Notice2026-05555
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Adopt Rules 11.29 and 11.30 Relating the Regulatory and Operations Trading Halts, Integrate Several Definitions and Concepts From the Amended CTA/CQ Plan, Reorganize Existing Rule 11.18, and To Make Conforming Changes to Related Rules
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
March 23, 2026
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 91 Issue 55 (Monday, March 23, 2026)</title>
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[Federal Register Volume 91, Number 55 (Monday, March 23, 2026)]
[Notices]
[Pages 13873-13883]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-05555]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-105038; File No. SR-CboeBZX-2026-017]
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Adopt
Rules 11.29 and 11.30 Relating the Regulatory and Operations Trading
Halts, Integrate Several Definitions and Concepts From the Amended CTA/
CQ Plan, Reorganize Existing Rule 11.18, and To Make Conforming Changes
to Related Rules
March 18, 2026.
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 March 6, 2026, Cboe BZX Exchange, Inc. (the ``Exchange'' or
``BZX'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I, II,
and III 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. (the ``Exchange'' or ``BZX'') is filing
with the Securities and Exchange Commission (``Commission'') a proposal
to adopt Rules 11.29 and 11.30 to integrate several definitions and
concepts from the Amended CTA/CQ Plan and to reorganize existing Rule
11.18 in light of the Exchange's experience with applying the rule
during its time as a national securities exchange and to make
conforming changes to related rules. The text of the proposed rule
change is provided in Exhibit 5.
The text of the proposed rule change is also available on the
Commission's website (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>), the
Exchange's website (<a href="https://www.cboe.com/us/equities/regulation/rule_filings/bzx/">https://www.cboe.com/us/equities/regulation/rule_filings/bzx/</a>), and at the principal office of the Exchange.
[[Page 13874]]
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
In conjunction with adoption of amended CTA/CQ Plans proposed by
its participants (``Amended CTA/CQ Plan''),\5\ the Exchange proposes to
adopt Rules 11.29 and 11.30 to integrate several definitions and
concepts from the Amended CTA/CQ Plan and to reorganize existing Rule
11.18 in light of the Exchange's experience with applying the rule
during its time as a national securities exchange.\6\ Current Rule
11.18 would be reorganized to include only the Limit Up-Limit Down
Mechanism.\7\ Proposed Rule 11.29 would be entitled ``Trading Halts''
and would set forth the Exchange's authority to halt trading under
various circumstances. Proposed Rule 11.30 would be entitled ``Trading
Halts Due to Extraordinary Market Volatility'' and would contain the
rule text related to Market-Wide Circuit Breakers currently codified in
Rule 11.18(a)--(d), (g)--(j). In addition, the Exchange is updating
cross references in other rules that are affected by the proposed
changes and making non-substantive formatting changes in related
rules.\8\
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\5\ On February 23, 2021, the participants of the CTA/CQ Plans
filed Amendment 36 to the CTA Plan and Amendment 27 to the CQ Plan,
to revise provisions governing regulatory and operational halts. See
Letter from Robert Books, Chairman, Operating Committee, CTA/CQ
Plans, to Vanessa Countryman, Secretary, Securities and Exchange
Commission, dated February 3, 2021. The SEC approved the amendments
on May 28, 2021. See Securities Exchange Act Release No. 34-92070
(May 28, 2021), 86 FR 29849 (June 3, 2021) (SR-CTA/CQ-2021-01). The
Amended CTA/CQ Plans includes provisions requiring participant self-
regulatory organizations (``SROs'') to honor a Regulatory Halt
declared by the Primary Listing Market. The provisions in the CTA/CQ
Plans, and the plan for consolidation of data for NASDAQ-listed
securities, The Joint Self-Regulatory Organization Plan Governing
The Collection, Consolidation and Dissemination of Quotation and
Transaction Information For NASDAQ-Listed Securities Traded on
Exchanges on an Unlisted Trading Privilege Basis (``UTP Plan''),
include provisions similar to the changes proposed by the Exchange
in this filing.
\6\ The Exchange notes that it is a participant of the
transaction reporting plan governing Tape B securities. Each
transaction reporting plan has a securities information processor
(``SIP'') responsible for consolidation of information for the
plan's securities, pursuant to Rule 603 of Regulation NMS. The
transaction reporting plans for BZX-listed securities are known as
the ``Consolidated Tape System and Consolidated Quotations System
Plan (collectively, the ``CTA/CQ Plans''). Pursuant to the CTA/CQ
Plans, the Securities Industry Automation Corporation (``SIAC'')
consolidates order and trade data from all markets trading BZX-
listed securities. The Exchange uses the term ``CTA/CQ SIP'' herein
when referring specifically to the SIP responsible for consolidation
of information in BZX-listed securities.
\7\ See Securities Exchange Act Release No. 88704 (April 21,
2020), 85 FR 23383 (April 27, 2020) (File No. 4-631) (approving the
Twentieth Amendment to the National Market System Plan to Address
Extraordinary Market Volatility).
\8\ The Exchange notes that this proposed rule change is based
on a similar rule change filed by the NYSE Arca, Inc. (``Arca'')
that was approved by the SEC in 2025. See Securities Exchange Act
Release No. 103476 (July 16, 2025), 90 FR 34314 (July 21, 2025), SR-
NYSEARCA-2025-50. In addition, the Exchange's affiliate exchanges,
Cboe BYX Exchange, Inc. (``BYX''), Cboe EDGA Exchange, Inc.
(``EDGA''), and Cboe EDGX Exchange, Inc. (``EDGX''), which do not
operate Primary Listing Markets will file similar rule changes.
Several exchanges that do not operate Primary Listing Markets have
also filed similar rule changes. See Securities Exchange Act Release
No. 96574 (December 22, 2022), 87 FR 80213 (December 29, 2022), SR-
PHLX-2022-49; Securities Exchange Act Release No. 97093 (March 9,
2023), 88 FR 16045 (March 15, 2023), SR-PEARL-2023-11; and
Securities Exchange Act Release No. 97824 (June 29, 2023), 88 FR
43159 (July 6, 2023), SR-MEMX-2023-11.
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Background
The Exchange has been working with other SROs to establish common
criteria and procedures for halting and resuming trading in equity
securities in the event of regulatory or operational issues. These
common standards are designed to ensure that events which might impact
multiple exchanges are handled in a consistent manner that is
transparent. The Exchange believes that implementation of these common
standards will assist the SROs in maintaining fair and orderly markets.
Notwithstanding the development of these common standards, the Exchange
will retain discretion in certain instances as to whether and how to
handle halts, as is described below.
Every U.S.-listed equity security has its primary listing on a
specific stock exchange that is responsible for a number of regulatory
functions (``Primary Listing Market'').\9\ These include confirming
that the security continues to meet the exchange's listing standards,
monitoring trading in that security and taking action to halt trading
in the security when necessary to protect investors and to ensure a
fair and orderly market. While these core responsibilities remain with
the primary listing venue, trading in the security can occur on
multiple exchanges that have unlisted trading privileges for the
security \10\ or in the over-the-counter market, regulated by the
Financial Industry Regulatory Authority, Inc. (``FINRA''). The
exchanges and FINRA are responsible for monitoring activity on the
markets over which they have oversight, but also must abide by the
regulatory decisions made by the Primary Listing Market. For example, a
venue trading a security pursuant to unlisted trading privileges must
halt trading in that security during a Regulatory Halt, which is a
defined term under the proposed rules,\11\ and may only trade the
security once the Primary Listing Market has cleared the security to
resume trading.
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\9\ The Exchange is proposing to adopt Primary Listing Market as
a new term, defined in the CTA/CQ Plan, Section XI(a)(i)(H), as
follows: ``[T]he national securities exchange on which an Eligible
Security is listed. If an Eligible Security is listed on more than
one national securities exchange, Primary Listing Market means the
exchange on which the security has been listed the longest.''
\10\ In addition, securities may also be listed on the New York
Stock Exchange or the Nasdaq Stock Market (``dually listed''). See
Rules 14.1(a)(7), 14.3(d) and Interpretation and Policy .01
thereunder.
\11\ See proposed Rule 11.29(a)(12).
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All SROs have rules that require them to honor a Regulatory Halt.
The Exchange, as a Primary Listing Market, also has rules outlining the
circumstances in which it will halt trading in its listed securities,
including situations in which such halts are for regulatory purposes--
and therefore are applicable to all markets trading the security--or
for operational purposes, which would not halt trading on other
markets.\12\ However, the trading halt rules are not consistent across
SROs. Consequently, events that might constitute a Regulatory Halt for
securities listed on one Primary Listing Market theoretically might not
be grounds for a Regulatory Halt in securities listed on another
Primary Listing Market. Such inconsistency among exchange rules could
lead to confusion in circumstances such as a cross-market event,
including, for example ``Extraordinary Market Activity.'' \13\
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\12\ See e.g., Rules 11.1(c), 11.18, and 14.6.
\13\ The proposed definition of Extraordinary Market Activity
encompasses a market event that affects multiple markets. See
proposed Rule 11.29(a)(2) (incorporating by reference Amended CTA/CQ
Plan, Section XI(a)(i)). Thus, such cross-market events could be
considered Extraordinary Market Activity.
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[[Page 13875]]
While the existing rule generally has worked as intended to afford
the Exchange authority to initiate a Regulatory Halt in appropriate
cases, the Exchange proposes to amend its rules to conform to the
Amended CTA/CQ Plan.
The complex and interconnected market structure in the United
States also relies on consolidated market data processed and
disseminated by the SIPs. In certain circumstances, the loss of this
information or issues with the accuracy or timeliness of the
information might cause a Primary Listing Market to determine that a
trading halt is appropriate. The Exchange believes that providing
further guidance in its rules will assist market participants in better
understanding how various scenarios could be handled.
As noted above, the proposed changes that would be uniformly
applied across SROs are those that relate to cross-market events as set
forth in the Amended CTA/CQ Plan. However, there will still be
situations where personnel at the Primary Listing Market will need to
determine the impact of the cross-market event on the securities listed
on its market and use discretion in deciding whether to halt trading in
some or all securities during a cross-market event that affects
securities listed on different markets. In making a determination as to
whether to declare a Regulatory Halt, the Primary Listing Market will
consider the totality of information available concerning the severity
of the issue, its likely duration, and potential impact on Members \14\
and other market participants, and it will make a good-faith
determination that the criteria for declaring a Regulatory Halt have
been satisfied and that a Regulatory Halt is appropriate. Moreover, the
Primary Listing Market will consult, if feasible, with the affected
Trading Center(s), other Plan Participants, or the Processor, as
applicable, regarding the scope of the issue and what steps are being
taken to address the issue. Once a Regulatory Halt has been declared,
the Primary Listing Market would continue to evaluate the circumstances
to determine when trading may resume in accordance with its rules.
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\14\ See Rule 1.5(n). The term ``Member'' shall mean any
registered broker or dealer that has been admitted to membership in
the Exchange.
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While the Exchange and the other SROs intend to harmonize certain
aspects of their trading halt rules, other elements of the rules will
continue to be unique to each market. The Exchange believes that this
is appropriate to reflect different products listed or traded on each
market and the unique relationship of the Primary Listing Market to its
listed companies. It is anticipated that these unique rules would most
likely be invoked in cases where the Primary Listing Market's decision
on whether to institute a Regulatory Halt turns on specific information
related to an individual security or issuer, such as the dissemination
of material news and the issuer's ability to meet listing standards,
rather than broader market issues stemming from Extraordinary Market
Activity or loss of consolidated market data from a SIP.
In addition to the changes noted above, the Exchange proposes non-
substantive changes to modify certain rules that cross reference
existing Rule 11.18 in order to reflect proposed Rules 11.29 and 11.30.
The Exchange will implement all of the changes proposed herein in
conjunction with other SROs implementing the necessary rule changes.
The Exchange will publish a Trade Desk Notice at least 30 business days
prior to implementing the proposed changes.
Proposed Exchange Rule Changes
The Exchange proposes to introduce Rule 11.29 and Rule 11.30 to
integrate several definitions and concepts from the Amended CTA/CQ Plan
and to reorganize existing Rule 11.18 in light of the Exchange's
experience with applying the rule during its time as a national
securities exchange. Proposed Rule 11.29 would be entitled ``Trading
Halts'' and would set forth the Exchange's authority to halt trading
under various circumstances. Proposed Rule 11.30 would be entitled
``Trading Halts Due to Extraordinary Market Volatility'' and would
contain the rule text related to Market-Wide Circuit Breakers currently
codified in Rule 11.18(a)-(d), (g)-(j). The Exchange proposes to re-
name current Rule 11.18 as ``Limit Up-Limit Down Mechanism'' and
renumber the existing rule text related to the Limit Up-Limit Down
Mechanism following the removal of the rule text related to Market-Wide
Circuit Breakers. In addition, the Exchange is updating cross
references in other rules that are affected by the proposed changes and
making non-substantive formatting changes in related rules.
Definitions
The Exchange proposes adding a definitions section as Rule 11.29(a)
to consolidate the various definitions that will be used in the Rule,
some of which are taken from the Amended CTA/CQ Plan. The Exchange is
adopting the following terms from the Amended CTA/CQ Plan:
``Extraordinary Market Activity,'' ``Material SIP Latency,''
``Operating Committee,'' ``Operational Halt,'' ``Primary Listing
Market,'' ``Processor,'' \15\ ``Regulatory Halt,'' ``Trading Center,''
``SIP Halt,'' ``SIP Halt Resume Time,'' ``SIP Outage,'' ``Limit Up
Limit Down'' and ``Market-Wide Circuit Breaker.'' The definitions of
``After Hours Trading Session,'' ``Pre-Opening Session,'' ``Regular
Trading Hours,'' ``UTP Security,'' and ``UTP Derivative Security'' are
currently defined in Rules 1.5(c), (r), (w), and (ee), respectively,
and have been cross-referenced in the definitions section.\16\ The
Exchange also proposes to adopt a definition for ``Derivative
Securities Products'' that is unique to proposed Rule 11.29.
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\15\ The Exchange proposes to also define the term ``SIP'' to
have the same meaning as the term ``Processor'' as set forth in the
Amended CTA/CQ Plan. Because the terms ``Processor'' and ``SIP'' are
also used throughout the Rules, at time, to apply to processors of
information furnished pursuant to the Nasdaq UTP Plan (``UTP
Plan''), the term ``Processor'' may, in those applicable
circumstances, refer to the processor of transactions in Tape C
securities, as set forth in the UTP Plan.
\16\ As noted above, the Exchange is adopting several new terms
that have the same meaning as those terms are defined in the Amended
CTA/CQ Plans. Each of the national market system plans governing the
single plan processors have identical definitions of these terms,
thus there will be uniformity in the meaning of the terms among such
plans as well as among the rules of the SROs.
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First, the Exchange proposes to add the definition of ``Primary
Listing Market'' \17\ to Rule 11.29(a), which will have the same
meaning as in the Amended CTA/CQ Plan, Section XI(a)(i)(H). As is
currently the case under Rule 14.3, Interpretation and Policy .01 and
under the Amended CTA/CQ Plan, all Regulatory Halt decisions are made
by the market on which the security has its primary listing. This
reflects the regulatory responsibility that the Primary Listing Market
has for fair and orderly trading in the securities that list on its
market and its direct access to its listed companies, which are
required to advise it of certain events and maintain lines of
communication with the Primary Listing Market. The proposed definition
makes clear that if a security is listed on more than one market (a
dually-listed security), the Primary Listing Market means the exchange
on which the security has been listed the longest. This provision
matches the language used in the definition of ``Primary Listing
Exchange'' in the Limit Up-Limit Down Plan and will avoid conflict in
the event of dually-listed securities.
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\17\ See proposed Rule 11.29(a)(10).
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Second, the Exchange proposes to add a definition for the term
``Extraordinary Market Activity'' as found in Section
[[Page 13876]]
XI(a)(i)(A) of the Amended CTA/CQ Plan.\18\ The Exchange notes that the
three scenarios included in the proposed new definition would not be
exhaustive. This enables the Primary Listing Market to act in the best
interests of the market when confronted with unexpected events.
However, the Exchange believes that the three scenarios included in the
rule cover many of the events that are most likely to occur.
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\18\ ``Extraordinary Market Activity'' means a disruption or
malfunction of any electronic quotation, communication, reporting,
or execution system operated by, or linked to, the Processor or a
Trading Center or a member of such Trading Center that has a severe
and continuing negative impact, on a market-wide basis, on quoting,
order, or trading activity or on the availability of market
information necessary to maintain a fair and orderly market. For
purposes of this definition, a severe and continuing negative impact
on quoting, order, or trading activity includes (i) a series of
quotes, orders, or transactions at prices substantially unrelated to
the current market for the security or securities; (ii) duplicative
or erroneous quoting, order, trade reporting, or other related
message traffic between one or more Trading Centers or their
members; or (iii) the unavailability of quoting, order, or
transaction information for a sustained period.
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The third set of new proposed definitions would be specific to
events involving the SIP. While the Exchange recognizes that many
events involving the SIP would also meet the definition of
``Extraordinary Market Activity'' as defined in the Amended CTA/CQ
Plan, the Exchange believes that the critical role of the SIPs in
market infrastructure factors in favor having the Exchange's rules
specify how such events would be handled. The definitions of ``SIP
Outage,'' \19\ ``Material SIP Latency,'' \20\ ``SIP Halt Resume Time,''
\21\ and ``SIP Halt'' \22\ are intended to provide specificity to
address this subset of potential market issues. In addition, the
Exchange is proposing to define terms related to SIP governance needed
in order to understand these definitions:
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\19\ See proposed Rule 11.29(a)(16).
\20\ See proposed Rule 11.29(a)(7).
\21\ See proposed Rule 11.29(a)(15).
\22\ See proposed Rule 11.29(a)(14).
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<bullet> ``Processor'' or ``SIP'' \23\ have the same meaning as the
term ``Processor'' set forth in the Nasdaq UTP Plan or the CTA Plan, as
applicable.\24\
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\23\ See proposed Rule 11.29(a)(11).
\24\ See, e.g., Amended CTA Plan, Section I(x), which provides:
``'Processor' means the organization designated as recipient and
processor of last sale price information furnished by Participants
pursuant to this CTA Plan, as Section V describes.''
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<bullet> ``SIP Plan'' \25\ would be defined as ``the national
market system plan governing the SIP, as applicable.''
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\25\ See proposed Rule 11.29(a)(17).
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<bullet> ``Operating Committee'' \26\ is defined as having the same
meaning as in the CTA/CQ Plan, namely the committee charged with
administering the CTA/CQ Plan.
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\26\ See proposed Rule 11.29(a)(8).
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<bullet> ``Trading Center'' would have the same meaning as in Rule
600(b)(95) of Regulation NMS.
The Exchange is proposing to adopt a category of Regulatory Halt,
called a ``SIP Halt,'' \27\ which will have the same meaning as that
term is defined in Section XI(a)(i)(K) of the CTA/CQ Plan, namely ``a
Regulatory Halt to trading in one or more securities that a Primary
Listing Market declares in the event of a SIP Outage or Material SIP
Latency.'' This new category of Regulatory Halt will address situations
where the Primary Listing Market declares a Regulatory Halt in one or
more securities as a result of a SIP Outage \28\ or Material SIP
Latency.\29\
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\27\ See proposed Rule 11.29(a)(14).
\28\ See Amended CTA/CQ Plan, Section XI(a)(i)(M). ``SIP
Outage'' means ``a situation in which the Processor has ceased, or
anticipates being unable, to provide updated and/or accurate
quotation or last sale price information in one or more securities
for a material period that exceeds the time thresholds for an
orderly failover to backup facilities established by mutual
agreement among the Processor, the Primary Listing Market for the
affected securities, and the Operating Committee unless the Primary
Listing Market, in consultation with the Processor and the Operating
Committee, determines that resumption of accurate data is expected
in the near future.''
\29\ See Amended CTA/CQ Plan, Section XI(a)(i)(E). ``Material
SIP Latency'' means ``a delay of quotation or last sale price
information in one or more securities between the time data is
received by the Processor and the time the Processor disseminates
the data over the Processors vendor lines, which delay the Primary
Listing Market determines, in consultation with, and in accordance
with, publicly disclosed guidelines established by the Operating
Committee, to be (a) material and (b) unlikely to be resolved in the
near future.''
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The Exchange proposes to add a definition of ``Regulatory Halt,''
\30\ which would be a new defined term that incorporates the Exchange's
existing regulatory halt authority as well as the proposed new
regulatory halt authority. The Exchange proposes that the term would
have the same meaning as in Section XI(a)(i)(J) of the Amended CTA/CQ
Plan, as follows:
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\30\ See proposed Rule 11.29(a)(12).
a halt declared by the Primary Listing Market in trading in one or
more securities on all Trading Centers for regulatory purposes,
including for the dissemination of material news, news pending,
suspensions, or where otherwise necessary to maintain a fair and
orderly market. A Regulatory Halt includes a trading pause triggered
by Limit Up Limit Down,\31\ a halt based on Extraordinary Market
Activity, a trading halt triggered by a Market-Wide Circuit
Breaker,\32\ and a SIP Halt.
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\31\ The Exchange proposes to incorporate the Amended CTA Plan's
definition of ``Limit Up Limit Down.'' See proposed Rule
11.29(a)(5).
\32\ The Exchange proposes to incorporate the Amended CTA Plan's
definition of ``Market-Wide Circuit Breaker.'' See proposed Rule
11.29(a)(6).
The term ``Regulatory Halt'' would include the various existing
reasons for a Regulatory Halt that are currently enumerated in the
Exchange's rules, as well as the proposed new categories of Regulatory
Halt from the Amended CTA/CQ Plan: (1) a SIP Halt (due to a SIP Outage
or Material SIP Latency), (2) a halt based on Extraordinary Market
Activity, and (3) a halt in the event of a national, regional, or
localized disruption that necessitates a Regulatory Halt to maintain a
fair and orderly market. The Exchange proposes to move the Market-Wide
Circuit Breaker rules in their entirety from Rule 11.18 to proposed
Rule 11.30, in order to improve clarity.
Next, the Exchange proposes to add a definition of ``Operational
Halt,'' \33\ which would be a new definition for the Exchange. The
Exchange proposes that this term would have the same meaning as the
Amended CTA/CQ Plans.\34\ An Operational Halt is effective only on BZX;
other markets are not required to halt trading in the impacted
securities. In practice, the Exchange has always had the capacity to
implement operational halts in specified circumstances, but such halts
are not currently referred to as ``operational halts'' in the
Exchange's rules.\35\ The proposed change would provide greater clarity
on when an Operational Halt may be implemented and the process for
halting and resuming trading in the event of an Operational Halt. An
Operational Halt is not a Regulatory Halt.
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\33\ See proposed Rule 11.29(a)(9).
\34\ See Amended CTA/CQ Plan, Section XI(a)(i)(G). An
``Operational Halt'' means a halt in trading in one or more
securities only on a Market declared by such Participant and is not
a Regulatory Halt.
\35\ See Rule 11.1(c).
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Finally, the Exchange proposes to introduce a definition of
``Derivative Securities Product.'' \36\ The Exchange notes that this
term is similar to the term ``Derivative Security'' in Rule 1.5(dd),
but provides additional specificity as to the exact products under
Chapter XIV that the Exchange would classify as a Derivative Securities
Product for purposes of proposed Rule 11.29. The term ``Derivative
Securities Product'' means a series of Portfolio Depositary Receipts,
Index Fund Shares, Managed Fund Shares, Trust Issued Receipts, Managed
Portfolio Shares, Exchange-Traded Fund Shares, Tracking
[[Page 13877]]
Fund Shares, and Class ETF Shares (as defined in Rule 14.11(b),
14.11(c), 14.11(i), 14.11(f), 14.11(k), 14.11(l), 14.11(m), and
14.11(n) respectively), a series of Commodity-Related Securities (as
defined in Rule 14.11(d)), securities representing interests in unit
investment trusts or investment companies, Index-Linked Exchangeable
Notes, Equity Gold Shares, Trust Certificates, Commodity-Based Trust
Shares, Commodity Index Trust Shares, Commodity Futures Trust Shares,
Partnership Units, Trust Units, Managed Trust Securities, or Currency
Warrants (as defined in Rule 14.11(e)(1)-(11)), or any other UTP
Derivative Security (as described in Rule 14.11(j)).
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\36\ See proposed Rule 11.29(a)(2).
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Regulatory Halts
Proposed Rule 11.29(b) would set forth requirements relating to
Regulatory Halts.
Authority To Initiate a Regulatory Halt
The Exchange proposes to consolidate the various types of
situations that form the basis for declaring a Regulatory Halt in
proposed Rule 11.29(b)(1). In this subsection, the Exchange would
identify all of the bases for its Regulatory Halt authority, including
cross-referencing to current rules describing existing halt authority
and by adding the new Regulatory Halt authority consistent with the
Amended CTA/CQ Plan.
Proposed Rule 11.29(b)(1)(A) describes ``Mandatory Halts,'' where
the Exchange must issue a Regulatory Halt. The proposed rule would
identify four categories of mandatory Regulatory Halts:
<bullet> Pursuant to Proposed Rule 11.29(b)(1)(A)(i) regarding the
Market-Wide Circuit Breakers, which will be retained without
modification in proposed Rule 11.30 (currently codified in Rule
11.18(a)-(d); (f)-(j)). This proposed rule would effectuate the
definition of Regulatory Halt in proposed Rule 11.29(a)(10), which
cross-references Section XI(a)(i)(J) of the Amended CTA/CQ Plan.
<bullet> Pursuant to Proposed Rule 11.29(b)(1)(A)(ii) regarding the
Limit Up-Limit Down Plan (proposed Rule 11.18). This proposed rule
would effectuate the definition of Regulatory Halt in proposed Rule
11.29(a)(10), which cross-references Section XI(a)(i)(J) of the Amended
CTA/CQ Plan.
<bullet> Pursuant to Proposed Rule 11.29(b)(1)(A)(iii) when the
Exchange becomes aware that a Derivative Securities Product (or in the
case of Index Fund Shares, Managed Fund Shares, Managed Trust
Securities, Managed Portfolio Shares, or Tracking Fund Shares, a
Disclosed Portfolio, holdings, Fund Portfolio, or Tracking Basket, as
applicable) is not being disseminated to all participants at the same
time. The Exchange will maintain the trading halt until such time as
the Exchange becomes aware that the required value is available to all
market participants at the same time. This proposed rule text is based
on authority found in current Rule 14.11, generally, and would
effectuate Section XI(a)(iii)(1) of the Amended CTA/CQ Plan, which
provides that a Primary Listing Exchange may declare a Regulatory Halt
``as provided for in the rules of the Primary Listing Market.''
<bullet> As provided for elsewhere in the Rules of the Exchange,
including but not limited to Rules 11.1, 11.23, 14.6, 14.8, 14.9,
14.10, 14.11(b)-(g), 14.11(i)-(n), and 14.12 concerning requirements
for listing, delisting, and maintaining listings of certain types of
securities, and regarding the public dissemination of material
information (Proposed Rule 11.29(b)(1)(A)(iv). This proposed rule text
is based on authority found in current Rules 11.1 and 14.11, generally,
and would effectuate Section XI(a)(iii)(1) of the Amended CTA/CQ Plan,
which provides that a Primary Listing Exchange may declare a Regulatory
Halt ``as provided for in the rules of the Primary Listing Market.''
Proposed Rule 11.29(b)(1)(B) would describe ``Discretionary
Halts,'' where ``the Exchange may declare a Regulatory Halt in trading
for any security for which it is the Primary Listing Market.'' The
proposed rule would list four bases for the Exchange to declare a
discretionary Regulatory Halt:
<bullet> Pursuant to Proposed Rule 11.29(b)(1)(B)(i) when the
Exchange determines that there is Extraordinary Market Activity, a SIP
Outage, or Material SIP Latency. This proposed rule would effectuate
Section XI(a)(iii)(2) of the Amended CTA/CQ Plan, which provides this
authority.
<bullet> Pursuant to Proposed Rule 11.29(b)(1)(B)(ii), as provided
for elsewhere in the Rules of the Exchange, including but not limited
to Rules 11.1, 11.23, 14.6, 14.8, 14.9, 14.10, 14.11(b)-(g), 14.11(i)-
(n), and 14.12 concerning requirements for listing, delisting, and
maintaining listings of certain types of securities, and regarding the
public dissemination of material information.
<bullet> Pursuant to Proposed Rule 11.29(b)(1)(iii), based on a
consideration of the following factors: (A) trading in the underlying
securities comprising the index or portfolio applicable to that series
has been halted in the primary market(s); (B) the extent to which
trading has ceased in securities underlying the index or portfolio; or
(C) the presence of other unusual conditions or circumstances
detrimental to the maintenance of a fair and orderly market. This
proposed rule text would effectuate Section XI(a)(iii)(1) of the
Amended CTA/CQ Plan, which provides that a Primary Listing Exchange may
declare a Regulatory Halt ``as provided for in the rules of the Primary
Listing Market.''
<bullet> Pursuant to Proposed Rule 11.29(b)(1)(B)(iv) in the event
of a national, regional, or localized disruption that necessitates a
Regulatory Halt to maintain a fair and orderly market. This proposed
rule would effectuate Section XI(a)(iii)(3) of the Amended CTA/CQ Plan,
which provides this authority.
Communications
Proposed Rule 11.29(b)(2) would describe communications, consistent
with Section XI(a)(viii) of the Amended CTA/CQ Plan. The proposed rule
would provide that whenever, in the exercise of its regulatory
functions, the Exchange as Primary Listing Market determines it is
appropriate to initiate a Regulatory Halt, it will notify all other
Participants and the Processor of such Regulatory Halt as well as
provide notice that a Regulatory Halt has been lifted using such
protocols and other emergency procedures as may be mutually agreed to
between the Operating Committee and the Exchange. The Processor shall
disseminate to Participants notice of the Regulatory Halt (as well as
notice of the lifting of a Regulatory Halt) through the high speed line
or through the ``high speed line'' under the CQ Plan, and any other
means the Processor, in its sole discretion, considers appropriate.
Each Participant shall be required to continuously monitor these
communication protocols established by the Operating Committee and the
Processor during market hours, and the failure of a Participant to do
so shall not prevent the Exchange from initiating a Regulatory Halt in
accordance with the SIP Plan and the procedures specified in these
rules.
Initiating a Regulatory Halt
Proposed Rule 11.29(b)(3) would specify how the Exchange, as a
Primary Listing Market, would initiate a Regulatory Halt. The proposed
rule is consistent with the procedures for initiating a Regulatory Halt
is set forth in Section XI(a)(iv) of the Amended CTA/CQ Plan.
Proposed Rule 11.29(b)(3)(A) would provide, consistent with Section
XI(a)(iv)(A) of the Amended CTA/CQ Plan, that the start time of a
Regulatory
[[Page 13878]]
Halt is the time the Exchange or the Primary Listing Market declares
the Halt, regardless of whether communications issues impact the
dissemination of notice of the Halt. This proposal would provide market
participants with certainty on the official start time of the
Regulatory Halt. Under the proposed rule, the start time is fixed by
the Primary Listing Market; it is not dependent on whether notice is
disseminated immediately. This will avoid possible disagreement if the
Halt time were tied to dissemination or receipt of notification, which
may occur at different times. The Exchange recognizes that in
situations where communication is interrupted, trades may continue to
occur until news of the Halt reaches all Trading Centers. However, a
fixed ``official'' Regulatory Halt time will allow SROs to revisit
trades after the fact and determine in a consistent manner whether
specific trades should stand.
Second, proposed Rule 11.29(b)(3)(B) would provide, consistent with
Section XI(a)(iv)(B) of the Amended CTA/CQ Plan, that if the SIP is
unable to disseminate notice of a Regulatory Halt or the Exchange is
not open for trading, the Exchange would take reasonable steps to
provide notice of a Regulatory Halt in the manner set forth in the
Amended CTA/CQ Plan. Currently, after receiving notice from the Primary
Listing Market, the SIP disseminates automated, machine-readable trade
halt messages to notify Trading Centers to automatically halt their
order matching and order dissemination systems. Many Trading Centers
rely solely on such SIP dissemination of a Regulatory Halt. Proposed
Rule 11.29(b)(3)(B) would provide that the Exchange would take
additional, reasonable steps to notify Trading Centers of a Regulatory
Halt. The Amended CTA/CQ Plan provides that if the SIP is unable to
disseminate notice of a Regulatory Halt, the other available means of
dissemination that a Primary Listing Market could use would include:
<bullet> Proprietary data feeds that contain the same quote and
trade information that the Exchange also sends to the applicable SIP;
<bullet> Posting on a publicly available Exchange website; or
<bullet> System status messages that are disseminated to market
participants who choose to sign up to receive such messages.\37\
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\37\ See Amended CTA/CQ Plan, Section XI(a)(iv)(B)(1)-(3).
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These additional sources for notice of a Regulatory Halt would
provide redundancy if either the SIP or the Exchange is unable to
communicate via the existing automated procedures. Although it may take
longer for participants to react to messages received in less automated
formats, the use of multiple forms of dissemination will increase the
likelihood that participants receive important information. It will
also assist participants who do not subscribe to the Exchange's
proprietary feeds in getting regulatory notices. As noted above, in
situations where communication is interrupted the Exchange and other
SROs would retain the ability to break trades that occurred after the
start of the Regulatory Halt in appropriate circumstances, thereby
lessening the potential impact on participants that were delayed in
halting trading.
Proposed Rule 11.29(b)(3)(C) would provide, consistent with Section
XI(a)(iv)(C) of the Amended CTA/CQ Plan, that except in exigent
circumstances, the Exchange would not declare a Regulatory Halt
retroactive to a time earlier than the notice of such halt. Feedback
from market participants has been that it is very disruptive to trading
when the Primary Listing Market sets the start of a trading halt for a
time earlier than the notice of the halt.\38\ Therefore, in almost all
situations, the trading halt will start at the time of the notice or at
a point in time thereafter. However, the Exchange retains the authority
to implement a retroactive halt to deal with unexpected and significant
situations that represent exigent circumstances. While it is difficult
in advance to provide an exhaustive list of when retroactive
application of a trading halt would be in the public interest, one
situation where a halt was applied retroactively was when the Primary
Listing Market erroneously lifted a Regulatory Halt. In that case, the
Primary Listing Market instituted a Regulatory Halt retroactively so
that it coincided with the time the original halt was lifted in error.
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\38\ As noted previously, the start time of a Regulatory Halt is
measured as the point in time when the Primary Listing Market
declares the halt, regardless of whether there is a delay in
dissemination of the notice or in receipt of the notice by
participants.
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Proposed Rule 11.29(b)(3)(D) would provide, consistent with Section
XI(a)(iii)(B) of the Amended CTA/CQ Plan, that in making a
determination to declare a Regulatory Halt in trading any security for
which the Exchange is the Primary Listing Market, the Exchange will
consider the totality of information available concerning the severity
of the issue, its likely duration, and potential impact on Members and
other market participants and will make a good-faith determination that
the criteria for declaring the Regulatory halt have been satisfied and
that a Regulatory Halt is appropriate. The Exchange will consult, if
feasible, with the affected Trading Center(s), other SIP Plan
Participants, or the Processor, as applicable, regarding the scope of
the issue and what steps are being taken to address the issue. Once a
Regulatory Halt has been declared, the Exchange will continue to
evaluate the circumstances to determine when trading may resume in
accordance with its Rules.
UTP Regulatory Halt
Proposed Rule 11.29(b)(4) would specify how the Exchange would
respond to Regulatory Halts declared by other Primary Listing Markets,
referred to by the Exchange as a ``UTP Regulatory Halt.'' Proposed Rule
11.29(b)(4)(A) would provide that the Exchange would halt trading in
any UTP Securities when the Primary Listing Market declares a
Regulatory Halt for any such securities. The proposed rule text is
based on current Rule 14.11(j)(3) and Section XI(a)(iii) of the Amended
CTA/CQ Plan. Proposed Rule 11.29(b)(4)(B)(i)-(iii) would set forth
rules for trading halts in UTP Derivative Securities Products.\39\ This
proposed rule text is based on current authority to halt Derivative
Securities pursuant to Rules 14.11(b)-(g); (i)-(m).
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\39\ See Rule 1.5(ee). The term ``UTP Derivative Security''
shall mean any one of a list of Derivative Securities that trades on
the Exchange pursuant to unlisted trading privileges. The term
``Derivative Security'' is defined in Rule 1.5(dd) and means a
security that meets the definition of ``new derivative securities
product'' in Rule 19b-4(e) under the Exchange Act.
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Resumption of Trading After a Regulatory Halt
The SROs have jointly developed processes to govern the resumption
of trading in the event of a Regulatory Halt. While the actual process
of re-launching trading will remain unique to each exchange (for
example, BZX-listed securities resume trading on the Exchange in most
cases through a Halt Auction pursuant to Rule 11.23(d)), the proposed
rule would harmonize certain common elements of the reopening process
that would benefit from consistency across markets. These common
elements include the primacy of the Primary Listing Market in
resumption decisions, the requirement that the Primary Listing Market
make its determination to resume trading in good faith, and certain
parts of the complex process of reopening trading after a SIP Halt.
With respect to a SIP Halt,
[[Page 13879]]
common elements of the reopening process include the interaction among
SROs (including the Primary Listing Market with the SIP), the
requirement that the Primary Listing Market terminate a SIP Halt with a
notification that specifies a SIP Halt Resume Time, the minimum quoting
times before resumption of trading, the cutoff time after which trading
would not resume during Regular Trading Hours, and the time when
trading may resume if the Primary Listing Market does not open a
security within the amount of time specified in its rules after the SIP
Halt Resume Time.
Proposed Rule 11.29(b)(5)(A) provides the process to be followed
when resuming trading upon the conclusion of Regulatory Halts other
than SIP Halts. The new rule would effectuate Section XI(a)(v) of the
Amended CTA/CQ Plan.
Proposed rule 11.29(b)(5)(A)(i) would make clear that BZX, as the
Primary Listing Market, is responsible for declaring a resumption of
trading when it makes a good faith determination that trading may
resume in a fair and orderly manner and in accordance with its rules.
The resumption process incorporating the Halt Auction would be
described under Proposed Rule 11.29(b)(5)(A)(ii), and states that the
Exchange will release the security for trading pursuant to its Halt
Auction process under Rule 11.23(d), except as provided in
subparagraphs (a) through (d). Proposed Rule 11.29(b)(5)(A)(ii) also
provides that during any trading halt or pause for which a Halt Auction
under Rule 11.23(d) will not occur, orders entered during the
Regulatory Halt or pause will be accepted pursuant to Rule 11.24(e).
Subparagraph (a) would specify that the Exchange would resume
trading after a Limit Up Limit Down trading pause as specified in Rule
11.18.
Subparagraph (b) would specify that the Exchange would resume
trading after a Market-Wide Circuit Breaker halt as specified in
proposed Rule 11.30.
Subparagraph (c) would provide that the Exchange would resume
trading as specified in Rule 11.23(e) when the start time of a
Regulatory Halt would begin between 3:50 p.m. and 4:00 p.m. or the
Quote-Only Period (as described in Rule 11.23(d)) of a Halt Auction for
a security subject to a Regulatory Halt would otherwise be extended by
the Exchange after 3:50 p.m.
Subparagraph (d) would provide that the Exchange would resume
trading after a UTP Regulatory Halt other than a SIP Halt by starting
to accept orders after the Exchange receives notification \40\ from the
UTP Listing Market that the Regulatory Halt has been terminated.
Subparagraph (d) would further provide that the Exchange would not
conduct a Halt Auction to resume trading after a Regulatory Halt in a
UTP Security, including a UTP Derivative Security.
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\40\ The manner and timing of such notice would be determined by
the Primary Listing Market.
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Proposed Rule 11.29(b)(5)(B) would address the resumption of
trading following a SIP Halt. This new rule would effectuate Section
XI(a)(vi) of the Amended CTA/CQ Plan.
Proposed Rule 11.29(b)(5)(B)(i) would establish the rules for the
resumption of trading following a SIP Halt initiated by the Exchange.
Proposed Rule 11.29(b)(5)(B)(i)(a), which is based on Section
XI(a)(vi)(A) of the Amended CTA/CA Plan, would provide that the
Exchange would determine when a SIP Halt would end, which would be
defined as the ``SIP Halt Resume Time,'' which is also defined in the
Amended CTA/CQ Plan.\41\ As further proposed, in making this
determination, the Exchange would make a good-faith determination and
consider the totality of information to determine whether resuming
trading would promote a fair and orderly market.
---------------------------------------------------------------------------
\41\ See Amended CTA/CQ Plan, Section XI(a)(i)(L).
---------------------------------------------------------------------------
The SROs' experience with such events is that communication amount
SROs, SIPs and market participants is the best way to ensure that the
Primary Listing Market has access to available information and to
coordinate the reopening of trading in an orderly manner. In addition,
the SROs anticipate that market participants and other impacted
entities will have access to information about the issue causing the
SIP Halt, the duration of the halt and the resumption process through
updated communications from the SIP, Operating Committee and Primary
Listing Market. Accordingly, the proposed Rule 11.29(b)(5)(B)(i)(a)
would further provide that when determining whether to resume trading,
the Exchange would include input from the SIP processor, the Operating
Committee, or the operator of the system in question (as well as any
Trading Center(s) to which such system is linked), regarding
operational readiness to resume trading. The rule would further provide
that the Exchange would retain discretion to delay the SIP Halt Resume
Time if it believes trading would not resume in a fair and orderly
manner.
Under proposed Rule 11.29(b)(5)(B)(i)(b), the Exchange would
terminate a SIP Halt with a notification that specifies the SIP Halt
Resume Time. Section XI(a)(vi)(B) of the Amended CTA/CQ Plan directs
the Primary Listing Market to specify in its rules (a) the minimum
notice it will provide of a SIP Halt Resume Time, during which period
market participants may enter orders in the affected securities, and
(b) the last SIP Halt Resume Time before the end of regular trading
hours. In accordance with that direction, Proposed Rule
11.29(b)(4)(B)(i)(b) would state that the Exchange would provide for a
minimum five-minute notice of a SIP Halt Resume Time, which is
sufficiently in advance of resumption to permit market participants to
prepare their systems for trading.
In addition, proposed Rule 11.29(b)(5)(B)(i)(b) would establish
that during Regular Trading Hours, the last SIP Halt Resume Time would
be 20 minutes before the end of Regular Trading Hours, e.g., 3:40 p.m.
ET. The Exchange believes that a SIP Halt Resume Time after 3:40 p.m.
ET would interrupt a fair and orderly closing process. Accordingly, in
such case, the Exchange would not run a Closing Auction and would
establish Official Closing Prices for securities affected by the SIP
Halt pursuant to Rule 11.23(i), which sets forth how the Exchange will
determine the Official Closing Price if the Exchange is unable to
conduct a closing transaction in one or more securities due to a
systems or technical issue. In such case, the Exchange would
disseminate a SIP Halt Resume Time after Regular Trading Hours.
Proposed Rule 11.29(b)(5)(B)(i)(b) would further provide the
Exchange, as the Primary Listing Market, with discretion to stagger the
SIP Halt Resume Times for multiple securities in order to reopen in a
fair and orderly manner. For example, this discretion could be used to
open trading in a small number of symbols to ensure that systems are
operating normally before resuming trading in the remaining symbols.
Proposed Rule 11.29(b)(5)(B)(i)(c) would provide that for a SIP
Halt initiated by the Exchange, the Exchange would reopen trading in
the same manner as a Regulatory Halt as described in proposed Rule
11.29(b)(5)(A), with the only difference being that the Quote-Only
Period will be a minimum of five minutes, but may be extended at the
discretion of the Exchange pursuant to Rule 11.29(b)(5)(B)(i)(a).
Because a SIP Halt is a Regulatory Halt, such Halt Auction would be
subject to the extension logic and widened auction collars as described
in Rule 11.23(d)(2)(C).
[[Page 13880]]
Proposed Rule 11.29(b)(5)(B)(ii) provides that, for a SIP Halt
initiated by another exchange that is the Primary Listing Market,
during Regular Trading Hours, BZX may resume trading after trading has
resumed on the Primary Listing Market or notice has been received from
the Primary Listing Market that trading may resume. Proposed Rule
11.29(b)(5)(B)(ii) provides that, for a SIP Halt initiated by a market
other than BZX, during Regular Trading Hours, if the Primary Listing
Market does not open a security within the amount of time listed by the
rules of the Primary Listing Market, BZX may resume trading in that
security. Under Proposed Rule 11.29(b)(4)(B)(ii), outside of Regular
Trading Hours, BZX may resume trading immediately after the SIP Halt
Resume Time.
Operational Halt
The Exchange proposes in Rule 11.29(c) to address Operational
Halts, which are non-regulatory in nature and apply only to the
exchange that calls the halt. As described above, the Exchange has
always had the capacity to implement operational halts and local
trading suspensions in specified circumstances, but such halts are not
currently referred to as ``operational halts'' in the Exchange's
rules.\42\ As part of the Exchange's assessment with the other SROs of
the halting and resumption of trading, the Exchange believes that the
markets would benefit from greater clarity regarding when an
Operational Halt may be appropriate. In part, the proposed change is
designed to cover situations similar to those that might constitute a
Regulatory Halt, but where the impact is limited to a single market.
For example, just as a market disruption might trigger a Regulatory
Halt for Extraordinary Market Activity (as defined in the Amended CTA/
CQ Plan) if it affects multiple markets, so a disruption at the
Exchange, such as a technical issue affecting trading in one or more
securities, could impact trading on the Exchange so significantly that
an Operational Halt is appropriate in one or more securities. In such
an instance, it would be in the public interest to institute an
Operational Halt to minimize the impact of a disruption that, if
trading were allowed to continue, might negatively affect a greater
number of market participants. An Operational Halt does not implicate
other trading centers.
---------------------------------------------------------------------------
\42\ See Rule 11.1(c). The Exchange also notes that its proposed
Rule 11.29(c) regarding Operational Halts is substantially identical
to the NYSE Arca, Nasdaq PHLX, MIAX Pearl, and MEMX rules cited in
note 6 above, and is therefore not novel.
---------------------------------------------------------------------------
Proposed Rule 11.29(c)(1) would specify the Exchange's authority to
initiate an Operational Halt, which is discretionary, and provide that
the Exchange may declare an Operational Halt for any security trading
on the Exchange if it is experiencing Extraordinary Market Activity on
the Exchange (proposed Rule 11.29(c)(1)(A)) or when otherwise necessary
to maintain a fair and orderly market or in the public interest
(proposed Rule 11.29(c)(1)(B)).
Under proposed Rule 11.29(c)(2), the Exchange would notify the
Processor if it has concerns about its ability to collect and transmit
quotes, orders, or last sale prices, or where it has declared an
Operational Halt or suspension of trading in one or more Eligible
Securities (as that term is defined in the Amended CTA/CQ Plan),
pursuant to the procedures adopted by the Operating Committee.
Proposed Rule 11.29(c)(3) would set out rules for order processing
during an Operational Halt. In such case, proposed Rule 11.29(c)(3)(A)
would provide that the Exchange would cancel all unexecuted orders
resting on the BZX Book, including Eligible Auction Orders, and
proposed Rule 11.29(c)(3)(B) would provide that the Exchange would
reject all other incoming order instructions until the Exchange resumes
trading. Proposed Rule 11.29(c)(3)(C) would provide that for a BZX-
listed security, a Halt Auction will not be conducted pursuant to Rule
11.23(d), and the security will resume trading once the Operational
Halt is lifted by the Exchange. Proposed Rule 11.29(c)(3)(D) provides
that an Operational Halt in a UTP Security would resume on the Exchange
pursuant to proposed Rule 11.24(f), which the Exchange proposes to
introduce. Proposed Rule 11.24(f) would describe the Exchange's current
practice for re-opening securities that are not subject to a Regulatory
Halt and states that while a security is subject to an Operational
Halt, orders will not be accepted for queuing prior to the security's
resumption of trading and that any open orders on the BZX Book \43\
will be cancelled. Proposed Rule 11.24(f)(1) states that a security
subject to an Operational Halt will return to trading when the Exchange
declares that trading may resume pursuant to Rule 11.29(c)(3).
---------------------------------------------------------------------------
\43\ See Rule 1.5(e).
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Proposed Rule 11.29(c)(4) would specify how the Exchange resumes
trading after an Operational Halt. Proposed Rule 11.29(c)(4)(A) would
provide that the Exchange would resume trading following an Operational
Halt when it determines that trading may resume in a fair and orderly
manner consistent with the Exchange's rules. Proposed Rule
11.29(c)(4)(B) would address ``Communications,'' and provide that
trading in a halted security shall resume at the time specified by the
Exchange in a notice. It would further specify that the Exchange will
notify all other Plan participants and the SIP of such Operational Halt
as well as provide notice that an Operational Halt has been lifted
using such protocols and other emergency procedures as may be mutually
agreed to between the Operating Committee and the Exchange. If the SIP
is unable to disseminate notice of an Operational Halt or the Exchange
is not open for trading, the Exchange would take reasonable steps to
provide notice of an Operational Halt, which shall include both the
type and start time of the Operational Halt. Each Plan participant
shall continuously monitor communication protocols established by the
Operating Committee and the Processor during market hours to
disseminate notice of an Operational Halt, and the failure of a
participant to do so shall not prevent the Exchange from initiating an
Operational Halt.
Conforming Changes to Other Rules
The Exchange is proposing to modify a number of other rules that
currently cross reference rules that are being relocated or to add
cross references to new Rules 11.29 and 11.30. Modifications to the
citation are proposed for the following rules:
<bullet> Rule 11.8(d)(2)(D) and Rule 11.8(d)(2)(E), Obligations of
Market Makers, have been modified to replace a reference to Rule
11.18(b) with Rule 11.18(a) to reflect the relocation of the original
rule.
<bullet> Rule 11.9(a)(2), Orders and Modifiers, has been modified
to replace a reference to Rule 11.18(e)(5)(B) with Rule 11.18(a)(5)(B)
to reflect the relocation of the original rule.
<bullet> Rule 11.13(a)(3) and Rule 11.13(b)(3)(I), Order Execution
and Routing, have been modified to replace a reference to Rule 11.18(e)
with Rule 11.18(a) to reflect the relocation of the original rule.
<bullet> Rules 11.13(b)(3) and 11.13(b)(5) have been modified to
remove the italic formatting from the title of each subsection in order
to conform with other subsections of Rule 11.13(b).
<bullet> Rule 11.23(d), Auctions, has been modified to replace a
reference to Rule 11.18(b)(2) with Rule 11.30(b)(2) to reflect the
relocation of the original rule.
<bullet> Rule 11.23(e), Auctions, has been modified to include
references to Rules
[[Page 13881]]
11.29 and 11.30 to reflect the addition of new rule text and the
relocation of the Market-Wide Circuit Breaker rule from the original
rule.
<bullet> Rule 11.24(e), Opening Process for Non-BZX-Listed
Securities, has been modified to replace a reference to Rule
11.18(b)(2) with Rule 11.30(b)(2) to reflect the relocation of the
original rule. This rule has also been modified to include the word
``Regulatory'' in order to indicate its applicability only to
Regulatory Halts.
<bullet> The preamble to Chapter XIV, Bats BZX Exchange Listing
Rules, has been modified to include references to Rules 11.29 and 11.30
to reflect the addition of new rule text and the relocation of the
Market-Wide Circuit Breaker rule from the original rule.
<bullet> Interpretation and Policy .01 to Rule 14.3, which covers
dually-listed securities, has been modified to reflect the changes
proposed in new Rule 11.29. The proposed rule makes clear that the
Primary Listing Market is the market on which the security has been
listed longest. This clear statement has eliminated the need for the
more specific citations to various subsections currently contained in
Interpretation and Policy .01 to Rule 14.3.
<bullet> Interpretation and Policy .01(c) to Rule 14.6, Disclosure
of Material Information, Trading Halts, has been modified to include
reference to new Rules 11.29 and 11.30. In addition, Interpretation and
Policy .01(b) has been modified to display the correct Exchange market
hours of 7:00 a.m. to 8:00 p.m. ET and to amend a reference to the
Company rather than the Exchange.
<bullet> Rule 14.11(c) has been modified to include references to
Rules 11.29 and 11.30 to reflect the addition of new rule text and the
relocation of the Market-Wide Circuit Breaker rule from the original
rule and to remove an extraneous comma.
<bullet> Rule 14.11(e)(9), Trust Units, has been modified to
replace a reference to Rule 11.18 with Rule 11.30, to reflect the
relocation of the original rule.
<bullet> Rule 14.11(e)(10), Managed Trust Securities, has been
modified to replace a reference to Rule 11.18 with Rule 11.29, to
reflect the relocation of the original rule.
<bullet> Rule 14.11(j) and Rule 14.11(j)(3), UTP Derivative
Securities, have been modified to include references to Rules 11.29 and
11.30 to reflect the addition of new rule text and the relocation of
the Market-Wide Circuit Breaker rule from the original rule.
The Staff notes that the changes described above are not
substantive and serve only to update cross references to rules that
have been relocated.
Implementation
The Exchange will implement the proposed changes herein in
conjunction with the Processors and the other SROs implementing the
necessary rule changes and related technology and procedural changes.
The Exchange will publish a Trade Desk Notice at least 30 days prior to
implementing the proposed changes.
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Act and the rules and regulations thereunder applicable to the
Exchange and, in particular, the requirements of Section 6(b) of the
Act.\44\ Specifically, the Exchange believes the proposed rule change
is consistent with the Section 6(b)(5) \45\ 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) \46\ requirement that the rules of
an exchange not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
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\44\ 15 U.S.C. 78f(b).
\45\ 15 U.S.C. 78f(b)(5).
\46\ Id.
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As described above, the Exchange and other SROs are seeking to
adopt harmonized rules related to halting and resuming trading in U.S.-
listed equity securities. The Exchange believes that the proposed rules
will provide greater transparency and clarity with respect to the
situations in which trading will be halted and the process through
which that halt will be implemented and terminated. Particularly, the
proposed changes seek to achieve consistent results for participants
across U.S. equities exchanges while maintaining a fair and orderly
market, protecting investors and protecting the public interest. Based
on the foregoing, the Exchange believes that the proposed rules are
consistent with Section 6(b)(5) of the Act \47\ because they will
foster cooperation and coordination with persons engaged in regulating
and facilitating transactions in securities.
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\47\ Id.
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As discussed previously, the Exchange believes that the various
provisions of the proposed rules that will apply to all SROs are
focused on the type of cross-market event where a consistent approach
will assist market participants and reduce confusion during a crisis.
Because market participants often trade the same security across
multiple venues and trade securities listed on different exchange as
part of a common strategy, the Exchange believes that the proposed
rules will lessen the risk that market participants holding a basket of
securities will have to deal with divergent outcomes depending on where
the securities are listed or traded. Conversely, the proposed rules
would still allow individual SROs to react differently to events that
impact various securities or markets in different ways. This avoids the
``brittle market'' risk where an isolated event at a single market
forces all markets trading equities securities to halt or halts trading
in all securities where the issue impacted only a subset of securities.
By addressing both concerns, the Exchange believes that the proposed
rules further the Act's goal of maintaining fair and orderly markets.
The Exchange believes that the proposed rules' focus of
responsibility on the Primary Listing Market for decisions related to a
Regulatory Halt and the resumption of trading is consistent with the
Act, which itself imposes obligations on exchanges with respect to
issuers that are listed. As is currently the case, the Primary Listing
Market would be responsible for the many regulatory functions related
to its listings, including the determination of when to declare a
Regulatory Halt. While these core responsibilities remain with the
Primary Listing Market, trading in the security can occur on multiple
exchanges that have unlisted trading privileges for the security or in
the over-the-counter market, regulated by FINRA. These other venues are
responsible for monitoring activity on their own markets, but also have
agreed to honor a Regulatory Halt.
The proposed changes relating to Regulatory Halts would ensure that
all SROs handle the situations covered therein in a consistent manner
that would prevent conflicting outcomes in cross-market events and
ensure that all Trading Centers recognize a Regulatory Halt declared by
the Primary Listing Market. The changes are consistent with and
implement the Amended CTA/CQ Plan. While the proposed rules recognize a
Primary Listing Market for
[[Page 13882]]
each security, the rules do not prevent an issuer from switching its
listing to another national securities exchange that would thereafter
assume the responsibilities of Primary Listing Market for that
security. Similarly, the proposed rules set forth a fair and objective
standard to determine which exchange will be the Primary Listing Market
in the case of dually-listed securities: the exchange on which the
security has been listed the longest.
The Exchange believes that the other definitions in the proposed
rules are also consistent with the Act. For example, the proposed rules
would define what constitutes Extraordinary Market Activity, consistent
with the amended definition of that term in the Amended CTA/CQ Plan,
thereby furthering the Act's goal of promoting fair and orderly
markets. The Exchange is also proposing to adopt definitions for ``SIP
Outage,'' ``Material SIP Latency'' and ``SIP Halt,'' to explicitly
address situations that may disrupt the markets, and these definitions
are identical to the definitions in the Amended CTA/CQ Plan. The
proposed rules provide guidance on when the Exchange should seek
information from the Operating Committee, other SROs and market
participants as well as means for dissemination of important
information to the market, consistent with the Amended CTA/CQ Plan. The
Exchange believes these provisions strike the right balance in
outlining a process to address unforeseen events without preventing
SROs from taking action needed to protect the market.
The Exchange believes that the proposed rules, which make halts
more consistent across exchange rules, are consistent with the Act in
that they will foster cooperation and coordination with persons engaged
in regulating the equities markets. In particular, the Exchange
believes it is important for SROs to coordinate when there is a
widespread and significant event, as multiple Trading Centers are
impacted in such an event. Further, while the Exchange recognizes that
the proposed rule will not guarantee a consistent result on every
market in all situations, the Exchange does believe that it will assist
in that outcome. While the proposed rules relating to Regulatory Halts
focuses primarily on the kinds of cross-market events that would likely
impact multiple markets, individual SROs will still retain flexibility
to deal with unique products or small situations confined to a
particular market. To that end, the Exchange has retained existing
elements of Chapter XIV that focus on its unique products and the
processes it has developed over time to interact with its issuers.
Also consistent with the Act, and with the Amended CTA/CQ Plan, is
the Exchange's proposal in Rule 11.29(c) to address Operational Halts,
which are non-regulatory in nature and apply only to the exchange that
calls the halt. As noted earlier, the Exchange presently has the
ability to implement operational halts and local trading suspensions,
but such halts are not currently referred to as ``operational halts''
in the Exchange's rules.\48\ The Exchange also notes that its proposed
Rule 11.29(c) regarding Operational Halts is substantially identical to
the revised NYSE Arca, Nasdaq PHLX, MIAX Pearl, and MEMX rules cited
above,\49\ and is therefore not novel.
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\48\ See Rule 11.1(c).
\49\ Supra note 6.
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The Exchange believes that the markets would benefit from greater
clarity regarding when an Operational Halt may be appropriate. In part,
the proposed change is designed to cover situations similar to those
that might constitute a Regulatory Halt, but where the impact is
limited to a single market. For example, just as a market disruption
might trigger a Regulatory Halt for Extraordinary Market Activity if it
affects multiple markets, so could a disruption at the Exchange, such
as a technical issue affecting trading in one or more securities,
impact trading on the Exchange so significantly that an Operational
Halt is appropriate in one or more securities. In such an instance, it
would be in the public interest to institute an Operational Halt to
minimize the impact of a disruption that, if trading were allowed to
continue, might negatively affect a greater number of market
participants. An Operational Halt does not implicate other Trading
Centers.
The Exchange believes that its proposal to introduce Rule 11.24(f)
is consistent with the Act because it will describe the Exchange's
ability to accept and process orders during an Operational Halt and
describe the re-opening process for securities subject to an
Operational Halt, which will provide clarity to market participants
about how their orders will behave during an Operational Halt and
describe how a security subject to an Operational Halt will resume
trading.
The Exchange believes that it is consistent with the Act to
reorganize the text related to Market-Wide Circuit Breakers currently
codified in Rule 11.18(a)-(d), (f)-(j) into Rule 11.30 as it would
provide clarity to market participants and better align with how the
rules of other market centers are currently organized.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act.
Importantly, the Exchange believes the proposal will not impose a
burden on intermarket competition but will rather alleviate any burden
on competition because it is the result of a collaborative effort by
all SROs to harmonize and improve the process related to the halting
and resumption of trading in U.S.-listed equity securities, consistent
with the Amended CTA/CQ Plan. In this area, the Exchange believes that
all SROs should have consistent rules to the extent possible in order
to provide additional transparency and certainty to market participants
and to avoid inconsistent outcomes that could cause confusion and erode
market confidence. The proposed changes would ensure that all SROs
handle the situations covered therein in a consistent manner and ensure
that all Trading Centers handle a Regulatory Halt consistently. The
Exchange understands that all other Primary Listing Markets intend to
file proposals that are substantially similar to this proposal.
The Exchange does not believe that its proposals concerning
Operational Halts impose an undue burden on competition. Under the
existing Rules, the Exchange already possesses discretionary authority
to impose Operational Halts for various reasons, including because of
an order imbalance or influx that causes another national securities
exchange to impose a trading halt in a security, or because another
national securities exchange imposes an operational halt in a security
that is a derivative or component of a security listed on BZX. As
described earlier, the proposed Rule change clarifies and broadens the
circumstances in which the Exchange may impose such Halts, and
specified procedures for both imposing and lifting them. The Exchange
does not intend for these proposals to have any competitive impact
whatsoever. Indeed, the Exchange expects that other exchanges will
adopt similar rules and procedures to govern operational halts, to the
extent that they have not done so already.
The Exchange does not believe that the proposed rule change imposes
a burden on intramarket competition because the provisions apply to all
market participants equally. In addition,
[[Page 13883]]
information regarding the halting and resumption of trading will be
disseminated using several freely accessible sources to ensure broad
availability of information in addition to the SIP data and proprietary
data feeds offered by the Exchange and other SROs that are available to
subscribers.
In addition, the proposals include several provisions related to
the declaration and timing of trading halts and the resumption of
trading designed to avoid any advantage to those who can react more
quickly than other participants. The proposed rule gives the Exchanges
the ability to declare the timing of a Regulatory Halt immediately. The
SROs retain the discretion to cancel trades that occur after the time
of the Regulatory Halt. The proposals also allow for the staggered
resumption of trading to assist firms in reentering the market after a
SIP Halt affecting multiple securities, in order to reopen in a fair
and orderly manner. In addition, the proposals encourage early and
frequent communication among the SROs, SIPs and market participants to
enable the dissemination of timely and accurate information concerning
the market to market participants.
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
Because the foregoing proposed rule change does not:
A. significantly affect the protection of investors or the public
interest;
B. impose any significant burden on competition; and
C. 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 \50\ and
Rule 19b-4(f)(6) \51\ thereunder. 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 will institute proceedings to determine whether the proposed
rule change should be approved or disapproved.
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\50\ 15 U.S.C. 78s(b)(3)(A).
\51\ 17 CFR 240.19b-4(f)(6).
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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="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#790b0c151c541a1614141c170d0a390a1c1a571e160f"><span class="__cf_email__" data-cfemail="d0a2a5bcb5fdb3bfbdbdb5bea4a390a3b5b3feb7bfa6">[email protected]</span></a>. Please include
file number SR-CboeBZX-2026-017 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-CboeBZX-2026-017. 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="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>). Copies of the filing will be available for inspection and
copying at the principal office of the Exchange. Do not include
personal identifiable information in submissions; you should submit
only information that you wish to make available publicly. We may
redact in part or withhold entirely from publication submitted material
that is obscene or subject to copyright protection. All submissions
should refer to file number SR-CboeBZX-2026-017 and should be submitted
on or before April 13, 2026.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\52\
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\52\ 17 CFR 200.30-3(a)(12).
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Vanessa A. Countryman,
Secretary.
[FR Doc. 2026-05555 Filed 3-20-26; 8:45 am]
BILLING CODE 8011-01-P
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