Notice2022-19351
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Order Approving a Proposed Rule Change, as Modified by Amendment Nos. 1 and 2, To Amend BZX Rule 11.17, Clearly Erroneous Executions
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
September 8, 2022
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 87 Issue 173 (Thursday, September 8, 2022)</title>
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[Federal Register Volume 87, Number 173 (Thursday, September 8, 2022)]
[Notices]
[Pages 55060-55063]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-19351]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-95658; File No. SR-CboeBZX-2022-037]
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Order
Approving a Proposed Rule Change, as Modified by Amendment Nos. 1 and
2, To Amend BZX Rule 11.17, Clearly Erroneous Executions
September 1, 2022.
I. Introduction
On July 11, 2022, Cboe BZX Exchange, Inc. (the ``Exchange'' or
``BZX'') 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\ a
proposed rule change to (i) make the current clearly erroneous
execution (``CEE'') pilot permanent, and (ii) apply the Limit Up-Limit
Down (``LULD'') mechanism in place of the CEE review process during
regular trading hours, except in limited circumstances. The proposed
rule change was published for comment in the Federal Register on July
18, 2022.\3\ On July 29, 2022, the Exchange filed Amendment No. 1 to
the proposed rule change.\4\ On August 26, 2022, the Exchange filed
Amendment No. 2 to the proposed rule change.\5\ This order approves the
proposed rule change, as modified by Amendment Nos. 1 and 2.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 95259 (July 12,
2022), 87 FR 42760 (``Notice'').
\4\ In Amendment No. 1, the Exchange made technical and non-
substantive corrections to the proposal. Specifically, the Exchange
corrected an erroneous mismarking in the rule text and removed
certain redundant language in the proposal. Because Amendment No. 1
does not materially alter the substance of the proposed rule change,
Amendment No. 1 is not subject to notice and comment. Amendment No.
1 is available at: <a href="https://www.sec.gov/comments/sr-cboebzx-2022-037/srcboebzx2022037-20135398-306303.pdf">https://www.sec.gov/comments/sr-cboebzx-2022-037/srcboebzx2022037-20135398-306303.pdf</a>.
\5\ In Amendment No. 2, the Exchange revised the proposal to
provide information on the implementation date of the proposal.
Because Amendment No. 2 does not materially alter the substance of
the proposed rule change, Amendment No. 2 is not subject to notice
and comment. Amendment No. 2 is available at: <a href="https://www.sec.gov/comments/sr-cboebzx-2022-037/srcboebzx2022037-20137788-308117.pdf">https://www.sec.gov/comments/sr-cboebzx-2022-037/srcboebzx2022037-20137788-308117.pdf</a>
(``Amendment No. 2'').
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II. Description of the Proposed Rule Change, as Modified by Amendment
Nos. 1 and 2
A. Background
On September 10, 2010, the Commission approved, on a pilot basis,
changes to BZX Rule 11.17 (Clearly Erroneous Executions) that, among
other things: (i) provided for uniform treatment of CEE 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, BZX Rule 11.17 was further
modified to account for the operation of the Plan to Address
Extraordinary Market Volatility (the ``LULD Plan'').\7\ The Exchange
states that in the 12 years since the initiation of the CEE pilot, the
Exchange, other national securities exchanges, and Financial Industry
Regulatory Authority (``FINRA'') have gained considerable experience in
the operation of the CEE rule, as amended on a pilot basis.\8\ Based on
that experience, the Exchange states that the CEE pilot should continue
on a permanent basis so that equities market participants and investors
can continue benefit from the increased certainty provided by the
amended CEE rule.\9\ The CEE pilot is currently set to expire at the
close of business on October 20, 2022.\10\
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\6\ See Securities Exchange Act Release No. 62886 (Sept. 10,
2010), 75 FR 56613 (Sept. 16, 2010) (SR-BATS-2010-016) (``CEE Pilot
Approval Order'').
\7\ See Securities Exchange Act Release No. 68797 (Jan. 31,
2013), 78 FR 8635 (Feb. 6, 2013) (SR-BATS-2013-008).
\8\ See Notice, supra note 3, at 42761.
\9\ See id.
\10\ See Securities Exchange Act Release No. 95288 (July 14,
2022), 87 FR 43346 (July 20, 2022) (SR-CboeBZX-2022-039).
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When the participants to the LULD Plan (``Participants'') filed to
introduce the LULD mechanism, some commenters noted the potential
discordance between the CEE rules and the Price Bands \11\ used to
limit the price at which trades would be permitted to be executed
pursuant to the LULD Plan.\12\ While the Participants acknowledged that
the potential to prevent CEE would be a ``key benefit'' of the LULD
Plan, the Participants decided not to amend the CEE rules at that time
in order to study how CEE rules and the LULD mechanism interact.\13\
After gaining experience with the LULD Plan, the Exchange now believes
that it is appropriate to largely eliminate CEE review during Regular
Trading Hours (``RTH'') \14\ when Price
[[Page 55061]]
Bands are in effect.\15\ Thus, as proposed and discussed further below,
trades executed within the Price Bands will stand, barring one of a
handful of identified scenarios where CEE review may still be necessary
for the protection of investors and the public interest.
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\11\ ``Price Bands'' refers to the term provided in Section V of
the LULD Plan.
\12\ See Notice, supra note 3, at 42761. The Exchange states
that two commenters on File No. 4-631, Plan to Address Extraordinary
Market Volatility, requested that the clearly erroneous rules be
amended so the presumption would be that trades executed within the
Price Bands would not be not subject to review. Id.
\13\ See id. at 42761-62.
\14\ The term ``Regular Trading Hours'' means the time between
9:30 a.m. and 4:00 p.m. Eastern Time. See BZX Rule 1.5(w).
\15\ See Notice, supra note 3, at 42762. The Exchange also
states that industry feedback has reflected a desire to eliminate
the discordance between the LULD mechanism and the CEE rules so that
market participants would have more certainty that trades executed
within the Price Bands would stand. See Notice, supra note 3, at
42762.
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Based on the forgoing, the Exchange proposes to: (1) make the
current CEE pilot permanent; and (2) apply the LULD mechanism in place
of the CEE review process during RTH, except in limited circumstances.
The Exchange believes that these changes are appropriate as the LULD
Plan has been approved by the Commission on a permanent basis,\16\ and
in light of recent amendments to the LULD Plan, including changes to
the applicable Price Bands around the Open and Close of trading.\17\
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\16\ See Securities Exchange Act Release Nos. 84843 (Dec. 18,
2018), 83 FR 66464 (Dec. 26, 2018); 85623 (April 11, 2019), 84 FR
16086 (April 17, 2019) (File No. 4-631) (``Amendment Eighteen'').
\17\ See Notice, supra note 3, at 42762. Amendment Eighteen to
the LULD Plan eliminated double-wide Price Bands: (1) between 9:30
a.m. and 9:45 a.m. (``the Open''), and (2) between 3:35 p.m. and
4:00 p.m., or in the case of an early scheduled close (``the
Close''), during the last 25 minutes of trading before the Close,
for Tier 2 NMS Stocks 2 with a Reference Price above $3.00. See
Amendment Eighteen, supra note 16, at 16090.
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B. Clearly Erroneous Review During Regular Trading Hours
As proposed, BZX Rule 11.17(c)(1) provides that trades executed
within the Price Bands during RTH will not be reviewable as clearly
erroneous, except in limited circumstances.\18\ Specifically, proposed
BZX Rule 11.17(c)(1)(A) provides that a transaction executed during RTH
will continue to be eligible for CEE review if the transaction is in an
NMS Stock that is not subject to the LULD Plan. In such case, the
Numerical Guidelines set forth in BZX Rule 11.17(c)(2) will be
applicable to such NMS Stock.\19\
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\18\ See id.
\19\ See proposed BZX Rule 11.17(c)(1)(A). While the majority of
securities traded on the Exchange will be subject to the LULD Plan,
certain equity securities, such as rights and warrants, are
explicitly excluded from the provisions of the LULD Plan and will
therefore be eligible for CEE review instead. See Notice, supra note
3, at 42762. Similarly, there are instances, such as the opening
auction on the primary listing market, where transactions are not
ordinarily subject to the LULD Plan. See id.
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Another such scenario where members will continue to be able to
request CEE review is where a transaction resulted from certain systems
issues pursuant to proposed BZX Rule 11.17(c)(1)(B). Specifically, as
proposed, transactions executed during RTH will be eligible for CEE
review if the transaction is the result of an Exchange technology or
systems issue that results in the transaction occurring outside the
applicable Price Bands pursuant to BZX Rule 11.17(g), or is executed
after the primary listing market for the security declares a regulatory
trading halt, suspension, or pause pursuant to BZX Rule 11.17(i).\20\
Proposed BZX Rule 11.17(c)(1)(B) also provides that a transaction
subject to review pursuant to this paragraph shall be found to be
clearly erroneous if the price of the transaction to buy (sell) that is
the subject of the complaint is greater than (less than) the Reference
Price, described in proposed BZX Rule 11.17(d), by an amount that
equals or exceeds the applicable Percentage Parameter defined in
Appendix A to the LULD Plan (``Percentage Parameters'').\21\
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\20\ See id. The Exchange also proposes to delete paragraph (f)
of BZX Rule 11.17, System Disruption or Malfunctions.
\21\ See id.
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Finally, the Exchange proposes to allow for CEE review of
transactions during RTH in limited cases when the Reference Price,
described in proposed BZX Rule 11.17(d), is determined to be erroneous
by an Officer of the Exchange. Specifically, a transaction executed
during RTH would be eligible for clearly erroneous review pursuant to
proposed BZX Rule 11.17(c)(1)(C), if the transaction involved, in the
case of (1) a corporate action or new issue or (2) a security that
enters a Trading Pause \22\ pursuant to the LULD Plan and resumes
trading without an auction,\23\ a Reference Price that is determined to
be erroneous by an Officer of the Exchange.\24\ In such circumstances,
the Exchange may use a different Reference Price pursuant to proposed
BZX Rule 11.17(d)(2).\25\
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\22\ ``Trading Pause'' refers to the term provided in Section
I(V) of the LULD Plan.
\23\ The Exchange states that the ``resumption of trading
without an auction'' provision of the proposed rule text applies
only to securities that enter a Trading Pause pursuant to the LULD
Plan and does not apply to a corporate action or new issue. See
Notice, supra note 3, at 42763, n.22.
\24\ See id. at 42763.
\25\ See id.
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In the context of a corporate action or a new issue under proposed
BZX Rule 11.17(c)(1)(C), when determining whether the Reference Price
is erroneous, the Exchange will examine whether such Reference Price
clearly deviated from the theoretical value of the security.\26\ In
such cases, the Exchange will consider a number of factors to determine
a new Reference Price that is based on the theoretical value of the
security, including but not limited to, the offering price of the new
issue, the ratio of the stock split applied to the prior day's closing
price, the theoretical price derived from the numerical terms of the
corporate action transaction such as the exchange ratio and spin-off
terms, and for an OTC up-listing, the price of the security as provided
in the prior day's FINRA Trade Data Dissemination Service final closing
report.\27\ In the foregoing instances, the theoretical value of the
security will be used as the new Reference Price when applying the
Percentage Parameters under the LULD Plan (or Numerical Guidelines if
the transaction is in an NMS Stock that is not subject to the LULD
Plan) to determine whether executions would be cancelled as clearly
erroneous.\28\
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\26\ See id.
\27\ See proposed BZX Rule 11.17(d)(2).
\28\ See Notice, supra note 3, at 42763.
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In the context where a security that enters a LULD Trading Pause
and resumes trading without an auction (i.e., reopens with quotations)
under proposed BZX Rule 11.17(c)(1)(C), the Reference Price will be the
last effective Price Band that was in a limit state before the Trading
Pause.\29\
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\29\ See proposed BZX Rule 11.17(d)(2). The Exchange states that
the LULD Plan requires that the new Reference Price in this instance
be established by using the midpoint of the best bid and offer
(``BBO'') on the primary listing exchange at the reopening time. See
Notice, supra note 3, at 42763. The Exchange states that this can
result in a Reference Price and subsequent Price Band calculation
that is significantly away from the security's last traded or more
relevant price, especially in less liquid names. See id. Thus, the
Exchange proposes to use a Reference Price that is based on the
prior LULD Price Band that triggered the Trading Pause, rather than
the midpoint of the BBO. See id.
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Proposed BZX Rule 11.17(c)(1)(C) also provides that a transaction
subject to review pursuant to this paragraph shall be found to be
clearly erroneous if the price of the transaction to buy (sell) that is
the subject of the complaint is greater than (less than) the new
Reference Price, described in proposed BZX Rule 11.17(d)(2), by an
amount that equals or exceeds the applicable Numerical Guidelines or
Percentage Parameters, as applicable depending on whether the security
is subject to the LULD Plan.\30\
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\30\ The Percentage Parameters will apply to all transactions
except those in an NMS Stock that is not subject to the LULD Plan,
as described in proposed BZX Rule 11.17(c)(1)(A). See id. at 42763.
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C. Review of Transactions During the Early Trading, Pre-Opening, and
After Hours Sessions
The Exchange proposes to move existing paragraphs (c)(2), (c)(3),
and (d)
[[Page 55062]]
of BZX Rule 11.17 to proposed paragraph (c)(2)(B), (c)(2)(C), and
(C)(2)(D) of BZX Rule 11.17, respectively, as Multi-Stock Events,
Additional Factors, and Outlier Transactions will only be subject to
review and consideration using the Numerical Guidelines if those NMS
Stocks are not subject to the LULD Plan or occur during the Early
Trading, Pre-Opening, and After Hours Sessions.\31\ Additionally, the
Exchange proposes to add rule text in renumbered paragraph (f) of BZX
Rule 11.17, Officer Acting on Own Motion, to specify that an Officer of
the Exchange or senior level employee designee, acting on his or her
own motion, may review potentially erroneous transactions that occur
only during Early Trading, Pre-Opening, or After Hours Sessions, or
that are eligible for review pursuant to proposed BZX Rule 11.17(c)(1).
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\31\ See id.
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The Exchange also proposes to modify the Numerical Guidelines
applicable to leveraged ETF/ETN securities during RTH.\32\ As leveraged
ETF/ETN securities are subject to LULD and thus the Percentage
Parameters will be applicable during RTH, the Exchange proposes to
eliminate the Numerical Guidelines for leveraged ETF/ETN securities
traded during RTH.\33\
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\32\ See id.
\33\ See id.
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Finally, the Exchange proposes to make conforming edits to update
applicable rule references throughout BZX Rule 11.17.
D. Reference Price
As proposed, the Reference Price used will continue to be equal to
the consolidated last sale immediately prior to the execution(s) under
review.\34\ The Exchange also proposes to allow for an alternate
Reference Price to be used as prescribed in proposed paragraphs (d)(1),
(2), and (3) of BZX Rule 11.17.\35\ Specifically, the Reference Price
may be a value other than the consolidated last sale immediately prior
to the execution(s) under review (1) in the case of Multi-Stock Events
involving twenty or more securities,\36\ (2) in the case of an
erroneous Reference Price (as described above in proposed BZX Rule
11.17(c)(1)(C)),\37\ or (3) in other circumstances, such as, for
example, relevant news impacting a security or securities, periods of
extreme market volatility, sustained illiquidity, or widespread system
issues, where use of a different Reference Price is necessary for the
maintenance of a fair and orderly market and the protection of
investors and the public interest, provided that such circumstances
occurred during Early Trading, Pre-Opening or After-Hours Session, or
are eligible for review pursuant to BZX Rule 11.17(c)(1)(A).\38\
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\34\ See proposed BZX Rule 11.17(d). The Exchange states that
continuing to use the consolidated last sale as the Reference Price
is necessary for operational efficiency as it may not be possible to
perform a timely CEE review if doing so required computing the
arithmetic mean price of eligible reported transactions over the
past five minutes, as contemplated by the LULD Plan. See Notice,
supra note 3, at 42764. The Exchange states that while this means
that there will still be some differences between the Price Bands
and the clearly erroneous parameters, the Exchange believes that
this difference is reasonable in light of the need to ensure timely
review if clearly erroneous rules are invoked. Id.
\35\ See id.
\36\ See proposed BZX Rule 11.17(d)(1).
\37\ See proposed BZX Rule 11.17(d)(2).
\38\ See proposed BZX Rule 11.17(d)(3).
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E. Appeals
The Exchange proposes to eliminate paragraph (f) of BZX Rule 11.17,
System Disruption or Malfunction. Pursuant to proposed BZX Rule
11.17(c)(1)(B), transactions occurring during RTH that are executed
outside of the Price Bands due to an Exchange technology or system
issue, may be subject to clearly erroneous review pursuant to proposed
paragraph (g) of BZX Rule 11.17. The Exchange believe that the
elimination of paragraph (f) of BZX Rule 11.17 will remove overlapping
provisions in the proposal.\39\ Accordingly, the Exchange proposes to
remove from paragraph (e)(2), Appeals, each reference to paragraph (f),
and include language referencing proposed paragraph (g), Transactions
Occurring Outside of the LULD Plan Price Bands.
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\39\ See Notice, supra note 3, at 42765.
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F. Trade Nullification for UTP Securities That Are the Subject of
Initial Public Offerings
Current paragraph (h) of BZX Rule 11.17 provides different
procedures for conducting CEE review in initial public offering
(``IPO'') securities that are traded pursuant to unlisted trading
privileges (``UTP'') after the initial opening of such IPO securities
on the listing market. The Exchange states that it no longer believes
that this provision is necessary as opening transactions on the
Exchange following an IPO are subject to Price Bands pursuant to the
LULD Plan.\40\ Accordingly, the Exchange proposes to eliminate this
provision in connection with the broader changes to CEE review during
RTH.\41\
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\40\ See Notice, supra note 3, at 42765.
\41\ See id.
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G. Securities Subject to Limit Up-Limit Down Plan
The Exchange proposes to renumber paragraph (i) to paragraph (h)
based on the proposal to eliminate existing paragraph (h), to rename
the paragraph to provide for transactions occurring outside of LULD
Price Bands, and to eliminate redundant language from proposed
paragraph (h).\42\ The Exchange also proposes to update references to
the LULD Plan and Price Bands so that they are uniform throughout BZX
Rule 11.17 and to update rule references throughout the paragraph to
conform to the structural changes described above.\43\
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\42\ See id.
\43\ See id.
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H. Multi-Day Event and Trading Halts
The Exchange proposes to renumber paragraphs (j) and (k) to
paragraphs (h) and (i), respectively.\44\ Additionally, the Exchange
proposes to modify the text of both paragraphs to reference the
Percentage Parameters as well as the Numerical Guidelines.\45\
Specifically, the Exchange proposes to amend the rule text to provide
that any action taken in connection with paragraphs (h) and (i) will be
taken without regard to the Percentage Parameters or Numerical
Guidelines set forth in BZX Rule 11.17, with the Percentage Parameters
being applicable to an NMS Stock subject to the LULD Plan and the
Numerical Guidelines being applicable to an NMS Stock not subject to
the LULD Plan.\46\
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\44\ See id.
\45\ See id.
\46\ See id.
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I. Implementation Date
In order to ensure that the other equity exchanges and FINRA are
able to adopt rules consistent with this proposal and to coordinate the
effectiveness of such harmonized rules, the Exchange proposes to delay
the effectiveness of this proposal to October 1, 2022.\47\
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\47\ See Amendment No. 2.
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III. Discussion and Commission Findings
The Commission finds that the proposed rule change, as modified by
Amendment Nos.1 and 2, is consistent with the requirements of the Act
and the rules and regulations thereunder applicable to a national
securities exchange.\48\ In particular, the Commission finds that the
proposed rule change, as modified by Amendment
[[Page 55063]]
Nos. 1 and 2, is consistent with the requirements of Section 6(b) of
the Act \49\ and with Section 6(b)(5) of the Act,\50\ which requires,
among other things, that the Exchange's rules 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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\48\ In approving this proposed rule change, the Commission
notes that it has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
\49\ 15 U.S.C. 78f(b).
\50\ 15 U.S.C. 78f(b)(5).
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The Commission believes that the proposal to make the CEE pilot
permanent will help assure greater objectivity, transparency, and
clarity with respect to the CEE review process. When the Commission
originally approved the CEE pilot, it explained that the changes were
``being implemented on a pilot basis so that the Commission and the
Exchanges can monitor the effects of the pilot on the markets and
investors, and consider appropriate adjustments, as necessary.'' \51\
The Exchange represents that, since that time, the equity exchanges and
FINRA have gained considerable experience in the operation of the rule
and that the pilot has provided greater certainty and transparency to
the process for conducting CEE reviews.\52\ In particular, the Exchange
states that the pilot has reduced the discretion of the equities
exchanges and FINRA to deviate from the objective standards in their
respective rules when dealing with potentially erroneous
transactions.\53\ Accordingly, the Commission finds that approving the
CEE pilot as a permanent program is designed to continue to provide
members and investors greater certainty and transparency in the CEE
review process, thus furthering fair and orderly markets, the
protection of investors, and the public interest.
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\51\ See CEE Pilot Approval Order, supra note 6, at 56618.
\52\ See Notice, supra note 3, at 42765.
\53\ See id. at 42761.
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The Commission also finds that applying the LULD mechanism in place
of CEE review during RTH except for limited circumstances is consistent
with the Act and will further the goal of providing greater certainty
to market participants that trades executed within the Price Bands will
stand and not be broken. Since the introduction of the LULD mechanism
in 2013, the Exchange represents that clearly erroneous trades are
largely prevented by the requirement that trades be executed within the
Price Bands.\54\ Additionally, the Exchange states that the LULD
mechanism may provide greater investor protections as it prevents
erroneous trades that are outside the Price Bands from being executed
in the first place.\55\ Thus, the proposal is designed to limit the
potential discordance between the LULD mechanism and CEE review
process.
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\54\ See id. at 42762.
\55\ See id.
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Additionally, the Commission believes that limiting the
availability of CEE review during RTH to a few exceptional
circumstances furthers the goal of providing transparency and certainty
to market participants while also balancing the need for flexibility to
address a narrow set of circumstances during RTH for the protection of
investors and the public interest. Specifically, in the context of
transactions that resulted from certain systems issues, CEE review
would only be permitted for transactions that would not have occurred
if the Price Bands had been available or transactions that would not
have occurred because a primary listing market for a security declared
a halt, suspension, or pause. Additionally, in the case of a corporate
action or a new issue, and a security that enters a Trading Pause
pursuant to the LULD Plan and resumes trading without an auction, the
Exchange represents that CEE reviews in such cases represent very
limited circumstances and will only occur if the Reference Price of a
security clearly deviates from the security's theoretical value.\56\
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\56\ See id. at 42765.
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At the same time, the proposed rules in these limited circumstances
expressly delineate the boundaries for determining an erroneous
Reference Price and subject the Exchange to specific considerations
when determining a new Reference Price. In these instances, the result
of an erroneous Reference Price that clearly deviated from the
theoretical value of the security (e.g., due to a bad first trade for a
new issue) can result in subsequent Price Bands being calculated from
that incorrect Reference Price, thus diminishing the investor
protections under the LULD Plan for the trades that occurred within the
erroneous Price Bands and with no remedy to request clearly erroneous
review. In the context of the Trading Pause circumstance, the proposal
defines the new Reference Price to be the last effective Price Band
that was in a limit state before the Trading Pause.\57\ In the context
of a corporate action or new issue, the proposal describes certain
objective factors that will be used to determine a new reference price
based on the theoretical value of the security.\58\ Accordingly, the
Commission finds that these limited circumstances for CEE review are
narrowly tailored and designed to provide market participants with
greater transparency and certainty to the process of breaking trades.
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\57\ See proposed BZX Rule 11.17(d)(2).
\58\ See id.
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Furthermore, the Commission believes that the conforming and
organizational updates to the CEE rule that are designed to improve the
readability and clarity of the CEE review process will remove
impediments to a free and open market and will ultimately benefit
investors, particularly those involved in the process of breaking
trades.
Finally, the Exchange represents that the other U.S. equities
exchanges and FINRA will file largely identical proposals to make their
respective clearly erroneous pilots permanent.\59\ Accordingly, the
proposed rule change also should 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. The Commission notes that the proposed rule change
will become operative on October 1, 2022. This delayed implementation
is to ensure that the other equities exchanges and FINRA will have
sufficient time to adopt rules consistent with this proposal.
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\59\ See id. at 42766.
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IV. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\60\ that the proposed rule change, as modified by Amendment Nos. 1
and 2 (SR-CboeBZX-2022-037), be, and hereby is, approved.
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\60\ 15 U.S.C. 78s(b)(2).
\61\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\61\
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-19351 Filed 9-7-22; 8:45 am]
BILLING CODE 8011-01-P
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