Federal Register 60-Day Notice

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Federal Register / Vol. 90, No. 13 / Wednesday, January 22, 2025 / Notices

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proposal is appropriate in light of the
need to protect investors and the public
interest and the Exchange’s process for
review of a delisting determination will
continue to provide a fair procedure for
the review of delisting determinations
in accordance with Section 6(b)(7) of the
Act.
Finally, the comment letters received
on the proposal were generally
supportive.31
In sum, the Exchange’s proposal
appropriately identifies securities listed
on its market that are more likely to
have serious recurrent issues in
regaining and maintaining compliance
with the Exchange’s continued listing
standards, including the Price Criteria,
and proposes reasonable changes to
shorten the time that such noncompliant securities can remain trading
on the Exchange, thereby protecting
investors and the public interest in
accordance with Section 6(b)(5) of the
Act,32 while at the same time
maintaining a fair procedure for affected
listed companies to seek review of a
delisting determination from the
Committee for Review of the Board of
Directors of the Exchange in accordance
with Section 6(b)(7) of the Act.33 For
these reasons, the Commission finds
that the proposed rule change, as
modified by Amendment No. 2, is
consistent with the requirements of the
Act.
31 See Letters from Barbara Rairden, dated Oct.
15, 2024, and Anonymous, dated Oct. 15, 2024. See
also Letter from the American Consumer and
Investor Institute, dated Nov. 4, 2024 (‘‘ACII
Letter’’), at 2 (stating that recent Exchange
proposals, including SR–NYSE–2024–48, to amend
listing rules to address concerns regarding
‘‘exchange-listed penny stocks and reverse stock
splits’’ are ‘‘another incremental step towards
protecting retail investors from the risks associated
with such penny stocks and reverse splits’’). This
commenter also expresses support for additional
proposals to enhance exchange listing standards to
further address investor protection concerns,
particularly those involving Nasdaq and NYSE
listed companies with low-priced securities. In
particular, this commenter recommends that the
Commission engage with the industry, including a
review of suggestions that have already been made,
and update the penny stock rules and exchange
listing standards. See ACII Letter at 4 (citing to
Petition for Rulemaking on Exchange Listings of
Penny Stocks filed with the Commission by Virtu
Financial, Inc., dated July 15, 2024; and Letter from
Ellen Greene, Managing Director and Joseph
Corcoran, Managing Director, Securities Industry
and Financial Markets Association, dated Oct. 8,
2024 (available at https://www.sec.gov/comments/
sr-nasdaq-2024-045/srnasdaq2024045-5276151515662.pdf)). These additional recommendations
are not before the Commission in the NYSE
proposal being considered herein. In approving this
proposal, the Commission is finding the proposal
before us is consistent with the Act.
32 15 U.S.C. 78f(b)(5).
33 15 U.S.C. 78f(b)(7).

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IV. Solicitation of Comments on
Amendment No. 2 to the Proposed Rule
Change
Interested persons are invited to
submit written data, views, and
arguments concerning whether the
proposed rule change, as modified by
Amendment No. 2, is consistent with
the Act. Comments may be submitted by
any of the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include file number SR–
NYSE–2024–48 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–2024–48. 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 (https://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
a.m. and 3 p.m. Copies of the filing also
will be available for inspection and
copying at the principal office of the
Exchange. Do not include personal
identifiable information in submissions;
you should submit only information
that you wish to make available
publicly. We may redact in part or
withhold entirely from publication
submitted material that is obscene or
subject to copyright protection. All
submissions should refer to file number
SR–NYSE–2024–48, and should be
submitted on or before February 12,
2025.

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V. Accelerated Approval of Proposed
Rule Change, as Modified by
Amendment No. 2
The Commission finds good cause to
approve the proposed rule change, as
modified by Amendment No. 2, prior to
the thirtieth day after the date of
publication of notice of the filing of
Amendment No. 2 in the Federal
Register. The changes in Amendment
No. 2 provide greater clarity to the
proposal. The proposed additional rule
text in Amendment No. 2 clarifies the
delisting process applicable to a
company that effectuates a reverse stock
split where the effectuation of such
reverse stock split results in the
company’s security falling below the
Distribution Criteria and is consistent
with the Exchange’s statements in the
Notice.34 Accordingly, the Commission
finds good cause, pursuant to Section
19(b)(2) of the Act,35 to approve the
proposed rule change, as modified by
Amendment No. 2, on an accelerated
basis.
VI. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,36 that the
proposed rule change (SR–NYSE–2024–
48), as modified by Amendment No. 2,
be, and it hereby is, approved on an
accelerated basis.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.37
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025–01415 Filed 1–21–25; 8:45 am]
BILLING CODE 8011–01–P

SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–508, OMB Control No.
3235–0565]

Proposed Collection; Comment
Request; Revision: Rule 482
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
34 See Notice, supra note 3, at 83739
(‘‘Furthermore, the Exchange proposes that a listed
company would not be allowed to effectuate a
reverse stock split, for purposes of regaining
compliance with the Price Criteria or otherwise, if
the effectuation of such reverse stock split results
in the company’s security falling below the
continued listing requirements of Section 802.01A.
If a listed company effectuated a reverse stock split
notwithstanding this proposed limitation, the
Exchange would promptly commence suspension
and delisting procedures with respect to such
company in accordance with Section 804.00.’’).
35 15 U.S.C. 78s(b)(2).
36 15 U.S.C. 78s(b)(2).
37 17 CFR 200.30–3(a)(12).

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Federal Register / Vol. 90, No. 13 / Wednesday, January 22, 2025 / Notices
100 F Street NE, Washington, DC
20549–2736
Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.), the Securities
and Exchange Commission (the
‘‘Commission’’) is soliciting comments
on the collection of information
summarized below. The Commission
plans to submit this existing collection
of information to the Office of
Management and Budget (‘‘OMB’’) for
revision and approval.
Like most issuers of securities, when
an investment company (‘‘fund’’) 1 offers
its shares to the public, its promotional
efforts become subject to the advertising
restrictions of the Securities Act of 1933
(15 U.S.C. 77) (the ‘‘Securities Act’’). In
recognition of the particular problems
faced by funds that continually offer
securities and wish to advertise their
securities, the Commission has adopted
advertising safe harbor rules. The most
important of these is rule 482 (17 CFR
230.482) under the Securities Act,
which, under certain circumstances,
permits funds to advertise investment
performance data, as well as other
information. Rule 482 advertisements
are deemed to be ‘‘prospectuses’’ under
Section 10(b) of the Securities Act (15
U.S.C. 77j(b)).
Rule 482 contains certain
requirements regarding the disclosure
that funds are required to provide in
qualifying advertisements. These
requirements are intended to encourage
the provision to investors of information
that is balanced and informative,
particularly in the area of investment
performance. For example, a fund is
required to include disclosure advising
investors to consider the fund’s
investment objectives, risks, charges and
expenses, and other information
described in the fund’s prospectus, and
highlighting the availability of the
fund’s prospectus and, if applicable, its
summary prospectus. In addition, rule
482 advertisements that include
performance data of open-end funds or
insurance company separate accounts
offering variable annuity contracts are
required to include certain standardized
performance information, information
about any sales loads or other
nonrecurring fees, and a legend warning
that past performance does not
guarantee future results. Such funds
including performance information in
rule 482 advertisements are also
required to make available to investors
1 ‘‘Investment

company’’ refers to both
investment companies registered under the
Investment Company Act of 1940 (‘‘Investment
Company Act’’) (15 U.S.C. 80a–1 et seq.) and
business development companies.

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month-end performance figures via
website disclosure or by a toll-free
telephone number, and to disclose the
availability of the month-end
performance data in the advertisement.
The rule also sets forth requirements
regarding the prominence of certain
disclosures, requirements regarding
advertisements that make tax
representations, requirements regarding
advertisements used prior to the
effectiveness of the fund’s registration
statement, requirements regarding the
timeliness of performance data, and
certain required disclosures by money
market funds.
Rule 482 advertisements must be filed
with the Commission or, in the
alternative, with the Financial Industry
Regulatory Authority (‘‘FINRA’’).2 This
information collection differs from
many other federal information
collections that are primarily for the use
and benefit of the collecting agency.
Rule 482 contains requirements that
are intended to encourage the provision
to investors of information that is
balanced and informative, particularly
in the area of investment performance.
The Commission is concerned that in
the absence of such provisions fund
investors may be misled by deceptive
rule 482 advertisements and may rely
on less-than-adequate information when
determining in which funds they should
invest money. As a result, the
Commission believes it is beneficial for
funds to provide investors with
balanced information in fund
advertisements in order to allow
investors to make better-informed
decisions.
On November 7, 2024, the
Commission adopted amendments to
rule 482 to correct outdated crossreferences and conform the risk
statements that money market funds
must include in their advertisements
and sales literature to the risk
statements that money market funds
must include in their prospectuses.3
The 2023 money market fund reform
adopting release amended the risk
statements that money market funds
must include in their prospectuses to
align with the changes to money market
fund regulations adopted in that
2 See note to rule 482(h) under the Securities Act,
which states that ‘‘these advertisements, unless
filed with [FINRA], are required to be filed in
accordance with the requirements of § 230.497.’’
See also rule 24b–3 under the Investment Company
Act (17 CFR 270.24b–3), which provides that any
sales material, including rule 482 advertisements,
shall be deemed filed with the Commission for
purposes of Section 24(b) of the Investment
Company Act upon filing with FINRA.
3 Conforming Amendments to Commission Rules
and Forms, Investment Company Act Release No.
35377 (Nov. 7, 2024) (the ‘‘Adopting Release’’).

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release.4 However, rule 482 was not
included in the amendments and the
statements that rule 482 required were
inconsistent with the recently amended
regulatory framework for money market
funds. Further, the risk statements that
money market funds were required to
include in prospectuses and
advertisements have otherwise always
been identical and the risk statements
should not differ based on whether an
investor is reviewing a prospectus or an
advertisement. As a result, rule 482
included outdated references to
concepts that have been removed or
significantly modified in underlying
money market fund regulations (e.g.,
allowing temporary suspensions of
redemptions). The amendments to rule
482 correct this error, make certain
other conforming edits to further align
the language of the risk statements with
the risk statements that money market
funds must include in their
prospectuses, and correct inaccurate
cross references to money market fund
rules.
We estimate the total annual burden
to comply with amended rule 482 to be
577,896 hours, at an average time cost
of $213,154,498. The estimate of average
burden hours is made solely for the
purposes of the Paperwork Reduction
Act and is not derived from a
comprehensive or even a representative
survey or study of the costs of
Commission rules and forms. The
provision of information under rule 482
is necessary to obtain the benefits of the
safe harbor offered by the rule. The
information provided under rule 482
will not be kept confidential. An agency
may not conduct or sponsor, and a
person is not required to respond to, a
collection of information unless it
displays a currently valid OMB control
number.
Written comments are invited on: (a)
whether the proposed collection of
information is necessary for the proper
performance of the functions of the
Commission, including whether the
information shall have practical utility;
(b) the accuracy of the Commission’s
estimate of the burden of the collection
of information; (c) ways to enhance the
quality, utility, and clarity of the
information collected; and (d) ways to
minimize the burden of the collection of
information on respondents, including
through the use of automated collection
techniques or other forms of information
technology. Consideration will be given
4 See Money Market Fund Reforms; Form PF
Reporting Requirements for Large Liquidity Fund
Advisers; Technical Amendments to Form N–CSR
and Form N–1A, Investment Company Act Release
No. 34959 (July 12, 2023) [88 FR 51404 (Aug. 3,
2023)].

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Federal Register / Vol. 90, No. 13 / Wednesday, January 22, 2025 / Notices

to comments and suggestions submitted
by March 24, 2025.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
under the PRA unless it displays a
currently valid OMB control number.
Please direct your written comments
to: Austin Gerig, Director/Chief Data
Officer, Securities and Exchange
Commission, c/o Tanya Ruttenberg, 100
F Street NE Washington, DC 20549 or
send an email to: PRA_Mailbox@
sec.gov.
Dated: January 15, 2025.
Sherry R. Haywood,
Assistant Secretary.

[Release No. 34–102203; File Nos. SR–
OCC–2024–016]

Self-Regulatory Organizations; The
Options Clearing Corporation; Order
Granting Approval of Proposed Rule
Change by The Options Clearing
Corporation Concerning
Enhancements to the System for
Theoretical Analysis and Numerical
Simulations (‘‘STANS’’) and OCC’s
Comprehensive Stress Testing (‘‘CST’’)
Methodology, To Better Capture the
Risks Associated With Short-Dated
Options
January 15, 2025.

[FR Doc. 2025–01417 Filed 1–21–25; 8:45 am]
BILLING CODE 8011–01–P

SECURITIES AND EXCHANGE
COMMISSION
Sunshine Act Meetings
FEDERAL REGISTER CITATION OF PREVIOUS
ANNOUNCEMENT: Publishing in the

Federal Register of January 21, 2025.
PREVIOUSLY ANNOUNCED TIME AND DATE OF
THE MEETING: Thursday, January 23,

2025, at 2 p.m.
The Closed
Meeting scheduled for Thursday,
January 23, 2025, at 2 p.m., has been
changed to Thursday, January 23, 2025,
at 1 p.m.

CHANGES IN THE MEETING:

CONTACT PERSON FOR MORE INFORMATION:

For further information; please contact
Vanessa A. Countryman from the Office
of the Secretary at (202) 551–5400.
Authority: 5 U.S.C. 552b.
Dated: January 17, 2025.
Stephanie J. Fouse,
Assistant Secretary.
[FR Doc. 2025–01596 Filed 1–17–25; 4:15 pm]
BILLING CODE 8011–01–P

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SECURITIES AND EXCHANGE
COMMISSION

I. Introduction
On November 22, 2024, the Options
Clearing Corporation (‘‘OCC’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change SR–OCC–2024–
016, pursuant to Section 19(b) of the
Securities Exchange Act of 1934
(‘‘Exchange Act’’) 1 and Rule 19b–4 2
thereunder, to (i) align assumptions
across models and (ii) generate implied
volatility shocks for options with a tenor
of less than one month that are
consistent with observed market
dynamics.3 The proposed rule change
was published for public comment in
the Federal Register on December 6,
2024.4 The Commission has received no
comments regarding the proposed rule
change. For the reasons discussed
below, the Commission is approving the
proposed rule change (hereinafter
defined as ‘‘Proposed Rule Change’’).
II. Background
OCC is a central counterparty
(‘‘CCP’’), which means that as part of its
function as a clearing agency, it
interposes itself as the buyer to every
seller and the seller to every buyer for
financial transactions. As the CCP for
the listed options markets and for
certain futures in the United States,
OCC is exposed to the risk that one or
more of its Clearing Members may fail
to make a payment or to deliver
securities. OCC addresses such risk
exposure, in part, by requiring its
members to provide collateral,
including both margin collateral and
Clearing Fund collateral. Margin is the
collateral that CCPs collect to cover
potential changes in a member’s
1 15

U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Notice of Filing infra note 4, at 89 FR 97131.
4 See Securities Exchange Act Release No. 101780
(Dec. 2, 2024), 89 FR 97131 (Dec. 6, 2024) (File No.
SR–OCC–2024–016) (‘‘Notice of Filing’’).
2 17

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positions over a set period of time
during normal market conditions. OCC’s
Clearing Fund is a mutualized pool of
financial resources to which each
Clearing Member is required to
contribute to ensure that OCC maintains
sufficient qualifying liquid resources to
manage its liquidity risk, and to address
the tail risk that the margin collateral
OCC collects from each Clearing
Member might be insufficient to cover
OCC’s credit exposure to a defaulting
member in extreme but plausible market
conditions.
OCC’s methodology for calculating
margin collateral requirements is called
the System for Theoretical Analysis and
Numerical Simulations (‘‘STANS’’).5
OCC’s methodology for sizing and
monitoring its Clearing Fund is called
the Comprehensive Stress Testing
(‘‘CST’’) methodology. OCC relies on
STANS and the CST methodology to set
collateral requirements to cover the
financial risk posed by the positions
OCC clears for its members. OCC states
that the proportion of such positions
that comprise short-dated options
(‘‘SDOs’’) 6 has increased over the past
several years.7 In response to this
observation, OCC examined the risks
posed by the increase in SDO trading
and identified opportunities to improve
the performance of the models
comprising STANS and the CST
methodology in covering the financial
risk posed by the increase in SDO
trading observed by OCC.8 As described
below, OCC proposes two changes to the
models comprising STANS and the CST
methodology: one set of changes related
to the day count conventions 9 and one
set of changes related to the application
of volatility shocks to theoretical option
prices.10
5 Capitalized terms used but not defined herein
have the meanings specified in OCC’s Rules and ByLaws, available at https://www.theocc.com/about/
publications/bylaws.jsp.
6 SDOs are option contracts with a maturity of
less than or equal to one month to expiration. See
Notice of Filing, 89 FR at 97132.
7 See Notice of Filing, 89 FR 97132 (citing Cboe,
The Rise of SPX & 0DTE Options (July 27, 2023),
available at https://go.cboe.com/l/77532/2023-0727/ffc83k).
8 See Notice of Filing, 89 FR 97132 (stating that
‘‘opportunities exist to improve model performance
for Clearing Member portfolios dominated by
SDOs’’).
9 OCC uses the term ‘‘day count convention’’ to
refer to a standardized methodology for calculating
the number of days between two dates. See Notice
of Filing, 89 FR 97132, note 13. Both calendar and
business day conventions are used by OCC in
STANS and CST calculations. Id.
10 The implied volatility of an option is a measure
of the expected future volatility of the option’s
underlying security at expiration, which is reflected
in the current option premium in the market. See
Notice of Filing, 89 FR 97132, note 12.

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