Changes to Parameters for DMM-Facilitated Electronic Auctions The Exchange believes that the proposed change to make permanent the parameters for DMM-facilitated electronic Core Open Auctions and Closing Auctions that are currently in effect on a temporary basis as set forth in Commentaries .01a and b to Rule 7.35A and Commentary .01 to Rule 7.35B would remove impediments to and perfect the mechanism of a free and open market and a national market system because the Exchange believes that these updated parameters would promote fair and orderly Auctions on the Exchange. These temporary parameters have been in effect not only during the period when the Trading Floor was closed in full, but also for the period when the Trading Floor has partially reopened to reduced staff of DMM and Floor brokers firms. In addition, these temporary parameters have been in effect during periods of both extreme volatility and high trading volumes. Accordingly, DMMs have had over six months of experience of electronically facilitating Auctions within these temporary parameters and applying them during varying market conditions.
During this period, the Exchange has observed that with these temporary
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Proposed Changes to Applicable Price Range for Pre-Opening Indications The Exchange believes that the proposed change to make permanent that the Applicable Price Range for determining whether to publish a preopening indication for a Core Open Auction would be 10% for securities with an Indication Reference Price 31 See, e.g., NYSE Arca, Inc. Rule 7.35Ee7
specifying initial Auction Collars for Trading Halt Auctions.

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parameters, a higher number of Core Open Auctions and Closing Auctions have been electronically facilitated by the DMM, which has resulted in a greater number of Core Open Auctions and Closing Auctions occurring shortly after 9:30 a.m. or 4:00 p.m., respectively.
The Exchange has further observed that there have been modest improvements in auction price dislocation during the period when these temporary parameters have been in place.
Accordingly, the Exchange believes that making these parameters permanent would promote the continued fair and orderly operation of Auctions for Exchange-listed securities.
In addition, the Exchange further believes that the proposed 5%
percentage parameter for DMMfacilitated electronic Trading Halt Auctions would remove impediments to and perfect the mechanism of a free and open market and a national market system because this percentage parameter would be aligned with the initial collars applicable to electronic reopening auctions following a MWCB
Halt or trading pause on the automated primary listing exchanges that do not have trading floors.31 On the Exchange, DMMs are required to facilitate manually a Trading Halt Auction following a regulatory halt issued under Section 2 of the Listed Company Manual. Accordingly, the proposed 5%
percentage parameter would be applicable only to DMM-facilitated electronic Trading Halt Auctions following a trading pause or MWCB
Halt. This proposed 5% percentage parameter would not require such Trading Halt Auctions to be priced within that range. Rather, if the Trading Halt Auction were to occur outside of that percentage parameter, the DMM
would be required to facilitate such Trading Halt Auction manually.
Regardless of whether a Trading Halt is facilitated by a DMM manually or electronically, the DMM would be required to determine the Auction Price as provided for in Rule 7.35Ag and orders would be allocated as provided for in Rule 7.35Ah.

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