Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Extend the Pilot Related to the Market-Wide Circuit Breaker in Rule 7.12-E, 50543-50545 [2019-20694]
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Federal Register / Vol. 84, No. 186 / Wednesday, September 25, 2019 / Notices
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–DTC–
2019–005 and should be submitted on
or before October 16, 2019.
V. Accelerated Approval of the
Proposed Rule Change, as Modified as
Partial Amendment No. 1
The Commission finds good cause,
pursuant to Section 19(b)(2) of the
Act,20 to approve the proposed rule
change prior to the 30th day after the
date of publication of Partial
Amendment No. 1 in the Federal
Register. As noted above, Partial
Amendment No. 1 delays the
implementation timeframe of the
proposal from September 26, 2019 to
December 6, 2019.21 The Commission
believes that the Partial Amendment is
consistent with the Act because it does
not raise any regulatory issues and
would provide more time before the
proposal would go into effect.
For the reasons discussed above, the
Commission finds that Partial
Amendment No. 1 is reasonably
designed to protect investors and the
public interest, and consistent with the
requirements of the Act. Accordingly,
the Commission finds good cause,
pursuant to Section 19(b)(2) of the
Act,22 to approve the proposed rule
change, as modified by Partial
Amendment No. 1, on an accelerated
basis.
VI. Conclusion
On the basis of the foregoing, the
Commission finds that the proposed
rule change, as modified by Partial
Amendment No. 1, is consistent with
the requirements of the Act and, in
particular, with the requirements of
Section 17A of the Act 23 and the rules
and regulations promulgated
thereunder.
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act 24 that
proposed rule change SR–DTC–2019–
005, as modified by Amendment No. 1,
be, and hereby is, approved on an
accelerated basis.25
jbell on DSK3GLQ082PROD with NOTICES
20 15
U.S.C. 78s(b)(2).
Amendment No. 1, supra note 3.
22 15 U.S.C. 78s(b)(2).
23 15 U.S.C. 78q–1.
24 15 U.S.C. 78s(b)(2).
25 In approving the proposed rule change, the
Commission considered the proposals’ impact on
efficiency, competition, and capital formation. 15
U.S.C. 78c(f).
21 Partial
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For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.26
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019–20702 Filed 9–24–19; 8:45 am]
50543
of the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–87017; File No. SR–
NYSEARCA–2019–66]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Extend the Pilot
Related to the Market-Wide Circuit
Breaker in Rule 7.12–E
September 19, 2019.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on
September 17, 2019, NYSE Arca, Inc.
(‘‘NYSE Arca’’ or the ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been prepared by the self-regulatory
organization. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to extend the
pilot related to the market-wide circuit
breaker in Rule 7.12–E. The proposed
rule change is available on the
Exchange’s website at www.nyse.com, at
the principal office of the Exchange, and
at the Commission’s Public Reference
Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, 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,
26 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
1 15
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Frm 00173
Fmt 4703
Sfmt 4703
1. Purpose
Rule 7.12–E provides a methodology
for determining when to halt trading in
all stocks due to extraordinary market
volatility (i.e., market-wide circuit
breakers). The market-wide circuit
breaker (‘‘MWCB’’) mechanism under
Rule 7.12–E was approved by the
Commission to operate on a pilot basis,4
the term of which was to coincide with
the pilot period for the Plan to Address
Extraordinary Market Volatility
Pursuant to Rule 608 of Regulation NMS
(the ‘‘LULD Plan’’),5 including any
extensions to the pilot period for the
LULD Plan.6 The Commission recently
approved an amendment to the LULD
Plan for it to operate on a permanent,
rather than pilot, basis.7 In light of the
proposal to make the LULD Plan
permanent, the Exchange amended Rule
7.12–E to untie the pilot’s effectiveness
from that of the LULD Plan and to
extend the pilot’s effectiveness to the
close of business on October 18, 2019.8
The Exchange now proposes to amend
Rule 7.12–E to extend the pilot to the
close of business on October 18, 2020.
This filing does not propose any
substantive or additional changes to
Rule 7.12–E. The Exchange will use the
extension period to develop with the
other SROs rules and procedures that
would allow for the periodic testing of
the performance of the MWCB
mechanism, with industry member
participation in such testing. The
extension will also permit the
exchanges to consider enhancements to
the MWCB processes such as
modifications to the Level 3 process.
The market-wide circuit breaker
under Rule 7.12–E provides an
4 See Securities Exchange Act Release No. 67090
(May 31, 2012), 77 FR 33531 (June 6, 2012) (SR–
NYSEArca –2011–68).
5 See Securities Exchange Act Release No. 67091
(May 31, 2012), 77 FR 33498 (June 6, 2012). The
LULD Plan provides a mechanism to address
extraordinary market volatility in individual
securities.
6 See Securities Exchange Act Release Nos. 67090
(May 31, 2012), 77 FR 33531 (June 6, 2012) (SR–
NYSEArca –2011–68) (Approval Order); and 68785
(January 31, 2013), 78 FR 8646 (February 6, 2013)
(SR–NYSEArca –2013–06) (Notice of Filing and
Immediate Effectiveness of Proposed Rule Change
Delaying the Operative Date of a Rule Change to
Exchange Rule 7.12).
7 See Securities Exchange Act Release No. 85623
(April 11, 2019), 84 FR 16086 (April 17, 2019).
8 See Securities Exchange Act Release No. 85561
(April 9, 2019), 84 FR 15262 (April 15, 2019) (SR–
NYSEArca –2019–23).
E:\FR\FM\25SEN1.SGM
25SEN1
50544
Federal Register / Vol. 84, No. 186 / Wednesday, September 25, 2019 / Notices
important, automatic mechanism that is
invoked to promote stability and
investor confidence during a period of
significant stress when securities
markets experience extreme broad-based
declines. All U.S. equity exchanges and
FINRA adopted uniform rules on a pilot
basis relating to market-wide circuit
breakers in 2012 (‘‘MWCB Rules’’),
which are designed to slow the effects
of extreme price movement through
coordinated trading halts across
securities markets when severe price
declines reach levels that may exhaust
market liquidity.9 Market-wide circuit
breakers provide for trading halts in all
equities and options markets during a
severe market decline as measured by a
single-day decline in the S&P 500 Index.
Pursuant to Rule 7.12–E, a marketwide trading halt will be triggered if the
S&P 500 Index declines in price by
specified percentages from the prior
day’s closing price of that index.
Currently, the triggers are set at three
circuit breaker thresholds: 7% (Level 1),
13% (Level 2), and 20% (Level 3). A
market decline that triggers a Level 1 or
Level 2 halt after 9:30 a.m. ET and
before 3:25 p.m. ET would halt marketwide trading for 15 minutes, while a
similar market decline at or after 3:25
p.m. ET would not halt market-wide
trading. A market decline that triggers a
Level 3 halt, at any time during the
trading day, would halt market-wide
trading until the primary listing market
opens the next trading day.
jbell on DSK3GLQ082PROD with NOTICES
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act,10 in general, and furthers the
objectives of Section 6(b)(5) of the Act,11
in particular, in that it is designed 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. The
market-wide circuit breaker mechanism
under Rule 7.12–E is an important,
automatic mechanism that is invoked to
promote stability and investor
confidence during a period of
significant stress when securities
markets experience extreme broad-based
9 See Securities Exchange Act Release No. 67090
(May 31, 2012), 77 FR 33531 (June 6, 2012) (SR–
BATS–2011–038; SR–BYX–2011–025; SR–BX–
2011–068; SR–CBOE–2011–087; SR–C2–2011–024;
SR–CHX–2011–30; SR–EDGA–2011–31; SR–EDGX–
2011–30; SR–FINRA–2011–054; SR–ISE–2011–61;
SR–NASDAQ–2011–131; SR–NSX–2011–11; SR–
NYSE–2011–48; SR–NYSEAmex –2011–73; SR–
NYSEArca –2011–68; SR–Phlx–2011–129) (‘‘MWCB
Approval Order’’).
10 15 U.S.C. 78f(b).
11 15 U.S.C. 78f(b)(5).
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18:25 Sep 24, 2019
Jkt 247001
declines. Extending the market-wide
circuit breaker pilot for an additional
year would ensure the continued,
uninterrupted operation of a consistent
mechanism to halt trading across the
U.S. markets while the Exchange, with
the other SROs, consider and develop
rules and procedures that would allow
for the periodic testing of the
performance of the MWCB mechanism,
which would include industry member
participation in such testing. The
extension will also permit the
exchanges to consider enhancements to
the MWCB processes such as
modifications to the Level 3 process.
The Exchange also believes that the
proposed rule change promotes just and
equitable principles of trade in that it
promotes transparency and uniformity
across markets concerning when and
how to halt trading in all stocks as a
result of extraordinary market volatility.
Based on the foregoing, the Exchange
believes the benefits to market
participants from the MWCB under Rule
7.12–E should continue on a pilot basis
because the MWCB will promote fair
and orderly markets, and protect
investors and the public interest.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition not
necessary or appropriate in furtherance
of the purposes of the Act because the
proposal would ensure the continued,
uninterrupted operation of a consistent
mechanism to halt trading across the
U.S. markets while the Exchange, in
conjunction with the other SROs,
consider and develop rules and
procedures that would allow for the
periodic testing of the performance of
the MWCB mechanism. Furthermore, as
noted above, the extension will permit
the exchanges to consider
enhancements to the MWCB processes
such as modifications to the Level 3
process.
Further, the Exchange understands
that FINRA and other national securities
exchanges will file proposals to extend
their rules regarding the market-wide
circuit breaker pilot. Thus, the proposed
rule change will help to ensure
consistency across market centers
without implicating any competitive
issues.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
PO 00000
Frm 00174
Fmt 4703
Sfmt 4703
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the proposed rule change
does not: (i) Significantly affect the
protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative prior to 30 days from the date
on which it was filed, or such shorter
time as the Commission may designate,
if consistent with the protection of
investors and the public interest, the
proposed rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 12 and Rule 19b–4(f)(6)(iii)
thereunder.13
At any time within 60 days of the
filing of such proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
under Section 19(b)(2)(B) 14 of the Act to
determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change 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–
NYSEARCA–2019–66 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–NYSEARCA–2019–66. This
file number should be included on the
12 15
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6) requires a self-regulatory organization to give
the Commission written notice of its intent to file
the proposed rule change at least five business days
prior to the date of filing of the proposed rule
change, or such shorter time as designated by the
Commission. The Exchange has satisfied this
requirement.
14 15 U.S.C. 78s(b)(2)(B).
13 17
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Federal Register / Vol. 84, No. 186 / Wednesday, September 25, 2019 / Notices
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
10:00 a.m. and 3:00 p.m. Copies of the
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–NYSEARCA–2019–66 and
should be submitted on or before
October 16, 2019.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.15
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019–20694 Filed 9–24–19; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–87024; File No. SR–CBOE–
2019–059]
Self-Regulatory Organizations; Cboe
Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend Certain Rules
Relating To Market-Makers Upon
Migration to the Trading System Used
by Cboe Affiliated Exchanges
jbell on DSK3GLQ082PROD with NOTICES
September 19, 2019.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on
15 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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18:25 Sep 24, 2019
Jkt 247001
September 6, 2019, Cboe Exchange, Inc.
filed with the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been prepared by the self-regulatory
organization. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Cboe Exchange, Inc. (the ‘‘Exchange’’
or ‘‘Cboe Options’’) proposes to amend
and move certain current Rules in
connection with Market-Makers from
the Exchange’s currently effective
Rulebook (‘‘current Rulebook’’) to the
shell structure for the Exchange’s
Rulebook that will become effective
upon the migration of the Exchange’s
trading platform to the same system
used by the Cboe Affiliated Exchanges
(as defined below) (‘‘shell Rulebook’’).
The text of the proposed rule change is
provided in Exhibit 5.
The text of the proposed rule change
is also available on the Exchange’s
website (https://www.cboe.com/About
CBOE/CBOELegalRegulatory
Home.aspx), at the Exchange’s Office of
the Secretary, and at the Commission’s
Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange 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 these
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 aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
In 2016, the Exchange’s parent
company, Cboe Global Markets, Inc.
(formerly named CBOE Holdings, Inc.)
(‘‘Cboe Global’’), which is also the
parent company of Cboe C2 Exchange,
Inc. (‘‘C2’’), acquired Cboe EDGA
Exchange, Inc. (‘‘EDGA’’), Cboe EDGX
Exchange, Inc. (‘‘EDGX’’ or ‘‘EDGX
Options’’), Cboe BZX Exchange, Inc.
(‘‘BZX’’ or ‘‘BZX Options’’), and Cboe
PO 00000
Frm 00175
Fmt 4703
Sfmt 4703
50545
BYX Exchange, Inc. (‘‘BYX’’ and,
together with Cboe Options, C2, EDGX,
EDGA, and BZX, the ‘‘Cboe Affiliated
Exchanges’’). The Cboe Affiliated
Exchanges are working to align certain
system functionality, retaining only
intended differences between the Cboe
Affiliated Exchanges, in the context of a
technology migration. The Exchange
intends to migrate its trading platform to
the same system used by the Cboe
Affiliated Exchanges, which the
Exchange expects to complete on
October 7, 2019. The Exchange believes
offering similar functionality to the
extent practicable will reduce potential
confusion for market participants.
In connection with this technology
migration, the Exchange has a shell
Rulebook that resides alongside its
current Rulebook, which shell Rulebook
will contain the Rules that will be in
place upon completion of the Cboe
Options technology migration.
The Exchange now proposes to
update and amend its rules under
Chapter 8 (Market-Makers, Trading
Crowds and Modified Trading Systems).
Specifically, the Exchange proposes to
amend its rules regarding Market-Maker
registration, class appointments, and
obligations (applicable to MarketMakers generally and the various
Market-Maker types, i.e. Designated
Primary Market-Makers (‘‘DPMs’’),
Primary Market-Makers (‘‘PMMs’’), and
Lead Market-Makers (‘‘LMMs’’)) to
conform to the corresponding MarketMakers rules of its affiliated options
exchanges, C2, EDGX Options, and BZX
Options (the ‘‘Affiliated Options
Exchanges’’).3 The Exchange proposes
these amendments to reflect the current
Market-Maker functionality and general
rule language of that of the Affiliated
Options Exchanges to the extent
necessary to retain intended differences
unique to Cboe Options market-model,
functionality and/or rule text. In
conforming its Rule to that of is
Affiliated Options Exchanges’ rules, the
Exchange proposes few substantive
changes, which include proposed
changes to the FLEX appointment
process, updates to Market-Maker class
appointments and obligations to such
appointments to apply across Global
Trading Hours (‘‘GTH’’) and Regular
Trading Hours (‘‘RTH’’), updates to the
3 The Exchange notes that the Affiliated Options
Exchanges recently updated and harmonized their
Market-Maker rules. The recent updates to BZX
Option’s Market-Maker rules will be implemented
on or around October 1, 2019, and this filing refers
to these updates. See Securities Exchange Act
Release No. 85845 (May 13, 2019), 84 FR 22541
(May 17, 2019) (Notice of Filing and Immediate
Effectiveness of a Proposed Rule Change To Delay
the Operative Date of Rule Change Pursuant to SR–
CboeBZX–2019–025) (SR–CboeBZX–2019–043).
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]]>Agencies
[Federal Register Volume 84, Number 186 (Wednesday, September 25, 2019)]
[Notices]
[Pages 50543-50545]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-20694]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-87017; File No. SR-NYSEARCA-2019-66]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Extend the Pilot
Related to the Market-Wide Circuit Breaker in Rule 7.12-E
September 19, 2019.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that, on September 17, 2019, NYSE Arca, Inc. (``NYSE Arca'' or
the ``Exchange'') filed with the Securities and Exchange Commission
(the ``Commission'') the proposed rule change as described in Items I
and II below, which Items have been prepared by the self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to extend the pilot related to the market-
wide circuit breaker in Rule 7.12-E. The proposed rule change is
available on the Exchange's website at www.nyse.com, at the principal
office of the Exchange, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, 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.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
Rule 7.12-E provides a methodology for determining when to halt
trading in all stocks due to extraordinary market volatility (i.e.,
market-wide circuit breakers). The market-wide circuit breaker
(``MWCB'') mechanism under Rule 7.12-E was approved by the Commission
to operate on a pilot basis,\4\ the term of which was to coincide with
the pilot period for the Plan to Address Extraordinary Market
Volatility Pursuant to Rule 608 of Regulation NMS (the ``LULD
Plan''),\5\ including any extensions to the pilot period for the LULD
Plan.\6\ The Commission recently approved an amendment to the LULD Plan
for it to operate on a permanent, rather than pilot, basis.\7\ In light
of the proposal to make the LULD Plan permanent, the Exchange amended
Rule 7.12-E to untie the pilot's effectiveness from that of the LULD
Plan and to extend the pilot's effectiveness to the close of business
on October 18, 2019.\8\
---------------------------------------------------------------------------
\4\ See Securities Exchange Act Release No. 67090 (May 31,
2012), 77 FR 33531 (June 6, 2012) (SR-NYSEArca -2011-68).
\5\ See Securities Exchange Act Release No. 67091 (May 31,
2012), 77 FR 33498 (June 6, 2012). The LULD Plan provides a
mechanism to address extraordinary market volatility in individual
securities.
\6\ See Securities Exchange Act Release Nos. 67090 (May 31,
2012), 77 FR 33531 (June 6, 2012) (SR-NYSEArca -2011-68) (Approval
Order); and 68785 (January 31, 2013), 78 FR 8646 (February 6, 2013)
(SR-NYSEArca -2013-06) (Notice of Filing and Immediate Effectiveness
of Proposed Rule Change Delaying the Operative Date of a Rule Change
to Exchange Rule 7.12).
\7\ See Securities Exchange Act Release No. 85623 (April 11,
2019), 84 FR 16086 (April 17, 2019).
\8\ See Securities Exchange Act Release No. 85561 (April 9,
2019), 84 FR 15262 (April 15, 2019) (SR-NYSEArca -2019-23).
---------------------------------------------------------------------------
The Exchange now proposes to amend Rule 7.12-E to extend the pilot
to the close of business on October 18, 2020. This filing does not
propose any substantive or additional changes to Rule 7.12-E. The
Exchange will use the extension period to develop with the other SROs
rules and procedures that would allow for the periodic testing of the
performance of the MWCB mechanism, with industry member participation
in such testing. The extension will also permit the exchanges to
consider enhancements to the MWCB processes such as modifications to
the Level 3 process.
The market-wide circuit breaker under Rule 7.12-E provides an
[[Page 50544]]
important, automatic mechanism that is invoked to promote stability and
investor confidence during a period of significant stress when
securities markets experience extreme broad-based declines. All U.S.
equity exchanges and FINRA adopted uniform rules on a pilot basis
relating to market-wide circuit breakers in 2012 (``MWCB Rules''),
which are designed to slow the effects of extreme price movement
through coordinated trading halts across securities markets when severe
price declines reach levels that may exhaust market liquidity.\9\
Market-wide circuit breakers provide for trading halts in all equities
and options markets during a severe market decline as measured by a
single-day decline in the S&P 500 Index.
---------------------------------------------------------------------------
\9\ See Securities Exchange Act Release No. 67090 (May 31,
2012), 77 FR 33531 (June 6, 2012) (SR-BATS-2011-038; SR-BYX-2011-
025; SR-BX-2011-068; SR-CBOE-2011-087; SR-C2-2011-024; SR-CHX-2011-
30; SR-EDGA-2011-31; SR-EDGX-2011-30; SR-FINRA-2011-054; SR-ISE-
2011-61; SR-NASDAQ-2011-131; SR-NSX-2011-11; SR-NYSE-2011-48; SR-
NYSEAmex -2011-73; SR-NYSEArca -2011-68; SR-Phlx-2011-129) (``MWCB
Approval Order'').
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Pursuant to Rule 7.12-E, a market-wide trading halt will be
triggered if the S&P 500 Index declines in price by specified
percentages from the prior day's closing price of that index.
Currently, the triggers are set at three circuit breaker thresholds: 7%
(Level 1), 13% (Level 2), and 20% (Level 3). A market decline that
triggers a Level 1 or Level 2 halt after 9:30 a.m. ET and before 3:25
p.m. ET would halt market-wide trading for 15 minutes, while a similar
market decline at or after 3:25 p.m. ET would not halt market-wide
trading. A market decline that triggers a Level 3 halt, at any time
during the trading day, would halt market-wide trading until the
primary listing market opens the next trading day.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\10\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\11\ in particular, in that it is designed 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. The market-wide circuit breaker mechanism under Rule 7.12-E
is an important, automatic mechanism that is invoked to promote
stability and investor confidence during a period of significant stress
when securities markets experience extreme broad-based declines.
Extending the market-wide circuit breaker pilot for an additional year
would ensure the continued, uninterrupted operation of a consistent
mechanism to halt trading across the U.S. markets while the Exchange,
with the other SROs, consider and develop rules and procedures that
would allow for the periodic testing of the performance of the MWCB
mechanism, which would include industry member participation in such
testing. The extension will also permit the exchanges to consider
enhancements to the MWCB processes such as modifications to the Level 3
process.
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\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(5).
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The Exchange also believes that the proposed rule change promotes
just and equitable principles of trade in that it promotes transparency
and uniformity across markets concerning when and how to halt trading
in all stocks as a result of extraordinary market volatility. Based on
the foregoing, the Exchange believes the benefits to market
participants from the MWCB under Rule 7.12-E should continue on a pilot
basis because the MWCB will promote fair and orderly markets, and
protect investors and the public interest.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act because the proposal would
ensure the continued, uninterrupted operation of a consistent mechanism
to halt trading across the U.S. markets while the Exchange, in
conjunction with the other SROs, consider and develop rules and
procedures that would allow for the periodic testing of the performance
of the MWCB mechanism. Furthermore, as noted above, the extension will
permit the exchanges to consider enhancements to the MWCB processes
such as modifications to the Level 3 process.
Further, the Exchange understands that FINRA and other national
securities exchanges will file proposals to extend their rules
regarding the market-wide circuit breaker pilot. Thus, the proposed
rule change will help to ensure consistency across market centers
without implicating any competitive issues.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the proposed rule change does not: (i) Significantly affect
the protection of investors or the public interest; (ii) impose any
significant burden on competition; and (iii) become operative prior to
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, if consistent with the protection of
investors and the public interest, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act \12\ and Rule 19b-
4(f)(6)(iii) thereunder.\13\
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\12\ 15 U.S.C. 78s(b)(3)(A)(iii).
\13\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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At any time within 60 days of the filing of such proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings under
Section 19(b)(2)(B) \14\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\14\ 15 U.S.C. 78s(b)(2)(B).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change 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 [email protected]. Please include
File Number SR-NYSEARCA-2019-66 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-NYSEARCA-2019-66. This
file number should be included on the
[[Page 50545]]
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 10:00 a.m. and 3:00 p.m. Copies of
the 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-
NYSEARCA-2019-66 and should be submitted on or before October 16, 2019.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-20694 Filed 9-24-19; 8:45 am]
BILLING CODE 8011-01-P
