Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Extend the Current Pilot Program Related to BZX Rule 11.17, Clearly Erroneous Executions, to the Close of Business on October 20, 2021, 20580-20583 [2021-08046]
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<![CDATA[
20580
Federal Register / Vol. 86, No. 74 / Tuesday, April 20, 2021 / Notices
consistent results in handling erroneous
trades across the U.S. equities markets,
thus furthering fair and orderly markets,
the protection of investors and the
public interest. Based on the foregoing,
the Exchange believes the amended
clearly erroneous 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 execution reviews.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change would impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. To the
contrary, the Exchange understands that
FINRA and other national securities
exchanges have or will also file similar
proposals to extend their respective
clearly erroneous execution pilot
programs.20 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 comments were solicited or
received 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 21 and Rule 19b–
4(f)(6) thereunder.22
A proposed rule change filed under
Rule 19b–4(f)(6) 23 normally does not
become operative prior to 30 days after
the date of the filing. However, Rule
19b–4(f)(6)(iii) 24 permits the
Commission to designate a shorter time
20 See
supra note 16.
U.S.C. 78s(b)(3)(A).
22 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.
23 17 CFR 240.19b–4(f)(6).
24 17 CFR 240.19b–4(f)(6)(iii).
21 15
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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
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.25
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.
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
internet website (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–CboeBYX–2021–008 and
should be submitted on or before May
11, 2021.
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:
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.26
J. Matthew DeLesDernier,
Assistant Secretary.
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–
CboeBYX–2021–008 on the subject line.
SECURITIES AND EXCHANGE
COMMISSION
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–CboeBYX–2021–008. This
file number should be included on the
subject line if email is used. To help the
Commission process and review your
25 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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[FR Doc. 2021–08048 Filed 4–19–21; 8:45 am]
BILLING CODE 8011–01–P
[Release No. 34–91558; File No. SR–
CboeBZX–2021–027]
Self-Regulatory Organizations; Cboe
BZX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change To Extend the
Current Pilot Program Related to BZX
Rule 11.17, Clearly Erroneous
Executions, to the Close of Business
on October 20, 2021
April 14, 2021.
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 April 5,
2021, Cboe BZX Exchange, Inc.
26 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
E:\FR\FM\20APN1.SGM
20APN1
Federal Register / Vol. 86, No. 74 / Tuesday, April 20, 2021 / Notices
(‘‘Exchange’’ or ‘‘BZX’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the Exchange. The Exchange filed the
proposal as a ‘‘non-controversial’’
proposed rule change pursuant to
Section 19(b)(3)(A)(iii) of the Act 3 and
Rule 19b–4(f)(6) thereunder.4 The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Cboe BZX Exchange, Inc. (‘‘BZX’’ or
the ‘‘Exchange’’) is filing with the
Securities and Exchange Commission
(the ‘‘Commission’’) a proposed rule
change to extend the current pilot
program related to BZX Rule 11.17,
Clearly Erroneous Executions, to the
close of business on October, 2021. 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/bzx/), at
the Exchange’s Office of the Secretary,
and at the Commission’s Public
Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The purpose of this filing is to extend
the effectiveness of the Exchange’s
current rule applicable to Clearly
Erroneous Executions to the close of
business on October 20, 2021. Portions
of Rule 11.17, explained in further
detail below, are currently operating as
3 15
4 17
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6).
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17:10 Apr 19, 2021
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a pilot program set to expire on April
20, 2021.5
On September 10, 2010, the
Commission approved, on a pilot basis,
changes to BZX Rule 11.17 that, among
other things: (i) Provided for uniform
treatment of clearly erroneous execution
reviews in multi-stock events involving
twenty or more securities; and (ii)
reduced the ability of the Exchange to
deviate from the objective standards set
forth in the rule.6 In 2013, the Exchange
adopted a provision designed to address
the operation of the Plan.7 Finally, in
2014, the Exchange adopted two
additional provisions providing that: (i)
A series of transactions in a particular
security on one or more trading days
may be viewed as one event if all such
transactions were effected based on the
same fundamentally incorrect or grossly
misinterpreted issuance information
resulting in a severe valuation error for
all such transactions; and (ii) in the
event of any disruption or malfunction
in the operation of the electronic
communications and trading facilities of
an Exchange, another SRO, or
responsible single plan processor in
connection with the transmittal or
receipt of a trading halt, an Officer,
acting on his or her own motion, shall
nullify any transaction that occurs after
a trading halt has been declared by the
primary listing market for a security and
before such trading halt has officially
ended according to the primary listing
market.8
On December 26, 2018, the
Commission published the proposed
Eighteenth Amendment 9 to the Plan to
Address Extraordinary Market Volatility
Pursuant to Rule 608 of Regulation NMS
under the Act (the ‘‘Limit Up-Limit
Down Plan’’ or the ‘‘Plan’’) 10 to allow
the Plan to operate on a permanent,
rather than pilot, basis. On April 8,
2019, the Exchange amended BZX Rule
11.17 to untie the pilot program’s
effectiveness from that of the Plan and
to extend the pilot’s effectiveness to the
close of business on October 18, 2019 in
order allow the Exchange and other
5 See Securities Exchange Act Release No. 90231
(October 20, 2020), 85 FR 67789 (October 26, 2020)
(SR–CboeBZX–2020–077).
6 See Securities Exchange Act Release No. 62886
(September 10, 2010), 75 FR 56613 (September 16,
2010) (SR–BATS–2010–016).
7 See Securities Exchange Act Release No. 68797
(January 31, 2013), 78 FR 8635 (February 6, 2013)
(SR–BATS–2013–008).
8 See Securities Exchange Act Release No. 72434
(June 19, 2014), 79 FR 36110 (June 25, 2014) (SR–
BATS–2014–014).
9 See Securities Exchange Act Release No. 84843
(December 18, 2018), 83 FR 66464 (December 26,
2018) (File No. 4–631) (‘‘Eighteenth Amendment’’).
10 See Securities Exchange Act Release No. 67091
(May 31, 2012), 77 FR 33498 (June 6, 2012) (the
‘‘Limit Up-Limit Down Release’’).
PO 00000
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20581
national securities exchanges additional
time to consider further amendments, if
any, to the clearly erroneous execution
rules in light of the proposed Eighteenth
Amendment to the Plan.11 On April 17,
2019, the Commission published an
approval of the Eighteenth Amendment
to allow the Plan to operate on a
permanent, rather than pilot, basis.12 On
October 21, 2019, the Exchange
amended BZX Rule 11.17 to extend the
pilot’s effectiveness to the close of
business on April 20, 2020.13 On March
18, 2020, the Exchange amended BZX
Rule 11.17 to extend the pilot’s
effectiveness to the close of business on
October 20, 2020.14 Finally, on October
20, 2020, the Exchange amended BZX
Rule 11.17 to extend the pilot’s
effectiveness to the close of business on
April 20, 2021.15
The Exchange now proposes to amend
BZX Rule 11.17 to extend the pilot’s
effectiveness to the close of business on
October 20, 2021. The Exchange
understands that the other national
securities exchanges and Financial
Industry Regulatory Authority
(‘‘FINRA’’) have filed similar proposals
to extend their respective clearly
erroneous execution pilot programs, the
substance of which are identical to BZX
Rule 11.17.16
The Exchange does not propose any
additional changes to BZX Rule 11.17.
The Exchange believes the benefits to
market participants from the more
objective clearly erroneous executions
rule should continue on a limited six
month pilot basis. As the 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 BZX Rule 11.17 for an
additional six months should provide
the Exchange and other national
securities exchanges additional time to
consider further amendments, if any, to
the clearly erroneous execution rules.
11 See Securities Exchange Act Release No. 85543
(April 8, 2019), 84 FR 15018 (April 12, 2019) (SR–
CboeBZX–2019–022).
12 See Securities Exchange Act Release No. 85623
(April 11, 2019), 84 FR 16086 (April 17, 2019) (File
No. 4–631).
13 See Securities Exchange Act Release No. 87365
(October 21, 2019), 84 FR 57540 (October 25, 2019)
(SR–CboeBZX–2019–089).
14 See Securities Exchange Act Release No. 88497
(March 27, 2020), 85 FR 18602 (April 2, 2020) (SR–
CboeBZX–2020–026).
15 See supra note 5.
16 See SR–FINRA–2021–004 (Filed March 15,
2021).
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Federal Register / Vol. 86, No. 74 / Tuesday, April 20, 2021 / Notices
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with the
Securities Exchange Act of 1934 (the
‘‘Act’’) and the rules and regulations
thereunder applicable to the Exchange
and, in particular, the requirements of
Section 6(b) of the Act.17 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 18 requirements that the rules of
an exchange be designed to prevent
fraudulent and manipulative acts and
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) 19 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 extending the clearly erroneous
execution pilot under BZX Rule 11.17
for an additional six months would help
assure that the determination of whether
a clearly erroneous trade has occurred
will be based on clear and objective
criteria, and that the resolution of the
incident will occur promptly through a
transparent process. The proposed rule
change would also help assure
consistent results in handling erroneous
trades across the U.S. equities markets,
thus furthering fair and orderly markets,
the protection of investors and the
public interest. Based on the foregoing,
the Exchange believes the amended
clearly erroneous 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 execution reviews.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change would impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. To the
contrary, the Exchange understands that
FINRA and other national securities
exchanges have or will also file similar
proposals to extend their respective
17 15
18 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
19 Id.
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17:10 Apr 19, 2021
Jkt 253001
clearly erroneous execution pilot
programs.20 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 comments were solicited or
received 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 21 and Rule 19b–
4(f)(6) thereunder.22
A proposed rule change filed under
Rule 19b–4(f)(6) 23 normally does not
become operative prior to 30 days after
the date of the filing. However, Rule
19b–4(f)(6)(iii) 24 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
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.25
20 See
supra note 16.
U.S.C. 78s(b)(3)(A).
22 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.
23 17 CFR 240.19b–4(f)(6).
24 17 CFR 240.19b–4(f)(6)(iii).
25 For purposes only of waiving the 30-day
operative delay, the Commission has also
21 15
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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
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–
CboeBZX–2021–027 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–CboeBZX–2021–027. 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
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. 86, No. 74 / Tuesday, April 20, 2021 / Notices
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–CboeBZX–2021–027 and
should be submitted on or before May
11, 2021.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.26
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–08046 Filed 4–19–21; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–91552; File No. SR–
NYSEAMER–2021–19]
Self-Regulatory Organizations; NYSE
American LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Extend the Current
Pilot Program Related to Rule 7.10E
April 14, 2021.
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 April 2,
2021, NYSE American LLC (‘‘NYSE
American’’ or the ‘‘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 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
current pilot program related to Rule
7.10E (Clearly Erroneous Executions) to
the close of business on October 20,
2021. 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.
26 17
CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
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17:10 Apr 19, 2021
Jkt 253001
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
The purpose of the proposed rule
change is to extend the current pilot
program related to Rule 7.10E (Clearly
Erroneous Executions) to the close of
business on October 20, 2021. The pilot
program is currently due to expire on
April 20, 2021.
On September 10, 2010, the
Commission approved, on a pilot basis,
changes to Rule 7.10E that, among other
things: (i) Provided for uniform
treatment of clearly erroneous execution
reviews in multi-stock events involving
twenty or more securities; and (ii)
reduced the ability of the Exchange to
deviate from the objective standards set
forth in the rule.4 In 2013, the Exchange
adopted a provision designed to address
the operation of the Plan.5 Finally, in
2014, the Exchange adopted two
additional provisions providing that: (i)
A series of transactions in a particular
security on one or more trading days
may be viewed as one event if all such
transactions were effected based on the
same fundamentally incorrect or grossly
misinterpreted issuance information
resulting in a severe valuation error for
all such transactions; and (ii) in the
event of any disruption or malfunction
in the operation of the electronic
communications and trading facilities of
an Exchange, another SRO, or
responsible single plan processor in
connection with the transmittal or
receipt of a trading halt, an Officer,
acting on his or her own motion, shall
nullify any transaction that occurs after
a trading halt has been declared by the
primary listing market for a security and
4 See Securities Exchange Act Release No. 62886
(Sept. 10, 2010), 75 FR 56613 (Sept. 16, 2010) (SR–
NYSEAmer–2010–60).
5 See Securities Exchange Act Release No. 68801
(Feb. 1, 2013), 78 FR 8630 (Feb. 6, 2013) (SR–
NYSEMKT–2013–11).
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20583
before such trading halt has officially
ended according to the primary listing
market.6
These changes were originally
scheduled to operate for a pilot period
to coincide with the pilot period for the
Plan to Address Extraordinary Market
Volatility (the ‘‘Limit Up-Limit Down
Plan’’ or ‘‘LULD Plan’’),7 including any
extensions to the pilot period for the
LULD Plan.8 In April 2019, the
Commission approved an amendment to
the LULD Plan for it to operate on a
permanent, rather than pilot, basis.9 In
light of that change, the Exchange
amended Rule 7.10E 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,
2019.10 The Exchange later amended
Rule 7.10E to extend the pilot’s
effectiveness to the close of business on
April 20, 2020,11 October 20, 2020,12
and subsequently, April 20, 2021.13
The Exchange now proposes to amend
Rule 7.10E to extend the pilot’s
effectiveness for a further six months
until the close of business on October
20, 2021. If the pilot period is not either
extended, replaced or approved as
permanent, the prior versions of
paragraphs (c), (e)(2), (f), and (g) shall be
in effect, and the provisions of
paragraphs (i) through (k) shall be null
and void.14 In such an event, the
remaining sections of Rule 7.10E would
continue to apply to all transactions
executed on the Exchange. The
Exchange understands that the other
national securities exchanges and
Financial Industry Regulatory Authority
(‘‘FINRA’’) will also file similar
proposals to extend their respective
clearly erroneous execution pilot
6 See Securities Exchange Act Release No. 72434
(June 19, 2014), 79 FR 36110 (June 25, 2014) (SR–
NYSEMKT–2014–37).
7 See Securities Exchange Act Release No. 67091
(May 31, 2012), 77 FR 33498 (June 6, 2012) (the
‘‘Limit Up-Limit Down Release’’).
8 See Securities Exchange Act Release No. 71820
(March 27, 2014), 79 FR 18595 (April 2, 2014) (SR–
NYSEMKT–2014–28).
9 See Securities Exchange Act Release No. 85623
(April 11, 2019), 84 FR 16086 (April 17, 2019)
(approving Eighteenth Amendment to LULD Plan).
10 See Securities Exchange Act Release No. 85563
(April 9, 2019), 84 FR 15241 (April 15, 2019) (SR–
NYSEAMER–2019–11).
11 See Securities Exchange Act Release No. 87354
(October 18, 2019), 84 FR 57139 (October 24, 2019)
(SR–NYSEAMER–2019–44).
12 See Securities Exchange Act Release No. 88589
(April 8, 2020), 85 FR 20769 (April 14, 2020) (SR–
NYSEAMER–2020–22).
13 See Securities Exchange Act Release No. 90154
(October 13, 2020), 85 FR 66376 (October 19, 2020)
(SR–NYSEAMER–2020–73).
14 See supra notes 4–6. The prior versions of
paragraphs (c), (e)(2), (f), and (g) generally provided
greater discretion to the Exchange with respect to
breaking erroneous trades.
E:\FR\FM\20APN1.SGM
20APN1
]]>Agencies
[Federal Register Volume 86, Number 74 (Tuesday, April 20, 2021)]
[Notices]
[Pages 20580-20583]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-08046]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-91558; File No. SR-CboeBZX-2021-027]
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Extend
the Current Pilot Program Related to BZX Rule 11.17, Clearly Erroneous
Executions, to the Close of Business on October 20, 2021
April 14, 2021.
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 April 5, 2021, Cboe BZX Exchange, Inc.
[[Page 20581]]
(``Exchange'' or ``BZX'') 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.
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\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).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Cboe BZX Exchange, Inc. (``BZX'' or the ``Exchange'') is filing
with the Securities and Exchange Commission (the ``Commission'') a
proposed rule change to extend the current pilot program related to BZX
Rule 11.17, Clearly Erroneous Executions, to the close of business on
October, 2021. 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/bzx/), at the Exchange's Office of the Secretary, and at
the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of this filing is to extend the effectiveness of the
Exchange's current rule applicable to Clearly Erroneous Executions to
the close of business on October 20, 2021. Portions of Rule 11.17,
explained in further detail below, are currently operating as a pilot
program set to expire on April 20, 2021.\5\
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\5\ See Securities Exchange Act Release No. 90231 (October 20,
2020), 85 FR 67789 (October 26, 2020) (SR-CboeBZX-2020-077).
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On September 10, 2010, the Commission approved, on a pilot basis,
changes to BZX Rule 11.17 that, among other things: (i) Provided for
uniform treatment of clearly erroneous execution reviews in multi-stock
events involving twenty or more securities; and (ii) reduced the
ability of the Exchange to deviate from the objective standards set
forth in the rule.\6\ In 2013, the Exchange adopted a provision
designed to address the operation of the Plan.\7\ Finally, in 2014, the
Exchange adopted two additional provisions providing that: (i) A series
of transactions in a particular security on one or more trading days
may be viewed as one event if all such transactions were effected based
on the same fundamentally incorrect or grossly misinterpreted issuance
information resulting in a severe valuation error for all such
transactions; and (ii) in the event of any disruption or malfunction in
the operation of the electronic communications and trading facilities
of an Exchange, another SRO, or responsible single plan processor in
connection with the transmittal or receipt of a trading halt, an
Officer, acting on his or her own motion, shall nullify any transaction
that occurs after a trading halt has been declared by the primary
listing market for a security and before such trading halt has
officially ended according to the primary listing market.\8\
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\6\ See Securities Exchange Act Release No. 62886 (September 10,
2010), 75 FR 56613 (September 16, 2010) (SR-BATS-2010-016).
\7\ See Securities Exchange Act Release No. 68797 (January 31,
2013), 78 FR 8635 (February 6, 2013) (SR-BATS-2013-008).
\8\ See Securities Exchange Act Release No. 72434 (June 19,
2014), 79 FR 36110 (June 25, 2014) (SR-BATS-2014-014).
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On December 26, 2018, the Commission published the proposed
Eighteenth Amendment \9\ to the Plan to Address Extraordinary Market
Volatility Pursuant to Rule 608 of Regulation NMS under the Act (the
``Limit Up-Limit Down Plan'' or the ``Plan'') \10\ to allow the Plan to
operate on a permanent, rather than pilot, basis. On April 8, 2019, the
Exchange amended BZX Rule 11.17 to untie the pilot program's
effectiveness from that of the Plan and to extend the pilot's
effectiveness to the close of business on October 18, 2019 in order
allow the Exchange and other national securities exchanges additional
time to consider further amendments, if any, to the clearly erroneous
execution rules in light of the proposed Eighteenth Amendment to the
Plan.\11\ On April 17, 2019, the Commission published an approval of
the Eighteenth Amendment to allow the Plan to operate on a permanent,
rather than pilot, basis.\12\ On October 21, 2019, the Exchange amended
BZX Rule 11.17 to extend the pilot's effectiveness to the close of
business on April 20, 2020.\13\ On March 18, 2020, the Exchange amended
BZX Rule 11.17 to extend the pilot's effectiveness to the close of
business on October 20, 2020.\14\ Finally, on October 20, 2020, the
Exchange amended BZX Rule 11.17 to extend the pilot's effectiveness to
the close of business on April 20, 2021.\15\
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\9\ See Securities Exchange Act Release No. 84843 (December 18,
2018), 83 FR 66464 (December 26, 2018) (File No. 4-631)
(``Eighteenth Amendment'').
\10\ See Securities Exchange Act Release No. 67091 (May 31,
2012), 77 FR 33498 (June 6, 2012) (the ``Limit Up-Limit Down
Release'').
\11\ See Securities Exchange Act Release No. 85543 (April 8,
2019), 84 FR 15018 (April 12, 2019) (SR-CboeBZX-2019-022).
\12\ See Securities Exchange Act Release No. 85623 (April 11,
2019), 84 FR 16086 (April 17, 2019) (File No. 4-631).
\13\ See Securities Exchange Act Release No. 87365 (October 21,
2019), 84 FR 57540 (October 25, 2019) (SR-CboeBZX-2019-089).
\14\ See Securities Exchange Act Release No. 88497 (March 27,
2020), 85 FR 18602 (April 2, 2020) (SR-CboeBZX-2020-026).
\15\ See supra note 5.
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The Exchange now proposes to amend BZX Rule 11.17 to extend the
pilot's effectiveness to the close of business on October 20, 2021. The
Exchange understands that the other national securities exchanges and
Financial Industry Regulatory Authority (``FINRA'') have filed similar
proposals to extend their respective clearly erroneous execution pilot
programs, the substance of which are identical to BZX Rule 11.17.\16\
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\16\ See SR-FINRA-2021-004 (Filed March 15, 2021).
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The Exchange does not propose any additional changes to BZX Rule
11.17. The Exchange believes the benefits to market participants from
the more objective clearly erroneous executions rule should continue on
a limited six month pilot basis. As the 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 BZX Rule 11.17 for an additional six
months should provide the Exchange and other national securities
exchanges additional time to consider further amendments, if any, to
the clearly erroneous execution rules.
[[Page 20582]]
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Securities Exchange Act of 1934 (the ``Act'') and the rules and
regulations thereunder applicable to the Exchange and, in particular,
the requirements of Section 6(b) of the Act.\17\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \18\ requirements that the rules of an exchange be
designed to prevent fraudulent and manipulative acts and 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) \19\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
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\17\ 15 U.S.C. 78f(b).
\18\ 15 U.S.C. 78f(b)(5).
\19\ Id.
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In particular, the Exchange believes that extending the clearly
erroneous execution pilot under BZX Rule 11.17 for an additional six
months would help assure that the determination of whether a clearly
erroneous trade has occurred will be based on clear and objective
criteria, and that the resolution of the incident will occur promptly
through a transparent process. The proposed rule change would also help
assure consistent results in handling erroneous trades across the U.S.
equities markets, thus furthering fair and orderly markets, the
protection of investors and the public interest. Based on the
foregoing, the Exchange believes the amended clearly erroneous
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 execution reviews.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change would
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. To the contrary, the
Exchange understands that FINRA and other national securities exchanges
have or will also file similar proposals to extend their respective
clearly erroneous execution pilot programs.\20\ Thus, the proposed rule
change will help to ensure consistency across market centers without
implicating any competitive issues.
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\20\ See supra note 16.
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C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No comments were solicited or received 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 \21\ and Rule 19b-
4(f)(6) thereunder.\22\
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\21\ 15 U.S.C. 78s(b)(3)(A).
\22\ 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) \23\ normally
does not become operative prior to 30 days after the date of the
filing. However, Rule 19b-4(f)(6)(iii) \24\ 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 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.\25\
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\23\ 17 CFR 240.19b-4(f)(6).
\24\ 17 CFR 240.19b-4(f)(6)(iii).
\25\ 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 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-CboeBZX-2021-027 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-CboeBZX-2021-027. 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
[[Page 20583]]
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-CboeBZX-2021-027 and should
be submitted on or before May 11, 2021.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\26\
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\26\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-08046 Filed 4-19-21; 8:45 am]
BILLING CODE 8011-01-P
