Self-Regulatory Organizations; MEMX, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Extend the Current Pilot Program Related to MEMX Rule 11.15, Clearly Erroneous Executions, 62340-62342 [2020-21768]
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Federal Register / Vol. 85, No. 192 / Friday, October 2, 2020 / Notices
Christopher C. Mohr; Comments Due:
October 6, 2020.
2. Docket No(s).: MC2020–258 and
CP2020–288; Filing Title: USPS Request
to Add Priority Mail Express & Priority
Mail Contract 119 to Competitive
Product List and Notice of Filing
Materials Under Seal; Filing Acceptance
Date: September 28, 2020; Filing
Authority: 39 U.S.C. 3642, 39 CFR
3040.130 through 3040.135, and 39 CFR
3035.105; Public Representative:
Christopher C. Mohr; Comments Due:
October 6, 2020.
This Notice will be published in the
Federal Register.
Erica A. Barker,
Secretary.
[FR Doc. 2020–21801 Filed 10–1–20; 8:45 am]
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–90022; File No. SR–MEMX–
2020–09]
Self-Regulatory Organizations; MEMX,
LLC; Notice of Filing and Immediate
Effectiveness of a Proposed Rule
Change to Extend the Current Pilot
Program Related to MEMX Rule 11.15,
Clearly Erroneous Executions
September 28, 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
September 17, 2020, MEMX LLC
(‘‘MEMX’’ 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 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
jbell on DSKJLSW7X2PROD with NOTICES
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
BILLING CODE 7710–FW–P
The Exchange is filing with the
Commission a proposed rule change to
proposed rule change [sic] to extend the
current pilot program related to MEMX
Rule 11.15, ‘‘Clearly Erroneous
Executions,’’ to the close of business on
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A).
4 17 CFR 240.19b–4.
April 20, 2021. The text of the proposed
rule change is provided in Exhibit 5.
1. Purpose
The Exchange proposes to extend the
effectiveness of the Exchange’s current
rule applicable to Clearly Erroneous
Executions to the close of business on
April 20, 2021. Portions of Rule 11.15,
explained in further detail below, are
currently operating as a pilot program
which expired on April 20, 2020.5
On May 4, 2020, the Commission
approved MEMX’s Form 1 Application
to register as a national securities
exchange with rules including, on a
pilot basis, MEMX Rule 11.15.6 Rule
11.15, among other things (i) provides
for uniform treatment of clearly
erroneous execution reviews in multistock events involving twenty or more
securities; and (ii) reduces the ability of
the Exchange to deviate from objective
standards set forth in the rule. The rule
further provides 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
the Exchange, another SRO, or
responsible single plan processor in
connection with the transmittal or
receipt of a trading halt, an Officer of
the Exchange or senior level employee
designee, acting on his or her own
motion, shall nullify any transaction
that occurs after a trading halt has been
1 15
2 17
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19:38 Oct 01, 2020
5 See
MEMX Rule 11.15.
Securities Exchange Release No. 88806 (May
4, 2020), 85 FR 27451 (May 8, 2020).
6 See
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declared by the primary listing market
for a security, and before such a trading
halt has officially ended according to
the primary listing market.7
Previously, the pilot program and the
current Plan to Address Extraordinary
Market Volatility Pursuant to Rule 608
of Regulation NMS under the Act (the
‘‘Limit Up-Limit Down Plan’’ or the
‘‘LULD Plan’’) were a single pilot
program. On December 26, 2018, the
Commission published the proposed
Eighteenth Amendment to the LULD
Plan to allow the LULD Plan to operate
on a permanent, rather than pilot,
basis.8 On April 17, 2019, the
Commission published an approval of
the Eighteenth Amendment.9
Accordingly, national securities
exchanges filed with the Commission
amendments to exchange rules to untie
the pilot program’s effectiveness from
that of the LULD Plan in order to
provide such exchanges additional time
to consider further amendments, if any,
to the clearly erroneous execution rules
in light of the proposed Eighteenth
Amendment to the LULD Plan.10
On July 6, 2020, MEMX executed and
filed with the Commission an amended
copy of the LULD Plan.11 An amended
and executed copy of the LULD Plan,
with MEMX included as a Party, was
provided to each then current Party to
the Plan, in accordance with the
requirements for the addition of a new
member to the LULD Plan. Accordingly,
MEMX is now a Participant pursuant to
the LULD Plan.12
The Exchange now proposes to amend
MEMX Rule 11.15 to extend the pilot’s
effectiveness to the close of business on
April 20, 2021. MEMX understands that
the other national securities exchanges
and the Financial Industry Regulatory
Authority (‘‘FINRA’’) also intend to file
similar proposals to extend their
respective clearly erroneous execution
pilot programs, the substance of which
are identical to MEMX Rule 11.15.
The Exchange does not propose any
additional changes to MEMX Rule
11.15. By proposing to extent the pilot,
the Exchange will avoid any
discrepancy between its clearly
erroneous pilot program and the pilot
programs of other exchanges and
7 See
MEMX Rule 11.15.
Securities Exchange Release Act No. 67091
(May 31, 2012), 77 FR 33498 (June 6, 2012) (the
‘‘Limit Up-Limit Down Release’’).
9 See Securities Exchange Act Release No. 85623
(April 11, 2019), 84 FR 16086 (April 17, 2019) (File
No. 4–631).
10 See, e.g., Securities Exchange Act Release No.
85542 (April 8, 2019), 84 FR 15009 (April 12, 2019)
(SR–CboeBYX–2019–003).
11 See Securities Exchange Act Release No. 89420
(July 29, 2020), 85 FR 46762 (August 3, 2020).
12 See id.
8 See
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Federal Register / Vol. 85, No. 192 / Friday, October 2, 2020 / Notices
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FINRA, as the language of such rules are
identical to MEMX Rule 11.15 and, as
noted above, other exchanges and
FINRA also intend to file proposals to
extend their respective clearly
erroneous execution pilot programs. The
Exchange believes the benefits to market
participants from the more objective
clearly erroneous executions rule
should continue on a limited pilot basis.
As the LULD Plan was approved by the
Commission to operate on a permanent,
rather than pilot, basis the Exchange
intends to assess whether additional
changes should also be made to the
operation of the clearly erroneous
execution rules. Extending the
effectiveness of MEMX Rule 11.15 on a
limited basis should provide the
Exchange and other national securities
exchanges additional time to consider
future amendments, if any, to the clearly
erroneous execution rules.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act,13 in general, and furthers the
objectives of Section 6(b)(5) of the Act,14
in particular, in that it is designed to
prevent fraudulent and manipulative
practices, to promote just and equitable
principles of trade, to foster cooperation
and coordination with persons engaged
in regulating, clearing, settling,
processing information with respect to,
and facilitating transactions in
securities, 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.
Additionally, the Exchange believes the
proposed rule change is consistent with
the Section 6(b)(5) requirement that the
rules of an exchange not be designed to
permit unfair discrimination between
customers, issuers, brokers, or dealers.
In particular, the Exchange believes
that the proposed extension to the pilot
rule addressing clearly erroneous
extensions 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
extension 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 clearly
erroneous executions rule should
13 15
14 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
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19:38 Oct 01, 2020
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continue to be in effect on a pilot basis
while the Exchange and the other
national securities exchanges consider
and develop a permanent proposal for
clearly erroneous executions reviews.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange believes its proposed
rule change would not impose any
burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. To the
contrary, the Exchange understands that
FINRA and other national securities
exchanges will also file similar
proposals to extend their respective
clearly erroneous execution pilot
programs. Thus, the proposed extension
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
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
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 15 and Rule 19b4(f)(6) thereunder.16
A proposed rule change filed under
Rule 19b-4(f)(6) 17 normally does not
become operative prior to 30 days after
the date of the filing. However, Rule
19b–4(f)(6)(iii) 18 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 operative
immediately upon filing. The
15 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.
17 17 CFR 240.19b–4(f)(6).
18 17 CFR 240.19b–4(f)(6)(iii).
16 17
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62341
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
proposed rule change to become
operative prior to the launch of the
Exchange’s operation as a national
securities exchange and permit 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.19
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 rule-comments@
sec.gov. Please include File Number SR–
MEMX–2020–09 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–MEMX–2020–09. 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/
19 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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Federal Register / Vol. 85, No. 192 / Friday, October 2, 2020 / Notices
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–MEMX–2020–09 and should
be submitted on or before October 23,
2020.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.20
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–21768 Filed 10–1–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–90034; File No. SR–NSCC–
2020–804]
Self-Regulatory Organizations;
National Securities Clearing
Corporation; Notice of Filing of
Amendment No. 2 and Notice of No
Objection to Advance Notice, as
Modified by Amendment Nos. 1 and 2,
To Introduce the Margin Liquidity
Adjustment Charge and Include a BidAsk Risk Charge in the VaR Charge
jbell on DSKJLSW7X2PROD with NOTICES
September 28, 2020.
On July 30, 2020, National Securities
Clearing Corporation (‘‘NSCC’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’) advance
notice SR–NSCC–2020–804 pursuant to
Section 806(e)(1) of Title VIII of the
Dodd-Frank Wall Street Reform and
Consumer Protection Act, entitled
Payment, Clearing and Settlement
20 17
CFR 200.30–3(a)(12).
VerDate Sep<11>2014
19:38 Oct 01, 2020
Jkt 253001
Supervision Act of 2010 (‘‘Clearing
Supervision Act’’),1 and Rule 19b–
4(n)(1)(i) 2 under the Securities
Exchange Act of 1934 (‘‘Exchange
Act’’) 3 to add two new charges to
NSCC’s margin methodology. On
August 13, 2020, NSCC filed
Amendment No. 1 to the advance
notice, to make clarifications and
corrections to the advance notice.4 The
advance notice, as modified by
Amendment No. 1, was published for
public comment in the Federal Register
on September 4, 2020,5 and the
Commission has received no comments
regarding the changes proposed in the
advance notice as modified by
Amendment No. 1. On September 10,
2020, the Commission received one
comment letter on NSCC’s related
Proposed Rule Change.6 To the extent
that the comment letter on the Proposed
Rule Change is relevant to the Advance
Notice, it is discussed below.7 On
August 27, 2020, NSCC filed
Amendment No. 2 to the advance notice
to provide additional data for the
Commission to consider in analyzing
the advance notice.8 The advance
1 12
U.S.C. 5465(e)(1).
CFR 240.19b–4(n)(1)(i).
3 15 U.S.C. 78a et seq.
4 Amendment No. 1 made clarifications and
corrections to the description of the advance notice
and Exhibits 3 and 5 of the filing.
5 Securities Exchange Act Release No. 89719
(September 1, 2020), 85 FR 55332 (September 4,
2020) (File No. SR–NSCC–2020–804) (‘‘Notice of
Filing’’). On July 30, 2020, NSCC also filed a related
proposed rule change (SR–NSCC–2020–016) with
the Commission pursuant to Section 19(b)(1) of the
Exchange Act and Rule 19b–4 thereunder. On
August 13, 2020, NSCC filed Amendment No. 1 to
the proposed rule change to make similar
clarifications and corrections to the proposed rule
change. See 15 U.S.C. 78s(b)(1) and 17 CFR
240.19b–4 respectively. The proposed rule change,
as amended by Amendment No. 1, was published
in the Federal Register on August 20, 2020.
Securities Exchange Act Release No. 89558 (August
14, 2020), 85 FR 51521 (August 20, 2020). On
August 27, 2020, NSCC filed Amendment No. 2 to
the proposed rule change to provide similar
additional data for the Commission’s consideration.
The proposed rule change, as amended by
Amendment Nos. 1 and 2, is hereinafter referred to
as the ‘‘Proposed Rule Change.’’ In the Proposed
Rule Change, NSCC seeks approval of proposed
changes to its rules necessary to implement the
Advance Notice. The comment period for the
related Proposed Rule Change filing closed on
September 10, 2020, and the Commission received
no comments.
6 See letter from Cass Sanford, Associated General
Counsel, OTC Markets Group (September 10, 2020)
(‘‘OTC Letter’’), available at https://www.sec.gov/
comments/sr-nscc-2020-016/srnscc20200167757533-223234.pdf.
7 As the proposals contained in the Advance
Notice were also filed as a proposed rule change,
all public comments received on the proposal are
considered regardless of whether the comments are
submitted on the Proposed Rule Change or the
Advance Notice.
8 In Amendment No. 2, NSCC updated Exhibit 3
to the advance notice to include impact analysis
2 17
PO 00000
Frm 00069
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notice, as modified by Amendment Nos.
1 and 2, is hereinafter referred to as the
‘‘Advance Notice.’’ The Commission is
publishing this notice to solicit
comments on Amendment No. 2 from
interested persons and, for the reasons
discussed below, is hereby providing
notice of no objection to the Advance
Notice.
I. The Advance Notice
First, the proposals in the Advance
Notice would revise NSCC’s Rules and
Procedures (‘‘Rules’’) 9 to introduce the
Margin Liquidity Adjustment Charge
(‘‘MLA Charge’’) as an additional margin
component. Second, the proposals in
the Advance Notice would revise the
Rules to add a bid-ask spread risk
charge (‘‘Bid-Ask Spread Charge’’) to
NSCC’s margin calculations.
A. Background
NSCC provides central counterparty
(‘‘CCP’’) services, including clearing,
settlement, risk management, and a
guarantee of completion for virtually all
broker-to-broker trades involving equity
securities, corporate and municipal debt
securities, and certain other securities.
In its role as a CCP, a key tool that NSCC
uses to manage its credit exposure to its
members by determining and collecting
an appropriate Required Fund Deposit
(i.e., margin) for each member.10 The
aggregate of all members’ Required
Fund Deposits (together with certain
other deposits required under the Rules)
constitutes NSCC’s Clearing Fund,
which NSCC would access should a
defaulted member’s own Required Fund
Deposit be insufficient to satisfy losses
to NSCC caused by the liquidation of
that member’s portfolio.11
Each member’s Required Fund
Deposit consists of a number of
applicable components, which are
calculated to address specific risks that
the member’s portfolio presents to
NSCC.12 Generally, the largest
component of a member’s Required
Fund Deposit is the volatility charge,
which is intended to capture the risks
related to the movement of market
prices associated with the securities in
a member’s portfolio.13 NSCC’s
methodology for calculating the
data with respect to the proposals in the advance
notice. NSCC filed Exhibit 3 as a confidential
exhibit to the advance notice pursuant to 17 CFR
240.24b–2.
9 Capitalized terms not defined herein are defined
in the Rules, available at https://dtcc.com/∼/media/
Files/Downloads/legal/rules/nscc_rules.pdf.
10 See Rule 4 (Clearing Fund) and Procedure XV
(Clearing Fund Formula and Other Matters) of the
Rules (‘‘Procedure XV’’), supra note 8.
11 See id.
12 See id.
13 See id.
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]]>Agencies
[Federal Register Volume 85, Number 192 (Friday, October 2, 2020)]
[Notices]
[Pages 62340-62342]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-21768]
=======================================================================
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-90022; File No. SR-MEMX-2020-09]
Self-Regulatory Organizations; MEMX, LLC; Notice of Filing and
Immediate Effectiveness of a Proposed Rule Change to Extend the Current
Pilot Program Related to MEMX Rule 11.15, Clearly Erroneous Executions
September 28, 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 September 17, 2020, MEMX LLC (``MEMX'' 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 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.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange is filing with the Commission a proposed rule change
to proposed rule change [sic] to extend the current pilot program
related to MEMX Rule 11.15, ``Clearly Erroneous Executions,'' to the
close of business on April 20, 2021. The text of the proposed rule
change is provided in Exhibit 5.
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 Exchange proposes to extend the effectiveness of the Exchange's
current rule applicable to Clearly Erroneous Executions to the close of
business on April 20, 2021. Portions of Rule 11.15, explained in
further detail below, are currently operating as a pilot program which
expired on April 20, 2020.\5\
---------------------------------------------------------------------------
\5\ See MEMX Rule 11.15.
---------------------------------------------------------------------------
On May 4, 2020, the Commission approved MEMX's Form 1 Application
to register as a national securities exchange with rules including, on
a pilot basis, MEMX Rule 11.15.\6\ Rule 11.15, among other things (i)
provides for uniform treatment of clearly erroneous execution reviews
in multi-stock events involving twenty or more securities; and (ii)
reduces the ability of the Exchange to deviate from objective standards
set forth in the rule. The rule further provides 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 the Exchange, another SRO, or responsible single plan processor in
connection with the transmittal or receipt of a trading halt, an
Officer of the Exchange or senior level employee designee, 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 a trading halt has officially ended according
to the primary listing market.\7\
---------------------------------------------------------------------------
\6\ See Securities Exchange Release No. 88806 (May 4, 2020), 85
FR 27451 (May 8, 2020).
\7\ See MEMX Rule 11.15.
---------------------------------------------------------------------------
Previously, the pilot program and the current Plan to Address
Extraordinary Market Volatility Pursuant to Rule 608 of Regulation NMS
under the Act (the ``Limit Up-Limit Down Plan'' or the ``LULD Plan'')
were a single pilot program. On December 26, 2018, the Commission
published the proposed Eighteenth Amendment to the LULD Plan to allow
the LULD Plan to operate on a permanent, rather than pilot, basis.\8\
On April 17, 2019, the Commission published an approval of the
Eighteenth Amendment.\9\ Accordingly, national securities exchanges
filed with the Commission amendments to exchange rules to untie the
pilot program's effectiveness from that of the LULD Plan in order to
provide such exchanges additional time to consider further amendments,
if any, to the clearly erroneous execution rules in light of the
proposed Eighteenth Amendment to the LULD Plan.\10\
---------------------------------------------------------------------------
\8\ See Securities Exchange Release Act No. 67091 (May 31,
2012), 77 FR 33498 (June 6, 2012) (the ``Limit Up-Limit Down
Release'').
\9\ See Securities Exchange Act Release No. 85623 (April 11,
2019), 84 FR 16086 (April 17, 2019) (File No. 4-631).
\10\ See, e.g., Securities Exchange Act Release No. 85542 (April
8, 2019), 84 FR 15009 (April 12, 2019) (SR-CboeBYX-2019-003).
---------------------------------------------------------------------------
On July 6, 2020, MEMX executed and filed with the Commission an
amended copy of the LULD Plan.\11\ An amended and executed copy of the
LULD Plan, with MEMX included as a Party, was provided to each then
current Party to the Plan, in accordance with the requirements for the
addition of a new member to the LULD Plan. Accordingly, MEMX is now a
Participant pursuant to the LULD Plan.\12\
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\11\ See Securities Exchange Act Release No. 89420 (July 29,
2020), 85 FR 46762 (August 3, 2020).
\12\ See id.
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The Exchange now proposes to amend MEMX Rule 11.15 to extend the
pilot's effectiveness to the close of business on April 20, 2021. MEMX
understands that the other national securities exchanges and the
Financial Industry Regulatory Authority (``FINRA'') also intend to file
similar proposals to extend their respective clearly erroneous
execution pilot programs, the substance of which are identical to MEMX
Rule 11.15.
The Exchange does not propose any additional changes to MEMX Rule
11.15. By proposing to extent the pilot, the Exchange will avoid any
discrepancy between its clearly erroneous pilot program and the pilot
programs of other exchanges and
[[Page 62341]]
FINRA, as the language of such rules are identical to MEMX Rule 11.15
and, as noted above, other exchanges and FINRA also intend to file
proposals to extend their respective clearly erroneous execution pilot
programs. The Exchange believes the benefits to market participants
from the more objective clearly erroneous executions rule should
continue on a limited pilot basis. As the LULD Plan was approved by the
Commission to operate on a permanent, rather than pilot, basis the
Exchange intends to assess whether additional changes should also be
made to the operation of the clearly erroneous execution rules.
Extending the effectiveness of MEMX Rule 11.15 on a limited basis
should provide the Exchange and other national securities exchanges
additional time to consider future amendments, if any, to the clearly
erroneous execution rules.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\13\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\14\ in particular, in that it is designed to
prevent fraudulent and manipulative practices, to promote just and
equitable principles of trade, to foster cooperation and coordination
with persons engaged in regulating, clearing, settling, processing
information with respect to, and facilitating transactions in
securities, 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. Additionally, the Exchange
believes the proposed rule change is consistent with the Section
6(b)(5) requirement that the rules of an exchange not be designed to
permit unfair discrimination between customers, issuers, brokers, or
dealers.
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\13\ 15 U.S.C. 78f(b).
\14\ 15 U.S.C. 78f(b)(5).
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In particular, the Exchange believes that the proposed extension to
the pilot rule addressing clearly erroneous extensions 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 extension 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 clearly erroneous executions rule should continue to be in effect
on a pilot basis while the Exchange and the other national securities
exchanges consider and develop a permanent proposal for clearly
erroneous executions reviews.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange believes its proposed rule change would not impose any
burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act. To the contrary, the Exchange
understands that FINRA and other national securities exchanges will
also file similar proposals to extend their respective clearly
erroneous execution pilot programs. Thus, the proposed extension 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
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
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 \15\ and Rule 19b-
4(f)(6) thereunder.\16\
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\15\ 15 U.S.C. 78s(b)(3)(A).
\16\ 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) \17\ normally
does not become operative prior to 30 days after the date of the
filing. However, Rule 19b-4(f)(6)(iii) \18\ 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 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 proposed rule change to become operative prior to the
launch of the Exchange's operation as a national securities exchange
and permit 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.\19\
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\17\ 17 CFR 240.19b-4(f)(6).
\18\ 17 CFR 240.19b-4(f)(6)(iii).
\19\ 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-MEMX-2020-09 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-MEMX-2020-09. 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/
[[Page 62342]]
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-MEMX-2020-09 and should be
submitted on or before October 23, 2020.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\20\
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\20\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-21768 Filed 10-1-20; 8:45 am]
BILLING CODE 8011-01-P
