Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Extend the Pilot Related to the Market-Wide Circuit Breaker in Rule 7.12-E, 65082-65085 [2020-22717]
Download as PDF
<![CDATA[
65082
Federal Register / Vol. 85, No. 199 / Wednesday, October 14, 2020 / Notices
POSTAL REGULATORY COMMISSION
[Docket Nos. MC2021–12 and CP2021–12;
MC2021–13 and CP2021–13; MC2021–14
and CP2021–14]
New Postal Products
Postal Regulatory Commission.
Notice.
AGENCY:
ACTION:
The Commission is noticing a
recent Postal Service filing for the
Commission’s consideration concerning
negotiated service agreements. This
notice informs the public of the filing,
invites public comment, and takes other
administrative steps.
DATES: Comments are due: October 16,
2020.
ADDRESSES: Submit comments
electronically via the Commission’s
Filing Online system at https://
www.prc.gov. Those who cannot submit
comments electronically should contact
the person identified in the FOR FURTHER
INFORMATION CONTACT section by
telephone for advice on filing
alternatives.
SUMMARY:
FOR FURTHER INFORMATION CONTACT:
David A. Trissell, General Counsel, at
202–789–6820.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Introduction
II. Docketed Proceeding(s)
jbell on DSKJLSW7X2PROD with NOTICES
I. Introduction
The Commission gives notice that the
Postal Service filed request(s) for the
Commission to consider matters related
to negotiated service agreement(s). The
request(s) may propose the addition or
removal of a negotiated service
agreement from the market dominant or
the competitive product list, or the
modification of an existing product
currently appearing on the market
dominant or the competitive product
list.
Section II identifies the docket
number(s) associated with each Postal
Service request, the title of each Postal
Service request, the request’s acceptance
date, and the authority cited by the
Postal Service for each request. For each
request, the Commission appoints an
officer of the Commission to represent
the interests of the general public in the
proceeding, pursuant to 39 U.S.C. 505
(Public Representative). Section II also
establishes comment deadline(s)
pertaining to each request.
The public portions of the Postal
Service’s request(s) can be accessed via
the Commission’s website (https://
www.prc.gov). Non-public portions of
the Postal Service’s request(s), if any,
VerDate Sep<11>2014
19:15 Oct 13, 2020
Jkt 253001
can be accessed through compliance
with the requirements of 39 CFR
3011.301.1
The Commission invites comments on
whether the Postal Service’s request(s)
in the captioned docket(s) are consistent
with the policies of title 39. For
request(s) that the Postal Service states
concern market dominant product(s),
applicable statutory and regulatory
requirements include 39 U.S.C. 3622, 39
U.S.C. 3642, 39 CFR part 3030, and 39
CFR part 3040, subpart B. For request(s)
that the Postal Service states concern
competitive product(s), applicable
statutory and regulatory requirements
include 39 U.S.C. 3632, 39 U.S.C. 3633,
39 U.S.C. 3642, 39 CFR part 3035, and
39 CFR part 3040, subpart B. Comment
deadline(s) for each request appear in
section II.
II. Docketed Proceeding(s)
1. Docket No(s).: MC2021–12 and
CP2021–12; Filing Title: USPS Request
to Add Priority Mail Contract 673 to
Competitive Product List and Notice of
Filing Materials Under Seal; Filing
Acceptance Date: October 7, 2020;
Filing Authority: 39 U.S.C. 3642, 39 CFR
3040.130 through 3040.135, and 39 CFR
3035.105; Public Representative: Curtis
Kidd; Comments Due: October 16, 2020.
2. Docket No(s).: MC2021–13 and
CP2021–13; Filing Title: USPS Request
to Add Priority Mail & First-Class
Package Service Contract 174 to
Competitive Product List and Notice of
Filing Materials Under Seal; Filing
Acceptance Date: October 7, 2020;
Filing Authority: 39 U.S.C. 3642, 39 CFR
3040.130 through 3040.135, and 39 CFR
3035.105; Public Representative: Curtis
Kidd; Comments Due: October 16, 2020.
3. Docket No(s).: MC2021–14 and
CP2021–14; Filing Title: USPS Request
to Add Priority Mail Express & Priority
Mail Contract 120 to Competitive
Product List and Notice of Filing
Materials Under Seal; Filing Acceptance
Date: October 7, 2020; Filing Authority:
39 U.S.C. 3642, 39 CFR 3040.130
through 3040.135, and 39 CFR 3035.105;
Public Representative: Curtis Kidd;
Comments Due: October 16, 2020.
This Notice will be published in the
Federal Register.
Erica A. Barker,
Secretary.
[FR Doc. 2020–22656 Filed 10–13–20; 8:45 am]
BILLING CODE 7710–FW–P
1 See Docket No. RM2018–3, Order Adopting
Final Rules Relating to Non-Public Information,
June 27, 2018, Attachment A at 19–22 (Order No.
4679).
PO 00000
Frm 00057
Fmt 4703
Sfmt 4703
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–90136; File No. SR–
NYSEARCA–2020–89)
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Extend the Pilot
Related to the Market-Wide Circuit
Breaker in Rule 7.12–E
October 8, 2020.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on October
6, 2020, NYSE Arca, Inc. (‘‘NYSE Arca’’
or the ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(the ‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the self-regulatory organization. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to extend the
pilot related to the market-wide circuit
breaker in Rule 7.12–E. The proposed
rule change is available on the
Exchange’s website at www.nyse.com, at
the principal office of the Exchange, and
at the Commission’s Public Reference
Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
Rule 7.12–E provides a methodology
for determining when to halt trading in
all stocks due to extraordinary market
15 U.S.C.78s(b)(1).
15 U.S.C. 78a.
3 17 CFR 240.19b–4.
1
2
E:\FR\FM\14OCN1.SGM
14OCN1
Federal Register / Vol. 85, No. 199 / Wednesday, October 14, 2020 / Notices
jbell on DSKJLSW7X2PROD with NOTICES
volatility (i.e., market-wide circuit
breakers). The market-wide circuit
breaker (‘‘MWCB’’) mechanism under
Rule 7.12–E was approved by the
Commission to operate on a pilot basis,4
the term of which was to coincide with
the pilot period for the Plan to Address
Extraordinary Market Volatility
Pursuant to Rule 608 of Regulation NMS
(the ‘‘LULD Plan’’),5 including any
extensions to the pilot period for the
LULD Plan.6 In April 2019, the
Commission approved an amendment to
the LULD Plan for it to operate on a
permanent, rather than pilot, basis.7 In
light of the proposal to make the LULD
Plan permanent, the Exchange amended
Rule 7.12–E to untie the pilot’s
effectiveness from that of the LULD Plan
and to extend the pilot’s effectiveness to
the close of business on October 18,
2019.8 The Exchange then filed to
extend the pilot for an additional year
to the close of business on October 18,
2020.9
The Exchange now proposes to amend
Rule 7.12–E to extend the pilot to the
close of business on October 18, 2021.
This filing does not propose any
substantive or additional changes to
Rule 7.12–E.
The market-wide circuit breaker
under Rule 7.12–E provides an
important, automatic mechanism that is
invoked to promote stability and
investor confidence during a period of
significant stress when securities
markets experience extreme broad-based
declines. All U.S. equity exchanges and
FINRA adopted uniform rules on a pilot
basis relating to market-wide circuit
breakers in 2012 (‘‘MWCB Rules’’),
which are designed to slow the effects
of extreme price movement through
coordinated trading halts across
securities markets when severe price
declines reach levels that may exhaust
4 See Securities Exchange Act Release No. 67090
(May 31, 2012), 77 FR 33531 (June 6, 2012) (SR–
NYSEArca–2011–68).
5 See Securities Exchange Act Release No. 67091
(May 31, 2012), 77 FR 33498 (June 6, 2012). The
LULD Plan provides a mechanism to address
extraordinary market volatility in individual
securities.
6 See Securities Exchange Act Release Nos. 67090
(May 31, 2012), 77 FR 33531 (June 6, 2012) (SR–
NYSEArca–2011–68) (Approval Order); and 68785
(January 31, 2013), 78 FR 8646 (February 6, 2013)
(SR–NYSEArca–2013–06) (Notice of Filing and
Immediate Effectiveness of Proposed Rule Change
Delaying the Operative Date of a Rule Change to
Exchange Rule 7.12–E).
7 See Securities Exchange Act Release No. 85623
(April 11, 2019), 84 FR 16086 (April 17, 2019).
8 See Securities Exchange Act Release No. 85561
(April 9, 2019), 84 FR 15262 (April 15, 2019) (SR–
NYSEArca–2019–23).
9 See Securities Exchange Act Release No. 87017
(September 19, 2019), 84 FR 50543 (September 25,
2019) (SR–NYSEArca–2019–66).
VerDate Sep<11>2014
19:15 Oct 13, 2020
Jkt 253001
market liquidity.10 Market-wide circuit
breakers provide for trading halts in all
equities and options markets during a
severe market decline as measured by a
single-day decline in the S&P 500 Index.
Pursuant to Rule 7.12–E, a marketwide trading halt will be triggered if the
S&P 500 Index declines in price by
specified percentages from the prior
day’s closing price of that index.
Currently, the triggers are set at three
circuit breaker thresholds: 7% (Level 1),
13% (Level 2), and 20% (Level 3). A
market decline that triggers a Level 1 or
Level 2 halt after 9:30 a.m. ET and
before 3:25 p.m. ET would halt marketwide trading for 15 minutes, while a
similar market decline at or after 3:25
p.m. ET would not halt market-wide
trading. A market decline that triggers a
Level 3 halt, at any time during the
trading day, would halt market-wide
trading for the remainder of the trading
day.
Since the MWCB pilot was last
extended in October 2019, the MWCB
mechanism has proven itself to be an
effective tool for protecting markets
through turbulent times. In the Spring of
2020, at the outset of the worldwide
COVID–19 pandemic, U.S. equities
markets experienced four MWCB Level
1 halts, on March 9, 12, 16, and 18,
2020. In each instance, the markets
halted as intended upon a 7% drop in
the S&P 500 Index, and resumed as
intended 15 minutes later.
In response to these events, the
previously-convened MWCB Taskforce
(‘‘Taskforce’’) reviewed the March 2020
halts and considered whether any
immediate changes to the MWCB
mechanism should be made. The
Taskforce, consisting of representatives
from equities exchanges, futures
exchanges, FINRA, broker-dealers, and
other market participants, had been
assembled in early 2020 to consider
more generally potential changes to the
MWCB mechanism. The Taskforce held
ten meetings in the Spring and Summer
of 2020 that were attended by
Commission staff to consider, among
other things: (1) Whether to retain the
S&P 500 Index as the standard for
measuring market declines; (2) whether
halts that occur shortly after the 9:30
a.m. market open cause more harm than
good; and (3) what additional testing of
the MWCB mechanism should be done.
10 See Securities Exchange Act Release No. 67090
(May 31, 2012), 77 FR 33531 (June 6, 2012) (SR–
BATS–2011–038; SR–BYX–2011–025; SR–BX–
2011–068; SR–CBOE–2011–087; SR–C2–2011–024;
SR–CHX–2011–30; SR–EDGA–2011–31; SR–EDGX–
2011–30; SR–FINRA–2011–054; SR–ISE–2011–61;
SR–NASDAQ–2011–131; SR–NSX–2011–11; SR–
NYSE–2011–48; SR–NYSEAmex–2011–73; SR–
NYSEArca–2011–68; SR–Phlx–2011–129) (‘‘MWCB
Approval Order’’).
PO 00000
Frm 00058
Fmt 4703
Sfmt 4703
65083
After considering data and anecdotal
reports of market participants’
experiences during the March 2020
MWCB events, the Taskforce did not
recommend immediate changes be made
to the use of the S&P 500 Index as the
reference price against which market
declines are measured, or to the current
MWCB mechanism which permits halts
even shortly after the 9:30 a.m. market
open. The Taskforce recommended
creating a process for a backup reference
price in the event that the S&P 500
Index becomes unavailable, and
enhancing functional MWCB testing.
The Taskforce also asked CME to
consider modifying its rules to enter
into a limit-down state in the futures
pre-market after a 7% decline instead of
5%.
On September 17, 2020, the Director
of the Division of Trading and Markets
requested that the equities exchanges
and FINRA prepare a more complete
study of the design and operation of the
MWCB mechanism and the LULD Plan
during the period of volatility in the
Spring of 2020. Based on the results of
that study, the Exchange expects to
work with the Commission, FINRA, the
other exchanges, and market
participants to determine if any
additional changes to the MWCB
mechanism should be made, including
consideration of rules and procedures
for the periodic testing of the MWCB
mechanism with industry participants.
In addition to the work of the
Taskforce, the equities exchanges also
moved forward in 2019 and 2020 with
a plan to normalize their Day 2 opening
procedures after a Level 3 MWCB halt,
such that all exchanges would reopen
on Day 2 with a standard opening
auction. The Exchange and its Affiliate
SROs 11 filed rule changes to that effect
in March 2020,12 and successfully tested
the implementation of those changes on
September 12, 2020.
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
11 The ‘‘Affiliate SROs’’ are the Exchange’s
affiliates NYSE American LLC, NYSE Arca, Inc.,
NYSE Chicago, Inc., and NYSE National, Inc.
12 See Securities Exchange Act Release Nos.
88402 (March 17, 2020), 85 FR 16436 (March 23,
2020) (SR–NYSE–2020–20); 88407 (March 18,
2020), 85 FR 16690 (March 24, 2020) (SR–
NYSEAMER–2020–20); 88414 (March 18, 2020), 85
FR 16707 (March 24, 2020) (SR–NYSEArca–2020–
23); 88410 (March 18, 2020), 85 FR 16693 (March
24, 2020) (SR–NYSECHX–2020–08); 88411 (March
18, 2020), 85 FR 16710 (March 24, 2020) (SR–
NYSENAT–2020–11).
13 15 U.S.C. 78f(b).
14 15 U.S.C. 78f(b)(5).
E:\FR\FM\14OCN1.SGM
14OCN1
65084
Federal Register / Vol. 85, No. 199 / Wednesday, October 14, 2020 / Notices
jbell on DSKJLSW7X2PROD with NOTICES
in particular, in that it is designed to
promote just and equitable principles of
trade, to remove impediments to and
perfect the mechanism of a free and
open market and a national market
system, and, in general to protect
investors and the public interest. The
market-wide circuit breaker mechanism
under Rule 7.12–E is an important,
automatic mechanism that is invoked to
promote stability and investor
confidence during a period of
significant stress when securities
markets experience extreme broad-based
declines. Extending the market-wide
circuit breaker pilot for an additional
year would ensure the continued,
uninterrupted operation of a consistent
mechanism to halt trading across the
U.S. markets while the Exchange and
the other SROs study the design and
operation of the MWCB mechanism and
the LULD Plan during the period of
volatility in the Spring of 2020. Based
on the results of that study, the
Exchange expects to work with the
Commission, FINRA, the other
exchanges, and market participants to
determine if any additional changes to
the MWCB mechanism should be made,
including consideration of rules and
procedures for the periodic testing of
the MWCB mechanism with industry
participants.
The Exchange also believes that the
proposed rule change promotes just and
equitable principles of trade in that it
promotes transparency and uniformity
across markets concerning when and
how to halt trading in all stocks as a
result of extraordinary market volatility.
Based on the foregoing, the Exchange
believes the benefits to market
participants from the MWCB under Rule
7.12–E should continue on a pilot basis
because the MWCB will promote fair
and orderly markets, and protect
investors and the public interest.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition not
necessary or appropriate in furtherance
of the purposes of the Act because the
proposal would ensure the continued,
uninterrupted operation of a consistent
mechanism to halt trading across the
U.S. markets while the Exchange and
the other SROs study the design and
operation of the MWCB mechanism and
the LULD Plan during the period of
volatility in the Spring of 2020.
Further, the Exchange understands
that FINRA and other national securities
exchanges will file proposals to extend
their rules regarding the market-wide
circuit breaker pilot. Thus, the proposed
VerDate Sep<11>2014
19:15 Oct 13, 2020
Jkt 253001
rule change will help to ensure
consistency across market centers
without implicating any competitive
issues.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The Exchange has designated this rule
filing as non-controversial under
Section 19(b)(3)(A) 15 of the Act and
Rule 19b–4(f)(6) 16 thereunder. Because
the proposed rule change does not: (i)
Significantly affect the protection of
investors or the public interest; (ii)
impose any significant burden on
competition; and (iii) become operative
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 and Rule 19b–
4(f)(6) thereunder.17
A proposed rule change filed under
Rule 19b–4(f)(6) 18 normally does not
become operative for 30 days after the
date of filing. However, pursuant to
Rule 19b–4(f)(6)(iii),19 the Commission
may designate a shorter time if such
action is consistent with the protection
of investors and the public interest. The
Exchange has asked the Commission to
waive the 30-day operative delay so that
the proposal may become operative
upon filing. Extending the pilot for an
additional year will allow the
uninterrupted operation of the existing
pilot while the Exchange, FINRA, and
the other exchanges conduct a study of
the MWCB mechanism in consultation
with market participants and determine
if any additional changes to the MWCB
mechanism should be made, including
consideration of rules and procedures
for the periodic testing of the MWCB
mechanism with industry participants.
Therefore, the Commission believes that
waiving the 30-day operative delay is
consistent with the protection of
investors and the public interest. The
15 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6).
17 In addition, Rule 19b–4(f)(6)(iii) requires the
Exchange 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
filing of the proposed rule change, or such shorter
time as designated by the Commission. The
Exchange has satisfied this requirement.
18 Id.
19 17 CFR 240.19b–4(f)(6)(iii).
16 17
PO 00000
Frm 00059
Fmt 4703
Sfmt 4703
Commission hereby designates the
proposed rule change to be operative
upon filing.20
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
change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
NYSEARCA–2020–89 on the subject
line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–NYSEARCA–2020–89. 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
20 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).
E:\FR\FM\14OCN1.SGM
14OCN1
Federal Register / Vol. 85, No. 199 / Wednesday, October 14, 2020 / Notices
Reference Room, 100 F Street NE,
Washington, DC 20549–1090, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly.
All submissions should refer to File
Number SR–NYSEARCA–2020–89 and
should be submitted on or before
November 4, 2020.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.21
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–22717 Filed 10–13–20; 8:45 am]
BILLING CODE P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–90127; File No. SR–
CboeEDGA–2020–026]
Self-Regulatory Organizations; Cboe
EDGA Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change To Extend the
Pilot Related to the Market-Wide
Circuit Breaker in Rule 11.16
jbell on DSKJLSW7X2PROD with NOTICES
October 8, 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 October
6, 2020, Cboe EDGA Exchange, Inc. (the
‘‘Exchange’’ or ‘‘EDGA’’) filed with the
Securities and Exchange Commission
(the ‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the 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.
CFR 200.30–3(a)(12).
1 15 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).
19:15 Oct 13, 2020
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
EDGA Rules 11.16(a) through (d), (f)
and (g) describe the methodology for
determining when to halt trading in all
stocks due to extraordinary market
volatility, i.e., market-wide circuit
breakers. The market-wide circuit
breaker (‘‘MWCB’’) mechanism was
approved by the Commission to operate
on a pilot basis, the term of which was
to coincide with the pilot period for the
Plan to Address Extraordinary Market
Volatility Pursuant to Rule 608 of
Regulation NMS (the ‘‘LULD Plan’’),5
including any extensions to the pilot
period for the LULD Plan. In April 2019,
the Commission approved an
amendment to the LULD Plan for it to
operate on a permanent, rather than
pilot, basis.6 In light of the proposal to
make the LULD Plan permanent, the
5 See Securities Exchange Act Release No. 67091
(May 31, 2012), 77 FR 33498 (June 6, 2012). The
LULD Plan provides a mechanism to address
extraordinary market volatility in individual
securities.
6 See Securities Exchange Act Release No. 85623
(April 11, 2019), 84 FR 16086 (April 17, 2019).
21 17
VerDate Sep<11>2014
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Cboe EDGA Exchange, Inc. (‘‘EDGA’’
or the ‘‘Exchange’’) is filing with the
Securities and Exchange Commission
(the ‘‘Commission’’) a proposal to
extend the pilot related to the marketwide circuit breaker in Rule 11.16. 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/
equities/regulation/rule_filings/edga/),
at the Exchange’s Office of the
Secretary, and at the Commission’s
Public Reference Room.
Jkt 253001
PO 00000
Frm 00060
Fmt 4703
Sfmt 4703
65085
Exchange amended Rule 11.16 to untie
the pilot’s effectiveness from that of the
LULD Plan and to extend the pilot’s
effectiveness to the close of business on
October 18, 2019.7 The Exchange
subsequently amended Rule 11.16 to
extend the pilot’s effectiveness for an
additional year to the close of business
on October 18, 2020.8 The Exchange
now proposes to amend Rule 11.16 to
extend the pilot to the close of business
on October 18, 2021. This filing does
not propose any substantive or
additional changes to Rule 11.16.
The market-wide circuit breaker
under Rule 11.16 provides an important,
automatic mechanism that is invoked to
promote stability and investor
confidence during a period of
significant stress when securities
markets experience extreme broad-based
declines. All U.S. equity exchanges and
FINRA adopted uniform rules on a pilot
basis relating to market-wide circuit
breakers in 2012 (‘‘MWCB Rules’’),
which are designed to slow the effects
of extreme price movement through
coordinated trading halts across
securities markets when severe price
declines reach levels that may exhaust
market liquidity.9 Market-wide circuit
breakers provide for trading halts in all
equities and options markets during a
severe market decline as measured by a
single-day decline in the S&P 500 Index.
Pursuant to Rule 11.16, a market-wide
trading halt will be triggered if the S&P
500 Index declines in price by specified
percentages from the prior day’s closing
price of that index. Currently, the
triggers are set at three circuit breaker
thresholds: 7% (Level 1), 13% (Level 2),
and 20% (Level 3). A market decline
that triggers a Level 1 or Level 2 halt
after 9:30 a.m. ET and before 3:25 p.m.
ET would halt market-wide trading for
15 minutes, while a similar market
decline at or after 3:25 p.m. ET would
not halt market-wide trading. A market
decline that triggers a Level 3 halt, at
any time during the trading day, would
halt market-wide trading for the
remainder of the trading day.
Since the MWCB pilot was last
extended in October 2019, the MWCB
7 See Securities Exchange Act Release No. 85668
(April 16, 2019), 84 FR 16743 (April 22, 2019) (SR–
CboeEDGA–2019–006).
8 See Securities Exchange Act Release No. 87335
(October 17, 2019), 84 FR 56858 (October 23, 2019)
(SR–CboeEDGA–2019–016).
9 See Securities Exchange Act Release No. 67090
(May 31, 2012), 77 FR 33531 (June 6, 2012) (SR–
BATS–2011–038; SR–BYX–2011–025; SR–BX–
2011–068; SR–CBOE–2011–087; SR–C2–2011–024;
SR–CHX–2011–30; SR–EDGA–2011–31; SR–EDGX–
2011–30; SR–FINRA–2011–054; SR–ISE–2011–61;
SR–NASDAQ–2011–131; SR–NSX–2011–11; SR–
NYSE–2011–48; SR–NYSEAmex–2011–73; SR–
NYSEArca–2011–68; SR–Phlx–2011–129) (‘‘MWCB
Approval Order’’).
E:\FR\FM\14OCN1.SGM
14OCN1
]]>Agencies
[Federal Register Volume 85, Number 199 (Wednesday, October 14, 2020)]
[Notices]
[Pages 65082-65085]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-22717]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-90136; File No. SR-NYSEARCA-2020-89)
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Extend the Pilot
Related to the Market-Wide Circuit Breaker in Rule 7.12-E
October 8, 2020.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that, on October 6, 2020, NYSE Arca, Inc. (``NYSE Arca'' or the
``Exchange'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I and II
below, which Items have been prepared by the self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C.78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to extend the pilot related to the market-
wide circuit breaker in Rule 7.12-E. The proposed rule change is
available on the Exchange's website at www.nyse.com, at the principal
office of the Exchange, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
Rule 7.12-E provides a methodology for determining when to halt
trading in all stocks due to extraordinary market
[[Page 65083]]
volatility (i.e., market-wide circuit breakers). The market-wide
circuit breaker (``MWCB'') mechanism under Rule 7.12-E was approved by
the Commission to operate on a pilot basis,\4\ the term of which was to
coincide with the pilot period for the Plan to Address Extraordinary
Market Volatility Pursuant to Rule 608 of Regulation NMS (the ``LULD
Plan''),\5\ including any extensions to the pilot period for the LULD
Plan.\6\ In April 2019, the Commission approved an amendment to the
LULD Plan for it to operate on a permanent, rather than pilot,
basis.\7\ In light of the proposal to make the LULD Plan permanent, the
Exchange amended Rule 7.12-E to untie the pilot's effectiveness from
that of the LULD Plan and to extend the pilot's effectiveness to the
close of business on October 18, 2019.\8\ The Exchange then filed to
extend the pilot for an additional year to the close of business on
October 18, 2020.\9\
---------------------------------------------------------------------------
\4\ See Securities Exchange Act Release No. 67090 (May 31,
2012), 77 FR 33531 (June 6, 2012) (SR-NYSEArca-2011-68).
\5\ See Securities Exchange Act Release No. 67091 (May 31,
2012), 77 FR 33498 (June 6, 2012). The LULD Plan provides a
mechanism to address extraordinary market volatility in individual
securities.
\6\ See Securities Exchange Act Release Nos. 67090 (May 31,
2012), 77 FR 33531 (June 6, 2012) (SR-NYSEArca-2011-68) (Approval
Order); and 68785 (January 31, 2013), 78 FR 8646 (February 6, 2013)
(SR-NYSEArca-2013-06) (Notice of Filing and Immediate Effectiveness
of Proposed Rule Change Delaying the Operative Date of a Rule Change
to Exchange Rule 7.12-E).
\7\ See Securities Exchange Act Release No. 85623 (April 11,
2019), 84 FR 16086 (April 17, 2019).
\8\ See Securities Exchange Act Release No. 85561 (April 9,
2019), 84 FR 15262 (April 15, 2019) (SR-NYSEArca-2019-23).
\9\ See Securities Exchange Act Release No. 87017 (September 19,
2019), 84 FR 50543 (September 25, 2019) (SR-NYSEArca-2019-66).
---------------------------------------------------------------------------
The Exchange now proposes to amend Rule 7.12-E to extend the pilot
to the close of business on October 18, 2021. This filing does not
propose any substantive or additional changes to Rule 7.12-E.
The market-wide circuit breaker under Rule 7.12-E provides an
important, automatic mechanism that is invoked to promote stability and
investor confidence during a period of significant stress when
securities markets experience extreme broad-based declines. All U.S.
equity exchanges and FINRA adopted uniform rules on a pilot basis
relating to market-wide circuit breakers in 2012 (``MWCB Rules''),
which are designed to slow the effects of extreme price movement
through coordinated trading halts across securities markets when severe
price declines reach levels that may exhaust market liquidity.\10\
Market-wide circuit breakers provide for trading halts in all equities
and options markets during a severe market decline as measured by a
single-day decline in the S&P 500 Index.
---------------------------------------------------------------------------
\10\ See Securities Exchange Act Release No. 67090 (May 31,
2012), 77 FR 33531 (June 6, 2012) (SR-BATS-2011-038; SR-BYX-2011-
025; SR-BX-2011-068; SR-CBOE-2011-087; SR-C2-2011-024; SR-CHX-2011-
30; SR-EDGA-2011-31; SR-EDGX-2011-30; SR-FINRA-2011-054; SR-ISE-
2011-61; SR-NASDAQ-2011-131; SR-NSX-2011-11; SR-NYSE-2011-48; SR-
NYSEAmex-2011-73; SR-NYSEArca-2011-68; SR-Phlx-2011-129) (``MWCB
Approval Order'').
---------------------------------------------------------------------------
Pursuant to Rule 7.12-E, a market-wide trading halt will be
triggered if the S&P 500 Index declines in price by specified
percentages from the prior day's closing price of that index.
Currently, the triggers are set at three circuit breaker thresholds: 7%
(Level 1), 13% (Level 2), and 20% (Level 3). A market decline that
triggers a Level 1 or Level 2 halt after 9:30 a.m. ET and before 3:25
p.m. ET would halt market-wide trading for 15 minutes, while a similar
market decline at or after 3:25 p.m. ET would not halt market-wide
trading. A market decline that triggers a Level 3 halt, at any time
during the trading day, would halt market-wide trading for the
remainder of the trading day.
Since the MWCB pilot was last extended in October 2019, the MWCB
mechanism has proven itself to be an effective tool for protecting
markets through turbulent times. In the Spring of 2020, at the outset
of the worldwide COVID-19 pandemic, U.S. equities markets experienced
four MWCB Level 1 halts, on March 9, 12, 16, and 18, 2020. In each
instance, the markets halted as intended upon a 7% drop in the S&P 500
Index, and resumed as intended 15 minutes later.
In response to these events, the previously-convened MWCB Taskforce
(``Taskforce'') reviewed the March 2020 halts and considered whether
any immediate changes to the MWCB mechanism should be made. The
Taskforce, consisting of representatives from equities exchanges,
futures exchanges, FINRA, broker-dealers, and other market
participants, had been assembled in early 2020 to consider more
generally potential changes to the MWCB mechanism. The Taskforce held
ten meetings in the Spring and Summer of 2020 that were attended by
Commission staff to consider, among other things: (1) Whether to retain
the S&P 500 Index as the standard for measuring market declines; (2)
whether halts that occur shortly after the 9:30 a.m. market open cause
more harm than good; and (3) what additional testing of the MWCB
mechanism should be done.
After considering data and anecdotal reports of market
participants' experiences during the March 2020 MWCB events, the
Taskforce did not recommend immediate changes be made to the use of the
S&P 500 Index as the reference price against which market declines are
measured, or to the current MWCB mechanism which permits halts even
shortly after the 9:30 a.m. market open. The Taskforce recommended
creating a process for a backup reference price in the event that the
S&P 500 Index becomes unavailable, and enhancing functional MWCB
testing. The Taskforce also asked CME to consider modifying its rules
to enter into a limit-down state in the futures pre-market after a 7%
decline instead of 5%.
On September 17, 2020, the Director of the Division of Trading and
Markets requested that the equities exchanges and FINRA prepare a more
complete study of the design and operation of the MWCB mechanism and
the LULD Plan during the period of volatility in the Spring of 2020.
Based on the results of that study, the Exchange expects to work with
the Commission, FINRA, the other exchanges, and market participants to
determine if any additional changes to the MWCB mechanism should be
made, including consideration of rules and procedures for the periodic
testing of the MWCB mechanism with industry participants.
In addition to the work of the Taskforce, the equities exchanges
also moved forward in 2019 and 2020 with a plan to normalize their Day
2 opening procedures after a Level 3 MWCB halt, such that all exchanges
would reopen on Day 2 with a standard opening auction. The Exchange and
its Affiliate SROs \11\ filed rule changes to that effect in March
2020,\12\ and successfully tested the implementation of those changes
on September 12, 2020.
---------------------------------------------------------------------------
\11\ The ``Affiliate SROs'' are the Exchange's affiliates NYSE
American LLC, NYSE Arca, Inc., NYSE Chicago, Inc., and NYSE
National, Inc.
\12\ See Securities Exchange Act Release Nos. 88402 (March 17,
2020), 85 FR 16436 (March 23, 2020) (SR-NYSE-2020-20); 88407 (March
18, 2020), 85 FR 16690 (March 24, 2020) (SR-NYSEAMER-2020-20); 88414
(March 18, 2020), 85 FR 16707 (March 24, 2020) (SR-NYSEArca-2020-
23); 88410 (March 18, 2020), 85 FR 16693 (March 24, 2020) (SR-
NYSECHX-2020-08); 88411 (March 18, 2020), 85 FR 16710 (March 24,
2020) (SR-NYSENAT-2020-11).
---------------------------------------------------------------------------
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\
[[Page 65084]]
in particular, in that it is designed to promote just and equitable
principles of trade, to remove impediments to and perfect the mechanism
of a free and open market and a national market system, and, in general
to protect investors and the public interest. The market-wide circuit
breaker mechanism under Rule 7.12-E is an important, automatic
mechanism that is invoked to promote stability and investor confidence
during a period of significant stress when securities markets
experience extreme broad-based declines. Extending the market-wide
circuit breaker pilot for an additional year would ensure the
continued, uninterrupted operation of a consistent mechanism to halt
trading across the U.S. markets while the Exchange and the other SROs
study the design and operation of the MWCB mechanism and the LULD Plan
during the period of volatility in the Spring of 2020. Based on the
results of that study, the Exchange expects to work with the
Commission, FINRA, the other exchanges, and market participants to
determine if any additional changes to the MWCB mechanism should be
made, including consideration of rules and procedures for the periodic
testing of the MWCB mechanism with industry participants.
---------------------------------------------------------------------------
\13\ 15 U.S.C. 78f(b).
\14\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The Exchange also believes that the proposed rule change promotes
just and equitable principles of trade in that it promotes transparency
and uniformity across markets concerning when and how to halt trading
in all stocks as a result of extraordinary market volatility. Based on
the foregoing, the Exchange believes the benefits to market
participants from the MWCB under Rule 7.12-E should continue on a pilot
basis because the MWCB will promote fair and orderly markets, and
protect investors and the public interest.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act because the proposal would
ensure the continued, uninterrupted operation of a consistent mechanism
to halt trading across the U.S. markets while the Exchange and the
other SROs study the design and operation of the MWCB mechanism and the
LULD Plan during the period of volatility in the Spring of 2020.
Further, the Exchange understands that FINRA and other national
securities exchanges will file proposals to extend their rules
regarding the market-wide circuit breaker pilot. Thus, the proposed
rule change will help to ensure consistency across market centers
without implicating any competitive issues.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The Exchange has designated this rule filing as non-controversial
under Section 19(b)(3)(A) \15\ of the Act and Rule 19b-4(f)(6) \16\
thereunder. Because the proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative 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 and Rule 19b-
4(f)(6) thereunder.\17\
---------------------------------------------------------------------------
\15\ 15 U.S.C. 78s(b)(3)(A).
\16\ 17 CFR 240.19b-4(f)(6).
\17\ In addition, Rule 19b-4(f)(6)(iii) requires the Exchange 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
filing of the proposed rule change, or such shorter time as
designated by the Commission. The Exchange has satisfied this
requirement.
---------------------------------------------------------------------------
A proposed rule change filed under Rule 19b-4(f)(6) \18\ normally
does not become operative for 30 days after the date of filing.
However, pursuant to Rule 19b-4(f)(6)(iii),\19\ the Commission may
designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has asked
the Commission to waive the 30-day operative delay so that the proposal
may become operative upon filing. Extending the pilot for an additional
year will allow the uninterrupted operation of the existing pilot while
the Exchange, FINRA, and the other exchanges conduct a study of the
MWCB mechanism in consultation with market participants and determine
if any additional changes to the MWCB mechanism should be made,
including consideration of rules and procedures for the periodic
testing of the MWCB mechanism with industry participants. Therefore,
the Commission believes that waiving the 30-day operative delay is
consistent with the protection of investors and the public interest.
The Commission hereby designates the proposed rule change to be
operative upon filing.\20\
---------------------------------------------------------------------------
\18\ Id.
\19\ 17 CFR 240.19b-4(f)(6)(iii).
\20\ 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).
---------------------------------------------------------------------------
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 change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-NYSEARCA-2020-89 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSEARCA-2020-89. 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
[[Page 65085]]
Reference Room, 100 F Street NE, Washington, DC 20549-1090, on official
business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of
the filing also will be available for inspection and copying at the
principal office of the Exchange. All comments received will be posted
without change. Persons submitting comments are cautioned that we do
not redact or edit personal identifying information from comment
submissions. You should submit only information that you wish to make
available publicly.
All submissions should refer to File Number SR-NYSEARCA-2020-89 and
should be submitted on or before November 4, 2020.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\21\
---------------------------------------------------------------------------
\21\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-22717 Filed 10-13-20; 8:45 am]
BILLING CODE P
