Self-Regulatory Organizations; Long-Term Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 11.270 (Clearly Erroneous Executions) in Light of the Commission's Approval of Overnight Protected Bands for 23/5 Trading

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<title>Federal Register, Volume 91 Issue 199 (Friday, October 16, 2026)</title>
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[Federal Register Volume 91, Number 199 (Friday, October 16, 2026)]
[Notices]
[Pages 65838-65841]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-21129]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-106649; File No. SR-LTSE-2026-24]


Self-Regulatory Organizations; Long-Term Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend Rule 11.270 (Clearly Erroneous Executions) in Light of the 
Commission's Approval of Overnight Protected Bands for 23/5 Trading

October 13, 2026.
    Pursuant to the provisions of Section 19(b)(1) under the Securities 
Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice 
is hereby given that on October 8, 2026, Long-Term Stock Exchange, Inc. 
(``LTSE'' or the ``Exchange'') filed with the Securities and Exchange 
Commission (``Commission'') the proposed rule change as described in 
Items I and II below, which Items have been prepared by the self-
regulatory organization. The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 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 is filing with the Commission a proposed rule change 
to amend Rule 11.270 (``Clearly Erroneous Executions'') in light of the 
Commission's approval of Overnight Protected Bands under the LULD Plan 
for 23/5 Trading.
    The text of the proposed rule change is available at the Exchange's 
website at <a href="https://longtermstockexchange.com/">https://longtermstockexchange.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 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 self-regulatory organization has prepared summaries, 
set forth in Sections A, B, and C below, of the most significant 
aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend Rule 11.270 (``Clearly Erroneous 
Executions'') in light of the Commission's approval of Overnight 
Protected Bands under the LULD Plan for 23/5 Trading.
Background
    In conjunction with the industry's plans for the introduction of 
trading 23 hours a day, 5 days a week (``23/5 Trading''), 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'').\3\ 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.\4\ On August 5, 2026, the Commission approved the 
proposal.\5\
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    \3\ 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).
    \4\ See id.
    \5\ 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 several amendments to Rule 11.270 
regarding Clearly Erroneous Executions. In general, the rule 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

[[Page 65839]]

transaction was executed, the transaction is not eligible for clearly 
erroneous review. Specifically, Rule 11.270(c)(1) currently provides 
that ``[i]f the execution time of the transaction(s) under review is 
during the Regular Market 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 time when 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.\6\ 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.'' \7\
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    \6\ See Rule 11.270(c)(1)(A), (B), and (C).
    \7\ 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 Regular 
Market Session, meaning that the restrictions on clearly erroneous 
review described above apply only during the Regular Market 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.
Proposed Changes to Rule 11.270(c)(1)
    To implement this change, the Exchange proposes to add several 
definitions to Rule 11.270(c)(1). First, the Exchange would add that 
the term ``LULD Protected Hours'' includes the Regular Market 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 Regular Market 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 
11.270(c)(1) to replace the phrase ``Regular Market 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 Regular Market Session to the 
Overnight Protected Hours.
    The Exchange also proposes to amend Rule 11.270(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 Regular Market 
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 11.270(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 11.270(c)(1).
Proposed Changes to Rule 11.270(c)(2), (d)(3), and (f)
    As noted above, current Rule 11.270(c)(1)(A) permits clearly 
erroneous review even during the Regular Market 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 
11.270(c)(2), including the Numerical Guidelines set out in the table 
accompanying Rule 11.270(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 Pre-Market 
Session and Post-Market Sessions.
    The heading of Rule 11.270(c)(2) addresses ``[r]eview of 
transactions occurring during the Pre-Market Session, Post-Market 
Session or eligible for review pursuant to paragraph (c)(1)(A).'' The 
Exchange proposes to replace the phrase ``eligible for review pursuant 
to paragraph (c)(1)(A)'' (which, in the current rule, means 
transactions executed during the Regular Market 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 
Regular Market 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 change 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).\8\ In each 
case, the Exchange proposes to replace the phrases ``during the Pre-
Market Session, Post-Market Session or eligible for review pursuant to 
paragraph (c)(1)(A)'' and ``during the Pre-Market Session or Post-
Market Session or eligible for review pursuant to paragraph (c)(1)(A)'' 
with ``transactions occurring during the Pre-Market or Post-Market 
Session or during LULD Protected Hours in NMS Stocks not subject to the 
LULD Plan.'' Additionally, the reference to ``Pre-Market or Post-Market 
Session Sessions'' under paragraph (f) was corrected to ``Pre-Market or 
Post-Market Session''.
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    \8\ Rule 11.270(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 11.270(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 
11.270(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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[[Page 65840]]

    The Exchange also proposes to make corresponding changes to the 
headings of the table accompanying Rule 11.270(c)(2)(A). The Exchange 
proposes to change the heading of the second column from ``Regular 
Market Hours Numerical Guidelines for transactions eligible for review 
pursuant to paragraph (c)(1)(A)'' to ``Numerical Guidelines for 
Transactions Executed During the Regular Market Hours 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 
Regular Market Hours 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 ``Pre-Market and Post-Market Session Numerical Guidelines'' 
to ``Numerical Guidelines for Transactions Executed During the Pre-
Market and Post-Market Session or During Overnight Protected Hours in 
NMS Stocks Not Subject to the LULD Plan.'' The proposed change 
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 Regular Market 
Session--but at the Numerical Guidelines that apply outside of the 
Regular Market Session.
    Additionally, the Exchange proposes to make a technical, non-
substantive change to add periods to the end of paragraphs (e)(2)(F) 
and (h) of Rule 11.270.
    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 Regular Market 
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 the proposed rule change is consistent 
with the provisions of Section 6 of the Act,\9\ in general, and 
furthers the objectives of Section 6(b)(5) of the Act,\10\ in 
particular, in that it is designed to promote just and equitable 
principles of trade, to foster cooperation and coordination with 
persons engaged in facilitating transactions in securities, to remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system and, in general, to protect investors and the 
public interest.
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    \9\ 15 U.S.C. 78f.
    \10\ 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 Regular 
Market Session meaning that the restrictions on clearly erroneous 
review described above apply only during the Regular Market Session. 
With the introduction of Overnight Price Bands, the Exchange believes 
that extending such 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 Regular Market 
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.\11\
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    \11\ See 87 FR 55060 at 55063, supra note 7.
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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 \12\ 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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    \12\ 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

    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: (i) 
significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \13\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\14\
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    \13\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \14\ 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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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule should be approved or disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act.

[[Page 65841]]

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#91e3e4fdf4bcf2fefcfcf4ffe5e2d1e2f4f2bff6fee7"><span class="__cf_email__" data-cfemail="b7c5c2dbd29ad4d8dadad2d9c3c4f7c4d2d499d0d8c1">[email&#160;protected]</span></a>. Please include 
file number SR-LTSE-2026-24 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-LTSE-2026-24. 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-LTSE-2026-24 and should be submitted on 
or before November 6, 2026.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2026-21129 Filed 10-15-26; 8:45 am]
BILLING CODE 8011-01-P


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