Self-Regulatory Organizations; Investors Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend IEX Rule 11.280 Concerning the Resumption of Trading Following a Level 3 Market-Wide Circuit Breaker Halt, 16720-16723 [2020-06118]

Download as PDF lotter on DSKBCFDHB2PROD with NOTICES 16720 Federal Register / Vol. 85, No. 57 / Tuesday, March 24, 2020 / Notices with such use of customer securities as collateral.1 The information required by Rule 8c– 1 is necessary for the execution of the Commission’s mandate under the Exchange Act to prevent broker-dealers from hypothecating or arranging for the hypothecation of any securities carried for the account of any customer under certain circumstances. In addition, the information required by Rule 8c–1 provides important investor protections. There are approximately 46 respondents as of year-end 2019 (i.e., broker-dealers that conducted business with the public, filed Part II of the FOCUS Report, did not claim an exemption from the Reserve Formula computation, and reported that they had a bank loan during at least one quarter of the current year). Each respondent makes an estimated 45 annual responses, for an aggregate total of 2,070 responses per year.2 Each response takes approximately 0.5 hours to complete. Therefore, the total third-party disclosure burden per year is 1,035 hours.3 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 estimates of the burden of the proposed 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 to comments and suggestions submitted in writing within 60 days of this publication. 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: David Bottom, Director/Chief Information Officer, Securities and Exchange Commission, c/o Cynthia Roscoe, 100 F Street NE, Washington, DC 20549, or send an email to: PRA_ Mailbox@sec.gov. Dated: March 18, 2020. J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2020–06108 Filed 3–23–20; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–88421; File No. SR–IEX– 2020–04] Self-Regulatory Organizations; Investors Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend IEX Rule 11.280 Concerning the Resumption of Trading Following a Level 3 Market-Wide Circuit Breaker Halt March 18, 2020. 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 March 18, 2020, the Investors Exchange LLC (‘‘IEX’’ 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 Pursuant to the provisions of Section 19(b)(1) under the Act,4 and Rule 19b– 4 thereunder,5 IEX is filing with the Commission a proposed rule change to amend IEX Rule 11.280 concerning the resumption of trading following a Level 3 market-wide circuit breaker halt. IEX has designated this rule change as ‘‘noncontroversial’’ under Section 19(b)(3)(A) of the Act 6 and provided the Commission with the notice required by Rule 19b–4(f)(6) thereunder.7 The text of the proposed rule change is available at the Exchange’s website at www.iextrading.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. 1 15 1 See Exchange Act Release No. 2690 (November 15, 1940); Exchange Act Release No. 9428 (December 29, 1971). 2 46 respondents × 45 annual responses = 2,070 aggregate total of annual responses. 3 2,070 responses × 0.5 hours = 1,035 hours. VerDate Sep<11>2014 17:34 Mar 23, 2020 Jkt 250001 U.S.C. 78s(b)(1). U.S.C. 78a. 3 17 CFR 240.19b–4. 4 15 U.S.C. 78s(b)(1). 5 17 CFR 240.19b–4. 6 15 U.S.C. 78s(b)(3)(A). 7 17 CFR 240.19b–4. 2 15 PO 00000 Frm 00115 Fmt 4703 Sfmt 4703 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 these statement may be examined at the places specified in Item IV below. The self-regulatory organization 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 The Exchange proposes to amend IEX Rule 11.280(b) 8 concerning the resumption of trading following a Level 3 market-wide circuit breaker halt. The Exchange is proposing this rule change in conjunction with other national securities exchanges and the Financial Industry Regulatory Authority (‘‘FINRA’’). IEX Rule 11.280 provides a methodology for determining when to halt trading in all stocks due to extraordinary market volatility (i.e., market-wide circuit breakers).9 The market-wide circuit breaker mechanism (‘‘MWCB’’) under IEX Rule 11.280 was approved by the Commission to operate on a pilot basis, 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’’), including any extensions to the pilot period for the LULD Plan.10 The Commission recently approved an amendment to the LULD Plan for it to operate on a permanent, rather than pilot, basis.11 In light of the proposal to make the LULD Plan permanent, the Exchange amended IEX Rule 11.280 to untie the pilot’s effectiveness from that of the LULD Plan and to extend the pilot’s effectiveness to the close of 8 See IEX Rule 11.280(b). IEX Rule 11.280(a)–(d) and (f). 10 See Securities Exchange Act Release No. 67091 (May 31, 2012), 77 FR 33498 (June 6, 2012). An amendment to the LULD Plan adding IEX as a Participant was filed with the Commission on August 11, 2016 and became effective upon filing pursuant to Rule 608(b)(3)(iii) of the Act. See Securities Exchange Act Release No. 78703 (August 26, 2016), 81 FR 60397 (September 1, 2016) (File No. 4–631). 11 See Securities Exchange Act Release No. 85623 (April 11, 2019), 84 FR 16086 (April 17, 2019). 9 See E:\FR\FM\24MRN1.SGM 24MRN1 Federal Register / Vol. 85, No. 57 / Tuesday, March 24, 2020 / Notices business on October 18, 2019.12 The Exchange then filed to extend the pilot for an additional year to the close of business on October 18, 2020.13 The market-wide circuit breaker under IEX Rule 11.280 provides 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. 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.14 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 IEX Rule 11.280, 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).15 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.16 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.17 Today, in the event that a Level 3 market decline occurs, the Exchange would halt trading for the remainder of the trading day and would not resume until the primary listing market opens the next trading day. Thus, if the primary listing market is the New York Stock Exchange, Inc. (‘‘NYSE’’), IEX would not resume trading in NYSElisted securities until NYSE opens at 9:30 a.m. ET on the next trading day.18 But if the primary listing market is the Nasdaq Stock Market LLC (‘‘Nasdaq’’), lotter on DSKBCFDHB2PROD with NOTICES 12 See Securities Exchange Act Release No. 85576 (April 9, 2019), 84 FR 15237 (April 15, 2019) (SR– IEX–2019–04). 13 See Securities Exchange Act Release No. 87298 (October 15, 2019), 84 FR 56255 (October 21, 2019) (SR–IEX–2019–11). 14 See supra note 10. 15 See IEX Rule 11.280(a). 16 See IEX Rule 11.280(b)(1). 17 See IEX Rule 11.280(b)(2). 18 See NYSE Rule 1.1. VerDate Sep<11>2014 17:34 Mar 23, 2020 Jkt 250001 IEX would resume trading in Nasdaqlisted securities at 8:00 a.m. ET on the next trading day, when IEX commences its Pre-Market Session.19 Effectively, Nasdaq would open its listed securities for trading following a Level 3 halt the same as a regular trading day under the current MWCB Level 3 re-opening procedures.20 For non-Nasdaq listed securities, however, IEX would resume trading once the primary listing market has re-opened the security for trading, which time may currently vary depending on the primary listing market.21 Upon feedback from industry participants, the Exchange has been working with other national securities exchanges and FINRA to establish a standardized approach for resuming trading in all NMS Stocks following a Level 3 halt. The proposed approach would allow for the opening of all securities the next trading day after a Level 3 halt as a regular trading day and is designed to ensure that Level 3 MWCB events are handled in a more consistent manner that is transparent for market participants.22 As proposed, a Level 3 halt would end at the end of the trading day on which it is declared. This proposed change would allow for next-day trading to resume in all NMS Stocks no differently from any other trading day. In other words, an exchange could resume trading in any security when it first begins trading under its rules and would not need to wait for the primary listing market to re-open trading in a security before it could start trading 19 Nasdaq’s pre-market session begins at 4:00 a.m. ET and continues until 9:30 a.m. ET. See Nasdaq Rule 4120(b)(4). IEX’s Pre-Market Session begins at 8:00 a.m. ET and continues until 9:30 a.m. ET. See IEX Rule 1.160(aa). 20 The Nasdaq system begins accepting and processing eligible orders in time priority at 4:00 a.m. ET. See Nasdaq Rule 4752(b) for further description of trading in the Pre-Market Session. 21 Furthermore, there may be cross-market differences in how each exchange currently opens the next day after a Level 3 MWCB halt. As discussed above, while Nasdaq currently resumes trading in its listed securities no differently from a regular trading day, other exchanges may, for instance, conduct a halt auction process instead of opening in the normal course under their respective rules. As discussed later in this filing, the proposed changes will allow each exchange to resume trading in all securities the next trading day following a Level 3 halt no differently from a regular trading day. 22 Of note, the U.S. futures markets, which have similar rules for coordinated MWCB halts, normally begin their ‘‘next day’’ trading session at 6:00 p.m. ET (for CFE and CME) or at 8:00 p.m. ET (for ICE). If the U.S. futures markets amend their MWCB rules, as needed, to allow for normal course trading following a Level 3 halt, the futures markets would resume trading in their normal course at 6:00 p.m. ET (CFE and CME) or 8:00 p.m. ET (ICE) the same day as the Level 3 halt. PO 00000 Frm 00116 Fmt 4703 Sfmt 4703 16721 such security.23 Accordingly, under the proposal, the Exchange could begin trading all securities at the beginning of the Exchange’s Pre-Market Session, just as it currently does for Nasdaq-listed securities. To effect this change, the Exchange proposes to delete the language in IEX Rule 11.280(b)(2) requiring the Exchange to wait until the primary listing exchange opens the next trading day following a Level 3 market decline, and specify that the Exchange will halt trading for the remainder of the same trading day.24 The proposed rule change would therefore allow each exchange to resume trading in all securities the next trading day following a Level 3 halt at whatever time such exchange normally begins trading under its rules, which for IEX would be at the beginning of the Pre-Market Session at 8:00 a.m. ET under its current rules.25 The Exchange also expects that the primary listing exchanges will facilitate this change by sending resume messages to the applicable securities information processor (‘‘SIP’’) to lift the Level 3 trading halt message in all securities. The resumption messages will be disseminated after the SIP has started on the next trading day and before the start of the earliest pre-market trading session of all exchanges. If a security is separately subject to a regulatory halt that has not ended, the primary listing exchange would replace the Level 3 halt message with the applicable regulatory halt message. Having a consistent approach for all securities will make the opening process the day after a Level 3 halt more uniform and reduce complexity, which the Exchange believes is important after a significant market event. Based on industry feedback, the Exchange believes that opening in the normal course in all equity securities as opposed to, for instance, having a normal opening for Nasdaq-listed securities only or waiting for the primary listing exchange to conduct a halt auction prior to resuming trading, will be more beneficial to the marketplace. By allowing trading to resume after a Level 3 halt in all securities no differently from any normal trading day under the respective 23 The Exchange anticipates that the other national securities exchanges and FINRA will also file similar proposals to amend their MWCB rules on the resumption of trading following Level 3 halts, and amend their rules, where required, to have their Level 3 next-day openings happen normally. See e.g., Securities Exchange Act Release No. 88004 (January 17, 2020), 85 FR 3992 (January 23, 2020) (SR–NASDAQ–2020–003). 24 Presently, the Exchange’s equities trading day ends at 5:00 p.m. ET. See IEX Rule 1.160(aa). 25 See supra note 19. E:\FR\FM\24MRN1.SGM 24MRN1 16722 Federal Register / Vol. 85, No. 57 / Tuesday, March 24, 2020 / Notices lotter on DSKBCFDHB2PROD with NOTICES rules of each exchange, the proposed rule change would provide greater certainty to the marketplace by ensuring a familiar experience for all market participants that trade NMS Stocks and balances out potential concerns around volatility. While the Exchange recognizes that the impact of this proposal is to permit all securities to be traded in the Pre-Market Session, which does not have certain price protections for volatility such as LULD Bands or MWCB protections, the Exchange nonetheless believes that this outcome is outweighed by the benefits provided by opening in the Pre-Market Session in a manner that is more familiar to the marketplace. Moreover, allowing the resumption of trading to occur on the Exchange at the beginning of the PreMarket Session in all NMS Stocks will allow for price formation to occur earlier in the trading day, which in turn allows market participants to react to news that has developed. As such, trading at the beginning of regular hours may be more orderly. 2. Statutory Basis The Exchange believes that its proposal is consistent with the requirements of Sections 6(b) 26 and 6(b)(5) of the Act,27 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 IEX Rule 11.280 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. The Exchange 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, and how the markets will resume trading following a Level 3 market decline. As described above, the Exchange, together with other national securities exchanges and FINRA, is seeking to adopt a standardized approach related to resuming trading in NMS Stocks after a Level 3 MWCB halt. In this regard, the Exchange believes that the proposal to resume trading in all securities following a Level 3 halt in the same manner that securities would open 26 15 27 15 U.S.C. 78f(b). U.S.C. 78f(b)(5). VerDate Sep<11>2014 17:34 Mar 23, 2020 trading on a regular trading day (i.e., the beginning of the Pre-Market Session at 8 a.m. ET on IEX) will benefit investors, the national market system, Exchange Members, and the Exchange market by promoting a fair and orderly market and reducing confusion during a significant cross-market event. By allowing trading to resume after a Level 3 halt in all securities no differently from any normal trading day under the respective rules of each exchange, the proposed rule change would provide greater certainty to the marketplace by ensuring a familiar experience for all market participants that trade NMS Stocks. Based on the foregoing, the Exchange believes the benefits to market participants from the MWCB under IEX Rule 11.280 with the proposed standardized process for resuming trading in all securities following a Level 3 halt will promote fair and orderly markets and protect investors and the public interest. B. Self-Regulatory Organization’s Statement on Burden on Competition IEX 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 proposed Level 3 rule change described above would standardize the opening process for all securities on the Exchange, which would make the opening process the day after a Level 3 halt more uniform and reduce complexity. Further the Exchange understands that FINRA and the other national securities exchanges will file similar proposals to adopt the proposed Level 3 rule change. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The Exchange has filed the proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act 28 and Rule 19b–4(f)(6) thereunder.29 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 28 15 29 17 Jkt 250001 PO 00000 U.S.C. 78s(b)(3)(A)(iii). CFR 240.19b–4(f)(6). Frm 00117 Fmt 4703 Sfmt 4703 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 and Rule 19b–4(f)(6)(iii) thereunder.30 A proposed rule change filed under Rule 19b–4(f)(6) 31 normally does not become operative prior to 30 days after the date of the filing. However, pursuant to Rule 19b–4(f)(6)(iii),32 the Commission may designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange has asked the Commission to waive the 30-day operative delay so that the proposal may become operative immediately upon filing. The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest. The Commission notes that it approved a substantively similarly proposed rule change submitted by Nasdaq.33 Waiver of the operative delay will ensure consistency across the market centers and the timely implementation of the proposed rule change. Accordingly, the Commission waives the 30-day operative delay and designates the proposed rule change operative upon filing.34 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) 35 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, 30 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 Commission has waived the prefiling requirement. 31 17 CFR 240.19b–4(f)(6). 32 17 CFR 240.19b–4(f)(6)(iii). 33 See Securities Exchange Act Release No. 88360 (March 11, 2020) (SR–NASDAQ–2020–003). 34 For purposes only of waiving the 30-day operative delay, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 35 15 U.S.C. 78s(b)(2)(B). E:\FR\FM\24MRN1.SGM 24MRN1 Federal Register / Vol. 85, No. 57 / Tuesday, March 24, 2020 / Notices including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments Paper Comments • Send paper comments in triplicate to Vanessa Countryman, Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549–1090. All submissions should refer to File Number SR–IEX–2020–04. This file number should be included in 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 Section, 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 will also be available for inspection and copying at the IEX’s principal office and on its internet website at www.iextrading.com. 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–IEX–2020–04 and should be submitted on or before April 14, 2020. 17:34 Mar 23, 2020 [FR Doc. 2020–06112 Filed 3–23–20; 8:45 am] BILLING CODE 4710–AD–P BILLING CODE 8011–01–P DEPARTMENT OF TRANSPORTATION Jkt 250001 Maritime Administration DEPARTMENT OF STATE [Docket No. MARAD–2020–0055] [Public Notice:11080] Designation of Amir Muhammad Sa’id Abdal-Rahman al-Mawla as a Specially Designated Global Terrorist Acting under the authority of and in accordance with section 1(a)(ii)(B) of Executive Order 13224 of September 23, 2001, as amended by Executive Order 13268 of July 2, 2002, Executive Order 13284 of January 23, 2003, and Executive Order 13886 of September 9, 2019, I hereby determine that the person known as Amir Muhammad Sa’id Abdal-Rahman al-Mawla, also known as Hajji Abdallah, also known as Amir Muhammad Sa’id ‘Abd-al-Rahman Muhammad al-Mula, also known as Muhammad Sa’id ‘Abd-al-Rahman alMawla, also known as Abdullah Qardash, also known as Abu-‘Abdullah Qardash, also known as Abu-‘Umar alTurkmani, also known as Al-Ustadh, also known as Ustadh Ahmad, also known as ‘Abdul Amir Muhammad Sa’id Salbi, also known as Hajji Abdullah al-Afari, also known as al-Hajj Abdullah Qardash, also known as Abu Ibrahim al-Hashimi al-Qurashi, is a leader of the Islamic State of Iraq and Syria, a group whose property and interests in property are blocked pursuant to a prior determination by the Secretary of State pursuant to Executive Order 13224. Consistent with the determination in section 10 of Executive Order 13224 that prior notice to persons determined to be subject to the Order who might have a constitutional presence in the United States would render ineffectual the blocking and other measures authorized in the Order because of the ability to transfer funds instantaneously, I determine that no prior notice needs to be provided to any person subject to this determination who might have a constitutional presence in the United States, because to do so would render ineffectual the measures authorized in the Order. This notice shall be published in the Federal Register. 36 17 VerDate Sep<11>2014 Dated: March 2, 2020. Michael R. Pompeo, Secretary of State. [FR Doc. 2020–06118 Filed 3–23–20; 8:45 am] • 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– IEX–2020–04 on the subject line. lotter on DSKBCFDHB2PROD with NOTICES For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.36 J. Matthew DeLesDernier, Assistant Secretary. 16723 PO 00000 CFR 200.30–3(a)(12). Frm 00118 Fmt 4703 Sfmt 4703 Request for Comments on the Approval of a Previously Approved Information Collection: America’s Marine Highway Program Maritime Administration, DOT Notice and request for comments. AGENCY: ACTION: The Maritime Administration (MARAD) invites public comments on our intention to request the Office of Management and Budget (OMB) approval to renew an information collection. The information to be collected will be used by the Maritime Administration to evaluate and review applications being submitted for project designation. The review will assess factors such as project scope, impact, public benefit, environmental effect, offsetting costs, cost to the government (if any), the likelihood of long-term selfsupporting operations, and its relationship with Marine Highway Routes once designated. We are required to publish this notice in the Federal Register by the Paperwork Reduction Act of 1995. DATES: Comments must be submitted on or before May 26, 2020. ADDRESSES: You may submit comments [identified by Docket No. MARAD– 2020–0055] through one of the following methods: • Federal eRulemaking Portal: https:// www.regulations.gov. Search using the above DOT docket number and follow the online instructions for submitting comments. • Fax: 1–202–493–2251. • Mail or Hand Delivery: Docket Management Facility, U.S. Department of Transportation, 1200 New Jersey Avenue SE, West Building, Room W12– 140, Washington, DC 20590, between 9 a.m. and 5 p.m., Monday through Friday, except on Federal holidays. Comments are invited on: (a) Whether the proposed collection of information is necessary for the Department’s performance; (b) the accuracy of the estimated burden; (c) ways for the Department to enhance the quality, utility and clarity of the information collection; and (d) ways that the burden SUMMARY: E:\FR\FM\24MRN1.SGM 24MRN1

Agencies

[Federal Register Volume 85, Number 57 (Tuesday, March 24, 2020)]
[Notices]
[Pages 16720-16723]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-06118]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-88421; File No. SR-IEX-2020-04]


Self-Regulatory Organizations; Investors Exchange LLC; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
IEX Rule 11.280 Concerning the Resumption of Trading Following a Level 
3 Market-Wide Circuit Breaker Halt

March 18, 2020.
    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 March 18, 2020, the Investors Exchange LLC (``IEX'' 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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Pursuant to the provisions of Section 19(b)(1) under the Act,\4\ 
and Rule 19b-4 thereunder,\5\ IEX is filing with the Commission a 
proposed rule change to amend IEX Rule 11.280 concerning the resumption 
of trading following a Level 3 market-wide circuit breaker halt. IEX 
has designated this rule change as ``non-controversial'' under Section 
19(b)(3)(A) of the Act \6\ and provided the Commission with the notice 
required by Rule 19b-4(f)(6) thereunder.\7\
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    \4\ 15 U.S.C. 78s(b)(1).
    \5\ 17 CFR 240.19b-4.
    \6\ 15 U.S.C. 78s(b)(3)(A).
    \7\ 17 CFR 240.19b-4.
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    The text of the proposed rule change is available at the Exchange's 
website at www.iextrading.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 these statement may be examined at 
the places specified in Item IV below. The self-regulatory organization 
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
    The Exchange proposes to amend IEX Rule 11.280(b) \8\ concerning 
the resumption of trading following a Level 3 market-wide circuit 
breaker halt. The Exchange is proposing this rule change in conjunction 
with other national securities exchanges and the Financial Industry 
Regulatory Authority (``FINRA'').
---------------------------------------------------------------------------

    \8\ See IEX Rule 11.280(b).
---------------------------------------------------------------------------

    IEX Rule 11.280 provides a methodology for determining when to halt 
trading in all stocks due to extraordinary market volatility (i.e., 
market-wide circuit breakers).\9\ The market-wide circuit breaker 
mechanism (``MWCB'') under IEX Rule 11.280 was approved by the 
Commission to operate on a pilot basis, 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''), including any extensions to the pilot period for the LULD 
Plan.\10\ The Commission recently approved an amendment to the LULD 
Plan for it to operate on a permanent, rather than pilot, basis.\11\ In 
light of the proposal to make the LULD Plan permanent, the Exchange 
amended IEX Rule 11.280 to untie the pilot's effectiveness from that of 
the LULD Plan and to extend the pilot's effectiveness to the close of

[[Page 16721]]

business on October 18, 2019.\12\ The Exchange then filed to extend the 
pilot for an additional year to the close of business on October 18, 
2020.\13\
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    \9\ See IEX Rule 11.280(a)-(d) and (f).
    \10\ See Securities Exchange Act Release No. 67091 (May 31, 
2012), 77 FR 33498 (June 6, 2012). An amendment to the LULD Plan 
adding IEX as a Participant was filed with the Commission on August 
11, 2016 and became effective upon filing pursuant to Rule 
608(b)(3)(iii) of the Act. See Securities Exchange Act Release No. 
78703 (August 26, 2016), 81 FR 60397 (September 1, 2016) (File No. 
4-631).
    \11\ See Securities Exchange Act Release No. 85623 (April 11, 
2019), 84 FR 16086 (April 17, 2019).
    \12\ See Securities Exchange Act Release No. 85576 (April 9, 
2019), 84 FR 15237 (April 15, 2019) (SR-IEX-2019-04).
    \13\ See Securities Exchange Act Release No. 87298 (October 15, 
2019), 84 FR 56255 (October 21, 2019) (SR-IEX-2019-11).
---------------------------------------------------------------------------

    The market-wide circuit breaker under IEX Rule 11.280 provides 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. 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.\14\ 
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.
---------------------------------------------------------------------------

    \14\ See supra note 10.
---------------------------------------------------------------------------

    Pursuant to IEX Rule 11.280, 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).\15\ 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.\16\ 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.\17\
---------------------------------------------------------------------------

    \15\ See IEX Rule 11.280(a).
    \16\ See IEX Rule 11.280(b)(1).
    \17\ See IEX Rule 11.280(b)(2).
---------------------------------------------------------------------------

    Today, in the event that a Level 3 market decline occurs, the 
Exchange would halt trading for the remainder of the trading day and 
would not resume until the primary listing market opens the next 
trading day. Thus, if the primary listing market is the New York Stock 
Exchange, Inc. (``NYSE''), IEX would not resume trading in NYSE-listed 
securities until NYSE opens at 9:30 a.m. ET on the next trading 
day.\18\ But if the primary listing market is the Nasdaq Stock Market 
LLC (``Nasdaq''), IEX would resume trading in Nasdaq-listed securities 
at 8:00 a.m. ET on the next trading day, when IEX commences its Pre-
Market Session.\19\ Effectively, Nasdaq would open its listed 
securities for trading following a Level 3 halt the same as a regular 
trading day under the current MWCB Level 3 re-opening procedures.\20\ 
For non-Nasdaq listed securities, however, IEX would resume trading 
once the primary listing market has re-opened the security for trading, 
which time may currently vary depending on the primary listing 
market.\21\
---------------------------------------------------------------------------

    \18\ See NYSE Rule 1.1.
    \19\ Nasdaq's pre-market session begins at 4:00 a.m. ET and 
continues until 9:30 a.m. ET. See Nasdaq Rule 4120(b)(4). IEX's Pre-
Market Session begins at 8:00 a.m. ET and continues until 9:30 a.m. 
ET. See IEX Rule 1.160(aa).
    \20\ The Nasdaq system begins accepting and processing eligible 
orders in time priority at 4:00 a.m. ET. See Nasdaq Rule 4752(b) for 
further description of trading in the Pre-Market Session.
    \21\ Furthermore, there may be cross-market differences in how 
each exchange currently opens the next day after a Level 3 MWCB 
halt. As discussed above, while Nasdaq currently resumes trading in 
its listed securities no differently from a regular trading day, 
other exchanges may, for instance, conduct a halt auction process 
instead of opening in the normal course under their respective 
rules. As discussed later in this filing, the proposed changes will 
allow each exchange to resume trading in all securities the next 
trading day following a Level 3 halt no differently from a regular 
trading day.
---------------------------------------------------------------------------

    Upon feedback from industry participants, the Exchange has been 
working with other national securities exchanges and FINRA to establish 
a standardized approach for resuming trading in all NMS Stocks 
following a Level 3 halt. The proposed approach would allow for the 
opening of all securities the next trading day after a Level 3 halt as 
a regular trading day and is designed to ensure that Level 3 MWCB 
events are handled in a more consistent manner that is transparent for 
market participants.\22\
---------------------------------------------------------------------------

    \22\ Of note, the U.S. futures markets, which have similar rules 
for coordinated MWCB halts, normally begin their ``next day'' 
trading session at 6:00 p.m. ET (for CFE and CME) or at 8:00 p.m. ET 
(for ICE). If the U.S. futures markets amend their MWCB rules, as 
needed, to allow for normal course trading following a Level 3 halt, 
the futures markets would resume trading in their normal course at 
6:00 p.m. ET (CFE and CME) or 8:00 p.m. ET (ICE) the same day as the 
Level 3 halt.
---------------------------------------------------------------------------

    As proposed, a Level 3 halt would end at the end of the trading day 
on which it is declared. This proposed change would allow for next-day 
trading to resume in all NMS Stocks no differently from any other 
trading day. In other words, an exchange could resume trading in any 
security when it first begins trading under its rules and would not 
need to wait for the primary listing market to re-open trading in a 
security before it could start trading such security.\23\ Accordingly, 
under the proposal, the Exchange could begin trading all securities at 
the beginning of the Exchange's Pre-Market Session, just as it 
currently does for Nasdaq-listed securities.
---------------------------------------------------------------------------

    \23\ The Exchange anticipates that the other national securities 
exchanges and FINRA will also file similar proposals to amend their 
MWCB rules on the resumption of trading following Level 3 halts, and 
amend their rules, where required, to have their Level 3 next-day 
openings happen normally. See e.g., Securities Exchange Act Release 
No. 88004 (January 17, 2020), 85 FR 3992 (January 23, 2020) (SR-
NASDAQ-2020-003).
---------------------------------------------------------------------------

    To effect this change, the Exchange proposes to delete the language 
in IEX Rule 11.280(b)(2) requiring the Exchange to wait until the 
primary listing exchange opens the next trading day following a Level 3 
market decline, and specify that the Exchange will halt trading for the 
remainder of the same trading day.\24\ The proposed rule change would 
therefore allow each exchange to resume trading in all securities the 
next trading day following a Level 3 halt at whatever time such 
exchange normally begins trading under its rules, which for IEX would 
be at the beginning of the Pre-Market Session at 8:00 a.m. ET under its 
current rules.\25\ The Exchange also expects that the primary listing 
exchanges will facilitate this change by sending resume messages to the 
applicable securities information processor (``SIP'') to lift the Level 
3 trading halt message in all securities. The resumption messages will 
be disseminated after the SIP has started on the next trading day and 
before the start of the earliest pre-market trading session of all 
exchanges. If a security is separately subject to a regulatory halt 
that has not ended, the primary listing exchange would replace the 
Level 3 halt message with the applicable regulatory halt message.
---------------------------------------------------------------------------

    \24\ Presently, the Exchange's equities trading day ends at 5:00 
p.m. ET. See IEX Rule 1.160(aa).
    \25\ See supra note 19.
---------------------------------------------------------------------------

    Having a consistent approach for all securities will make the 
opening process the day after a Level 3 halt more uniform and reduce 
complexity, which the Exchange believes is important after a 
significant market event. Based on industry feedback, the Exchange 
believes that opening in the normal course in all equity securities as 
opposed to, for instance, having a normal opening for Nasdaq-listed 
securities only or waiting for the primary listing exchange to conduct 
a halt auction prior to resuming trading, will be more beneficial to 
the marketplace. By allowing trading to resume after a Level 3 halt in 
all securities no differently from any normal trading day under the 
respective

[[Page 16722]]

rules of each exchange, the proposed rule change would provide greater 
certainty to the marketplace by ensuring a familiar experience for all 
market participants that trade NMS Stocks and balances out potential 
concerns around volatility. While the Exchange recognizes that the 
impact of this proposal is to permit all securities to be traded in the 
Pre-Market Session, which does not have certain price protections for 
volatility such as LULD Bands or MWCB protections, the Exchange 
nonetheless believes that this outcome is outweighed by the benefits 
provided by opening in the Pre-Market Session in a manner that is more 
familiar to the marketplace. Moreover, allowing the resumption of 
trading to occur on the Exchange at the beginning of the Pre-Market 
Session in all NMS Stocks will allow for price formation to occur 
earlier in the trading day, which in turn allows market participants to 
react to news that has developed. As such, trading at the beginning of 
regular hours may be more orderly.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with the 
requirements of Sections 6(b) \26\ and 6(b)(5) of the Act,\27\ 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 IEX Rule 11.280 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. The Exchange 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, and how the markets will resume trading following a 
Level 3 market decline. As described above, the Exchange, together with 
other national securities exchanges and FINRA, is seeking to adopt a 
standardized approach related to resuming trading in NMS Stocks after a 
Level 3 MWCB halt. In this regard, the Exchange believes that the 
proposal to resume trading in all securities following a Level 3 halt 
in the same manner that securities would open trading on a regular 
trading day (i.e., the beginning of the Pre-Market Session at 8 a.m. ET 
on IEX) will benefit investors, the national market system, Exchange 
Members, and the Exchange market by promoting a fair and orderly market 
and reducing confusion during a significant cross-market event. By 
allowing trading to resume after a Level 3 halt in all securities no 
differently from any normal trading day under the respective rules of 
each exchange, the proposed rule change would provide greater certainty 
to the marketplace by ensuring a familiar experience for all market 
participants that trade NMS Stocks.
---------------------------------------------------------------------------

    \26\ 15 U.S.C. 78f(b).
    \27\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    Based on the foregoing, the Exchange believes the benefits to 
market participants from the MWCB under IEX Rule 11.280 with the 
proposed standardized process for resuming trading in all securities 
following a Level 3 halt will promote fair and orderly markets and 
protect investors and the public interest.

B. Self-Regulatory Organization's Statement on Burden on Competition

    IEX 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 proposed Level 3 rule change 
described above would standardize the opening process for all 
securities on the Exchange, which would make the opening process the 
day after a Level 3 halt more uniform and reduce complexity. Further 
the Exchange understands that FINRA and the other national securities 
exchanges will file similar proposals to adopt the proposed Level 3 
rule change.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \28\ and Rule 19b-4(f)(6) thereunder.\29\ 
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 and Rule 19b-
4(f)(6)(iii) thereunder.\30\
---------------------------------------------------------------------------

    \28\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \29\ 17 CFR 240.19b-4(f)(6).
    \30\ 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 Commission has waived the pre-filing requirement.
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) \31\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\32\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay so that the proposal 
may become operative immediately upon filing. The Commission believes 
that waiving the 30-day operative delay is consistent with the 
protection of investors and the public interest. The Commission notes 
that it approved a substantively similarly proposed rule change 
submitted by Nasdaq.\33\ Waiver of the operative delay will ensure 
consistency across the market centers and the timely implementation of 
the proposed rule change. Accordingly, the Commission waives the 30-day 
operative delay and designates the proposed rule change operative upon 
filing.\34\
---------------------------------------------------------------------------

    \31\ 17 CFR 240.19b-4(f)(6).
    \32\ 17 CFR 240.19b-4(f)(6)(iii).
    \33\ See Securities Exchange Act Release No. 88360 (March 11, 
2020) (SR-NASDAQ-2020-003).
    \34\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
---------------------------------------------------------------------------

    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) \35\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \35\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing,

[[Page 16723]]

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-IEX-2020-04 on the subject line.

Paper Comments

     Send paper comments in triplicate to Vanessa Countryman, 
Secretary, Securities and Exchange Commission, 100 F Street NE, 
Washington, DC 20549-1090.
All submissions should refer to File Number SR-IEX-2020-04. This file 
number should be included in 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 Section, 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 will also be available for inspection 
and copying at the IEX's principal office and on its internet website 
at www.iextrading.com. 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-IEX-2020-04 
and should be submitted on or before April 14, 2020.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\36\
---------------------------------------------------------------------------

    \36\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-06118 Filed 3-23-20; 8:45 am]
BILLING CODE 8011-01-P
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