Notice2021-22934
Self-Regulatory Organizations; NYSE National, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Extend the Current Pilot Program Related to Rule 7.10
Primary source
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Published
October 21, 2021
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 86 Issue 201 (Thursday, October 21, 2021)</title>
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[Federal Register Volume 86, Number 201 (Thursday, October 21, 2021)]
[Notices]
[Pages 58322-58324]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-22934]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-93359; File No. SR-NYSENAT-2021-20]
Self-Regulatory Organizations; NYSE National, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Extend
the Current Pilot Program Related to Rule 7.10
October 15, 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 October 5, 2021, NYSE National, Inc. (``NYSE National''
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.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
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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 7.10 (Clearly Erroneous Executions) to the close of business on
April 20, 2022. The proposed rule change is available on the Exchange's
website at <a href="http://www.nyse.com">www.nyse.com</a>, at the principal office of the Exchange, and
at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of the proposed rule change is to extend the current
pilot program related to Rule 7.10 (Clearly Erroneous Executions) to
the close of business on April 20, 2022. The pilot program is currently
due to expire on October 20, 2021.
On September 10, 2010, the Commission approved, on a pilot basis,
changes to Rule 11.19 (Clearly Erroneous Executions) 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 before such
trading halt has officially ended according to the primary listing
market.\6\ Rule 11.19 is no longer applicable to any securities that
trade on the Exchange and has been replaced with Rule 7.10, which is
substantively identical to Rule 11.19.\7\
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\4\ See Securities Exchange Act Release No. 62886 (Sept. 10,
2010), 75 FR 56613 (Sept. 16, 2010) (SR-NSX-2010-07).
\5\ See Securities Exchange Act Release No. 68803 (Feb. 1,
2013), 78 FR 9078 (Feb. 7, 2013) (SR-NSX-2013-06).
\6\ See Securities Exchange Act Release No. 72434 (June 19,
2014), 79 FR 36110 (June 25, 2014) (SR-NSX-2014-08).
\7\ See Securities Exchange Act Release No. 83289 (May 17,
2018), 83 FR 23968 (May 23, 2018) (SR-NYSENAT-2018-02).
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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''),\8\ including any extensions to the pilot period for the
LULD Plan.\9\ In April 2019, the Commission approved an amendment to
the LULD Plan for it to operate on a permanent, rather than pilot,
basis.\10\ In light of that change, the Exchange amended Rule 7.10 to
untie the pilot program's effectiveness from that of the LULD Plan and
to extend the pilot's effectiveness to the close of business on October
18, 2019.\11\ The Exchange later amended Rule 7.10 to extend the
pilot's effectiveness to the close of business on April 20, 2020,\12\
October 20, 2020,\13\ April 20, 2021,\14\ and subsequently, October 20,
2021.\15\
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\8\ See Securities Exchange Act Release No. 67091 (May 31,
2012), 77 FR 33498 (June 6, 2012) (the ``Limit Up-Limit Down
Release'').
\9\ See Securities Exchange Act Release No. 71797 (March 25,
2014), 79 FR 18108 (March 31, 2014) (SR-NSX-2014-07).
\10\ See Securities Exchange Act Release No. 85623 (April 11,
2019), 84 FR 16086 (April 17, 2019) (approving Eighteenth Amendment
to LULD Plan).
\11\ See Securities Exchange Act Release No. 85522 (April 5,
2019), 84 FR 14704 (April 11, 2019) (SR-NYSENAT-2019-07).
\12\ See Securities Exchange Act Release No. 87352 (October 18,
2019), 84 FR 57063 (October 24, 2019) (SR-NYSENAT-2019-24).
\13\ See Securities Exchange Act Release No. 88593 (April 8,
2020), 85 FR 20728 (April 14, 2020) (SR-NYSENAT-2020-13).
\14\ See Securities Exchange Act Release No. 90157 (October 13,
2020), 85 FR 66393 (October 19, 2020) (SR-NYSENAT-2020-32).
\15\ See Securities Exchange Act Release No. 91549 (April 14,
2021), 86 FR 20548 (April 20, 2021) (SR-NYSENAT-2021-08).
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The Exchange now proposes to amend Rule 7.10 to extend the pilot's
effectiveness for a further six months to the close of business on
April 20, 2022. If the pilot period is not either extended, replaced or
approved as permanent, the prior versions of paragraphs (c), (e)(2),
(f), and (g) as described in former Rule 11.19 will be in effect, and
the
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provisions of paragraphs (i) through (k) shall be null and void.\16\ In
such an event, the remaining sections of Rule 7.10 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
programs, the substance of which are identical to Rule 7.10.
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\16\ 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.
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The Exchange does not propose any additional changes to Rule 7.10.
Extending the effectiveness of Rule 7.10 for an additional six months
will provide the Exchange and other self-regulatory organizations
additional time to consider whether further amendments to the clearly
erroneous execution rules are appropriate.
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the requirements of Section 6(b) of the Act,\17\ in general, and
Section 6(b)(5) of the Act,\18\ in particular, in that it is designed
to remove impediments to and perfect the mechanism of a free and open
market and a national market system, to promote just and equitable
principles of trade, and, in general, to protect investors and the
public interest and not to permit unfair discrimination between
customers, issuers, brokers, or dealers. The Exchange believes that the
proposed rule change promotes just and equitable principles of trade in
that it promotes transparency and uniformity across markets concerning
review of transactions as clearly erroneous. The Exchange believes that
extending the clearly erroneous execution pilot under Rule 7.10 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 other self-regulatory organizations consider whether
further amendments to these rules are appropriate.
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\17\ 15 U.S.C. 78f(b).
\18\ 15 U.S.C. 78f(b)(5).
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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. The proposal would ensure
the continued, uninterrupted operation of harmonized clearly erroneous
execution rules across the U.S. equities markets while the Exchange and
other self-regulatory organizations consider whether further amendments
to these rules are appropriate. The Exchange understands that the other
national securities exchanges and FINRA will also file similar
proposals to extend their respective clearly erroneous execution pilot
programs. Thus, the proposed rule change will help to ensure
consistency across market centers without implicating any competitive
issues.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
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 \19\ and Rule 19b-
4(f)(6) thereunder.\20\
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\19\ 15 U.S.C. 78s(b)(3)(A).
\20\ 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) \21\ normally
does not become operative prior to 30 days after the date of the
filing. However, Rule 19b-4(f)(6)(iii) \22\ 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.\23\
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\21\ 17 CFR 240.19b-4(f)(6).
\22\ 17 CFR 240.19b-4(f)(6)(iii).
\23\ 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
<bullet> Use the Commission's internet comment form (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#cbb9bea7aee6a8a4a6a6aea5bfb88bb8aea8e5aca4bd"><span class="__cf_email__" data-cfemail="6311160f064e000c0e0e060d1710231006004d040c15">[email protected]</span></a>. Please include
File Number SR-NYSENAT-2021-20 on the subject line.
Paper Comments
<bullet> 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-NYSENAT-2021-20. 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
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post all comments on the Commission's internet website (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>). 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-
NYSENAT-2021-20 and should be submitted on or before November 12, 2021.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\24\
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\24\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-22934 Filed 10-20-21; 8:45 am]
BILLING CODE 8011-01-P
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