Notice2026-19398
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 7.10-E Clearly Erroneous Executions
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Published
September 23, 2026
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 91 Issue 183 (Wednesday, September 23, 2026)</title>
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[Federal Register Volume 91, Number 183 (Wednesday, September 23, 2026)]
[Notices]
[Pages 60424-60427]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-19398]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-106419; File No. SR-NYSEARCA-2026-97]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend Rule 7.10-
E Clearly Erroneous Executions
September 18, 2026.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that, on September 14, 2026, NYSE Arca, Inc. (``NYSE Arca'' 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 self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend Rule 7.10-E (``Clearly Erroneous
Executions'') in light of the Commission's approval of Overnight
Protected Bands for 23/5 Trading. The proposed rule change is available
on the Exchange's website at <a href="http://www.nyse.com">www.nyse.com</a> and at the principal office
of the Exchange.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
NYSE Arca, Inc. (``NYSE Arca'' or the ``Exchange'') proposes to
amend proposes to amend Rule 7.10-E (``Clearly Erroneous Executions'')
in light of the Commission's approval of Overnight Protected Bands
under the LULD Plan for 23/5 Trading.
Background
In May 2026, the Commission approved the Exchange's proposal
(``Arca 23/5 Filing'') to introduce trading 23 hours a day, 5 days a
week (``23/5 Trading'').\4\ As part of that proposal, the Exchange made
changes to Rule 7.10-E (``Clearly Erroneous Executions'') to treat
transactions executed during the Overnight Trading Session in the same
manner as transactions executed during the Early and Late Trading
Sessions.
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\4\ See Securities Exchange Act Release No. 105532 (May 21,
2026), 91 FR 31509 (May 27, 2026) (SR-NYSEARCA-2026-53) (``Arca 23/5
Filing'').
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Subsequently, the Operating Committee of the Plan to Address
Extraordinary Market Volatility (``LULD Plan'') filed proposed
Amendment 27 to the LULD Plan, which proposed to establish price band
protections during overnight trading hours (``Overnight Price
Bands'').\5\ The Operating Committee proposed that the Overnight Price
Bands would initially be temporary static bands 20% above and below two
reference points, and that after implementation, the Operating
Committee would evaluate the performance of such Overnight Price Bands
and propose appropriate changes in a new plan amendment.\6\ On August
5, 2026, the Commission approved the proposal.\7\
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\5\ See Securities Exchange Act Release No. 105596 (June 1,
2026), 91 FR 33774 (June 4, 2026) (File No. 4-631) (Notice of Filing
of 27th Amendment to the National Market System Plan).
\6\ See id.
\7\ See Securities Exchange Act Release No. 106042 (August 5,
2026), 91 FR 51515 (August 10, 2026) (File No. 4-631) (Order
Granting Approval of the 27th Amendment to the National Market
System Plan to Address Extraordinary Market Volatility to Establish
Temporary Price Band Protections in Overnight Trading).
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In light of the Commission's approval of these changes to the LULD
Plan, the Exchange now proposes to reverse the changes to Rule 7.10-E
that were made as part of the Arca 23/5 Filing, and to make several
other amendments to Rule 7.10-E in light of the Commission's approval
of Overnight Price Bands.
In general, Rule 7.10-E describes the process a market participant
may use to request cancellation of a transaction that was ``clearly
erroneous.'' The current rule's central premise is that if LULD Price
Bands under the LULD Plan were available and correct at the time the
transaction was executed, the transaction is not eligible for clearly
erroneous review. Specifically, Rule 7.10-E(c)(1) currently provides
that ``[i]f the execution time of the transaction(s) under review is
during the Core Trading Session, the transaction will not be reviewable
as clearly erroneous'' except in certain limited circumstances,
including when (A) the transaction is in an NMS stock that is not
subject to the LULD Plan (e.g., rights and warrants), (B) the
transaction was executed at a
[[Page 60425]]
time with LULD Price Bands were unavailable or trading should have been
prevented due to a regulatory halt or other halt, or (C) several other
limited circumstances.\8\ In approving the existing version of the
rule, the Commission noted that restricting clearly erroneous review in
this way during times when LULD Price Bands were in effect was
``consistent with the Act and will further the goal of providing
greater certainty to market participants that trades executed within
the Price Bands will stand and not be broken. . . . Thus, the proposal
is designed to limit the potential discordance between the LULD
mechanism and CEE review process.'' \9\
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\8\ See Rule 7.10-E(c)(1)(A), (B), and (C).
\9\ See Securities Exchange Act Release No. 95658 (September 1,
2022), 87 FR 55060 at 55063 (September 8, 2022) (SR-CboeBZX-2022-
037) (Order Approving a Proposed Rule Change, as Modified by
Amendment Nos. 1 and 2, to Amend BZX Rule 11.17, Clearly Erroneous
Executions).
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Currently, LULD Price Bands are available only during the Core
Trading Session, meaning that the restrictions on clearly erroneous
review described above apply only during the Core Trading Session. With
the introduction of Overnight Price Bands, the Exchange now proposes to
extend the existing restrictions on clearly erroneous review to the
period when Overnight Price Bands are in place. This proposed change
would be consistent with the Commission's rationale in approving the
current version of the rule because it would limit any potential
discordance between the LULD mechanism and CEE review in the overnight
trading session, providing greater certainty to market participants
that trades executed with the Overnight Price Bands will stand and not
be broken.
Reversal of Changes Made to Rule 7.10-E Pursuant to the Arca 23/5
Filing
As noted above, as part of the Arca 23/5 Filing,\10\ the Exchange
made changes to Rule 7.10-E to treat transactions executed during the
Overnight Trading Session in the same manner as transactions executed
during the Early and Late Trading Sessions. Given the Commission's
subsequent approval of Overnight Price Bands, the Exchange proposes to
reverse each of the changes made to Rule 7.10-E by the Arca 23/5
Filing.\11\ As detailed below, this proposal would instead make clearly
erroneous review of transactions executed during the Overnight Trading
Session available in a manner similar to transactions executed during
the Core Trading Session.
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\10\ See Arca 23/5 Filing, supra note 4.
\11\ Specifically, the Exchange proposes reversing the changes
made by the Arca 23/5 Filing to Rule 7.10-E(c)(2)(A)-(D), (d)(3),
and (f).
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Proposed Changes to Rule 7.10-E(c)(1)
To implement this change, the Exchange proposes to add several
definitions to Rule 7.10-E(c)(1). First, the Exchange would add that
the term ``LULD Protected Hours'' includes the Core Trading Session and
``Overnight Protected Hours'' defined in Section VIII of the LULD Plan.
Second, the Exchange would define ``LULD Price Bands'' or ``Price
Bands'' to mean the Price Bands defined in Section V of the LULD Plan
(i.e., the Price Bands that apply during the Core Trading Session) and
``Overnight Price Bands'' as defined in Section VIII of the LULD Plan
(i.e., the Price Bands that apply to the Overnight Protected Hours from
9:00 p.m. ET through 4:00 a.m. ET).
The Exchange proposes to amend the current first sentence of Rule
7.10-E(c)(1) to replace the phrase ``Core Trading Session'' with ``LULD
Protected Hours,'' to provide that ``[i]f the execution time of the
transaction(s) under review is during LULD Protected Hours, the
transaction will not be reviewable as clearly erroneous . . . .'' This
change would extend the LULD-based restrictions on clearly erroneous
review currently in place during the Core Trading Session to the
Overnight Protected Hours.
The Exchange also proposes to amend Rule 7.10-E(c)(1)(B)'s
reference to ``Percentage Parameter'' to incorporate the Percentage
Parameter that applies to Overnight Protected Hours. The amended
provision would provide for the applicability of clearly erroneous
review if the price of the transaction to buy (sell) that is the
subject of the clearly erroneous complaint is greater than (less than)
the Reference Price by an amount that equals or exceeds the applicable
Percentage Parameter defined in Appendix A to the LULD Plan (with
respect to the Price Bands that apply during the Core Trading Session)
or the ``Overnight Percentage Parameter defined in Section VIII of the
LULD Plan'' (with respect to Overnight Protected Hours).
In addition to these changes, the Exchange also proposes to make a
non-substantive change to Rule 7.10-E(c)(1)(A), substituting the term
``LULD Plan'' for the current text ``the Plan to Address Extraordinary
Market Volatility Pursuant to Rule 608 of Regulation NMS under the Act
(the `Limit Up-Limit Down Plan' or `LULD Plan,')'' as the ``LULD Plan''
would be defined in the proposed revision to Rule 7.10-E(c)(1).
Proposed Changes to Rule 7.10-E(c)(2), (d)(3), and (f)
As noted above, current Rule 7.10-E(c)(1)(A) permits clearly
erroneous review even during the Core Trading Session when the
transaction in question is in an NMS Stock that is not subject to the
LULD Plan, i.e., rights and warrants. Such transactions are reviewed
for clearly erroneous status using the procedures set out in Rule 7.10-
E(c)(2), including the Numerical Guidelines set out in the table
accompanying Rule 7.10-E(c)(2)(A). The Exchange now proposes to
introduce a similar provision regarding transactions in NMS Stocks not
subject to the LULD Plan that are executed during the Overnight
Protected Hours; such transactions would be subject to the same
Numerical Guidelines as transactions occurring in the Early and Late
Trading Sessions.
The heading of Rule 7.10-E(c)(2) currently addresses, in part, the
``[r]eview of transactions occurring during the Overnight, Early, or
Late Trading Session or eligible for review pursuant to paragraph
(c)(1)(A).'' The Exchange proposes to remove the reference to the
Overnight Trading Session that was added by the Arca 23/5 Filing. The
Exchange also proposes to replace the phrase ``eligible for review
pursuant to paragraph (c)(1)(A)'' (which, in the current rule, means
transactions executed during the Core Trading Session in NMS Stocks not
subject to the LULD Plan) with ``during LULD Protected Hours in NMS
Stocks not subject to the LULD Plan.'' This proposed language would
cover transactions in NMS Stocks not subject to the LULD Plan in the
Core Trading Session and expand the same treatment to transactions
executed in NMS Stocks not subject to the LULD Plan during Overnight
Protected Hours. As such, the proposed change is not novel.
The Exchange proposes to make the same changes everywhere else such
language appears in the rule--namely, in the text of paragraphs
(c)(2)(A), (c)(2)(B), (c)(2)(C), (c)(2)(D), (d)(3), and (f).\12\ In
each case, the Exchange proposes to remove the reference to the
Overnight Trading Session added by the Arca 23/5 Filing and to replace
the
[[Page 60426]]
phrase ``eligible for review pursuant to paragraph (c)(1)(A)'' with
``during LULD Protected Hours in NMS Stocks not subject to the LULD
Plan.''
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\12\ Rule 7.10-E(c)(2)(A)-(D) specifies general rules for
applying clearly erroneous review to transactions where such review
is not precluded by paragraph (c)(1). Rule 7.10-E(d)(3) specifies
conditions where the Exchange may use a revised Reference Price for
the purpose of clearly erroneous review in certain transactions
where such review is not precluded by paragraph (c)(1). Rule 7.10-
E(f) specifies that for transactions where clearly erroneous review
is not precluded by paragraph (c)(1), an officer may initiate
clearly erroneous review on his or her own motion.
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The Exchange also proposes to make corresponding changes to the
headings of the table accompanying Rule 7.10-E(c)(2)(A). The Exchange
proposes to change the heading of the second column from ``Core Trading
Session Numerical Guidelines for transactions eligible for review
pursuant to paragraph (c)(1)(A)'' to ``Numerical Guidelines for
Transactions Executed During the Core Trading Session in NMS Stocks Not
Subject to the LULD Plan.'' This change would simply replace the
shorthand ``eligible for review pursuant to paragraph (c)(1)(A)'' with
the fuller description that such transactions are ``executed during the
Core Trading Session in NMS Stocks not subject to the LULD Plan,'' and
is not a substantive change.
Similarly, the Exchange proposes to change the heading of the third
column from ``Overnight, Early, and Late Trading Session Numerical
Guidelines'' to ``Numerical Guidelines for Transactions Executed During
the Early and Late Trading Session or During Overnight Protected Hours
in NMS Stocks Not Subject to the LULD Plan.'' The proposed change
removes the reference to the Overnight Trading Session added by the
Arca 23/5 Filing and addresses the fact that transactions executed
during Overnight Protected Hours in NMS Stocks not subject to the LULD
Plan are eligible for clearly erroneous review--just as are
transactions in NMS Stocks not subject to the LULD Plan executed during
the Core Trading Sesion--but at the Numerical Guidelines that apply
outside of the Core Trading Session.
Together, these proposed changes would extend the eligibility of
clearly erroneous review for transactions in NMS Stocks not subject to
the LULD Plan that is currently in place during the Core Trading
Session to the Overnight Protected Hours, and would apply the
Commission's recent approval of Overnight Price Bands to the clearly
erroneous executions rule.
Implementation
The Exchange understands that the other national securities
exchanges and FINRA will also file similar proposals, the substance of
which are identical to this proposal. The Exchange proposes that this
rule change would become operative at the commencement of 23/5 Trading,
which is scheduled to commence industry-wide on December 6, 2026.
2. Statutory Basis
The Exchange believes that its proposal is consistent with the
requirements of the Act and the rules and regulations thereunder that
are applicable to a national securities exchange, and, in particular,
with the requirements of Section 6(b) of the Act.\13\ Specifically, the
proposal is consistent with Section 6(b)(5) of the Act \14\ because it
would promote just and equitable principles of trade, 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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\13\ 15 U.S.C. 78f(b).
\14\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that the proposed change is consistent with
just and equitable principles of trade because it extends the basic
premise of the current rule that clearly erroneous review should be
generally unavailable any time a transaction is executed within LULD
Price Bands at a time the Price Bands were available and correct.
Currently, LULD Price Bands are available only during the Core Trading
Session, meaning that the restrictions on clearly erroneous review
described above apply only during the Core Trading Session. With the
Commission's approval of Overnight Price Bands, the Exchange believes
that reversing the changes made to the rule by the Arca 23/5 Filing and
extending the current restrictions on clearly erroneous review to the
period when Overnight Price Bands are in place would remove impediments
to and perfect the mechanism of a free and open market and a national
market system by enhancing the transparency and consistency of the
rule.
The resulting rule would thus extend the LULD-related limits on
clearly erroneous review that are applicable in the Core Trading
Session to the overnight period. The proposed change would also be
consistent with the Commission's rationale in approving the current
version of the rule because it would limit any potential discordance
between the LULD mechanism and CEE review in the overnight trading
session, providing greater certainty to market participants that trades
executed with the Overnight Price Bands will stand and not be
broken.\15\
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\15\ See 87 FR 55060 at 55063, supra note 9.
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange believes the proposal is consistent with Section
6(b)(8) of the Act \16\ in that it does not impose any burden on
competition that is not necessary or appropriate in furtherance of the
purposes of the Act. Rather than impacting competition, the proposed
change would simply extend the basic premise of the current rule that
clearly erroneous review should be generally unavailable any time a
transaction is executed within LULD Price Bands at a time the Price
Bands were available and correct. The Exchange understands that the
other national securities exchanges and FINRA will also file similar
proposals, the substance of which are identical to this proposal. Thus,
the proposed rule change will help to ensure consistency across SROs
without implicating any competitive issues.
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\16\ 15 U.S.C. 78f(b)(8).
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C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \17\ and Rule 19b-4(f)(6) thereunder.\18\
Because the 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 prior to
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, if consistent with the protection of
investors and the public interest, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.
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\17\ 15 U.S.C. 78s(b)(3)(A)(iii).
\18\ 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) \19\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\20\ the Commission
may designate a shorter time if such action is consistent with the
[[Page 60427]]
protection of investors and the public interest.
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\19\ 17 CFR 240.19b-4(f)(6).
\20\ 17 CFR 240.19b-4(f)(6)(iii).
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At any time within 60 days of the filing of such 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 under
Section 19(b)(2)(B) \21\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\21\ 15 U.S.C. 78s(b)(2)(B).
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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#93e1e6fff6bef0fcfefef6fde7e0d3e0f6f0bdf4fce5"><span class="__cf_email__" data-cfemail="d3a1a6bfb6feb0bcbebeb6bda7a093a0b6b0fdb4bca5">[email protected]</span></a>. Please include
file number SR-NYSEARCA-2026-97 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-NYSEARCA-2026-97. 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-NYSEARCA-2026-97 and should be submitted
on or before October 14, 2026.
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\22\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\22\
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2026-19398 Filed 9-22-26; 8:45 am]
BILLING CODE 8011-01-P
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