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Federal Register / Vol. 86, No. 34 / Tuesday, February 23, 2021 / Notices
The Exchange proposes to add the term Auction NBBO as Rule 7.35a5
and make non-substantive changes to renumber the definitions currently set forth in Rules 7.35a512 as Rules 7.35a613.
Because there are technology changes associated with this proposed rule change, the Exchange proposes to announce the implementation date of this change by Trader Update. The Exchange anticipates that the Exchange will implement this technology change in the first quarter of 2021.
To provide continuity, the Exchange further proposes to amend Commentary .04 to Rule 7.35C to provide that such Commentary would end on the earlier of when the Exchange implements its technology change to use the midpoint of the Auction NBBO as the Auction Reference Price for the Core Open Auction or after the Exchange closes on April 30, 2020. With this proposed rule change, the widened Auction Collars specified in that Commentary would continue to be operative until such time that the proposed changes to the Auction Reference Price for Exchangefacilitated Core Open Auctions are operative and implemented.
2. Statutory Basis The proposed rule change is consistent with Section 6b of the Act,10 in general, and furthers the objectives of Section 6b5 of the Act,11
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, and to remove impediments to and perfect the mechanism of a free and open market and a national market system.
The Exchange believes that the proposal to change the Auction Reference Price for Exchange-facilitated Core Open Auctions would remove impediments to and perfect the mechanism of a free and open market and a national market system because it would reduce the potential number of securities that would be subject to a collared Exchange-facilitated Core Open Auction, including when there is significant overnight market-wide volatility. Commentary .04 to Rule 7.35C sought to achieve this goal by widening the Auction Collars, but as noted above, these temporary widened Auction Collars would not prevent an Exchange-facilitated Core Open Auction from being subject to an Auction Collar 10 15
11 15

U.S.C. 78fb.
U.S.C. 78fb5.

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when there has been significant overnight market-wide volatility. The Exchange believes that aligning the Auction Reference Price more closely with the anticipated opening price by using the midpoint of the Auction NBBO as the Auction Reference Price or Official Closing Price of the prior Trading Day if no Auction NBBO
would reduce the potential for an Exchange-facilitated Core Open Action to be subject to an Auction Collar on all trading days, including when there is significant overnight market-wide volatility. The Exchange further believes that this proposed rule change would reduce the potential number of securities that would open at a price that may not represent the current value of the security due to unfilled marketable auction interest, while still preserving investor protections by preventing significantly dislocated openings. This proposed rule change would therefore promote the fair and orderly operation of Exchangefacilitated Core Open Auctions by allowing such securities to open at a price that is consistent with the buy and sell interest in the security, which would also allow more buy and sell interest to participate in such Auction.
The Exchange notes that this proposed change is not novel and is based on how NYSE Arca and NYSE
American determine the Auction Reference Price for their respective electronic Core Open Auctions.
Accordingly, this proposed change would align how Auction Reference Prices are determined for electronic Exchange-facilitated Auctions across NYSE, NYSE Arca, and NYSE
American.
B. Self-Regulatory Organizations 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 but rather is designed to provide the Exchange with additional tools for when it facilitates an Auction, including by aligning the Auction Reference Price for an Exchange-facilitated Core Open Auction with the Auction Reference Price used for NYSE Arca and NYSE
American electronic Core Open Auctions. The proposed rule change does not implicate any intermarket competition concerns because it relates to how the Exchange would facilitate Auctions in Exchange-listed securities.

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C. Self-Regulatory Organizations 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 19b3Aiii of the Act 12 and Rule 19b4f6 thereunder.13 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; or 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 19b3Aiii of the Act 14 and Rule 19b4f6iii thereunder.15
A proposed rule change filed under Rule 19b4f6 16 normally does not become operative prior to 30 days after the date of the filing. However, pursuant to Rule 19b4f6iii,17 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 Exchange has represented that the technology to implement this proposed rule change will be available in less than 30 days from filing and that a waiver of the operative delay would allow the Exchange to implement this proposed rule change as soon as the technology is available. The Commission notes that the proposal was previously included in another filing and afforded a public comment period under that filing of greater than 30 days.18 The Commission 12 15

U.S.C. 78sb3Aiii.
CFR 240.19b4f6.
14 15 U.S.C. 78sb3Aiii.
15 17 CFR 240.19b4f6. In addition, Rule 19b 4f6iii 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 complied with this requirement.
16 17 CFR 240.19b4f6.
17 17 CFR 240.19b4f6iii.
18 The proposal was originally included in SR
NYSE202089, and published for public notice and comment on November 5, 2020. See Securities 13 17

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