Self-Regulatory Organizations; Nasdaq BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Extend the Current Pilot Program Related to BX Rule 11890, 18626-18628 [2020-06854]
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Federal Register / Vol. 85, No. 64 / Thursday, April 2, 2020 / Notices
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Moreover, Congress was aware of the
Commission’s ability to delegate
authority to approve SRO rule filings
when the time restrictions in Exchange
Act Section 19(b)(2)(D) were enacted.
Yet it did not indicate that a delegated
order would not comply with the
statutory deadlines. Congress authorized
actions taken by delegated authority in
1962,108 added the 240-day requirement
for approving or disapproving a
proposed rule change in 1975,109 and
added the provision that a proposed
rule change is deemed approved if the
Commission fails to act in that time in
2010.110 Indeed, Congress amended the
delegated authority provisions at the
same time it enacted the majority of the
current review provisions for SRO
proposed rule changes.111
To construe Section 19(b)(2), as BOX
does, to require Commission review of
an order by delegated authority to be
completed within 240 days ‘‘would
undermine both the specific deadlines
set forth in the statute and the
Commission’s ability to delegate
functions.’’ 112 Exchange Act Section 4A
makes clear that, when it delegates an
action, the Commission retains a
discretionary right to review staff action,
either on its own initiative or at the
request of a party to that action.113 If
action taken by delegated authority were
insufficient to meet the statutory
deadline, the Commission would either
be unable to delegate this function, or be
entered pursuant to [delegated authority]’’); Rule of
Practice 431(f), 17 CFR 201.431(f) (giving an order
by delegated authority operative effect, even when
review has been sought, until a person receives
actual notice that it was been stayed, modified, or
reversed on review).
108 See ‘‘An Act to Authorize the Securities and
Exchange Commission to Delegate Certain
Functions,’’ Public Law 87–592, 76 Stat. 394, 394–
95 (1962).
109 See Securities Act Amendments of 1975,
Public Law 94–29, 89 Stat. 97.
110 Dodd-Frank Wall Street Reform and Consumer
Protection Act, Public Law 111–203, 124 Stat. 1376
(2010). Commission Rule of Practice 431(e), which
states that actions performed by delegated authority
shall be deemed the actions of the Commission, was
originally enacted in 1963, and in its current form
in 1995. See Exchange Act Release No. 35833 (June
9, 1995), 60 FR 32738, 32823 (June 23, 1995),
https://www.govinfo.gov/content/pkg/FR-1995-0623/pdf/95-14750.pdf (noting that Rule of Practice
431(e) replaced previous Rule 26(e)); Exchange Act
Release No. 7031, 1963 WL 64555, at *12 (Mar. 8,
1963) (‘‘Any determination at a delegated level shall
have immediate effect and be deemed the action of
the Commission.’’).
111 See Securities Act Amendments of 1975, 89
Stat. 97.
112 See Order Setting Aside Action by Delegated
Authority and Disapproving a Proposed Rule
Change, as Modified by Amendments No. 1 and No.
2, Regarding the Acquisition of CHX Holdings, Inc.
by North America Casin Holdings, Inc., Exchange
Act Release No. 82727 (Feb. 15, 2018) at 21–23,
https://www.sec.gov/rules/sro/chx/2018/3482727.pdf.
113 See 15 U.S.C. 78d–1(b).
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faced with the possibility that this right
of review would be thwarted; action
taken by delegated authority close to the
end of the statutory period would leave
insufficient time for either the
Commission or outside parties to seek
review. Alternatively, to avoid this
result, an action taken by delegated
authority would have to be taken well
before the end of the statutory period so
the Commission could complete any
review of the action before the
underlying proposed rule change was
deemed approved. And the Commission
might have to issue its decision with
insufficient time to engage in the
independent and thoughtful analysis
required by both the Exchange Act and
the APA or otherwise have the order
deemed approved before completing its
deliberations.114
Nor does Exchange Act Section 4A(c)
support BOX’s argument. That provision
states: ‘‘If the right to exercise such
review is declined, or if no such review
is sought within the time stated in the
rules promulgated by the Commission,
then the action [taken by delegated
authority] shall, for all purposes,
including appeal or review thereof, be
deemed the action of the
Commission.’’ 115 Contrary to BOX’s
assertion, this does not mean that an
action taken by delegated authority shall
‘‘ ‘be deemed the action of the
Commission’ only ‘[i]f the right to
exercise such review is declined, or if
no such review is sought within the
time stated in the rules promulgated by
the Commission.’ ’’ 116 Section 4A is
silent on the effect of a delegated action
when Commission review is sought and
granted.117 And the Commission
employed the rulemaking authority
granted by Section 4A(b) to promulgate
Rule 431(e), which provides that actions
made pursuant to delegated authority
are deemed actions of the
Commission.118
114 See Motor Vehicle Mfrs. Ass’n v. State Farm
Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983) (‘‘[T]he
agency must examine the relevant data and
articulate a satisfactory explanation for its action
including a ‘rational connection between the facts
found and the choice made.’’’) (quoting Burlington
Truck Lines, Inc. v. United States, 371 U.S. 156, 168
(1962)).
115 15 U.S.C. 78d–1(c).
116 The emphasis and alteration are in BOX’s
filing. The language in the internal quotation marks
is in Section 4A(c), 15 U.S.C. 78d–1(c). The word
‘‘only’’ is not. Id.
117 Cf. Indiana Bell Telephone Co., Inc. v.
McCarthy, 362 F.3d 378, 387 (7th Cir. 2004) (noting
that decisions made pursuant to delegated authority
represent actions of the agency).
118 See Exchange Act Section 4A(a), 15 U.S.C.
78d–1(a) (‘‘[T]he Commission shall have the
authority to delegate, by published order or rule,
any of its functions . . . .’’); see also Exchange Act
Release No. 35833 (June 9, 1995), 60 FR 32738,
32777 (June 23, 1995), https://www.govinfo.gov/
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III. Conclusion
For the reasons set forth above, the
Commission does not find, pursuant to
Section 19(b)(2) of the Exchange Act,
that BOX has met its burden of
demonstrating that the Proposed Rule
Changes are consistent with the
requirements of the Exchange Act and
the rules and regulations thereunder
applicable to a national securities
exchange. It is therefore ordered,
pursuant to Rule 431 of the
Commission’s Rules of Practice, that the
Proposed Rule Changes (SR–BOX–
2018–24; SR–BOX–2018–37; SR–BOX–
2019–04) be, and hereby are,
disapproved.
By the Commission.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–06837 Filed 4–1–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–88505; File No. SR–BX–
2020–005]
Self-Regulatory Organizations; Nasdaq
BX, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Extend the Current
Pilot Program Related to BX Rule
11890
March 27, 2020.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on March 23,
2020, Nasdaq BX, Inc. (‘‘BX’’ or
‘‘Exchange’’) 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 Exchange. 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
current pilot program related to BX Rule
11890 (Clearly Erroneous Transactions)
by six months, to the close of business
on October 20, 2020.
content/pkg/FR-1995-06-23/pdf/95-14750.pdf
(noting that Commission was relying on the
authority granted by Exchange Act Section 4A,
among other provisions, in promulgating the Rule
430 series); Exchange Act Release No. 7031, 1963
WL 64555, at *1 (Mar. 8, 1963) (noting that original
rule relied on same language from Section 4A(a)).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
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Federal Register / Vol. 85, No. 64 / Thursday, April 2, 2020 / Notices
The text of the proposed rule change
is available on the Exchange’s website at
https://nasdaqbx.cchwallstreet.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
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.
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A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The purpose of the proposed rule
change is to extend the current pilot
program related to Rule 11890, Clearly
Erroneous Transactions, to the close of
business on October 20, 2020. This
change is being proposed to allow the
Exchange to further consider a
permanent proposal for clearly
erroneous execution reviews.
On September 10, 2010, the
Commission approved, on a pilot basis,
changes to Rule 11890 that, among other
things: (i) Provided for uniform
treatment of clearly erroneous execution
reviews in multi-stock events involving
twenty or more securities; and (ii)
reduced the ability of the Exchange to
deviate from the objective standards set
forth in the rule.3 In 2013, the Exchange
adopted a provision designed to address
the operation of the Plan.4 Finally, in
2014, the Exchange adopted two
additional provisions providing that: (i)
A series of transactions in a particular
security on one or more trading days
may be viewed as one event if all such
transactions were effected based on the
same fundamentally incorrect or grossly
misinterpreted issuance information
resulting in a severe valuation error for
all such transactions; and (ii) in the
event of any disruption or malfunction
in the operation of the electronic
3 See Securities Exchange Act Release No. 62886
(September 10, 2010), 75 FR 56613 (September 16,
2010) (SR–BX–2010–040).
4 See Securities Exchange Act Release No. 68818
(February 1, 2013), 78 FR 9100 (February 7, 2013)
(SR–BX–2013–010).
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communications and trading facilities of
an Exchange, another SRO, or
responsible single plan processor in
connection with the transmittal or
receipt of a trading halt, an Officer,
acting on his or her own motion, shall
nullify any transaction that occurs after
a trading halt has been declared by the
primary listing market for a security and
before such trading halt has officially
ended according to the primary listing
market.5 These changes are currently
scheduled to operate for a pilot period
that concludes on April 20, 2020.6
If the pilot period is not either
extended, replaced or approved as
permanent, the prior versions of
paragraphs (a)(2)(C), (c)(1), (b)(i), and
(b)(ii) shall be in effect, and the
provisions of paragraphs (g) through (i)
shall be null and void.7 In such an
event, the remaining sections of Rule
11890 would continue to apply to all
transactions executed on the Exchange.
The Exchange understands that the
other national securities exchanges and
Financial Industry Regulatory Authority
(‘‘FINRA’’) will also file similar
proposals to extend their respective
clearly erroneous execution pilot
programs, the substance of which are
identical to Rule 11890.
The Exchange does not propose any
additional changes to Rule 11890. The
Exchange believes the benefits to market
participants from the more objective
clearly erroneous executions rule
should continue on a limited six month
pilot basis after the current expiration
date to allow the Exchange to continue
to assess whether additional changes
should also be made to the operation of
the clearly erroneous execution rules.
Extending the effectiveness of Rule
11890 for an additional six months
should provide the Exchange, other
national securities exchanges and
FINRA additional time to consider
further amendments to the clearly
erroneous execution rules.
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with the
requirements of Section 6(b) of the Act,8
in general, and Section 6(b)(5) of the
Act,9 in particular, in that it is designed
to remove impediments to and perfect
5 See Securities Exchange Act Release No. 72434
(June 19, 2014), 79 FR 36110 (June 25, 2014) (SR–
BX–2014–021).
6 See Securities Exchange Act Release No. 87359
(October 18, 2019), 84 FR 57131 (October 24, 2019)
(SR–BX–2019–037).
7 See notes 3–5, supra. The prior versions of
paragraphs (a)(2)(C), (c)(1), (b)(i), and (b)(ii)
generally provided greater discretion to the
Exchange with respect to breaking erroneous trades.
8 15 U.S.C. 78f(b).
9 15 U.S.C. 78f(b)(5).
PO 00000
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18627
the mechanism of a free and open
market and a national market system, to
promote just and equitable principles of
trade, and, in general, to protect
investors and the public interest and not
to permit unfair discrimination between
customers, issuers, brokers, or dealers.
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 review of
transactions as clearly erroneous. The
Exchange believes that extending the
clearly erroneous execution pilot under
Rule 11890 for an additional six months
would help assure that the
determination of whether a clearly
erroneous trade has occurred will be
based on clear and objective criteria,
and that the resolution of the incident
will occur promptly through a
transparent process. The proposed rule
change would also help assure
consistent results in handling erroneous
trades across the U.S. equities markets,
thus furthering fair and orderly markets,
the protection of investors and the
public interest. Based on the foregoing,
the Exchange believes the amended
Clearly Erroneous Transactions rule
should continue to be in effect on a pilot
basis while the Exchange, other national
securities exchanges and FINRA
consider a permanent proposal for
clearly erroneous execution reviews.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change would impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. The proposal
would ensure the continued,
uninterrupted operation of harmonized
clearly erroneous execution rules across
the U.S. equities markets while the
Exchange, other national securities
exchanges and FINRA consider further
amendments to these rules. The
Exchange understands that the other
national securities exchanges and
FINRA will also file similar proposals to
extend their respective clearly
erroneous execution pilot programs.
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 either
solicited or received.
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18628
Federal Register / Vol. 85, No. 64 / Thursday, April 2, 2020 / Notices
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing 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 for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate, it has
become effective pursuant to Section
19(b)(3)(A) of the Act 10 and Rule 19b–
4(f)(6) thereunder.11
A proposed rule change filed under
Rule 19b–4(f)(6) 12 normally does not
become operative prior to 30 days after
the date of the filing. However, Rule
19b–4(f)(6)(iii) 13 permits the
Commission to 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 proposed
rule change may become effective and
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, as it will allow the
current clearly erroneous execution
pilot program to continue
uninterrupted, without any changes,
while the Exchange and the other
national securities exchanges consider a
permanent proposal for clearly
erroneous execution reviews. For this
reason, the Commission hereby waives
the 30-day operative delay and
designates the proposed rule change as
operative upon filing.14
At any time within 60 days of the
filing of the 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
10 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6)(iii) requires a self-regulatory organization to
give the Commission written notice of its intent to
file the proposed rule change, along with a brief
description and text of 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.
12 17 CFR 240.19b–4(f)(6).
13 17 CFR 240.19b–4(f)(6)(iii).
14 For purposes only of waiving the 30-day
operative delay, the Commission has also
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
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11 17
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to determine whether the proposed rule
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:
• 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–
BX–2020–005 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–BX–2020–005. 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
10:00 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–BX–2020–005 and should
be submitted on or before April 23,
2020.
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[FR Doc. 2020–06854 Filed 4–1–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–88500; File No. SR–
CboeEDGX–2020–013]
Electronic Comments
PO 00000
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.15
J. Matthew DeLesDernier,
Assistant Secretary.
Sfmt 4703
Self-Regulatory Organizations; Cboe
EDGX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change To Extend the
Current Pilot Program Related to EDGX
Rule 11.15, Clearly Erroneous
Executions, to the Close of Business
on October 20, 2020
March 27, 2020.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on March 18,
2020, Cboe EDGX Exchange, Inc.
(‘‘Exchange’’ or ‘‘EDGX’’) 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 Exchange. The Exchange filed the
proposal as a ‘‘non-controversial’’
proposed rule change pursuant to
Section 19(b)(3)(A)(iii) of the Act 3 and
Rule 19b–4(f)(6) thereunder.4 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 EDGX Exchange, Inc. (‘‘EDGX’’
or the ‘‘Exchange’’) is filing with the
Securities and Exchange Commission
(the ‘‘Commission’’) a proposed rule
change to extend the current pilot
program related to EDGX Rule 11.15,
Clearly Erroneous Executions, to the
close of business on October 20, 2020.
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://markets.cboe.com/us/
options/regulation/rule_filings/edgx/),
at the Exchange’s Office of the
Secretary, and at the Commission’s
Public Reference Room.
15 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(iii).
4 17 CFR 240.19b–4(f)(6).
1 15
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]]>Agencies
[Federal Register Volume 85, Number 64 (Thursday, April 2, 2020)]
[Notices]
[Pages 18626-18628]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-06854]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-88505; File No. SR-BX-2020-005]
Self-Regulatory Organizations; Nasdaq BX, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Extend the
Current Pilot Program Related to BX Rule 11890
March 27, 2020.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on March 23, 2020, Nasdaq BX, Inc. (``BX'' or ``Exchange'') 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 Exchange. 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\ 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 current pilot program related
to BX Rule 11890 (Clearly Erroneous Transactions) by six months, to the
close of business on October 20, 2020.
[[Page 18627]]
The text of the proposed rule change is available on the Exchange's
website at https://nasdaqbx.cchwallstreet.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 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
The purpose of the proposed rule change is to extend the current
pilot program related to Rule 11890, Clearly Erroneous Transactions, to
the close of business on October 20, 2020. This change is being
proposed to allow the Exchange to further consider a permanent proposal
for clearly erroneous execution reviews.
On September 10, 2010, the Commission approved, on a pilot basis,
changes to Rule 11890 that, among other things: (i) Provided for
uniform treatment of clearly erroneous[thinsp]execution reviews in
multi-stock events involving twenty or more securities; and (ii)
reduced the ability of the Exchange to deviate from the objective
standards set forth in the rule.\3\ In 2013, the Exchange adopted a
provision designed to address the operation of the Plan.\4\ Finally, in
2014, the Exchange adopted two additional provisions providing that:
(i) A series of transactions in a particular security on one or more
trading days may be viewed as one event if all such transactions were
effected based on the same fundamentally incorrect or grossly
misinterpreted issuance information resulting in a severe valuation
error for all such transactions; and (ii) in the event of any
disruption or malfunction in the operation of the electronic
communications and trading facilities of an Exchange, another SRO, or
responsible single plan processor in connection with the transmittal or
receipt of a trading halt, an Officer, acting on his or her own motion,
shall nullify any transaction that occurs after a trading halt has been
declared by the primary listing market for a security and before such
trading halt has officially ended according to the primary listing
market.\5\ These changes are currently scheduled to operate for a pilot
period that concludes on April 20, 2020.\6\
---------------------------------------------------------------------------
\3\ See Securities Exchange Act Release No. 62886 (September 10,
2010), 75 FR 56613 (September 16, 2010) (SR-BX-2010-040).
\4\ See Securities Exchange Act Release No. 68818 (February 1,
2013), 78 FR 9100 (February 7, 2013) (SR-BX-2013-010).
\5\ See Securities Exchange Act Release No. 72434 (June 19,
2014), 79 FR 36110 (June 25, 2014) (SR-BX-2014-021).
\6\ See Securities Exchange Act Release No. 87359 (October 18,
2019), 84 FR 57131 (October 24, 2019) (SR-BX-2019-037).
---------------------------------------------------------------------------
If the pilot period is not either extended, replaced or approved as
permanent, the prior versions of paragraphs (a)(2)(C), (c)(1), (b)(i),
and (b)(ii) shall be in effect, and the provisions of paragraphs (g)
through (i) shall be null and void.\7\ In such an event, the remaining
sections of Rule 11890 would continue to apply to all transactions
executed on the Exchange. The Exchange understands that the other
national securities exchanges and Financial Industry Regulatory
Authority (``FINRA'') will also file similar proposals to extend their
respective clearly erroneous execution pilot programs, the substance of
which are identical to Rule 11890.
---------------------------------------------------------------------------
\7\ See notes 3-5, supra. The prior versions of paragraphs
(a)(2)(C), (c)(1), (b)(i), and (b)(ii) generally provided greater
discretion to the Exchange with respect to breaking erroneous
trades.
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The Exchange does not propose any additional changes to Rule 11890.
The Exchange believes the benefits to market participants from the more
objective clearly erroneous executions rule should continue on a
limited six month pilot basis after the current expiration date to
allow the Exchange to continue to assess whether additional changes
should also be made to the operation of the clearly erroneous execution
rules. Extending the effectiveness of Rule 11890 for an additional six
months should provide the Exchange, other national securities exchanges
and FINRA additional time to consider further amendments to the clearly
erroneous execution rules.
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the requirements of Section 6(b) of the Act,\8\ in general, and Section
6(b)(5) of the Act,\9\ in particular, in that it is designed to remove
impediments to and perfect the mechanism of a free and open market and
a national market system, to promote just and equitable principles of
trade, and, in general, to protect investors and the public interest
and not to permit unfair discrimination between customers, issuers,
brokers, or dealers.
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\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(5).
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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 review of transactions as clearly
erroneous. The Exchange believes that extending the clearly erroneous
execution pilot under Rule 11890 for an additional six months would
help assure that the determination of whether a clearly erroneous trade
has occurred will be based on clear and objective criteria, and that
the resolution of the incident will occur promptly through a
transparent process. The proposed rule change would also help assure
consistent results in handling erroneous trades across the U.S.
equities markets, thus furthering fair and orderly markets, the
protection of investors and the public interest. Based on the
foregoing, the Exchange believes the amended Clearly Erroneous
Transactions rule should continue to be in effect on a pilot basis
while the Exchange, other national securities exchanges and FINRA
consider a permanent proposal for clearly erroneous execution reviews.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change would
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The proposal would ensure
the continued, uninterrupted operation of harmonized clearly erroneous
execution rules across the U.S. equities markets while the Exchange,
other national securities exchanges and FINRA consider further
amendments to these rules. The Exchange understands that the other
national securities exchanges and FINRA will also file similar
proposals to extend their respective clearly erroneous execution pilot
programs. 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 either solicited or received.
[[Page 18628]]
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing 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 for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \10\ and Rule 19b-
4(f)(6) thereunder.\11\
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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change, along
with a brief description and text of 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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A proposed rule change filed under Rule 19b-4(f)(6) \12\ normally
does not become operative prior to 30 days after the date of the
filing. However, Rule 19b-4(f)(6)(iii) \13\ permits the Commission to
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 proposed
rule change may become effective and 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, as
it will allow the current clearly erroneous execution pilot program to
continue uninterrupted, without any changes, while the Exchange and the
other national securities exchanges consider a permanent proposal for
clearly erroneous execution reviews. For this reason, the Commission
hereby waives the 30-day operative delay and designates the proposed
rule change as operative upon filing.\14\
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\12\ 17 CFR 240.19b-4(f)(6).
\13\ 17 CFR 240.19b-4(f)(6)(iii).
\14\ For purposes only of waiving the 30-day operative delay,
the Commission has also considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of the 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 to
determine whether the proposed rule 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 [email protected]. Please include
File Number SR-BX-2020-005 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-BX-2020-005. 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 10:00 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-BX-2020-005 and should be submitted on
or before April 23, 2020.
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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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-06854 Filed 4-1-20; 8:45 am]
BILLING CODE 8011-01-P
