Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Extend the Pilot Program Related to FINRA Rule 11892 (Clearly Erroneous Transactions in Exchange-Listed Securities), 67574-67576 [2020-23456]
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Federal Register / Vol. 85, No. 206 / Friday, October 23, 2020 / Notices
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SECURITIES AND EXCHANGE
COMMISSION
Dated: October 19, 2020.
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Robert B. Elliott,
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[FR Doc. 2020–23463 Filed 10–22–20; 8:45 am]
BILLING CODE 7590–01–P
khammond on DSKJM1Z7X2PROD with NOTICES
Time
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Extend the Pilot
Program Related to FINRA Rule 11892
(Clearly Erroneous Transactions in
Exchange-Listed Securities)
October 19, 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 October
16, 2020, the Financial Industry
Regulatory Authority, Inc. (‘‘FINRA’’)
filed with the Securities and Exchange
Commission (‘‘SEC’’ or ‘‘Commission’’)
the proposed rule change as described
in Items I and II below, which Items
have been prepared by FINRA. 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
FINRA is proposing to extend the
current pilot program related to FINRA
Rule 11892 (Clearly Erroneous
Transactions in Exchange-Listed
Securities) (‘‘Clearly Erroneous
Transaction Pilot’’ or ‘‘Pilot’’) until
April 20, 2021.
The text of the proposed rule change
is available on FINRA’s website at
https://www.finra.org, at the principal
office of FINRA 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,
FINRA 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. FINRA has prepared
2 17
18:09 Oct 22, 2020
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Webinar Information: https://usnrc.webex.com.
Event number: 199 753 7173.
Telephone Bridge Line: 1–800–369–2157.
Participant Passcode: 525781#.
[Release No. 34–90219; File No. SR–FINRA–
2020–036]
1 15
VerDate Sep<11>2014
1:00 p.m. to 3:00 p.m. (EST) ..
PO 00000
U.S.C. 78s(b)(1).
CFR 240.19b–4.
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Sfmt 4703
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
FINRA is proposing a rule change to
extend the current pilot program related
to FINRA Rule 11892 governing clearly
erroneous transactions in exchangelisted securities until the close of
business on April 20, 2021. Extending
the Pilot would provide FINRA and the
national securities exchanges additional
time to consider a permanent proposal
for clearly erroneous transaction
reviews.
On September 10, 2010, the
Commission approved, on a pilot basis,
changes to FINRA Rule 11892 that,
among other things: (i) Provided for
uniform treatment of clearly
erroneous transaction reviews in multistock events involving twenty or more
securities; and (ii) reduced the ability of
FINRA to deviate from the objective
standards set forth in the rule.3 In 2013,
FINRA adopted a provision designed to
address the operation of the Plan to
Address Extraordinary Market Volatility
Pursuant to Rule 608 of Regulation NMS
(‘‘Plan’’).4 Finally, in 2014, FINRA
adopted two additional provisions
addressing (i) erroneous transactions
that occur over one or more trading days
that were based on the same
fundamentally incorrect or grossly
misinterpreted information resulting in
a severe valuation error; and (ii) a
disruption or malfunction in the
operation of the facilities of a selfregulatory organization or responsible
single plan processor in connection
with the transmittal or receipt of a
trading halt.5
On April 9, 2019, FINRA filed a
proposed rule change to untie the
3 See Securities Exchange Act Release No. 62885
(September 10, 2010), 75 FR 56641 (September 16,
2010) (Order Approving File No. SR–FINRA–2010–
032).
4 See Securities Exchange Act Release No. 68808
(February 1, 2013), 78 FR 9083 (February 7, 2013)
(Notice of Filing and Immediate Effectiveness of
File No. SR–FINRA–2013–012).
5 See Securities Exchange Act Release No. 72434
(June 19, 2014), 79 FR 36110 (June 25, 2014) (Order
Approving File No. SR–FINRA–2014–021).
E:\FR\FM\23OCN1.SGM
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Federal Register / Vol. 85, No. 206 / Friday, October 23, 2020 / Notices
effectiveness of the Clearly Erroneous
Transaction Pilot from the effectiveness
of the Plan, and to extend the Pilot’s
effectiveness to the close of business on
October 18, 2019.6 On October 18, 2019,
FINRA filed a proposed rule change to
extend the Pilot’s effectiveness until
April 20, 2020.7 On March 27, 2020,
FINRA filed a proposed rule change to
extend the pilot’s effectiveness until
October 20, 2020.8 FINRA now is
proposing to further extend the Pilot
until April 20, 2021, so that market
participants can continue to benefit
from the more objective clearly
erroneous transaction standards under
the Pilot.9 Extending the Pilot also
would provide more time to permit
FINRA and the other self-regulatory
organizations to consider what changes,
if any, to the clearly erroneous
transaction rules are appropriate.10
FINRA has filed the proposed rule
change for immediate effectiveness and
has requested that the SEC waive the
requirement that the proposed rule
change not become operative for 30 days
from the date of filing, so that FINRA
can implement the proposed rule
change immediately.
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2. Statutory Basis
FINRA believes that the proposed rule
change is consistent with the provisions
of Section 15A(b)(6) of the Act,11 which
requires, among other things, that
FINRA rules must be designed to
prevent fraudulent and manipulative
acts and practices, to promote just and
equitable principles of trade and, in
general, to protect investors and the
public interest. FINRA believes that the
proposed rule change promotes just and
equitable principles of trade in that it
promotes transparency and uniformity
across markets concerning the review of
transactions as clearly erroneous.
FINRA believes that extending the Pilot
6 See Securities Exchange Act Release No. 85612
(April 11, 2019), 84 FR 16107 (April 17, 2019)
(Notice of Filing and Immediate Effectiveness of
File No. SR–FINRA–2019–011).
7 See Securities Exchange Act Release No. 87344
(October 18, 2019), 84 FR 57076 (October 24, 2019)
(Notice of Filing and Immediate Effectiveness of
File No. SR–FINRA–2019–025).
8 See Securities Exchange Act Release No. 88495
(March 27, 2020), 85 FR 18608 (April 2, 2020)
(Notice of Filing and Immediate Effectiveness of
File No. SR–FINRA–2020–008).
9 If the pilot period is not either extended or
approved as permanent, the version of Rule 11892
prior to SR–FINRA–2010–032 shall be in effect, and
the amendments set forth in SR–FINRA–2014–021
and the provisions of Supplementary Material .03
of the rule shall be null and void.
10 See Securities Exchange Act Release No. 85623
(April 11, 2019), 84 FR 16086 (April 17, 2019)
(Order Approving the Eighteenth Amendment to
the National Market System Plan to Address
Extraordinary Market Volatility).
11 15 U.S.C. 78o–3(b)(6).
VerDate Sep<11>2014
18:09 Oct 22, 2020
Jkt 253001
under FINRA Rule 11892, until April
20, 2021, would 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, FINRA
believes the Clearly Erroneous
Transaction Pilot should continue to be
in effect while FINRA and the national
securities exchanges consider a
permanent proposal for clearly
erroneous transaction reviews.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
FINRA does not believe that the
proposed rule change will result in any
burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. The proposal
would ensure the continued,
uninterrupted operation of harmonized
clearly erroneous transaction rules
across the U.S. equities markets while
FINRA and the national securities
exchanges consider further amendments
to these rules. FINRA understands that
the national securities exchanges also
will file similar proposals to extend
their clearly erroneous execution pilot
programs, as applicable. 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
Written comments were neither
solicited nor received.
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 12 and Rule 19b–
4(f)(6) thereunder.13
12 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. FINRA has
satisfied this requirement.
13 17
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Fmt 4703
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67575
A proposed rule change filed under
Rule 19b–4(f)(6) 14 normally does not
become operative prior to 30 days after
the date of the filing. However, Rule
19b–4(f)(6)(iii) 15 permits the
Commission to designate a shorter time
if such action is consistent with the
protection of investors and the public
interest. FINRA has asked the
Commission to waive the 30-day
operative delay so that the proposed
rule change may become effective and
operative immediately upon filing. The
Commission believes that waiving the
30-day operative delay is consistent
with the protection of investors and the
public interest, as it will allow the
current clearly erroneous execution
pilot program to continue
uninterrupted, without any changes,
while FINRA 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.16
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–
FINRA–2020–036 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
14 17
CFR 240.19b–4(f)(6).
CFR 240.19b–4(f)(6)(iii).
16 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).
15 17
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Federal Register / Vol. 85, No. 206 / Friday, October 23, 2020 / Notices
Commission, 100 F Street NE,
Washington, DC 20549–1090.
SECURITIES AND EXCHANGE
COMMISSION
All submissions should refer to File
Number SR–FINRA–2020–036. 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 FINRA. 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–FINRA–
2020–036 and should be submitted on
or before November 13, 2020.
[Release No. 34–90223]
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.17
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–23456 Filed 10–22–20; 8:45 am]
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BILLING CODE 8011–01–P
17 17
18:09 Oct 22, 2020
October 19, 2020.
I. Introduction
By letter dated August 27, 2020, BOX
Exchange LLC, Cboe BYX Exchange,
Inc., Cboe BZX Exchange, Inc., Cboe
EDGA Exchange, Inc., Cboe EDGX
Exchange, Inc., Cboe C2 Exchange, Inc.,
Cboe Exchange, Inc., Financial Industry
Regulatory Authority, Inc. (‘‘FINRA’’),
Investors Exchange LLC, Long Term
Stock Exchange, Inc., MEMX LLC,
Miami International Securities
Exchange LLC, MIAX Emerald, LLC,
MIAX PEARL, LLC, NASDAQ BX, LLC,
Nasdaq GEMX, LLC, Nasdaq ISE, LLC,
Nasdaq MRX, LLC, NASDAQ PHLX
LLC, The NASDAQ Stock Market LLC,
New York Stock Exchange LLC, NYSE
American LLC, NYSE Arca, Inc., NYSE
Chicago, Inc., and NYSE National, Inc.
(collectively, the ‘‘Participants’’)
requested that the Securities and
Exchange Commission (‘‘Commission’’
or ‘‘SEC’’) grant them exemptive relief
from the National Market System Plan
Governing the Consolidated Audit Trail
(‘‘CAT NMS Plan’’),1 pursuant to its
authority under Section 36 of the
Securities Exchange Act of 1934
(‘‘Exchange Act’’) 2 and Rule 608(e) of
Regulation NMS under the Exchange
Act, from certain allocation reporting
requirements of Sections 6.4(d)(ii)(A)(1)
and (2) of the CAT NMS Plan.3
Section 36 of the Exchange Act grants
the Commission the authority, with
certain limitations, to ‘‘conditionally or
unconditionally exempt any person,
security, or transaction . . . from any
provision or provisions of [the Exchange
Act] or of any rule or regulation
thereunder, to the extent that such
exemption is necessary or appropriate
in the public interest, and is consistent
1 The CAT NMS Plan was approved by the
Commission, as modified, on November 15, 2016.
See Securities Exchange Act Release No. 79318
(November 15, 2016), 81 FR 84696 (November 23,
2016).
2 15 U.S.C. 78mm(a)(1).
3 See letter from the Participants to Vanessa
Countryman, Secretary, Commission, dated August
27, 2020 (the ‘‘August 27, 2020 Exemption
Request’’). Unless otherwise noted, capitalized
terms are used as defined in the CAT NMS Plan.
CFR 200.30–3(a)(12).
VerDate Sep<11>2014
Order Granting Conditional Exemptive
Relief, Pursuant to Section 36 of the
Securities Exchange Act of 1934
(‘‘Exchange Act’’) and Rule 608(e) of
Regulation NMS Under the Exchange
Act, Relating to the Reporting of
Allocations Pursuant to the National
Market System Plan Governing the
Consolidated Audit Trail
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PO 00000
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Fmt 4703
Sfmt 4703
with the protection of investors.’’ 4
Under Rule 608(e) of Regulation NMS,
the Commission may ‘‘exempt from
[Rule 608], either unconditionally or on
specified terms and conditions, any selfregulatory organization, member
thereof, or specified security, if the
Commission determines that such
exemption is consistent with the public
interest, the protection of investors, the
maintenance of fair and orderly markets
and the removal of impediments to, and
perfection of the mechanism of, a
national market system.’’ 5
For the reasons set forth below, this
Order grants the Participants’ request for
an exemption from Sections
6.4(d)(ii)(A)(1) and (2) of the CAT NMS
Plan as set forth in the August 27, 2020
Exemption Request, subject to certain
conditions.
II. Background
Pursuant to Section 6.4(d)(ii)(A) of the
CAT NMS Plan, each Participant must,
through its Compliance Rule, require its
Industry Members to record and report
to the Central Repository, if the order is
executed, in whole or in part: (1) An
Allocation Report; 6 (2) the SROAssigned Market Participant Identifier
of the clearing broker or prime broker,
if applicable; and the (3) CAT-Order-ID
of any contra-side order(s). Accordingly,
the Participants have implemented
Compliance Rules that, among other
things, require their Industry Members
that are executing brokers to submit to
the Central Repository, among other
things, Allocation Reports and the SROAssigned Market Participant Identifier
of the clearing broker or prime broker,
if applicable.7
III. Request for Relief
In the August 27, 2020 Exemption
Request, the Participants request that
the Participants be permitted to
implement an alternative approach to
reporting allocations to the Central
Repository, the ‘‘Allocation
Alternative.’’ Under the Allocation
Alternative, any Industry Member that
performs an allocation to a client
4 15
U.S.C. 78mm(a)(1).
CFR 242.608(e).
6 Section 1.1 of the CAT NMS Plan defines an
‘‘Allocation Report’’ as ‘‘a report made to the
Central Repository by an Industry Member that
identifies the Firm Designated ID for any account(s),
including subaccount(s), to which executed shares
are allocated and provides the security that has
been allocated, the identifier of the firm reporting
the allocation, the price per share of shares
allocated, the side of shares allocated, the number
of shares allocated to each account, and the time of
the allocation; provided for the avoidance of doubt,
any such Allocation Report shall not be required to
be linked to particular orders or executions.’’
7 See, e.g., Cboe Exchange, Inc. Rule 7.22(a)(2)(A);
New York Stock Exchange LLC Rule 6830(a)(2)(A).
5 17
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]]>Agencies
[Federal Register Volume 85, Number 206 (Friday, October 23, 2020)]
[Notices]
[Pages 67574-67576]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-23456]
=======================================================================
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-90219; File No. SR-FINRA-2020-036]
Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Extend the Pilot Program Related to FINRA Rule
11892 (Clearly Erroneous Transactions in Exchange-Listed Securities)
October 19, 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 October 16, 2020, the Financial Industry Regulatory Authority, Inc.
(``FINRA'') filed with the Securities and Exchange Commission (``SEC''
or ``Commission'') the proposed rule change as described in Items I and
II below, which Items have been prepared by FINRA. The Commission is
publishing this notice to solicit comments on the proposed rule change
from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
FINRA is proposing to extend the current pilot program related to
FINRA Rule 11892 (Clearly Erroneous Transactions in Exchange-Listed
Securities) (``Clearly Erroneous Transaction Pilot'' or ``Pilot'')
until April 20, 2021.
The text of the proposed rule change is available on FINRA's
website at https://www.finra.org, at the principal office of FINRA 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, FINRA 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. FINRA 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
FINRA is proposing a rule change to extend the current pilot
program related to FINRA Rule 11892 governing clearly erroneous
transactions in exchange-listed securities until the close of business
on April 20, 2021. Extending the Pilot would provide FINRA and the
national securities exchanges additional time to consider a permanent
proposal for clearly erroneous transaction reviews.
On September 10, 2010, the Commission approved, on a pilot basis,
changes to FINRA Rule 11892 that, among other things: (i) Provided for
uniform treatment of clearly erroneous transaction reviews in multi-
stock events involving twenty or more securities; and (ii) reduced the
ability of FINRA to deviate from the objective standards set forth in
the rule.\3\ In 2013, FINRA adopted a provision designed to address the
operation of the Plan to Address Extraordinary Market Volatility
Pursuant to Rule 608 of Regulation NMS (``Plan'').\4\ Finally, in 2014,
FINRA adopted two additional provisions addressing (i) erroneous
transactions that occur over one or more trading days that were based
on the same fundamentally incorrect or grossly misinterpreted
information resulting in a severe valuation error; and (ii) a
disruption or malfunction in the operation of the facilities of a self-
regulatory organization or responsible single plan processor in
connection with the transmittal or receipt of a trading halt.\5\
---------------------------------------------------------------------------
\3\ See Securities Exchange Act Release No. 62885 (September 10,
2010), 75 FR 56641 (September 16, 2010) (Order Approving File No.
SR-FINRA-2010-032).
\4\ See Securities Exchange Act Release No. 68808 (February 1,
2013), 78 FR 9083 (February 7, 2013) (Notice of Filing and Immediate
Effectiveness of File No. SR-FINRA-2013-012).
\5\ See Securities Exchange Act Release No. 72434 (June 19,
2014), 79 FR 36110 (June 25, 2014) (Order Approving File No. SR-
FINRA-2014-021).
---------------------------------------------------------------------------
On April 9, 2019, FINRA filed a proposed rule change to untie the
[[Page 67575]]
effectiveness of the Clearly Erroneous Transaction Pilot from the
effectiveness of the Plan, and to extend the Pilot's effectiveness to
the close of business on October 18, 2019.\6\ On October 18, 2019,
FINRA filed a proposed rule change to extend the Pilot's effectiveness
until April 20, 2020.\7\ On March 27, 2020, FINRA filed a proposed rule
change to extend the pilot's effectiveness until October 20, 2020.\8\
FINRA now is proposing to further extend the Pilot until April 20,
2021, so that market participants can continue to benefit from the more
objective clearly erroneous transaction standards under the Pilot.\9\
Extending the Pilot also would provide more time to permit FINRA and
the other self-regulatory organizations to consider what changes, if
any, to the clearly erroneous transaction rules are appropriate.\10\
---------------------------------------------------------------------------
\6\ See Securities Exchange Act Release No. 85612 (April 11,
2019), 84 FR 16107 (April 17, 2019) (Notice of Filing and Immediate
Effectiveness of File No. SR-FINRA-2019-011).
\7\ See Securities Exchange Act Release No. 87344 (October 18,
2019), 84 FR 57076 (October 24, 2019) (Notice of Filing and
Immediate Effectiveness of File No. SR-FINRA-2019-025).
\8\ See Securities Exchange Act Release No. 88495 (March 27,
2020), 85 FR 18608 (April 2, 2020) (Notice of Filing and Immediate
Effectiveness of File No. SR-FINRA-2020-008).
\9\ If the pilot period is not either extended or approved as
permanent, the version of Rule 11892 prior to SR-FINRA-2010-032
shall be in effect, and the amendments set forth in SR-FINRA-2014-
021 and the provisions of Supplementary Material .03 of the rule
shall be null and void.
\10\ See Securities Exchange Act Release No. 85623 (April 11,
2019), 84 FR 16086 (April 17, 2019) (Order Approving the Eighteenth
Amendment to the National Market System Plan to Address
Extraordinary Market Volatility).
---------------------------------------------------------------------------
FINRA has filed the proposed rule change for immediate
effectiveness and has requested that the SEC waive the requirement that
the proposed rule change not become operative for 30 days from the date
of filing, so that FINRA can implement the proposed rule change
immediately.
2. Statutory Basis
FINRA believes that the proposed rule change is consistent with the
provisions of Section 15A(b)(6) of the Act,\11\ which requires, among
other things, that FINRA rules must be designed to prevent fraudulent
and manipulative acts and practices, to promote just and equitable
principles of trade and, in general, to protect investors and the
public interest. FINRA believes that the proposed rule change promotes
just and equitable principles of trade in that it promotes transparency
and uniformity across markets concerning the review of transactions as
clearly erroneous. FINRA believes that extending the Pilot under FINRA
Rule 11892, until April 20, 2021, would 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, FINRA believes the Clearly
Erroneous Transaction Pilot should continue to be in effect while FINRA
and the national securities exchanges consider a permanent proposal for
clearly erroneous transaction reviews.
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\11\ 15 U.S.C. 78o-3(b)(6).
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B. Self-Regulatory Organization's Statement on Burden on Competition
FINRA does not believe that the proposed rule change will result in
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act. The proposal would ensure the
continued, uninterrupted operation of harmonized clearly erroneous
transaction rules across the U.S. equities markets while FINRA and the
national securities exchanges consider further amendments to these
rules. FINRA understands that the national securities exchanges also
will file similar proposals to extend their clearly erroneous execution
pilot programs, as applicable. 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
Written comments were neither solicited nor received.
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 \12\ and Rule 19b-
4(f)(6) thereunder.\13\
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\12\ 15 U.S.C. 78s(b)(3)(A).
\13\ 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.
FINRA has satisfied this requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) \14\ normally
does not become operative prior to 30 days after the date of the
filing. However, Rule 19b-4(f)(6)(iii) \15\ permits the Commission to
designate a shorter time if such action is consistent with the
protection of investors and the public interest. FINRA has asked the
Commission to waive the 30-day operative delay so that the proposed
rule change may become effective and operative immediately upon filing.
The Commission believes that waiving the 30-day operative delay is
consistent with the protection of investors and the public interest, as
it will allow the current clearly erroneous execution pilot program to
continue uninterrupted, without any changes, while FINRA 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.\16\
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\14\ 17 CFR 240.19b-4(f)(6).
\15\ 17 CFR 240.19b-4(f)(6)(iii).
\16\ 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-FINRA-2020-036 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange
[[Page 67576]]
Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-FINRA-2020-036. 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 FINRA. 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-FINRA-2020-036 and should be submitted
on or before November 13, 2020.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
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\17\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-23456 Filed 10-22-20; 8:45 am]
BILLING CODE 8011-01-P
