Statement Summary
The SEC has approved NYSE Chicago, Inc.’s proposed rule change allowing the listing and trading of certain exchange-traded products (ETPs). This includes amending Exchange Rule 1.1 to redefine ETPs as ‘Derivative Securities Products’ and allowing the addition of Exchange-Traded Fund Shares. The proposed amendments align the Exchange’s standards for ETP listings with those of NYSE Arca, ensuring consistency across exchanges. The revisions involve deleting redundant rules and adopting new technical changes across various rules to enhance clarity. The proposal aims to increase market liquidity, competition, and investor confidence while safeguarding against manipulative practices. No public comments were received on this proposal, which is seen as an important step toward maintaining a robust and transparent trading environment.
Original Statement
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-102957; File No. SR-NYSECHX-2025-04]
Self-Regulatory Organizations; NYSE Chicago, Inc.; Notice of Filing of Amendment No. 1, and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment No. 1, to Amend Exchange Rules 1.1, 5, 7.18, 8 and Exchange Article 22, Rules 24-27
April 29, 2025.
Introduction
On March 10, 2025, the NYSE Chicago, Inc. (now known as NYSE Texas, Inc., “Exchange”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) and Rule 19b-4 thereunder, a proposed rule change to: (a) amend Exchange Rules 5, 7.18, and 8 to permit the listing and trading of shares of certain exchange-traded products on the Exchange; (b) amend Exchange Rule 1.1 to change the definition of “Exchange-Traded Product” to “Derivative Securities Product” and include Exchange-Traded Fund Shares in the definition; and (c) delete redundant listing rules set forth in Exchange Article 22, Rules 24-27. The proposed rule change was published for comment in the Federal Register on March 18, 2025. On April 23, 2025, the Exchange filed Amendment No. 1, which amends and replaces the proposed rule change in its entirety. The Commission has received no comments on the proposed rule change.
Exchange’s Description of the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements.
Self-Regulatory Organization’s Statement of Purpose
The Exchange proposes amendments to (1) Rules 5, 7.18, and 8 to permit the listing and trading of certain Exchange Traded Products (“ETPs”), and (2) Rule 1.1 to conform the definition of “Exchange Traded Product” to “Derivative Securities Product” in NYSE Arca Rule 1.1 and include Exchange-Traded Fund Shares in the definition. The proposed rule changes would adopt the initial and continued listing standards for these products based on the rules of the Exchange’s affiliate NYSE Arca, Inc without substantive change.
Background
Current rules permit the trading on the Exchange of securities, including certain ETPs, on an unlisted trading privileges (“UTP”) basis. Rule 1.1(k) defines “UTP Exchange Traded Product” to mean one of the following ETPs that trades on the Exchange on a UTP basis:
- Equity Linked Notes, Investment Company Units listed pursuant to NYSE Arca Rule 5.2- E(j)(3) and Index Fund Shares listed pursuant to Cboe BZX Exchange, Inc. (“Cboe BZX”) Rule 14.11(c) or Nasdaq Stock Exchange LLC (“Nasdaq”) Rule 5705(b);
- Index-Linked Exchangeable Notes;
- Equity Gold Shares;
- Equity Index-Linked Securities;
- Commodity-Linked Securities;
- Currency-Linked Securities;
- Fixed-Income Index-Linked Securities;
- Futures-Linked Securities;
- Multifactor-Index-Linked Securities;
- Trust Certificates;
- Currency and Index Warrants;
- Portfolio Depository Receipts;
- Trust Issued Receipts;
- Commodity-Based Trust Shares;
- Currency Trust Shares;
- Commodity Index Trust Shares;
- Commodity Futures Trust Shares;
- Partnership Units;
- Paired Trust Shares;
- Trust Units;
- Managed Fund Shares;
- Managed Trust Securities;
- Managed Portfolio Shares;
- Active Proxy Portfolio Shares listed pursuant to NYSE Arca, Inc. Rule 8.601-E, Tracking Fund Shares listed pursuant to Cboe BZX Rule 14.11(m), and Proxy Portfolio Shares listed pursuant to Nasdaq Rule 5750.
The Exchange proposes substantially identical rules to those of NYSE Arca for the qualification and listing of ETPs on the Exchange. Each proposed rule corresponds to the same rule number as the NYSE Arca rule on which it is based.
Proposed Rule Change
The Exchange proposes certain non-substantive, technical and conforming changes throughout the proposed rules. In addition to minor spelling, grammatical and other similar changes and edits, the Exchange proposes to use:
- “Exchange” rather than “NYSE Arca” or “NYSE Arca Marketplace”;
- “will” rather than “shall”;
- “Participant” rather than “ETP Holder” to reflect the Exchange’s membership structure;
- “Core Trading Hours” rather than “NYSE Arca Marketplace trading hours.”
Further, the Exchange proposes to amend Rule 7.18 (Halts) to add a new section (c)(2) governing trading halts for listed ETPs based on the corresponding NYSE Arca rule.
Rule 1.1
The Exchange proposes to amend Rule 1.1, which sets forth definitions of terms used in Exchange rules, including the terms “Exchange Traded Product” and “UTP Exchange Traded Product.” Specifically, the Exchange proposes to conform these terms with NYSE Arca Rule 1.1, which uses the terms “Derivative Securities Product” and “UTP Derivative Securities Product.”
Proposed Rule 5 – Exchange Traded Products Listing Requirements
The Exchange proposes to amend Rule 5, titled “Trading on an Unlisted Trading Privileges Basis,” to add listing (proposed Rule 5.2) and continued listing (proposed Rule 5.5) rules.
(Further detailed structured information would follow here.)
Deletion of Obsolete Listing Rules – Article 22, Rules 24-27
The Exchange’s listing rules are set forth in Article 22. The Exchange proposes to delete the following listing rules that would be superseded by the ETP listing and trading rules in proposed Rules 5 and 8:
- Article 22, Rule 24 (Investment Company Units);
- Article 22, Rule 25 (Portfolio Depositary Receipts);
- Article 22, Rule 26 (Equity-Linked Debt Securities);
- Article 22, Rule 27 (Trust Issued Receipts).
The Exchange believes that the proposed change would make the Exchange’s rules more accessible and add clarity and transparency to its rule by removing superseded text.
Conclusion
IT IS THEREFORE ORDERED, pursuant to Section 19(b)(2) of the Act, that the proposed rule change (SR-NYSECHX-2025-04), as modified by Amendment No. 1, be, and it hereby is, approved on an accelerated basis.
