[Federal Register Volume 87, Number 140 (Friday, July 22, 2022)]
[Notices]
[Pages 43914-43921]
[FR Doc No: 2022-15656]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-95312; File No. SR-NYSE-2022-14]

Self-Regulatory Organizations; New York Stock Exchange LLC; Order
Instituting Proceedings To Determine Whether To Approve or Disapprove a
Proposed Rule Change To Modify Certain Pricing Limitations for
Securities Listed on the Exchange Pursuant to a Primary Direct Floor
Listing

July 18, 2022.

I. Introduction

    On April 7, 2022, New York Stock Exchange LLC (``NYSE'' or
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission''), pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (``Exchange Act'') \1\ and Rule 19b-4
thereunder,\2\ a proposed rule change to modify certain pricing
limitations for securities listed on the Exchange pursuant to a direct
listing with a primary offering in which the company will sell shares
itself in the opening auction on the first day of trading on the
Exchange. The proposed rule change was published for comment in the
Federal Register on April 19, 2022.\3\ On May 26, 2022, pursuant to
Section 19(b)(2) of the Exchange Act,\4\ the Commission designated a
longer period within which to either approve the proposed rule change,
disapprove the proposed rule change, or institute proceedings to
determine whether to disapprove the proposed rule change.\5\ The
Commission has received one comment on the proposal.\6\ This order
institutes proceedings under Section 19(b)(2)(B) of the Exchange Act
\7\ to determine whether to approve or disapprove the proposed rule
change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 94708 (April 13,
2022), 87 FR 23300 (April 19, 2022) (``Notice'').
    \4\ 15 U.S.C. 78s(b)(2).
    \5\ See Securities Exchange Act Release No. 94991 (May 26,
2022), 87 FR 33518 (June 2, 2022). The Commission designated July
18, 2022, as the date by which it should approve, disapprove, or
institute proceedings to determine whether to disapprove the
proposed rule change.
    \6\ See Letter from Andrew Robison, dated April 22, 2022,
available at https://www.sec.gov/comments/sr-nyse-2022-14/srnyse202214-20125830-286149.htm. The comments expressed by the
commenter are not relevant to the proposed rule change.
    \7\ 15 U.S.C. 78s(b)(2)(B).
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II. Description of the Proposal

    Section 102.01B, Footnote (E) of the of the Listed Company Manual
(the ``Manual'') provides that, in certain cases, a company that has
not previously had its common equity securities registered under the
Exchange Act may wish to list its common equity securities on the
Exchange at the time of effectiveness of a registration statement \8\
pursuant to which the company will sell shares itself on the first day
of trading on the Exchange in addition to, or instead of, facilitating
sales by selling shareholders (any such listing in which either (i)
only the company itself is selling shares in the opening auction on the
first day of trading or (ii) the company is selling shares and selling
shareholders may also sell shares in such opening auction, is referred
to as a ``Primary Direct Floor Listing'').\9\ In the Exchange's prior
approved proposal to initially allow for a Primary Direct Floor
Listing, the Exchange also adopted Rule 7.31(c)(1)(D) defining an
Issuer Direct Offering Order (``IDO Order'') \10\ for use by a company
that wishes to sell its shares through a Primary Direct Floor Listing.
In addition, the Exchange modified Rule 7.35A to describe how the IDO
Order would participate in a Direct Listing Auction, establish
additional requirements for a Designated Market Maker (``DMM'') when
conducting a Direct Listing Auction for a Primary Direct Floor Listing,
and specify how the Indication Reference Price would be determined for
a security to be opened in a Direct Listing.\11\ The Exchange states
that currently, under Rule 7.35A(g)(2), the DMM will not conduct a
Direct Listing Auction for a Primary Direct Floor Listing if (i) the
Auction Price \12\ would be outside of the price range specified by the
company in its effective registration statement (the ``Price Range
Limitation'') \13\ and (ii) there is insufficient interest to satisfy
both the IDO Order and all better-priced sell orders in full.\14\
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    \8\ The reference to a registration statement refers to a
registration statement effective under the Securities Act of 1933
(``Securities Act'').
    \9\ See Section 102.01B, Footnote (E) of the Manual. See also
Securities Exchange Act Release No. 90768 (December 22, 2020), 85 FR
85807 (December 29, 2020) (SR-NYSE-2019-67) (Order Setting Aside
Action by Delegated Authority and Approving a Proposed Rule Change,
as Modified by Amendment No. 2, to Amend Chapter One of the Listed
Company Manual to Modify the Provisions Relating to Direct Listings)
(``Approval Order'').
    \10\ An IDO Order is a Limit Order to sell that is to be traded
only in a Direct Listing Auction. See Rule 7.31(c)(1)(D). See also
Rule 7.31(a)(2) for the definition of ``Limit Order,'' Rule
7.35(a)(1) for the definition of ``Auction,'' and Rule 7.35(a)(1)(E)
for the definition of ``Direct Listing Auction.'' The IDO Order has
the following requirements: (i) only one IDO Order may be entered on
behalf of the issuer and only by one member organization; (ii) the
limit price of the IDO Order must be equal to the lowest price of
the price range established by the issuer in its effective
registration statement; (iii) the IDO Order must be for the quantity
of shares offered by the issuer, as disclosed in the prospectus in
the effective registration statement; (iv) an IDO Order may not be
cancelled or modified; and (v) an IDO Order must be executed in full
in the Direct Listing Auction. See Rule 7.31(c)(1)(D)(i)-(v).
    \11\ See Notice, supra note 3, 87 FR at 23300. See Rule
7.35A(d)(2)(A)(v) for a description about how the ``Indication
Reference Price'' is determined for a security that is a Primary
Direct Floor Listing.
    \12\ ``Auction Price'' means the price at which an Auction is
conducted. See Rule 7.35(a)(6).
    \13\ The Exchange states that references in this rule filing to
the price range established by the issuer in its effective
registration statement are to the price range disclosed in the
prospectus in such registration statement. See Notice, supra note 3,
87 FR at 23300 n.6. Currently, the Exchange defines the price range
established by the issuer in its effective registration statement as
the ``Primary Direct Floor Listing Auction Price Range.'' See Rule
7.31(c)(1)(D)(ii). As discussed further below, the Exchange proposes
to redefine the price range established by the issuer in its
effective registration statement as the ``Issuer Price Range.'' See
proposed Rule 7.31(c)(1)(D)(ii). Throughout this order, we also
refer to this ``Issuer Price Range'' as the ``disclosed price
range.''
    \14\ See Notice, supra note 3, 87 FR at 23300.
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    The Exchange has proposed to modify the Price Range Limitation to
provide that a Direct Listing Auction for a Primary Direct Floor
Listing may be conducted if the Auction Price is outside of the price
range established by the company in its effective registration
statement (the Issuer Price Range) but is either (i) at or above the
price that is 20% below the lowest price or at or below the price that
is 20% above the highest price of the Issuer Price Range \15\ or (ii)
above the price that is 20% above the highest price of the Issuer Price
Range.\16\ The Exchange states that, under its proposal, a Direct
Listing Auction for a Primary Direct Floor Listing could proceed in
these circumstances provided that the issuer has certified to the
Exchange and publicly disclosed that: (i) it does not expect that the
Auction Price would materially change the issuer's previous disclosure
in its effective registration

statement; (ii) the price range in the preliminary prospectus included
in the effective registration statement is a bona fide price range in
accordance with Item 501(b)(3) of Regulation S-K; and (iii) such
registration statement contains a sensitivity analysis explaining how
the issuer's plans would change if the actual proceeds from the
offering differ from the amount assumed in the price range established
by the issuer in its effective registration statement.\17\ The Exchange
proposes that, for purposes of determining the Primary Direct Floor
Listing Auction Price Range, the 20% threshold will be calculated based
on the maximum offering price set forth in the registration fee table,
consistent with the Instruction to paragraph (a) of Securities Act Rule
430A.\18\
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    \15\ As discussed further below, the Exchange proposes to
redefine the ``Primary Direct Floor Listing Auction Price Range'' as
the price range that includes 20% below the lowest price and 20%
above the highest price of the Issuer Price Range. See proposed Rule
7.31(c)(1)(D)(ii).
    \16\ See Notice, supra note 3, 87 FR at 23300. See also proposed
Rule 7.35A(g)(2)(B).
    \17\ See Notice, supra note 3, 87 FR at 23300. See also proposed
Rule 7.35A(g)(2)(B)(i).
    \18\ See proposed Rule 7.31(c)(1)(D)(ii).
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    The Exchange states its belief that, while many companies are
interested in alternatives to the traditional initial public offering
(``IPO''), companies and their advisors may be reluctant to use the
Primary Direct Floor Listing under current Exchange rules because of
concerns about the Price Range Limitation.\19\ The Exchange states it
believes that ``[t]he Price Range Limitation--which is imposed on a
Primary Direct Floor Listing but not on an IPO--increases the
probability of a failed offering because it contemplates there also
being too much investor interest. In other words, if investor interest
is greater than the company and its advisors anticipated, an offering
would need to be delayed or cancelled.'' \20\
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    \19\ See Notice, supra note 3, 87 FR at 23300.
    \20\ Id. at 23301.
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    The Exchange states that, under current Exchange Rules, the DMM
would not conduct a Direct Listing Auction for a security subject to a
Primary Direct Floor Listing if the Auction Price determined is above
the highest price of the price range established by the issuer in its
effective registration statement.\21\ The Exchange further states that,
in this case, the offering would be cancelled or postponed until the
company amends its effective registration statement, and at a minimum,
such a delay could expose the company to risks associated with changing
investor sentiment in the event of an adverse market event.\22\ The
Exchange states its belief that, as a result, companies may be
reluctant to use this alternative method of going public despite its
expected potential benefits because of the restrictions of the Price
Range Limitation.\23\
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    \21\ See id.
    \22\ See Notice, supra note 3, 87 FR at 23300.
    \23\ See id.
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    The Exchange has proposed to modify the Price Range Limitation such
that a Direct Listing Auction for a Primary Direct Floor Listing could
proceed even if the Auction Price is outside of the Issuer Price Range,
provided all other necessary conditions are met, if the Auction Price
would not be more than 20% below the lowest price or more than 20%
above the highest price of the Issuer Price Range and the company has,
in its effective registration statement, specified the quantity of
shares registered, as permitted by Securities Act Rule 457.\24\ The
Exchange also has proposed that a Direct Listing Auction could proceed
if the Auction Price is a price that is greater than 20% above the
highest price of the Issuer Price Range, provided that all other
necessary conditions are satisfied, and the company has, in its
effective registration statement, specified the quantity of shares
registered, as permitted by Securities Act Rule 457.\25\
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    \24\ See id.
    \25\ See id.
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    The Exchange proposes that when the Auction Price is either (i)
outside of the Issuer Price Range but not more than 20% above or below
such price range, or (ii) greater than 20% above the highest price of
the Issuer Price Range, the Direct Listing Auction would not proceed
unless the company has publicly disclosed and certified to the Exchange
that (i) the company does not expect that such offering price would
materially change the company's previous disclosure in its effective
registration statement; (ii) the price range in the preliminary
prospectus included in the effective registration statement is a bona
fide price range in accordance with Item 501(b)(3) of Regulation S-K;
and (iii) the company's registration statement contains a sensitivity
analysis explaining how the company's plans would change if the actual
proceeds from the offering differ from the amount assumed in the price
range established by the issuer in its effective registration
statement.\26\ In such cases, the Exchange also proposes to provide the
issuer with the opportunity to provide any necessary additional
disclosures that are dependent on the price of the offering so that any
such disclosures would be available to investors prior to the
completion of the offering.\27\ The Exchange proposes that a Direct
Listing Auction for a Primary Direct Floor Listing would not take place
until the issuer confirms to the Exchange that no additional
disclosures are required under federal securities laws based on the
Auction Price determined by the DMM.\28\
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    \26\ See id.
    \27\ See id.
    \28\ See id. See proposed Rule 7.35A(g)(2)(B)(ii).
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    The Exchange states its belief that the additional requirements to
permit a Direct Listing Auction to take place at an Auction Price that
is outside of the Issuer Price Range (whether it is at or within the
Primary Direct Floor Listing Auction Price Range or above the highest
price of such price range), as proposed, would provide sufficient
disclosures to allow investors to evaluate whether to participate in
the Direct Listing Auction for a Primary Direct Floor Listing,
including the opportunity to see how changes in share price may impact
the company's disclosures.\29\
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    \29\ See Notice, supra note 3, 87 FR at 23300.
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    The Exchange states that it believes its proposal with respect to
the Price Range Limitation for a Primary Direct Floor Listing is
consistent with Securities Act Rule 430A and staff guidance, which,
according to the Exchange, generally allow a company to price a public
offering 20% outside of the disclosed price range without regard to the
materiality of the changes to the disclosure contained in the company's
registration statement.\30\ According to the Exchange, the Exchange
believes that such guidance would also allow for deviation of greater
than 20% above the highest price of the price range in a company's
registration statement, provided that such change would not materially
change the previous disclosure.\31\ The Exchange states that,
accordingly, the Exchange believes that a company listing in connection
with a Primary Direct Floor Listing could specify the quantity of
shares registered, as permitted by Securities Act Rule 457, and, if an
auction prices outside of the disclosed price range, use a Rule 424(b)

prospectus, rather than a post-effective amendment, when either (i) the
20% threshold noted in Rule 430A is not exceeded, regardless of the
materiality or non-materiality of resulting changes to the registration
statement disclosure that would be contained in the Rule 424(b)
prospectus, or (ii) there is a deviation above the price range beyond
the 20% threshold noted in Rule 430A if such deviation would not
materially change the previous disclosures, in each case assuming the
number of shares issued is not increased from the number of shares
disclosed in the prospectus.\32\
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    \30\ See id. The Exchange states that Securities Act Rule 457
permits issuers to register securities either by specifying the
quantity of shares registered, pursuant to Rule 457(a), or the
proposed maximum aggregate offering amount. The Exchange proposes to
require that companies selling shares through a Primary Direct Floor
Listing will register securities by specifying the quantity of
shares registered and not a maximum offering amount. See id. at
23301 n.10. The Exchange also states that the Exchange believes that
the proposed modification of the Price Range Limitation would
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 protect investors and the public
interest, because, according to the Exchange, this approach is
similar to the pricing of an IPO where an issuer is permitted to
price outside of the disclosed price range in accordance with the
SEC Staff's guidance. See id. at 23304.
    \31\ See id. at 23301-02.
    \32\ See id. at 23302.
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    The Exchange states that given that, as proposed, there may be a
Primary Direct Floor Listing that could price outside of the price
range of the company's effective registration statement and that there
may be no upper limit above which the Direct Listing Auction could not
proceed, the Exchange proposes ``to support price discovery
transparency by providing readily available, real time pricing
information to investors.'' \33\ Specifically, the Exchange represents
that the DMM's pre-opening indications for a security to be opened in a
Direct Listing Auction for a Primary Direct Floor Listing would
continue to be published via the securities information processor
(``SIP'') and proprietary data feeds.\34\ The Exchange states that it
would also make the Indication Reference Price available, free of
charge, on a public website (such as www.nyse.com) on the day such
auction is anticipated to take place.\35\ The Exchange also proposes to
require member organizations to provide to a customer, before that
customer places an order to participate in a Direct Listing Auction for
a Primary Direct Floor Listing, a notice describing the mechanics of
pricing a security subject to a Direct Listing Auction for a Primary
Direct Floor Listing, including information regarding the availability
of pre-opening indications via the SIP and proprietary data feeds and
the location of the public website where the Exchange would disseminate
information relating to the Indication Reference Price.\36\
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    \33\ See id.
    \34\ See id. See also proposed Rule 7.35A(d)(2)(A)(v).
    \35\ See Notice, supra note 3, 87 FR at 23302. The Commission
observes that the Indication Reference Price for a security that is
a Primary Direct Floor Listing is the lowest price of the Primary
Direct Floor Listing Auction Price Range, which, as proposed, would
be the price that is 20% below the lowest price of the disclosed
price range. This price would be known before the opening process
begins and would not change once established.
    \36\ See id. See also proposed Rule 7.35A, Commentary .20(3).
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    The Exchange further proposes to distribute, at least one business
day prior to the commencement of trading of a security listing in
connection with a Primary Direct Floor Listing, a regulatory bulletin
that describes any special characteristics of the offering and the
Exchange rules that apply to the pricing of a Primary Direct Floor
Listing.\37\ The Exchange states that the regulatory bulletin would
also include information about the notice that member organizations
would be required to provide customers, as proposed, and remind member
organizations of their obligations pursuant to the Exchange rules that
(1) require member organizations to use reasonable diligence in regard
to the opening and maintenance of every account, to know (and retain)
the essential facts concerning every customer and concerning the
authority of each person acting on behalf of such customer (Rule 2090);
and (2) require member organizations in recommending transactions for a
security subject to a Direct Listing Auction for a Primary Direct Floor
Listing to have a reasonable basis to believe that: (i) the
recommendation is suitable for a customer given reasonable inquiry
concerning the customer's investment objectives, financial situation,
needs, and any other information known by such member organizations,
and (ii) the customer can evaluate the special characteristics, and is
able to bear the financial risks, of an investment in such security
(Rule 2111).\38\
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    \37\ See Notice, supra note 3, 87 FR at 23302. See also proposed
Rule 7.35A, Commentary .20.
    \38\ See Notice, supra note 3, 87 FR at 23302. See also proposed
Rule 7.35A, Commentary .20(1) and (2).
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    The Exchange states that these member organization requirements are
intended to remind members of their obligations to ``know their
customers'' and would also serve to increase transparency regarding the
pricing mechanisms applicable to a Primary Direct Floor Listing and
help provide investors with sufficient price discovery information.\39\
The Exchange represents that, for each Primary Direct Floor Listing,
the Exchange's regulatory bulletin would also inform market
participants that the Auction Price could be up to 20% below the lowest
price of the disclosed price range and would specify that price.\40\
The Exchange also represents that this regulatory bulletin would
indicate whether there is a price range outside of which the Direct
Listing Auction for the Primary Direct Floor Listing could not proceed,
based on the company's certification.\41\
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    \39\ See Notice, supra note 3, 87 FR at 23302.
    \40\ See id.
    \41\ See id.
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    The Exchange also proposes to amend certain aspects of the Manual.
Specifically, Section 102.01B, Footnote (E) of the Manual currently
provides that, with respect to a Primary Direct Floor Listing, the
Exchange will deem a company to have met the applicable aggregate
market value of publicly-held shares requirement \42\ if the company
will sell at least $100,000,000 in market value of shares in the
Exchange's opening auction on the first day of trading on the Exchange.
The Manual further provides that, where a company is conducting a
Primary Direct Floor Listing and will sell shares in the opening
auction with a market value of less than $100,000,000, the Exchange
will determine that such company has met its market-value of publicly-
held shares requirement if the aggregate market value of the shares the
company will sell in the opening auction on the first day of trading
and the shares that are publicly held immediately prior to the listing
is at least $250,000,000 with such market value calculated using a
price per share equal to the lowest price of the price range
established by the issuer in its registration statement.\43\
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    \42\ See Section 102.01B of the Manual.
    \43\ See Section 102.01B, Footnote (E) of the Manual.
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    The Exchange states that, to effect the changes to the Price Range
Limitation and facilitate the possibility of a Direct Listing Auction
for a Primary Direct Floor Listing pricing up to 20% below the
disclosed price range, the Exchange proposes to modify Section 102.01B,
Footnote (E) of the Manual to provide that the Exchange would calculate
the market value of such company's shares using a price per share equal
to the lowest price of the disclosed price range, minus an amount equal
to 20% of the highest price included in such price range, which would
be referred to as the ``Primary Direct Floor Listing Minimum Price.''
\44\ The Exchange also proposes to amend Section 102.01B, Footnote (E)
to include the requirement that a company listing its securities on the
Exchange pursuant to a Primary Direct Floor Listing must have specified
the quantity of shares registered, as permitted by Securities Act Rule
457, in its effective registration statement.\45\
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    \44\ See Notice, supra note 3, 87 FR at 23302.
    \45\ See id.
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    The Exchange states that, to implement the changes to the Price
Range Limitation described above, the

Exchange is proposing the following changes to Rules 7.31 and
7.35A.\46\
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    \46\ See id. at 23303.
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    The Exchange proposes to modify Rule 7.31(c)(1)(D)(ii) to provide
that the limit price of an IDO Order would be equal to the lowest price
of the Primary Direct Floor Listing Auction Price Range and to redefine
the ``Primary Direct Floor Listing Auction Price Range'' as 20% below
the lowest price and 20% above the highest price of the price range
established by the issuer in its effective registration statement.\47\
The Exchange also proposes to define ``Issuer Price Range'' as the
price range established by the issuer in its effective registration
statement.\48\ The Exchange states that Rule 7.31(c)(1)(D)(ii), as
modified, would facilitate the proposed changes to the Price Range
Limitation by providing that the limit price of an IDO Order would be
equal to the price that is 20% below the lowest price of the Issuer
Price Range.\49\
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    \47\ See id.
    \48\ See id.
    \49\ See id. The Exchange further proposes to specify in Rule
7.31(c)(D)(ii) that, for purposes of determining the Primary Direct
Floor Listing Price Range, the 20% threshold would be calculated
based on the maximum offering price set forth in the registration
fee table, consistent with the Instruction to paragraph (a) of
Securities Act Rule 430A. See id.
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    Currently, Rule 7.35A(d)(2)(A)(v) provides that, for a security
that is a Primary Direct Floor Listing, the Indication Reference Price
will be the lowest price of the Primary Direct Floor Listing Auction
Price Range.\50\ The Exchange proposes to add the requirement that the
Exchange disseminate the Indication Reference Price on a public website
to Rule 7.35A(d)(2)(A)(v).\51\
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    \50\ See id.
    \51\ See id.
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    Currently, Rule 7.35A(g)(2) specifies the circumstances under which
a DMM may not conduct a Direct Listing Auction for a Primary Direct
Floor Listing.\52\ The Exchange proposes to amend Rule 7.35A(g)(2) such
that the rule would specify requirements for a Direct Listing Auction
for a Primary Direct Floor Listing to proceed, rather than specifying
circumstances under which a DMM would not conduct a Direct Listing
Auction for a Primary Direct Floor Listing.\53\ The Exchange also
proposes to modify Rule 7.35A(g)(2)(A) to specify that the Auction
Price for a Direct Listing Auction for a Primary Direct Floor Listing
may not be lower than the lowest price of the Primary Direct Floor
Listing Auction Price Range.\54\ The Exchange states that, based on the
proposed revision to the definition of Primary Direct Floor Listing
Auction Price Range in Rule 7.31(c)(1)(D)(ii): (i) the Indication
Reference Price for a Primary Direct Floor Listing would be the price
that is 20% below the lowest price of the Issuer Price Range; and (ii)
Rule 7.35A(g)(2)(A) would provide that the Auction Price for a Direct
Listing Auction for a Primary Direct Listing would not be more than 20%
below the lowest price of the Issuer Price Range.\55\
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    \52\ See id.
    \53\ See id.
    \54\ See id.
    \55\ See id.
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    The Exchange proposes to amend Rule 7.35A(g)(2)(B) to provide that,
when the Auction Price is either (i) at or within the Primary Direct
Floor Listing Price Range but outside of the Issuer Price Range, or
(ii) above the highest price of the Primary Direct Floor Listing
Auction Price Range, the Direct Listing Auction could proceed if the
issuer has previously certified to the Exchange and publicly disclosed
that: (a) the issuer does not expect that the Auction Price would
materially change its previous disclosure in its effective registration
statement (proposed Rule 7.35A(g)(2)(B)(i)(a)); (b) the price range in
the preliminary prospectus included in the effective registration
statement is a bona fide price range in accordance with Item 501(b)(3)
of Regulation S-K (proposed Rule 7.35A(g)(2)(B)(i)(b)); and (c) the
registration statement contains a sensitivity analysis explaining how
the issuer's plans would change if the actual proceeds from the
offering differ from the amount assumed in the price range established
by the issuer in its effective registration statement (proposed Rule
7.35A(g)(2)(B)(i)(c)).\56\
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    \56\ See id.
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    The Exchange states that proposed Rule 7.35A(g)(2)(B)(ii) would
further provide that, when the Auction Price determined by the DMM is
at or within the Primary Direct Floor Listing Auction Price Range but
outside of the Issuer Price Range or is above the highest price of the
Primary Direct Floor Listing Auction Price Range, the issuer would be
required to confirm to the Exchange that no additional disclosures are
required under the federal securities laws based on such price.\57\
According to the Exchange, this proposed change would permit issuers to
comply with their disclosure obligations under federal securities laws
and provide investors with access to the requisite disclosures before
the offering would proceed.\58\ The Exchange states that, upon
receiving confirmation from the issuer that any such obligations have
been met, the Exchange would relay that information to the DMM to
proceed with the Direct Listing Auction.\59\
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    \57\ See id.
    \58\ See id.
    \59\ See id.
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    The Exchange states that proposed Rule 7.35A(g)(2)(C)(i) would
reflect the requirement set forth in current Rule 7.35A(g)(2)(B) that
the DMM may not conduct a Direct Listing Auction for a Primary Direct
Floor Listing if there is insufficient buy interest to satisfy both the
IDO Order and all better-priced sell orders in full.\60\ The Exchange
does not propose to change this requirement, other than adding
clarifying text to specify that such orders would be satisfied at the
Auction Price.\61\
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    \60\ See id. at 23303-04.
    \61\ See id. at 23304.
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    The Exchange states that proposed Rule 7.35A(g)(2)(C)(ii) would
provide that the DMM would not proceed with a Direct Listing Auction
for a Primary Direct Floor Listing until it has been notified by the
Exchange that the additional conditions set forth in new Commentary .20
to Rule 7.35A have been satisfied.\62\ The Exchange also states that
proposed Commentary .20 to Rule 7.35A would provide that the Direct
Listing Auction for a Primary Direct Floor Listing for a security may
not be conducted until the Exchange has notified the DMM that, at least
one business day prior to the commencement of trading in such security,
the Exchange has distributed a regulatory bulletin describing: (i) any
special characteristics of the offering and the Exchange rules that
apply to the pricing of the Primary Direct Floor Listing; (ii) the
obligations of member organizations pursuant to Exchange Rules 2090 and
2111; and (iii) the requirement that a member organization provide its
customers with a notice with information regarding the Direct Listing
Auction for a Primary Direct Floor Listing.\63\ The Exchange states
that this proposed change would: (i) facilitate the requirements
described above to provide member organizations with sufficient
information so that they may in turn inform their customers; (ii)
remind member organizations of their obligations to ``know their
customers''; (iii) increase transparency around the pricing mechanisms
of a Primary Direct Floor Listing; and (iv) help provide investors with
sufficient price discovery information.\64\
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    \62\ See id.
    \63\ See id. See also supra notes 36-38 and accompanying text.
    \64\ See Notice, supra note 3, 87 FR at 23304.

---------------------------------------------------------------------------

    Finally, the Exchange states that proposed Rule 7.35A(g)(2)(C)(iii)
would provide that the DMM would not conduct a Direct Listing Auction
for a Primary Direct Floor Listing if the Auction Price is outside of
the Issuer Price Range and the issuer has not satisfied the conditions
set forth in proposed Rules 7.35A(g)(2)(B)(i) and (ii).\65\ The
Exchange states that it proposes this rule to reinforce that a Direct
Listing Auction for a Primary Direct Floor Listing could not proceed in
these circumstances unless the issuer has made the requisite
disclosures described in proposed Rule 7.35A(g)(2)(B).\66\
---------------------------------------------------------------------------

    \65\ See id.
    \66\ See id.
---------------------------------------------------------------------------

III. Proceedings To Determine Whether To Approve or Disapprove SR-NYSE-
2022-14 and Grounds for Disapproval Under Consideration

    The Commission is instituting proceedings pursuant to Section
19(b)(2)(B) of the Exchange Act to determine whether the proposal
should be approved or disapproved.\67\ Institution of such proceedings
is appropriate at this time in view of the legal and policy issues
raised by the proposed rule change, as discussed below. Institution of
disapproval proceedings does not indicate that the Commission has
reached any conclusions with respect to any of the issues involved.
---------------------------------------------------------------------------

    \67\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

    Pursuant to Section 19(b)(2)(B) of the Exchange Act, the Commission
is providing notice of the grounds for disapproval under consideration.
The Commission is instituting proceedings to allow for additional
analysis and input concerning the proposed rule change's consistency
with the Exchange Act and, in particular, with Section 6(b)(5) \68\ of
the Exchange Act, which requires, among other things, that the rules of
a national securities exchange be designed to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade, 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; and are not
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.\69\
---------------------------------------------------------------------------

    \68\ 15 U.S.C. 78f(b)(5).
    \69\ Id.
---------------------------------------------------------------------------

    The Commission has consistently recognized the importance of
national securities exchange listing standards. Among other things,
such listing standards help ensure that exchange-listed companies will
have sufficient public float, investor base, and trading interest to
provide the depth and liquidity necessary to promote fair and orderly
markets.\70\
---------------------------------------------------------------------------

    \70\ The Commission has stated in approving national securities
exchange listing requirements that the development and enforcement
of adequate standards governing the listing of securities on an
exchange is an activity of critical importance to the financial
markets and the investing public. In addition, once a security has
been approved for initial listing, maintenance criteria allow an
exchange to monitor the status and trading characteristics of that
issue to ensure that it continues to meet the exchange's standards
for market depth and liquidity so that fair and orderly markets can
be maintained. See, e.g., Securities Exchange Act Release No. 91947
(May 19, 2021), 86 FR 28169, 28172 n.47 (May 25, 2021) (SR-NASDAQ-
2020-057) (``Nasdaq 2021 Order''); Approval Order, supra note 9, 85
FR at 85811 n.55; Securities Exchange Act Release Nos. 82627
(February 2, 2018), 83 FR 5650, 5653 n.53 (February 8, 2018) (SR-
NYSE-2017-30) (``NYSE 2018 Order''); 81856 (October 11, 2017), 82 FR
48296, 48298 (October 17, 2017) (SR-NYSE-2017-31); 81079 (July 5,
2017), 82 FR 32022, 32023 (July 11, 2017) (SR-NYSE-2017-11). The
Commission has stated that adequate listing standards, by promoting
fair and orderly markets, are consistent with Section 6(b)(5) of the
Exchange Act, in that they are, among other things, designed to
prevent fraudulent and manipulative acts and practices, promote just
and equitable principles of trade, and protect investors and the
public interest. See, e.g., Nasdaq 2021 Order, 86 FR at 28172 n.47;
Approval Order, supra note 9, 85 FR at 85811 n.55; NYSE 2018 Order,
83 FR at 5653 n.53; Securities Exchange Act Release Nos. 87648
(December 3, 2019), 84 FR 67308, 67314 n.42 (December 9, 2019) (SR-
NASDAQ-2019-059); 88716 (April 21, 2020), 85 FR 23393, 23395 n.22
(April 27, 2020) (SR-NASDAQ-2020-001).
---------------------------------------------------------------------------

    The Exchange is proposing to modify the rules concerning the
opening transaction on the first day of trading for a Primary Direct
Floor Listing so that the opening transaction is not constrained by the
Price Range Limitation, which limits the price of the opening
transaction to the price range disclosed in the issuer's effective
registration statement. Instead, the proposal would allow the opening
transaction to proceed, provided other requirements are satisfied,
either (i) at or above the price that is 20% below the lowest price or
at or below the price that is 20% above the highest price of the
disclosed price range or (ii) above the price that is 20% above the
highest price of the disclosed price range.
    Specifically, under the proposal, to execute at a price outside of
the disclosed price range, the issuer has to certify to the Exchange
and publicly disclose that: (i) it does not expect that the Auction
Price would materially change the issuer's previous disclosure in its
effective registration statement; (ii) the price range in the
preliminary prospectus included in the effective registration statement
is a bona fide price range in accordance with Item 501(b)(3) of
Regulation S-K; and (iii) such registration statement contains a
sensitivity analysis explaining how the issuer's plans would change if
the actual proceeds from the offering differ from the amount assumed in
the disclosed price range.
    In support of its proposal, the Exchange states that allowing an
auction to be conducted when the Auction Price is not within the
disclosed price range would, among other things, protect investors and
the public interest because the proposed approach ``is similar to the
pricing of an IPO, where the issuer is permitted to price outside of
the price range disclosed in its effective registration statement.''
\71\ NYSE also states that various aspects of its proposal promote
investor protection, including, among others, those that require that a
company listing shares through a Primary Direct Floor Listing make
applicable disclosures under the federal securities laws, support price
discovery transparency by providing readily available, real time
pricing information to investors, and provide member organizations with
the necessary information to share with their customers regarding the
Primary Direct Floor Listing.\72\ NYSE also states its belief that
allowing Direct Listing Auctions in connection with a Primary Direct
Floor Listing to price up to 20% below the lowest price and at a price
above the highest price of the disclosed price range would be
consistent with Chair Gensler's recent call to treat ``like cases
alike.'' \73\
---------------------------------------------------------------------------

    \71\ See Notice, supra note 3, 87 FR at 23304.
    \72\ See generally id. at 23304-05.
    \73\ See id. at 23305.
---------------------------------------------------------------------------

    We have concerns about whether the Exchange has met its burden to
demonstrate that its proposal to expand the conditions under which
Primary Direct Floor Listings are permitted \74\ is consistent with the
protection of investors and the public interest, and other relevant
provisions under Section 6(b)(5) of the Exchange Act and the rules and
regulations thereunder. Under existing NYSE rules that permit Primary
Direct Floor Listings, such offerings are required to price within the
price range disclosed in the issuer's effective registration statement.
When these rules were approved in 2020, the Commission considered that
required feature and also stated that the related registration

statements would include, among other disclosures, a bona fide price
range.\75\ The Exchange has indicated that it believes that some
companies may be reluctant to use the existing rules for a Primary
Direct Floor Listing because of concerns about the Price Range
Limitation.\76\ Permitting Primary Direct Floor Listings to price
outside of the disclosed price range could increase the frequency of
such offerings and may raise investor protection concerns.
---------------------------------------------------------------------------

    \74\ Under the NYSE rules for a Primary Direct Floor Listing
approved by the Commission in December 2020, the DMM would not
conduct a Direct Listing Auction for a Primary Direct Floor Listing
if the Auction Price would be below the lowest price or above the
highest price of the disclosed price range.
    \75\ See Approval Order, supra note 9, 85 FR at 85813, 85815.
    \76\ See Notice, supra note 3, 87 FR at 23300.
---------------------------------------------------------------------------

    While the Exchange has indicated that the proposal is intended to
treat like cases alike with respect to pricing flexibility, it has not
addressed certain differences between listings that would occur under
this proposed rule change and firm commitment underwritten initial
public offerings on the Exchange that may affect investor protection,
including the lack of a named underwriter,\77\ any challenges to
bringing claims under Section 11 of the Securities Act due to the
potential assertion of tracing defenses,\78\ and how those differences
could affect the consistency of the proposal with Section 6(b)(5) of
the Exchange Act.\79\ It is not clear from the proposal what
consideration, if any, the Exchange has given to addressing these
issues, or why it believes the proposal is consistent with investor
protection, as required by Section 6(b)(5) of the Exchange Act, in
light of the pricing flexibility proposed by the Exchange.
---------------------------------------------------------------------------

    \77\ Section 2(a)(11) of the Securities Act defines
``underwriter'' to mean ``any person who has purchased from an
issuer with a view to, or offers or sells for an issuer in
connection with, the distribution of any security, or participates,
or has a direct or indirect participation in the direct or indirect
underwriting of any such undertaking.'' Given this broad definition
of ``underwriter,'' a financial advisor to an issuer engaged in a
Primary Direct Floor Listing may, depending on the facts and
circumstances including the nature and extent of the financial
advisor's activities, be deemed a statutory ``underwriter'' with
respect to the securities offering, with attendant underwriter
liabilities. See Approval Order, supra note 9, 85 FR at 85815.
Whether or not any person would be considered a statutory
underwriter would be evaluated based on the particular facts and
circumstances, in light of the definition of underwriter contained
in Section 2(a)(11). In the context of a firm commitment
underwritten initial public offering, Item 508 of Regulation S-K
requires the underwriters to be named in the registration statement.
    \78\ Where a Securities Act registration statement, at the time
of effectiveness, contains an untrue statement of a material fact or
omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, Section
11(a) of the Securities Act provides a cause of action to ``any
person acquiring such security,'' unless it is proved that at the
time of the acquisition the person knew of such untruth or omission.
Courts have interpreted this statutory provision to permit
aftermarket purchasers (i.e., those who acquire their securities in
secondary market transactions rather than in the initial
distribution from the issuer or underwriter) to recover damages
under Section 11, but only if they can ``trace'' the acquired shares
back to the offering covered by the false or misleading registration
statement. See, e.g., In re Century Aluminum Co. Sec. Litig., 729
F.3d 1104 (9th Cir. 2013). Tracing is not set forth in Section 11
and is a judicially-developed doctrine. The Commission has
previously stated that shareholders' ability to pursue claims
pursuant to Section 11 of the Securities Act due to traceability
issues are not exclusive to nor necessarily inherent in direct
listings with a primary capital-raising component, and that this
issue is potentially implicated any time securities that are not the
subject of a recently effective registration statement trade in the
same market as the shares issued pursuant to the registration
statement. See Approval Order, supra note 9, 85 FR at 85815-16. The
Ninth Circuit has held that investors who purchase shares in a
direct listing may bring claims pursuant to Section 11, even if they
cannot prove that the shares they acquired were registered shares.
See Pirani v. Slack Techs., Inc., 13 F.4th 940 (9th Cir. 2021).
    \79\ Tracing concerns may be more prevalent in direct listings
than traditional underwritten initial public offerings. As compared
to traditional firm commitment underwritten initial public offerings
in which lock-up arrangements are routinely imposed, direct listings
to date typically have not imposed lock-up arrangements. This raises
a concern that there may be a heightened risk that investors in
direct listings may face difficulties tracing their shares,
potentially jeopardizing their ability to pursue Section 11 claims.
See supra note 78. Given the limited judicial precedent addressing
tracing requirements in the context of direct listings, and the
typical absence of lock-up arrangements in connection with direct
listings to date, we are considering whether the Exchange has met
its burden of establishing that the proposal to allow a direct
listing to proceed at a price outside of the disclosed price range
is consistent with Section 6(b)(5) of the Exchange Act that requires
the rules of the Exchange be designed to protect investors and the
public interest.
---------------------------------------------------------------------------

    In a firm commitment underwritten initial public offering, issuers
often adjust the price range disclosed in their registration statements
prior to effectiveness in light of pricing feedback received from
market analysts and potential investors. These revisions to the
disclosed price range may provide valuable information to potential
investors as to the issuer's valuation. If, under the proposal, the
opening auction can proceed at any price above the disclosed price
range, and up to 20% below the low end of the disclosed price range, it
is not clear whether issuers pursuing Primary Direct Floor Listings
would make similar revisions to the disclosed price range based on
investor or market analyst sentiment, and whether the absence of any
such corrective price signaling would detrimentally affect investors.
    In the absence of a named underwriter in a direct listing where the
opening price is executed outside of the disclosed price range, there
may not be an adequate assurance that a party who may meet the
definition of underwriter will review the information disclosed in the
registration statement and take the steps necessary to claim a ``due
diligence'' defense. To assert such a defense, a party must establish
that, after reasonable investigation, the party had reasonable ground
to believe and did believe, at the time the registration statement
became effective, that the statements therein were true and that there
was no omission to state a material fact required to be stated therein
or necessary to make the statements therein not misleading.\80\
Underwriters play a critical role in the securities offering process as
gatekeepers to the public markets.\81\
---------------------------------------------------------------------------

    \80\ See U.S.C. 77k(b)(3).
    \81\ See Securities Act Release No. 7393 (February 20, 1997), 62
FR 9276 (February 28, 1997) (``The due diligence efforts performed
by underwriters, accounting professionals and others play a critical
role in the integrity of our disclosure system.''); Securities Act
Release No. 6335 (August 6, 1981), 46 FR 42015 (August 18, 1981)
(``[T]he Securities Act imposes a high standard of conduct on
specific persons, including underwriters and directors, associated
with a registered public offering of securities. Under Section 11,
they must make a reasonable investigation and have reasonable
grounds to believe the disclosures in the registration statement are
accurate.'').
---------------------------------------------------------------------------

    The Exchange's proposed expansion of its rules permitting Primary
Direct Floor Listings could potentially result in increased regulatory
arbitrage, if and to the extent that issuers and intermediaries,
including financial advisors, are not subject to equivalent liability
standards in the direct listings context as they would be in
traditional firm commitment underwritten initial public offerings. Any
ability of issuers or intermediaries to minimize potential liability
through choosing a direct listing over other methods to become listed
on the Exchange could be inconsistent with Section 6(b)(5) of the
Exchange Act.
    Although financial advisors may, depending on the facts and
circumstances, be held liable as statutory underwriters, absent greater
clarity as to a financial advisor's status as a statutory underwriter
in listings that would occur under this proposed rule change, investors
would have no way to know whether financial advisors named as assisting
with the direct listing would face Section 11 liability for the
disclosure in the registration statement. Investors also may assume
that financial advisors would incur equivalent liability, without any
assurance that such is the case. Some legal observers have raised
concerns that, without clarity on whether financial advisors would be
held liable as statutory underwriters, any due diligence may not be as
robust as that

performed by named underwriters in traditional initial public
offerings.\82\ Less robust due diligence could result in reduced
disclosure quality and lead investors to improperly value the
securities offered under the proposed rules. As the proposed rules
would permit direct listings to be conducted at prices outside of the
disclosed price range, would investors be able to make reasonable
pricing decisions without greater clarity as to whether financial
advisors would face liability as statutory underwriters? Without
increased clarity on this point, would the proposed rule change be
inconsistent with investor protection and the public interest?
---------------------------------------------------------------------------

    \82\ See Tuch, Andrew F. and Seligman, Joel, The Further Erosion
of Investor Protection: Expanded Exemptions, SPAC Mergers and Direct
Listings (December 15, 2021), at 70-71, Washington University in St.
Louis Legal Studies Research Paper No. 22-01-03, available at SSRN:
https://ssrn.com/abstract=4020460 (questioning the extent of due
diligence performed by financial advisors in direct listings);
Horton, Brent J., Spotify's Direct Listing: Is It a Recipe for
Gatekeeper Failure?, 72 SMU L.Rev. 177 (2019). In the Approval
Order, the Commission stated that ``financial advisors to issuers in
Primary Direct Floor Listings have incentives to engage in robust
due diligence, given their reputational interests and potential
liability, including as statutory underwriters under the broad
definition of that term.'' Approval Order, supra note 9, 85 FR at
85815.
---------------------------------------------------------------------------

    There are a number of additional questions relating to investor
protection and Securities Act liability that merit examination in
connection with our consideration of whether the Exchange has met its
burden to demonstrate its proposal is consistent with Section 6(b)(5)
of the Exchange Act. It is not clear what role a financial advisor
would perform, in relation to price range disclosures, in a direct
listing where the offering can price outside of the disclosed price
range. Would additional transparency into the functions performed by
financial advisors in a direct listing where the offering can price
outside of the disclosed price range be necessary for investors to
determine how much reliance to place on issuer disclosures?
    Would any tracing concerns be exacerbated, thus raising investor
protection concerns, in the context of direct listings where the
offering can price outside of the disclosed price range? \83\ What are
the implications if the expansion of Primary Direct Floor Listings, as
proposed by the Exchange, resulted in fewer investor protections in a
direct listing? If under the proposal to modify the Price Range
Limitation there is continued uncertainty as to whether a financial
advisor would be liable as a statutory underwriter, is the liability of
any other gatekeepers in the offering sufficient to protect investors?
---------------------------------------------------------------------------

    \83\ See notes 78 and 79, supra, and accompanying text. The
Commission disapproved a prior proposal of Nasdaq to expand the
direct listing price range. See Securities Exchange Act Release No.
94311 (February 24, 2022). 87 FR 11780 (March 2, 2022) (SR-NASDAQ-
2021-045) (``Disapproval Order''). In the Disapproval Order, the
Commission stated that Nasdaq did not respond to one commenter's
concerns, among others, that investors in direct listings, including
direct listings with a capital raise, are likely to continue to have
fewer legal rights than investors in a traditional public offering
and concerns relating to ``tracing'' share purchases for purposes of
Section 11 claims. See Disapproval Order, 87 FR at 11785 n.82.
---------------------------------------------------------------------------

    The Commission also has concerns about the potential effect of the
proposed rules on the usefulness of price range disclosure provided to
investors in Securities Act registration statements.\84\ Given the
possibility under the proposed rules that the offering might price far
outside the disclosed price range, would issuers be less likely to
update their disclosed price ranges, compared to firm commitment
underwritten initial public offerings? \85\ Similarly, would disclosed
price ranges for direct listings be less reliable as indicators of
management's perceived valuation of the issuer? How would the ability
to ultimately conduct the auction up to 20% below or anywhere above the
disclosed price range affect issuer decisions as to what price range to
disclose in the registration statement? Would this impact the
usefulness of price range disclosure to potential investors or market
analysts? If so, this raises concerns about the consistency of the
proposal with investor protection and the public interest under Section
6(b)(5) of the Exchange Act.
---------------------------------------------------------------------------

    \84\ Under the proposed rule change, to execute at a price
outside of the disclosed price range, the issuer must certify to
NYSE and publicly disclose that: (a) it does not expect that the
Auction Price would materially change the issuer's previous
disclosure in its effective registration statement; (b) the price
range in the preliminary prospectus included in the effective
registration statement is a bona fide price range in accordance with
Item 501(b)(3) of Regulation S-K; and (c) such registration
statement contains a sensitivity analysis explaining how the
issuer's plans would change if the actual proceeds from the offering
differ from the amount assumed in the disclosed price range.
    \85\ The Exchange has stated that its proposal to permit more
flexibility as to pricing would allow Primary Direct Floor Listings
to be treated similarly to other initial public offerings. See
Notice, supra note 3, 87 FR at 23304, 23305.
---------------------------------------------------------------------------

    Additionally, it is not clear whether the proposed changes would
result in the Exchange using the minimum price at which the opening
auction could occur as the per share price for purposes of evaluating
whether the issuer satisfies the applicable market value of publicly-
held shares requirement. The Exchange proposes to amend Section
102.01B, Footnote (E) of the Manual to provide that the Exchange would
calculate the market value of publicly-held shares using a price per
share equal to the lowest price of the price range established by the
issuer in its registration statement ``minus an amount equal to 20% of
the highest price included in such price range.'' \86\ The Exchange
also proposes to specify in Rule 7.31(c)(1)(D)(ii) that, for purposes
of determining the Primary Direct Floor Listing Auction Price Range,
``the 20% threshold would be calculated based on the maximum offering
price set forth in the registration fee table, consistent with the
Instruction to paragraph (a) of Securities Act Rule 430A.'' \87\
Further, the Exchange states its belief that ``the proposed change to
Section 102.01B [Footnote] (E) to reflect that the market value
calculation of a company's shares would be based on a price per share
equal to the lowest price of the price range established by the issuer
in its registration statement, less an amount equal to 20% of the
highest price included in such price range . . . would update the
Manual to align with the proposed changes to the Price Range
Limitation.'' \88\ Is further clarification needed as to the precise
manner of computing the 20% threshold under proposed Rule
7.31(c)(1)(D)(ii) and whether that computation would lead to the same
minimum price contemplated by the proposed revisions to Section
102.01B, Footnote (E) of the Manual?
---------------------------------------------------------------------------

    \86\ See Notice, supra note 3, 87 FR at 23302.
    \87\ See id. at 23303.
    \88\ Id. at 23306.
---------------------------------------------------------------------------

    Finally, the Exchange proposes to amend Rule 7.35A(d)(2)(A)(v) to
provide that the Exchange will disseminate, free of charge, the
Indication Reference Price on a public website. As proposed, the
Indication Reference Price for a security that is a Primary Direct
Floor Listing would be the price that is 20% below the lowest price of
the disclosed price range, and as such would be fixed during the course
of the auction process. When certain conditions are met, the DMM
publishes pre-opening indications that include the price range within
which the auction price is anticipated to occur. As proposed, the DMM's
pre-opening indications would continue to be published via the SIP and
proprietary data feeds, all of which charge subscription fees. Would
providing pricing information during the course of the auction process
only through pre-opening indications via data feeds that charge
subscription fees be consistent with ``providing readily available,
real time pricing information to investors''? \89\ If not, would the
Exchange's proposal provide sufficient

price discovery transparency for investors to be consistent with the
protection of investors and the public interest pursuant to Section
6(b)(5) of the Exchange Act?
---------------------------------------------------------------------------

    \89\ Id. at 23302.
---------------------------------------------------------------------------

    Under the Commission's Rules of Practice, the ``burden to
demonstrate that a proposed rule change is consistent with the Exchange
Act and the rules and regulations issued thereunder . . . is on the
self-regulatory organization [`SRO'] that proposed the rule change.''
\90\ The description of a proposed rule change, its purpose and
operation, its effect, and a legal analysis of its consistency with
applicable requirements must all be sufficiently detailed and specific
to support an affirmative Commission finding,\91\ and any failure of an
SRO to provide this information may result in the Commission not having
a sufficient basis to make an affirmative finding that a proposed rule
change is consistent with the Exchange Act and the applicable rules and
regulations.\92\
---------------------------------------------------------------------------

    \90\ Rule 700(b)(3), Commission Rules of Practice, 17 CFR
201.700(b)(3).
    \91\ See id.
    \92\ See id.
---------------------------------------------------------------------------

    For these reasons, the Commission believes it is appropriate to
institute proceedings pursuant to Section 19(b)(2)(B) of the Exchange
Act \93\ to determine whether the proposal should be approved or
disapproved.
---------------------------------------------------------------------------

    \93\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

IV. Commission's Solicitation of Comments

    The Commission requests that interested persons provide written
submissions of their views, data, and arguments with respect to the
issues identified above, as well as any other concerns they may have
with the proposal. In particular, the Commission invites the written
view of interested persons concerning whether the proposal is
consistent with Section 6(b)(5) or any other provision of the Exchange
Act, or the rules and regulations thereunder. Although there do not
appear to be any issues relevant to approval or disapproval that would
be facilitated by an oral presentation of views, data, and arguments,
the Commission will consider, pursuant to Rule 19b-4, any request for
an opportunity to make an oral presentation.\94\
---------------------------------------------------------------------------

    \94\ Section 19(b)(2) of the Exchange Act, as amended by the
Securities Act Amendments of 1975, Public Law 94-29 (June 4, 1975),
grants the Commission flexibility to determine what type of
proceeding--either oral or notice and opportunity for written
comments--is appropriate for consideration of a particular proposal
by a self-regulatory organization. See Securities Act Amendments of
1975, Senate Comm. on Banking, Housing & Urban Affairs, S. Rep. No.
75, 94th Cong., 1st Sess. 30 (1975).
---------------------------------------------------------------------------

    Interested persons are invited to submit written data, views, and
arguments regarding whether the proposal should be approved or
disapproved by August 12, 2022. Any person who wishes to file a
rebuttal to any other person's submission must file that rebuttal by
August 26, 2022.
    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-NYSE-2022-14 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-NYSE-2022-14. 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 such 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-NYSE-2022-14 and should be submitted on
or before August 12, 2022. Rebuttal comments should be submitted by
August 26, 2022.
---------------------------------------------------------------------------

    \95\ 17 CFR 200.30-3(a)(57).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\95\
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-15656 Filed 7-21-22; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 85, Number 90 (Friday, May 8, 2020)]
[Notices]
[Pages 27409-27410]
[FR Doc No: 2020-09870]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. TX20-4-000]

Rugged Solar LLC

May 4, 2020.
    Take notice that on April 28, 2020, pursuant to sections 211 of the
Federal Power Act,\1\ and Rule 211 and 214 of the Federal Energy
Regulatory Commission's (Commission) Rules of Practice and
Procedure,\2\ Rugged Solar LLC filed an application requesting that the
Commission issue an order directing San Diego Gas & Electric Company to
provide interconnection and transmission service.
---------------------------------------------------------------------------

    \1\ 16 U.S.C. 824j, (2012 & Supp. V. 2017).
    \2\ 18 CFR 385.211, 385.214 (2019).
---------------------------------------------------------------------------

    Any person desiring to intervene or to protest this filing must
file in accordance with Rules 211 and 214 of the Commission's Rules of
Practice and Procedure (18 CFR 385.211 and 385.214). Protests will be
considered by the Commission in determining the appropriate action to
be taken, but will not serve to make protestants parties to the
proceeding. Any person wishing to become a party must file a notice of
intervention or motion to intervene, as appropriate. Such notices,
motions, or protests must be filed on or before the comment date.
Anyone filing a motion to intervene or protest must serve a copy of
that document on the Applicant. On or before the comment date, it is
not necessary to serve motions to intervene or protests on persons
other than the Applicant.
    In addition to publishing the full text of this document in the
Federal Register, the Commission provides all interested persons an
opportunity to view and/or print the contents of this document via the
internet through the Commission's Home Page (http://ferc.gov) using the
eLibrary link. Enter the docket number excluding the last three digits
in the docket number field to access the document. At this time, the
Commission has suspended access to the Commission's Public Reference
Room, due to the proclamation declaring a National Emergency concerning
the Novel Coronavirus Disease (COVID-19), issued by the President on
March 13, 2020. For

assistance, contact FERC at<EMAIL_ADDRESS>or call toll-
free,<PHONE_NUMBER> or TYY,<PHONE_NUMBER>.
    The Commission strongly encourages electronic filings of comments,
protests and interventions in lieu of paper using the eFiling link at
http://www.ferc.gov. Persons unable to file electronically may mail
similar pleadings to the Federal Energy Regulatory Commission, 888
First Street NE, Washington, DC 20426. Hand delivered submissions in
docketed proceedings should be delivered to Health and Human Services,
12225 Wilkins Avenue, Rockville, Maryland 20852.
    Comment Date: 5:00 p.m. Eastern Time on May 19, 2020.

    Dated: May 4, 2020.
 Nathaniel J. Davis, Sr.,
 Deputy Secretary.
[FR Doc. 2020-09870 Filed 5-7-20; 8:45 am]
 BILLING CODE 6717-01-P


[Federal Register Volume 86, Number 4 (Thursday, January 7, 2021)]
[Notices]
[Pages 1105-1106]
[FR Doc No: 2021-00026]

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ENVIRONMENTAL PROTECTION AGENCY

[EPA-HQ-OAR-2019-0668; FRL-10019-17-OAR]

Guidance on the Preparation of Clean Air Act Section 179B
Demonstrations for Nonattainment Areas Affected by International
Transport of Emissions

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice of availability.

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SUMMARY: Notice is hereby given that the Environmental Protection
Agency (EPA) has posted on its website a final guidance document
titled, ``Guidance on the Preparation of Clean Air Act Section 179B
Demonstrations for Nonattainment Areas Affected by International
Transport of Emissions.''

FOR FURTHER INFORMATION CONTACT: For general questions concerning this
final guidance document, please contact Gobeail McKinley, U.S. EPA,
Office of Air Quality Planning and Standards, Air Quality Policy
Division, C539-04, Research Triangle Park, NC 27711, telephone (919)
541-5246, email at<EMAIL_ADDRESS>For questions about the
technical issues discussed in Section 6 of this guidance, please
contact Barron Henderson, U.S. EPA, Office of Air Quality Planning and
Standards, Air Quality Assessment Division, Research Triangle Park, NC
27711, telephone<PHONE_NUMBER>, email at<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

I. General Information

How can I get copies of this guidance document and other related
information?

    Docket: The EPA has established a docket for this action under
Docket ID No. EPA-HQ-OAR-2019-0668. All documents in the docket are
listed on the https://www.regulations.gov website. Although listed in
the index, some information may not be publicly available, e.g.,
Confidential Business Information or other information whose disclosure
is restricted by statute. Certain other material, such as copyrighted
material, is not placed on the internet and will be publicly available
only in hard copy. Publicly available docket materials are available
electronically through https://www.regulations.gov.
    Agency Website: The EPA has established the EPA Guidance Portal
website for posting of all active final guidance documents. The EPA
Guidance Portal can be accessed at the following website: https://epa.gov/guidance/.
    The EPA has a website to house information related to the
international transport of air pollution at: https://www.epa.gov/ground-level-ozone-pollution/international-transport-air-pollution. The
website includes the EPA's draft and final Clean Air Act (CAA) section
179B guidance documents, a recording of and the slides presented during
the public webinar held on February 12, 2020, and other technical
information and resources related to the international transport of air
pollution. The website provides related information that the public may
find useful.

What's the purpose of the EPA's guidance?

    The purpose of this new final guidance document is to assist state,
local, and tribal air agencies that are considering the development of
a demonstration, under section 179B of the CAA, that a nonattainment
area would be able to attain, or would have attained, the relevant
National Ambient Air Quality Standard (NAAQS) but for air pollutant
emissions emanating from outside the United States. The guidance
describes and provides examples of the kinds of information and
analyses that the U.S. Environmental Protection Agency (EPA) recommends
air agencies consider including in a CAA section 179B demonstration.
The guidance also describes a weight of evidence approach that the EPA
intends to use when evaluating CAA section 179B demonstrations. This
nonbinding guidance is intended to assist air agencies considering the
preparation of a CAA section 179B demonstration but does not limit the
types of information or analyses that could be provided as part of any
such demonstration under the CAA.
    The EPA has the authority under CAA section 179B to assess such an
international transport demonstration when evaluating a state
implementation plan (SIP) submitted in response to a nonattainment
designation or reclassification of an area, or when the EPA determines
whether a nonattainment area has or has not failed to attain the
standard by the attainment date (and thus would become subject to
additional CAA requirements). If the EPA determines that such a
demonstration is approvable, the EPA will provide certain regulatory
relief as described in CAA section 179B. If the EPA approves a CAA
section 179B demonstration showing that an area in the future would
attain the relevant NAAQS but for international emissions, then the air
agency would not be subject to the SIP requirement to provide an
attainment demonstration. If the EPA approves a CAA section 179B
demonstration showing that a nonattainment area would have attained the
relevant NAAQS based on past air quality data but for international
emissions, then the nonattainment area would not be subject to
reclassification to a higher classification and would not be subject to
additional regulatory requirements that come with a higher
classification.
    In addition to describing the kinds of information and analyses
that may be helpful to include in a CAA section 179B demonstration,
this guidance provides:
     A review of the existing regulatory framework for
considering CAA section 179B demonstrations;
     A review of other existing regulatory mechanisms that may
be more appropriate alternatives to CAA section 179B in certain
situations;
     Recommended timeframes for the CAA section 179B
demonstration development and submittal process; and

     Background on the nature of intracontinental and
intercontinental transport of air pollution.
    The EPA accepted comments on the draft guidance from January 9,
2020, through March 10, 2020. The EPA received comments from 15
entities. All comments received by the EPA are included in the docket
for this guidance. The EPA thoroughly considered the points raised in
the comments in the development of this final guidance.
1. Executive Order 12866: Regulatory Planning and Review and Executive
Order 13563: Improving Regulation and Regulatory Review
    This action is a significant guidance document that was submitted
to the Office of Management and Budget (OMB) for review. Any changes
made in response to OMB recommendations have been documented in the
docket.
2. Executive Order 13771: Reducing Regulations and Controlling
Regulatory Costs
    This action is not considered an Executive Order 13771 deregulatory
or regulatory action. This action is considered a significant guidance
action. There are no quantified cost estimates for this guidance
because it does not create regulatory requirements for states. To the
extent the clarifications in the guidance influence the behaviors of
states, this guidance could help a state develop an approvable CAA
section 179B demonstration, which in turn would be expected to reduce
the state's burden associated with implementing nonattainment area
requirements.
3. Executive Order 13609: Promoting International Regulatory
Cooperation
    This guidance does not impact regulatory cooperation because it is
not a regulation.
4. Executive Order 13777: Enforcing the Regulatory Reform Agenda
    This guidance is not being issued as a result of the agency's
regulatory reform agenda or through a recommendation from the Agency's
Regulatory Reform Task Force because it is not a regulation.
5. Executive Order 13891: Promoting the Rule of Law Through Improved
Agency Guidance Documents
    This guidance complies with all the requirements of Executive Order
13891.

    Dated: December 18, 2020.
Panagiotis Tsirigotis,
Director, Office of Air Quality Planning and Standards.
[FR Doc. 2021-00026 Filed 1-6-21; 8:45 am]
BILLING CODE 6560-50-P