Notice2023-02237
Self-Regulatory Organizations; MEMX LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Extend the Exchange's Post-Market Session To End at 8:00 p.m. Eastern Time
Primary source
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Published
February 3, 2023
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 88 Issue 23 (Friday, February 3, 2023)</title>
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[Federal Register Volume 88, Number 23 (Friday, February 3, 2023)]
[Notices]
[Pages 7484-7486]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-02237]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-96773; File No. SR-MEMX-2023-01]
Self-Regulatory Organizations; MEMX LLC; Notice of Filing and
Immediate Effectiveness of a Proposed Rule Change To Extend the
Exchange's Post-Market Session To End at 8:00 p.m. Eastern Time
January 30, 2023.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on January 17, 2023, MEMX LLC (``MEMX'' or the ``Exchange'') filed
with the Securities and Exchange Commission (the ``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
The Exchange is filing with the Commission a proposed rule change
to amend Exchange Rule 1.5(w), which defines the Post-Market Session,
to allow trading until 8:00 p.m. Eastern Time. The text of the proposed
rule change is provided in Exhibit 5.
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 Exchange offers three distinct trading sessions during in which
the Exchange accepts orders from Users \5\ for potential execution: (1)
the ``Pre-Market Session,'' which begins at 7:00 a.m. Eastern Time
(``ET'') and continues until 9:30 a.m. ET,\6\ (2) ``Regular Trading
Hours,'' which begin at 9:30 a.m. ET and continue until 4:00 p.m.
ET,\7\ and (3) the ``Post-Market Session,'' which begins at 4:00 p.m.
ET and continues until 5:00 p.m. ET.\8\ Members may designate when
their orders are eligible for execution by selecting their desired
Time-in-Force instruction.\9\
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\5\ See Exchange Rule 1.5(jj).
\6\ See Exchange Rule 1.5(x).
\7\ See Exchange Rule 1.5(bb).
\8\ See Exchange Rule 1.5(w).
\9\ See Exchange Rule 11.6(o).
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The purpose of the proposed rule change is to extend the length of
the Exchange's after-hours trading session by amending Exchange Rule
1.5(w), which defines Post-Market Session, to allow trading until 8:00
p.m. ET. The Exchange notes that it allowed trading in the Post-Market
Session until 8:00 p.m. ET under the Exchange's initial rules \10\ when
it commenced trading operations in September 2020 until the Exchange
modified its operating hours to end trading in the Post-Market Session
at 5:00 p.m. ET in October 2020.\11\ The Exchange shortened its
operating hours to end trading in the Post-Market Session at 5:00 p.m.
ET, instead of 8:00 p.m. ET, because it was a new entrant to the market
at that time and did not believe that the trading volume it was
experiencing during those hours justified the costs to the Exchange to
operate during those hours; however, the Exchange noted in its proposal
to shorten the Post-Market Session to end at 5:00 p.m. ET that ``[t]o
the extent the Exchange in the future believes there is adequate demand
to justify operating a longer after-hours trading session, it will
consider again extending its hours to accommodate such demand.'' \12\
The Exchange now believes that there is adequate demand to justify
operating the Post-Market Session until 8:00 p.m. ET.
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\10\ See Securities Exchange Act Release No. 88806 (May 4,
2020), 85 FR 27451 (May 8, 2020).
\11\ See Securities Exchange Act Release No. 90119 (October 7,
2020), 85 FR 64536 (October 13, 2020) (Notice of Filing and
Immediate Effectiveness of a Proposed Rule Change To Shorten the
Exchange's Post-Market Session To End at 5:00 p.m. Eastern Time).
\12\ See id. at 64537.
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As proposed, orders entered for participation in the Post-Market
Session will continue to be handled in the same manner as today, with
the exception that the Exchange will now accept those orders until 8:00
p.m. ET, thereby providing additional time for market participants to
source liquidity outside of Regular Trading Hours. The Exchange
therefore believes that amending Rule 1.5(w) to extend the Exchange's
trading hours will benefit market participants, which will now be able
to trade on the Exchange later in the day. The Exchange also notes that
having a Post-Market Session that lasts from 4:00 p.m. ET until 8:00
p.m. ET, as proposed, is consistent with the after-hours sessions
currently available on several other exchanges, including each of the
equity exchanges operated by Cboe Global Markets, Inc.\13\
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\13\ See e.g., Cboe BZX Rule 1.5(c); Cboe BYX Rule 1.5(c); Cboe
EDGX Rule 1.5(r); Cboe EDGA Rule 1.5(r).
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In connection with the change described above, the Exchange also
proposes to make conforming changes to Exchange Rules 1.5(k) and
11.1(a) to reflect the Post-Market Session ending at 8:00 p.m. ET.
Specifically, the Exchange proposes to amend Exchange Rule 1.5(k),
which defines ``Exchange Operating Hours'' or ``Exchange Hours,'' to
reflect that the Exchange's daily trading hours, comprised of all three
trading sessions offered by the Exchange, would begin at 7:00 a.m. ET
and continue until 8:00 p.m. ET. The Exchange also proposes to amend
Exchange Rule 11.1(a) to update the hours of operations referenced in
that Rule consistent with the changes described above.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the provisions of Section 6(b) of the Act,\14\ in general, and
furthers the objectives of Sections and 6(b)(5) of the Act,\15\ in
particular, in that it is designed to promote just and equitable
principles of trade, to foster cooperation and coordination with
persons engaged in 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) requirement that the
rules of an
[[Page 7485]]
exchange not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
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\14\ 15 U.S.C. 78f(b).
\15\ 15 U.S.C. 78f(b)(5).
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Specifically, the Exchange believes that the proposed rule change
will benefit market participants by providing additional opportunities
to transact on the Exchange later in the trading day. As described
above, the Exchange currently accepts orders in its Post-Market Session
until 5:00 p.m. ET, while several other exchanges currently have after-
hours sessions that end at 8:00 p.m. ET.\16\ The Exchange believes that
market participants would benefit from a longer Post-Market Session on
the Exchange too, and it is therefore proposing to extend its Post-
Market Session to allow trading until 8:00 p.m. ET. The Exchange
believes that this change will provide additional opportunities for
firms to source liquidity for their orders on the Exchange later in the
trading day and will enable the Exchange to better compete with other
exchanges that offer trading in after-hours sessions until 8:00 p.m.
ET. For the reasons set forth above, the Exchange believes the proposal
would promote just and equitable principles of trade, foster
cooperation and coordination with persons engaged in facilitating
transactions in securities, remove impediments to and perfect the
mechanism of a free and open market and a national market system, and,
in general, protect investors and the public interest.
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\16\ See supra note 13.
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The Exchange also believes that the proposed rule change would not
permit unfair discrimination between customers, issuers, brokers, or
dealers because it would affect all Members and market participants in
the same way and to the same extent, in that all Members would be
allowed to submit orders to the Exchange in the Post-Market Session
until 8:00 p.m. ET, and it is therefore consistent with Section 6(b)(5)
of the Act. Moreover, as described above, the Exchange previously
operated the Post-Market Session until 8:00 p.m. ET under its initial
rules,\17\ other exchanges allow trading in after-hours sessions from
4:00 p.m. ET until 8:00 p.m. ET,\18\ and there is precedent for an
exchange extending the end of its after-hours trading session from 5:00
p.m. ET to 8:00 p.m. ET,\19\ so this aspect of the proposed rule change
does not raise any new or novel issues that have not previously been
considered by the Commission.
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\17\ See supra note 10.
\18\ See supra note 13.
\19\ See Securities Exchange Act Release No. 83809 (August 9,
2018), 83 FR 40599 (August 15, 2018) (notice of filing and immediate
effectiveness of a proposed rule change by Cboe BZX Exchange, Inc.
to extend the end of its After Hours Trading Session from 5:00 p.m.
to 8:00 p.m.).
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In addition, the Exchange believes the proposed amendments to
Exchange Rules 1.5(k) and 11.1(a) are consistent with the Act because
such amendments would update those rules to reference the proposed 8:00
p.m. ET time as the time until which the Exchange would accept orders
in the Post-Market Session. No further substantive changes to those
rules are proposed. The Exchange believes that it is appropriate to
update all of its rules that specifically reference the Exchange's
operating hours so that the Exchange's rules properly reflect the
change to the Post-Market Session to be implemented with this proposed
rule change.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
result in any burden on competition that is not necessary or
appropriate in furtherance of the Act. The Exchange does not believe
that the proposed rule change would have any significant impact on
intermarket competition, as there are other equity exchanges that
already allow after-hours trading until 8:00 p.m. ET, and other markets
are free to provide similar trading hours. Furthermore, the Exchange
does not believe that the proposed rule change would have any
significant impact on intramarket competition, as all Members would be
subject to the modified hours of the Post-Market Session.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange neither solicited nor received comments on the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \20\ and Rule 19b-4(f)(6) thereunder.\21\
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 \22\ and Rule 19b-4(f)(6) \23\
thereunder.
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\20\ 15 U.S.C. 78s(b)(3)(A)(iii).
\21\ 17 CFR 240.19b-4(f)(6).
\22\ 15 U.S.C. 78s(b)(3)(A).
\23\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file 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) \24\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\25\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange asked
that the Commission waive the 30-day operative delay so that the
proposal may become operative immediately upon filing. The Exchange
states the proposed rule change extends the Post-Market Session on the
Exchange to provide additional opportunities for market participants to
source liquidity later in the day and that its Members would benefit
from the same after-hours trading hours available on other exchanges
(including each of the equity exchanges operated by Cboe Global
Markets, Inc.), which already offer after-hours trading until 8:00 p.m.
ET.\26\ For these reasons, and because the proposed rule change does
not raise any novel regulatory issues,\27\ the Commission believes that
waiving the 30-day operative delay is consistent with the protection of
investors and the public interest. Therefore, the Commission hereby
waives the operative delay and designates the proposal operative upon
filing.\28\
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\24\ 17 CFR 240.19b-4(f)(6).
\25\ 17 CFR 240.19b-4(f)(6)(iii).
\26\ See supra note 13.
\27\ See Securities Exchange Act Release No. 88806 (May 4,
2020), 85 FR 27451 (May 8, 2020) at note 155 (noting that MEMX's
initial rulebook when the Commission granted MEMX's registration as
a national securities exchange provided for a Post-Market Session
that ran until 8:00 p.m. ET).
\28\ For purposes only of waiving the 30-day operative delay,
the Commission also has 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.
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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#c9bbbca5ace4aaa6a4a4aca7bdba89baacaae7aea6bf"><span class="__cf_email__" data-cfemail="cebcbba2abe3ada1a3a3aba0babd8ebdabade0a9a1b8">[email protected]</span></a>. Please include
File Number SR-MEMX-2023-01 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-MEMX-2023-01. 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 (<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-MEMX-2023-01 and should be submitted on
or before February 24, 2023.
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\29\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\29\
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-02237 Filed 2-2-23; 8:45 am]
BILLING CODE 8011-01-P
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