Notice2021-13917
Self-Regulatory Organizations; Cboe BYX Exchange, Inc.; Cboe BZX Exchange, Inc.; Cboe EDGA Exchange, Inc.; Cboe EDGX Exchange, Inc.; Order Granting Approval of Proposed Rule Changes, as Modified by Amendments No. 1, Relating to the Exchanges' Process for Re-Opening Securities Listed on Other National Securities Exchanges Following the Resumption of Trading After a Halt, Suspension, or Pause Outside of Regular Trading Hours
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Published
June 30, 2021
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 86 Issue 123 (Wednesday, June 30, 2021)</title>
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[Federal Register Volume 86, Number 123 (Wednesday, June 30, 2021)]
[Notices]
[Pages 34806-34807]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-13917]
[[Page 34806]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-92257; File Nos. SR-CboeBYX-2021-012, SR-CboeBZX-2021-
035, SRCboeEDGA-2021-011, SR-CboeEDGX-2021-025]
Self-Regulatory Organizations; Cboe BYX Exchange, Inc.; Cboe BZX
Exchange, Inc.; Cboe EDGA Exchange, Inc.; Cboe EDGX Exchange, Inc.;
Order Granting Approval of Proposed Rule Changes, as Modified by
Amendments No. 1, Relating to the Exchanges' Process for Re-Opening
Securities Listed on Other National Securities Exchanges Following the
Resumption of Trading After a Halt, Suspension, or Pause Outside of
Regular Trading Hours
June 24, 2021.
I. Introduction
On April 26, 2021, Cboe BYX Exchange, Inc. (``CboeBYX''), Cboe BZX
Exchange, Inc. (``CboeBZX''), Cboe EDGA Exchange, Inc. (``CboeEDGA'')
and Cboe EDGX Exchange, Inc. (``CboeEDGX,'' and collectively, the
``Exchanges'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\
proposed rule changes to amend each Exchange's process for re-opening
trading of securities listed on other national securities exchanges
outside of regular trading hours. The proposed rule changes were
published for comment in the Federal Register on May 14, 2021.\3\ On
June 21, 2021, the Exchanges each filed an Amendment No. 1 to their
respective proposed rule changes (``Amendments No. 1'').\4\ The
Commission received no comments on the proposed rule changes. This
order approves the proposed rule changes, as modified by Amendments No.
1.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release Nos. 91804 (May 10,
2021), 86 FR 26583 (May 14, 2021) (SR-CboeBYX-2021-012); 91801 (May
10, 2021), 86 FR 26594 (May 14, 2021) (SR-CboeBZX-2021-035); 91802
(May 10, 2021), 86 FR 26574 (May 14, 2021) (SR-CboeEDGA-2021-011)
(``CboeEDGA Notice''); 91803 (May 10, 2021), 86 FR 26558 (May 14,
2021) (SR-CboeEDGX-2021-025) (``CboeEDGX Notice'') (collectively,
``Notices''). The proposed rule changes are nearly identical.
\4\ In the Amendments No. 1, the Exchanges: (i) Added additional
justification for the proposed rule changes, stating that the
proposed re-opening process would provide certainty as to how orders
will be handled across Tape A, B, and C securities and promote
consistency with the re-opening process used by the Exchanges in
other circumstances; (ii) stated that allowing one second to elapse
prior to initiating the mid-point re-opening would ensure sufficient
time for the midpoint to accurately reflect the market; and (iii)
made technical and conforming edits. Because the Amendments No. 1 do
not materially alter the substance of the proposed rule changes and
make conforming and technical changes, the Amendments No. 1 are not
subject to notice and comment. The Amendments No. 1 are available on
the Commission's website at: <a href="https://www.sec.gov/comments/sr-cboebyx-2021-012/srcboebyx2021012-8931890-245403.pdf">https://www.sec.gov/comments/sr-cboebyx-2021-012/srcboebyx2021012-8931890-245403.pdf</a>; <a href="https://www.sec.gov/comments/sr-cboebzx-2021-035/srcboebzx2021035-8931888-245385.pdf">https://www.sec.gov/comments/sr-cboebzx-2021-035/srcboebzx2021035-8931888-245385.pdf</a>; <a href="https://www.sec.gov/comments/sr-cboeedga-2021-011/srcboeedga2021011-8931893-245388.pdf">https://www.sec.gov/comments/sr-cboeedga-2021-011/srcboeedga2021011-8931893-245388.pdf</a>; and <a href="https://www.sec.gov/comments/sr-cboeedgx-2021-025/srcboeedgx2021025-8931886-245402.pdf">https://www.sec.gov/comments/sr-cboeedgx-2021-025/srcboeedgx2021025-8931886-245402.pdf</a>.
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II. Description of the Proposed Rule Changes, as Modified by Amendments
No. 1
The Exchanges have proposed to harmonize the manner by which they
re-open trading in a security listed on other national securities
exchanges if the trading halt, suspension or pause in that security is
lifted during one of the Exchanges' extra-hours sessions.\5\ The
Exchanges' respective processes for the re-opening of trading in
securities listed on other national security exchanges under such
circumstances vary depending on whether the securities are listed on
the New York Stock Exchange LLC (``NYSE'') (``Tape A''), or are listed
on exchanges other than NYSE (``Tape B'' and ``Tape C'').\6\
Specifically, Tape A securities that resume trading after a halt,
suspension, or pause during an extra-hours trading session will be
automatically re-opened pursuant each of the Exchanges' contingent
opening procedures, as described in each of the Exchanges' rules,\7\
after one second has passed following an Exchange's receipt of the
first NBBO following such resumption of trading.\8\ As a result, when
the Exchanges re-open Tape A securities during their respective extra-
hours sessions today, orders are handled in time sequence and placed on
each Exchange's book, routed, cancelled, or executed in accordance with
the terms of the order.
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\5\ Outside of regular trading hours, the Exchanges operate
certain extra-hours sessions. See CboeBYX Rules 1.5(c), (r), and
(ee); CboeBZX Rules 1.5(c), (r), and (ee); CboeEDGA Rules 1.5(r),
(s), and (ii); CboeEDGX Rules 1.5(r), (s), and (ii).
\6\ The Exchanges state that Tape B securities are those listed
on exchanges other than NYSE and Nasdaq and Tape C securities are
those listed on Nasdaq. See Notices, supra note 3.
\7\ See CboeBYX Rule 11.23(d); CboeBZX Rule 11.24(d); CboeEDGA
Rule 11.7(d); CboeEDGX Rule 11.7(d).
\8\ See CboeBYX Rule 11.23(e)(3); CboeBZX Rule 11.24(e)(3);
CboeEDGA Rule 11.7(e)(3); CboeEDGX Rule 11.7(e)(3).
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With respect to Tape B and C securities, the Exchanges' rules \9\
provide that the re-opening process following the resumption of trading
after a trading halt, suspension, or pause during each of the
Exchanges' extra-hours sessions will occur at the midpoint of the: (i)
First NBBO subsequent to the first reported trade and first two-sided
quotation on the listing exchange following the resumption of trading
after a halt, suspension, or pause; or (ii) NBBO when the first two-
sided quotation is published by the listing exchange following the
resumption of trading after a halt, suspension, or pause if no first
trade is reported by the listing exchange within one second of
publication of the first two-sided quotation by the listing exchange.
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\9\ See CboeBYX Rule 11.23(e)(1); CboeBZX Rule 11.24(e)(1);
CboeEDGA Rule 11.7(e)(1); CboeEDGX Rule 11.7(e)(1).
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The Exchanges have proposed to harmonize the different processes
for re-opening Tape A, and Tape B and C securities during the extra-
hours sessions by: (1) Amending the Exchanges' automated re-opening
processes for Tape A securities to provide for the execution of orders
at the midpoint of the NBBO; and (2) eliminating unnecessary
differences between the process utilized for Tape A securities and the
process used for Tape B and C securities. Thus, as proposed, each of
the Exchanges' relevant rules \10\ would provide that during extra-
hours sessions, the re-opening process for Tape A securities will occur
at the midpoint of the NBBO after one second has passed following the
Exchange's receipt of the first NBBO following the resumption of
trading after a halt, suspension, or pause. In addition, the Exchanges
propose to amend their respective processes for re-opening Tape B and C
securities to mirror their proposed processes for Tape A securities,
except that the Exchanges would require the primary listing market to
have begun quoting a security before it initiates its own re-opening
process. As amended, each of the Exchanges' rules \11\ would provide
that, during extra-hours trading sessions, the re-opening process for
Tape B and C securities will occur at the midpoint of the NBBO after
one second has passed following the publication of the first two-sided
quotation by the listing exchange following the resumption of trading
after a halt, suspension, or pause. The Exchanges have stated that, to
simplify the re-opening during these timeframes, the Exchanges are not
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proposing to retain a separate trigger that would allow the re-opening
process to be initiated immediately when the Exchanges receive both a
two-sided quotation and a trade from the listing exchange.\12\
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\10\ See proposed rules CboeBYX Rule 11.23(e)(1)(C); CboeBZX
Rule 11.24(e)(1)(C); CboeEDGA Rule 11.7(e)(1)(C); CboeEDGX Rule
11.7(e)(1)(C).
\11\ See proposed rules CboeBYX Rule 11.23(e)(1)(C); CboeBZX
Rule 11.24(e)(1)(C); CboeEDGA Rule 11.7(e)(1)(C); CboeEDGX Rule
11.7(e)(1)(C).
\12\ In addition to these proposed changes to the reopening
process, the Exchanges also proposed other technical and non-
substantive changes to their rules in order to facilitate the
substantive changes explained above. See Notices, supra note 3.
CboeEDGA and CboeEDGX also proposed non-substantive changes to
conform CboeEDGA Rule 11.7 and CboeEDGX 11.7 to CboeBZX Rule 11.24.
See CboeEDGA Notice and CboeEDGX Notice, supra note 3.
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III. Discussion and Commission's Findings
The Commission has carefully reviewed the proposed rule changes, as
modified by Amendments No. 1, and finds that they are consistent with
the requirements of the Act and the rules and regulations thereunder
applicable to a national securities exchange, in particular, the
requirements of Section 6(b) of the Act and the rules and regulations
thereunder.\13\ Specifically, the Commission finds that the proposals,
as modified by Amendments No. 1, are consistent with Section 6(b)(5) of
the Act,\14\ which requires, among other things, that the rules of a
national securities exchange be designed to prevent fraudulent and
manipulative acts and practices, 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.
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\13\ 15 U.S.C. 78f. In approving these proposed rule changes,
the Commission has considered the proposed rule changes' impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
\14\ 15 U.S.C. 78f(b)(5).
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As described above, the Exchanges seek to harmonize their
respective processes for re-opening trading in a security when a
trading halt, suspension, or pause in that security is lifted and
trading in that security resumes outside regular trading hours. In the
Exchanges' view, applying their midpoint re-opening procedures in these
circumstances, regardless of whether a security is a Tape A, B, or C
security, would: (1) Provide greater consistency with the process
currently used by the each of the Exchanges in other circumstances, (2)
provide greater certainty as to how orders will be handled across
security types, and (3) potentially provide executions that better
reflect the applicable market for the security.\15\ The Exchanges have
stated that the proposal to not retain a separate trigger whereby the
reopening process for Tape B and C securities would be initiated
immediately when the Exchange receives both a two-sided quotation and a
trade from the listing exchange would harmonize the reopening process
with that for Tape A securities, simplify the re-opening process to be
followed during these timeframes, and ensure that sufficient time is
provided for the midpoint to accurately reflect the market in those
securities.\16\
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\15\ See Notices, supra note 3, and Amendments No. 1, supra note
4.
\16\ See Amendments No. 1, supra note 4.
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The Commission believes that the proposals are reasonably designed
to facilitate a more orderly and efficient re-opening process following
the resumption of trading after a trading halt, suspension, or pause
during each of the Exchanges' extra-hours sessions. By providing a more
consistent and harmonized approach to each of the Exchanges' re-opening
procedures, the proposals should promote greater certainty, reduce the
likelihood of confusion, and facilitate the resumption of orderly
trading under such circumstances.
Therefore, the Commission finds that the proposals, as modified by
Amendments No. 1, are consistent with the Act.
IV. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\17\ that the proposed rule changes (SR-CboeBYX-2021-012, SR-
CboeBZX-2021-035, SR-CboeEDGA-2021-011, and SR-CboeEDGX-2021-025), as
modified by Amendments No. 1, be, and hereby are, approved.
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\17\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
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\18\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-13917 Filed 6-29-21; 8:45 am]
BILLING CODE 8011-01-P
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