Securities Exchange Act of 1934; Order Denying Stay; In the Matter of Order Directing the Exchanges and the Financial Industry Regulatory Authority To Submit a New National Market System Plan Regarding Consolidated Equity Market Data, 36921-36923 [2020-13127]
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Federal Register / Vol. 85, No. 118 / Thursday, June 18, 2020 / Notices
the public markets for their investment
needs. The Exchange also notes the
proposed rule change has no impact on
the allocation or priority of orders and
responses at the conclusion of AIM and
C–AIM auctions. Additionally, any
Agency Order for less than 50 contracts
must continue to have an auction price
that improves the then-current NBBO.
The Exchange does not believe the
proposed rule change will impose any
burden on intermarket competition that
is not necessary or appropriate in
furtherance of the purposes of the Act,
as the proposed rule change relates to an
Exchange-specific auction mechanism
in a class of options only listed for
trading on the Exchange. The Exchange
also notes that other options exchanges
offer similar price improvement
auctions 13 that are available to market
participants, and other options
exchanges may, in their discretion,
adopt similar flexibility in connection
with their auctions.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange neither solicited nor
received comments on the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of
publication of this notice in the Federal
Register or within such longer period
up to 90 days (i) as the Commission may
designate if it finds such longer period
to be appropriate and publishes its
reasons for so finding or (ii) as to which
the Exchange consents, the Commission
will:
A. By order approve or disapprove
such proposed rule change, or
B. institute proceedings to determine
whether the proposed rule change
should be 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.
13 See e.g., BOX Options’ Price Improvement
Period (‘‘PIP’’) available at https://boxoptions.com/
about/price-improvement; and Complex Order Price
Improvement Period (‘‘COPIP’’) available at https://
boxoptions.com/about/complex-order-description/;
and MIAX Options’ Price Improvement Mechanism
(‘‘PRIME’’) and Complex Price Improvement
Mechanism (‘‘cPRIME’’) available at https://
www.miaxoptions.com/sites/default/files/
knowledge-center/2017-07/MIAX_PRIME_
07212017.pdf.
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Comments may be submitted by any of
the following methods:
SECURITIES AND EXCHANGE
COMMISSION
Electronic Comments
[Release No. 89066/June 12, 2020; File No.
4–757]
• 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–
CBOE–2020–051 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–CBOE–2020–051. 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–CBOE–2020–051, and
should be submitted on or before July 9,
2020.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.14
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–13118 Filed 6–17–20; 8:45 am]
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Securities Exchange Act of 1934;
Order Denying Stay; In the Matter of
Order Directing the Exchanges and the
Financial Industry Regulatory
Authority To Submit a New National
Market System Plan Regarding
Consolidated Equity Market Data
On June 1, 2020, Nasdaq Stock Market
LLC, Nasdaq BX, Inc., and Nasdaq
PHLX LLC filed a petition in the U.S.
Court of Appeals for the District of
Columbia Circuit seeking review of the
Commission’s Order Directing the
Exchanges and the Financial Industry
Regulatory Authority to Submit a New
National Market System (‘‘NMS’’) Plan
Regarding Consolidated Equity Market
Data (the ‘‘Governance Order’’), which
was approved by the Commission on
May 6, 2020 and later published in the
Federal Register. See 85 FR 28702 (May
13, 2020). On June 3, 2020, petitioners
filed with the Commission a motion to
stay the effect of the Governance Order
pending final resolution of their petition
for review.
Pursuant to Section 25(c)(2) of the
Securities Exchange Act of 1934
(‘‘Exchange Act’’) and Section 705 of the
Administrative Procedure Act, the
Commission has discretion to stay its
order directing the self-regulatory
organizations (‘‘SROs’’) to jointly
develop, and file with the Commission
by August 11, 2020, a single New
Consolidated Data Plan that replaces the
three current Equity Data Plans if it
finds that ‘‘justice so requires.’’ 15
U.S.C. 78y(c)(2); 5 U.S.C. 705. The
Commission has determined, however,
that petitioners have not met their
burden to demonstrate that the
extraordinary remedy of a stay of the
Commission’s Governance Order is
warranted. Petitioners have not
established sufficient irreparable harm,
petitioners’ legal challenges to the Order
lack merit, and the public interest
would be served by the SROs complying
with the requirements of the Order.
1. The Commission finds that
petitioners’ stay request overstates the
harm that will result from their
compliance with the Governance Order.
Petitioners assert that, in the absence of
a stay, they ‘‘will incur immediate and
significant upfront costs in drafting the
New Consolidated Data Plan, seeking
Commission approval of the plan, and,
if approved, implementing the plan.’’
Stay Mot. 16. But the Governance Order
does not establish a New Consolidated
Data Plan. It requires the SROs to file a
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Federal Register / Vol. 85, No. 118 / Thursday, June 18, 2020 / Notices
proposed plan with the Commission.
Pursuant to Regulation NMS Rule 608,
the New Consolidated Data Plan
submitted in response to the
Governance Order ‘‘will itself be
published for public comment prior to
any Commission decision to disapprove
or to approve the plan with any changes
or subject to any conditions the
Commission deems necessary or
appropriate after considering public
comment.’’ 85 FR at 28705; see 17 CFR
242.608. Through that process,
interested parties will still be able to
comment on the proposed plan, and the
Commission will review the plan and
may make changes or add conditions
before issuing a subsequent order
approving or disapproving a new plan.
Petitioners thus err by claiming that
they will incur significant upfront costs
in implementing a plan if the
Governance Order is not stayed.
Similarly, petitioners wrongly assert
that there would be any actions taken
pursuant to a New Consolidated Data
Plan that would have to be unwound in
the absence of a stay. Stay Mot. 16–17.
As the Governance Order makes clear,
the current Equity Data Plans will
remain in place until a New
Consolidated Data Plan has been
approved by the Commission and
implemented. See 17 CFR 242.608(b)(1);
85 FR at 28705, 28728. The proposed
plan, moreover, must include provisions
for the orderly transition of functions
and responsibilities from the three
existing Equity Data Plans. Id. at 28729.
And any approval order will be subject
to judicial review at that time.
Petitioners also overstate the harm
from compliance with the Governance
Order itself, including drafting the New
Consolidated Data Plan and seeking
Commission approval. For example, the
SROs will be able to use their extensive
expertise and experience in NMS plan
operation to efficiently formulate the
specific terms and provisions of the
proposed New Consolidated Data Plan.
85 FR at 28711. The Commission
anticipates that proposal costs will be
further reduced because most of the
detailed provisions relating to the
operation of the existing Equity Data
Plans could be imported into the New
Consolidated Data Plan without
substantial effort or great cost. Id. And
to the extent governance provisions in
the New Consolidated Data Plan would
differ from those in the existing Equity
Data Plans, the Governance Order
prescribes the content of these
provisions, further reducing the costs of
preparing the new plan. Id. at 28729.
We therefore do not believe that any
harm resulting from compliance with
the Governance Order warrants a stay.
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2. Petitioners have not shown a
likelihood of success on the merits.
Exchange Act Section 11A permits the
Commission ‘‘to authorize or require’’
SROs ‘‘to act jointly’’ with respect to
‘‘matters as to which they share
authority under this chapter in
planning, developing, operating, or
regulating a national market system.’’ 15
U.S.C. 78k–1(a)(3)(B). Rule 608 likewise
provides that ‘‘[a]ny two or more selfregulatory organizations, acting jointly,
may file a national market system plan’’
and that ‘‘[s]elf-regulatory organizations
are authorized to act jointly in’’
‘‘[p]lanning, developing, and operating
any national market subsystem or
facility contemplated by a national
market system plan,’’ ‘‘[p]reparing and
filing a national market system plan,’’
and ‘‘[i]mplementing or administering
an effective national market system
plan.’’ 17 CFR 242.608(a). In petitioners’
view, the statutory and regulatory
references to ‘‘acting jointly’’ mean that
SROs—and only SROs—may have
voting power on an NMS operating
committee.
The Commission has already
considered and rejected that argument.
In the Governance Order, the
Commission determined that granting
non-SROs voting power is consistent
with Section 11A and Rule 608(a).
Despite petitioners’ challenge, nothing
in the text of either Section 11A or Rule
608(a) demonstrates that ‘‘acting
jointly’’ means ‘‘acting jointly and
exclusively.’’ Rather, paragraph (2) of
Section 11A(a) contains a broad grant of
authority to the Commission, directing
it ‘‘to use its authority’’ under the
Exchange Act ‘‘to facilitate the
establishment of a national market
system for securities’’ in accordance
with certain broad congressional
findings and objectives. 15 U.S.C. 78k–
1(a)(2). Paragraph (3) then references the
Commission’s ability to authorize or
require SROs to act jointly, and nothing
in the text or structure of paragraph (3)
undermines the Commission’s grant of
authority in paragraph (2) or compels
the conclusion that joint SRO action
must mean exclusive SRO action. The
Commission’s grant of authority to SROs
in Rule 608(a)(3) likewise authorizes
SROs to act jointly but, in doing so, does
not by implication limit the
Commission’s authority to set forth a
governance structure that includes nonSROs with some measure of voting
power on an NMS plan operating
committee. Rather, as the Governance
Order notes, both Section 11A and Rule
608 are silent as to the participation of
non-SROs in the operation of the plan.
85 FR at 28715. The Governance Order’s
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allocation of voting power to non-SROs
is thus consistent with Section 11A and
Rule 608(a).
The Governance Order does not
discount the important role SROs play
in plan governance. But it balances that
role against the need for, among other
things, more viewpoints on plan
operating committees. The Commission
has determined that ‘‘the distribution of
voting power’’ described in the
Governance Order ‘‘appropriately
strikes th[e] balance’’ between broader
representation and the SROs’ statutory
and regulatory responsibilities, ‘‘by
providing for meaningful input from a
broad range of stakeholders while also
ensuring that the SROs retain sufficient
voting power to act jointly on behalf of
the plan pursuant to their regulatory
responsibilities.’’ 85 FR at 28722.
Petitioners’ other challenges
presented in their stay motion were
already rejected in the Governance
Order.
3. The Governance Order serves a
strong public interest. The governance
model for the Equity Data Plans was
established in 1970s. Since then, critical
developments in the equities markets—
including the heightening of an inherent
conflict of interest between the for-profit
and regulatory roles of the exchanges
and the concentration of voting power
in the Equity Data Plans among a few
large exchange groups—have
demonstrated the need for an updated
governance model. The public interest
will be served by the enhanced
decisionmaking and innovation in the
provision of equity market data that will
result from the governance changes
outlined in the Governance Order. And
the governance of the consolidated data
feeds can be improved by consolidating
the three existing, separate Equity Data
Plans into a single New Consolidated
Data Plan that will reduce existing
redundancies, inefficiencies, and
inconsistencies between and among the
Equity Data Plans. See 85 FR at 28711;
Proposed Order, 85 FR 2164, 2166–74
(Jan. 14, 2020). Moreover, as the Order
explains, ‘‘[a]ddressing the issues with
the current governance structure of the
Equity Data Plans discussed in this
Order is a key step in responding to
broader concerns about the consolidated
data feeds.’’ 85 FR at 28702 & n.11. Any
further delay in taking this first step
toward establishing a new governance
structure will impede the achievement
of these benefits.
Accordingly, it is ordered, pursuant to
Section 25(c)(2) of the Exchange Act and
Section 705 of the Administrative
Procedure Act that petitioners’ motions
for a stay be denied.
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Federal Register / Vol. 85, No. 118 / Thursday, June 18, 2020 / Notices
By the Commission.
Eduardo A. Aleman,
Deputy Secretary.
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
[FR Doc. 2020–13127 Filed 6–17–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–89063; File No. SR–CBOE–
2020–052]
Self-Regulatory Organizations; Cboe
Exchange, Inc.; Notice of Filing of a
Proposed Rule Change Relating To
Amend Rules 5.37, 5.38 and Rule 5.73
June 12, 2020.
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 June 3,
2020, Cboe Exchange, Inc. (the
‘‘Exchange’’ or ‘‘Cboe Options’’) filed
with the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III 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
Cboe Exchange, Inc. (the ‘‘Exchange’’
or ‘‘Cboe Options’’) proposes to amend
Rules 5.37, 5.38 and Rule 5.73. 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/
AboutCBOE/
CBOELegalRegulatoryHome.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
1 15
2 17
U.S.C. 78s(b)(1).
CFR 240.19b–4.
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1. Purpose
The Exchange proposes to amend
Rule 5.38 and Rule 5.73 regarding the
minimum increment for Complex
Automated Improvement Mechanism
(‘‘C–AIM’’) and FLEX AIM Auction
responses, respectively, in connection
with SPX Combo Orders, as well as Rule
5.37, Rule 5.38, and Rule 5.73 in
connection with dissemination of the
stop price in auction notification
messages for auctions in SPX.
By way of background, the Exchange
recently activated the Automated
Improvement Mechanism (‘‘AIM’’) and
C–AIM Auctions in S&P 500 Index
(‘‘SPX’’) options.3 When submitting an
Agency Order into a C–AIM Auction,
the Initiating Member must also submit
a contra-side second order for the same
size as the Agency Order. This second
order guarantees that the Agency Order
will receive an execution (i.e., it acts as
a stop). Upon commencement of a C–
AIM Auction, market participants
submit responses to trade against the
Agency Order. At the end of an auction,
depending on the contra-side interest
available, the contra order may be
allocated a certain percentage of the
Agency Order.4
When the Exchange is operating in its
normal trading environment, the
Exchange has not activated C–AIM (or
AIM) in SPX,5 thus all non-FLEX
crossing transactions in SPX were
previously only able to occur on the
trading floor. Therefore, Trading Permit
Holders may cross orders only in open
outcry on the trading floor. Pursuant to
Rule 5.87(f), a floor broker holding an
order for the eligible order size is
entitled to cross a certain percentage 6 of
3 The Exchange notes FLEX AIM in SPX had been
activated prior to March 16, 2020.
4 See generally Rule 5.38(e). The Exchange notes,
too, that the same process applies to the FLEX AIM
Auction pursuant to the FLEX Rules. See generally
Rule 5.73(e).
5 The Exchange had activated C–AIM and AIM in
SPX for the first time as a result of the March 16,
2020 trading floor suspension to help prevent the
spread of COVID–19 and operated in an allelectronic configuration beginning March 16, 2020.
Currently, the trading floor is scheduled to reopen
June 15, 2020. The Exchange intends to activate
AIM and C–AIM in SPX as electronic crossing
mechanisms available for Users while the trading
floor is open, subject to approval of this proposed
rule change and separate proposed rule changes
regarding AIM and C–AIM.
6 Currently, the Exchange has set the percentage
as 40% (the same crossing entitlement percentage
as on AIM, C–AIM, and FLEX AIM). See CBOE
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36923
the order with facilitated (and solicited
orders, if designated by the Exchange for
a class) after satisfying public customer
orders 7 if the order trades at or between
the best bid or offer given by the crowd
in response to the floor broker’s initial
request for a market. Specifically, a floor
broker representing an order of the
eligible order size or greater that he
wishes to cross (and the percentage of
which he is entitled to cross) must
request bids and offers for such option
series and make all persons in the
trading crowd, including the PAR
Official, aware of his request. In this
way, the crossing mechanism on the
trading floor allows for the trading
crowd to control the price of a crossing
order and indicates to responding TPHs
and the crossing floor broker a
reasonable range at which the market is
willing to buy (sell) at that point in
time. This provision is subject to the
crossing rules in Rule 5.86 (subject to
certain exceptions), which require
disclosure of all terms and conditions to
the crowd (including the price) prior to
executing a cross.8
Moreover, orders in SPX generally
take on greater risk than in other option
classes. SPX options tend to have a
higher notional value than options in
other classes (e.g., they are ten times the
notional size of SPY options), trade
much larger size than in other options
classes (indeed, even smaller sized
orders in SPX would be considered
fairly large size in other classes), and
effect increasingly more complex
strategies than executed in other classes
(e.g., SPX Combo orders) or executed
electronically (e.g., in open outcry
complex orders trade with larger ratios
that may be negotiated by the trading
crowd). Given these factors, SPX
Market-Makers on the floor generally
have more confidence in the pricing of
their responses as the crosses start with
a request for market and the trading
crowd then provides a ‘‘ballpark’’ of the
prices at which they are willing to trade
and a Market-Maker may thus more
confidently base response on the market
of other members of the trading crowd.
Pursuant to Rules 5.4(b) and
5.33(f)(1)(A), the minimum increment
for bids and offers on complex orders in
options on SPX 9 is $0.05 or greater, or
in any increment determined by the
Exchange. When seeking to cross SPX
Regulatory Circular RG16–179, Participation
Entitlement Applicable to Crossing Orders in Open
Outcry (November 18, 2016) available at https://
www.cboe.com/publish/RegCir/RG16-179.pdf.
7 Similarly, the AIM and C–AIM percentage
applies after public customer orders are satisfied.
See Rules 5.37(e) and 5.38(e).
8 See Rule 5.87, Interpretation and Policy .05.
9 Except for box/roll spreads.
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]]>Agencies
[Federal Register Volume 85, Number 118 (Thursday, June 18, 2020)]
[Notices]
[Pages 36921-36923]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-13127]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 89066/June 12, 2020; File No. 4-757]
Securities Exchange Act of 1934; Order Denying Stay; In the
Matter of Order Directing the Exchanges and the Financial Industry
Regulatory Authority To Submit a New National Market System Plan
Regarding Consolidated Equity Market Data
On June 1, 2020, Nasdaq Stock Market LLC, Nasdaq BX, Inc., and
Nasdaq PHLX LLC filed a petition in the U.S. Court of Appeals for the
District of Columbia Circuit seeking review of the Commission's Order
Directing the Exchanges and the Financial Industry Regulatory Authority
to Submit a New National Market System (``NMS'') Plan Regarding
Consolidated Equity Market Data (the ``Governance Order''), which was
approved by the Commission on May 6, 2020 and later published in the
Federal Register. See 85 FR 28702 (May 13, 2020). On June 3, 2020,
petitioners filed with the Commission a motion to stay the effect of
the Governance Order pending final resolution of their petition for
review.
Pursuant to Section 25(c)(2) of the Securities Exchange Act of 1934
(``Exchange Act'') and Section 705 of the Administrative Procedure Act,
the Commission has discretion to stay its order directing the self-
regulatory organizations (``SROs'') to jointly develop, and file with
the Commission by August 11, 2020, a single New Consolidated Data Plan
that replaces the three current Equity Data Plans if it finds that
``justice so requires.'' 15 U.S.C. 78y(c)(2); 5 U.S.C. 705. The
Commission has determined, however, that petitioners have not met their
burden to demonstrate that the extraordinary remedy of a stay of the
Commission's Governance Order is warranted. Petitioners have not
established sufficient irreparable harm, petitioners' legal challenges
to the Order lack merit, and the public interest would be served by the
SROs complying with the requirements of the Order.
1. The Commission finds that petitioners' stay request overstates
the harm that will result from their compliance with the Governance
Order. Petitioners assert that, in the absence of a stay, they ``will
incur immediate and significant upfront costs in drafting the New
Consolidated Data Plan, seeking Commission approval of the plan, and,
if approved, implementing the plan.'' Stay Mot. 16. But the Governance
Order does not establish a New Consolidated Data Plan. It requires the
SROs to file a
[[Page 36922]]
proposed plan with the Commission. Pursuant to Regulation NMS Rule 608,
the New Consolidated Data Plan submitted in response to the Governance
Order ``will itself be published for public comment prior to any
Commission decision to disapprove or to approve the plan with any
changes or subject to any conditions the Commission deems necessary or
appropriate after considering public comment.'' 85 FR at 28705; see 17
CFR 242.608. Through that process, interested parties will still be
able to comment on the proposed plan, and the Commission will review
the plan and may make changes or add conditions before issuing a
subsequent order approving or disapproving a new plan. Petitioners thus
err by claiming that they will incur significant upfront costs in
implementing a plan if the Governance Order is not stayed.
Similarly, petitioners wrongly assert that there would be any
actions taken pursuant to a New Consolidated Data Plan that would have
to be unwound in the absence of a stay. Stay Mot. 16-17. As the
Governance Order makes clear, the current Equity Data Plans will remain
in place until a New Consolidated Data Plan has been approved by the
Commission and implemented. See 17 CFR 242.608(b)(1); 85 FR at 28705,
28728. The proposed plan, moreover, must include provisions for the
orderly transition of functions and responsibilities from the three
existing Equity Data Plans. Id. at 28729. And any approval order will
be subject to judicial review at that time.
Petitioners also overstate the harm from compliance with the
Governance Order itself, including drafting the New Consolidated Data
Plan and seeking Commission approval. For example, the SROs will be
able to use their extensive expertise and experience in NMS plan
operation to efficiently formulate the specific terms and provisions of
the proposed New Consolidated Data Plan. 85 FR at 28711. The Commission
anticipates that proposal costs will be further reduced because most of
the detailed provisions relating to the operation of the existing
Equity Data Plans could be imported into the New Consolidated Data Plan
without substantial effort or great cost. Id. And to the extent
governance provisions in the New Consolidated Data Plan would differ
from those in the existing Equity Data Plans, the Governance Order
prescribes the content of these provisions, further reducing the costs
of preparing the new plan. Id. at 28729. We therefore do not believe
that any harm resulting from compliance with the Governance Order
warrants a stay.
2. Petitioners have not shown a likelihood of success on the
merits. Exchange Act Section 11A permits the Commission ``to authorize
or require'' SROs ``to act jointly'' with respect to ``matters as to
which they share authority under this chapter in planning, developing,
operating, or regulating a national market system.'' 15 U.S.C. 78k-
1(a)(3)(B). Rule 608 likewise provides that ``[a]ny two or more self-
regulatory organizations, acting jointly, may file a national market
system plan'' and that ``[s]elf-regulatory organizations are authorized
to act jointly in'' ``[p]lanning, developing, and operating any
national market subsystem or facility contemplated by a national market
system plan,'' ``[p]reparing and filing a national market system
plan,'' and ``[i]mplementing or administering an effective national
market system plan.'' 17 CFR 242.608(a). In petitioners' view, the
statutory and regulatory references to ``acting jointly'' mean that
SROs--and only SROs--may have voting power on an NMS operating
committee.
The Commission has already considered and rejected that argument.
In the Governance Order, the Commission determined that granting non-
SROs voting power is consistent with Section 11A and Rule 608(a).
Despite petitioners' challenge, nothing in the text of either Section
11A or Rule 608(a) demonstrates that ``acting jointly'' means ``acting
jointly and exclusively.'' Rather, paragraph (2) of Section 11A(a)
contains a broad grant of authority to the Commission, directing it
``to use its authority'' under the Exchange Act ``to facilitate the
establishment of a national market system for securities'' in
accordance with certain broad congressional findings and objectives. 15
U.S.C. 78k-1(a)(2). Paragraph (3) then references the Commission's
ability to authorize or require SROs to act jointly, and nothing in the
text or structure of paragraph (3) undermines the Commission's grant of
authority in paragraph (2) or compels the conclusion that joint SRO
action must mean exclusive SRO action. The Commission's grant of
authority to SROs in Rule 608(a)(3) likewise authorizes SROs to act
jointly but, in doing so, does not by implication limit the
Commission's authority to set forth a governance structure that
includes non-SROs with some measure of voting power on an NMS plan
operating committee. Rather, as the Governance Order notes, both
Section 11A and Rule 608 are silent as to the participation of non-SROs
in the operation of the plan. 85 FR at 28715. The Governance Order's
allocation of voting power to non-SROs is thus consistent with Section
11A and Rule 608(a).
The Governance Order does not discount the important role SROs play
in plan governance. But it balances that role against the need for,
among other things, more viewpoints on plan operating committees. The
Commission has determined that ``the distribution of voting power''
described in the Governance Order ``appropriately strikes th[e]
balance'' between broader representation and the SROs' statutory and
regulatory responsibilities, ``by providing for meaningful input from a
broad range of stakeholders while also ensuring that the SROs retain
sufficient voting power to act jointly on behalf of the plan pursuant
to their regulatory responsibilities.'' 85 FR at 28722.
Petitioners' other challenges presented in their stay motion were
already rejected in the Governance Order.
3. The Governance Order serves a strong public interest. The
governance model for the Equity Data Plans was established in 1970s.
Since then, critical developments in the equities markets--including
the heightening of an inherent conflict of interest between the for-
profit and regulatory roles of the exchanges and the concentration of
voting power in the Equity Data Plans among a few large exchange
groups--have demonstrated the need for an updated governance model. The
public interest will be served by the enhanced decisionmaking and
innovation in the provision of equity market data that will result from
the governance changes outlined in the Governance Order. And the
governance of the consolidated data feeds can be improved by
consolidating the three existing, separate Equity Data Plans into a
single New Consolidated Data Plan that will reduce existing
redundancies, inefficiencies, and inconsistencies between and among the
Equity Data Plans. See 85 FR at 28711; Proposed Order, 85 FR 2164,
2166-74 (Jan. 14, 2020). Moreover, as the Order explains,
``[a]ddressing the issues with the current governance structure of the
Equity Data Plans discussed in this Order is a key step in responding
to broader concerns about the consolidated data feeds.'' 85 FR at 28702
& n.11. Any further delay in taking this first step toward establishing
a new governance structure will impede the achievement of these
benefits.
Accordingly, it is ordered, pursuant to Section 25(c)(2) of the
Exchange Act and Section 705 of the Administrative Procedure Act that
petitioners' motions for a stay be denied.
[[Page 36923]]
By the Commission.
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2020-13127 Filed 6-17-20; 8:45 am]
BILLING CODE 8011-01-P
