Self-Regulatory Organizations; MX2 LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rule 11.15 (Clearly Erroneous Executions)

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<title>Federal Register, Volume 91 Issue 208 (Thursday, October 29, 2026)</title>
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[Federal Register Volume 91, Number 208 (Thursday, October 29, 2026)]
[Notices]
[Pages 68198-68201]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-22025]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-106729; File No. SR-MX2-2026-10]


Self-Regulatory Organizations; MX2 LLC; Notice of Filing and 
Immediate Effectiveness of a Proposed Rule Change To Amend Rule 11.15 
(Clearly Erroneous Executions)

October 26, 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 October 19, 2026, MX2 LLC (``MX2'' or the ``Exchange'') filed 
with the Securities and Exchange Commission (the ``Commission'') the 
proposed rule change as described in Items I and II below, which Items 
have been prepared by the Exchange. The Exchange filed the proposal as 
a ``non-controversial'' proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-4(f)(6) thereunder.\4\ The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4.

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[[Page 68199]]

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 11.15 (``Clearly Erroneous Executions'') in light of the 
Commission's approval of Overnight Protected Bands for 23/5 Trading. 
The text of the proposed rule change is provided in Exhibit 5 and is 
available on the Exchange's website at <a href="https://info.memxtrading.com/regulation/rules-and-filings/">https://info.memxtrading.com/regulation/rules-and-filings/</a>.

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

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

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

1. Purpose
    The Exchange proposes to amend Rule 11.15 (``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'').\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 several amendments to Rule 11.15 
regarding Clearly Erroneous Executions.
    In general, Rule 11.15 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 11.15(c)(1) currently provides 
that ``[i]f the execution time of the transaction(s) under review is 
during Regular Trading Hours, 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.\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 11.15(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 Regular 
Trading Hours, meaning that the restrictions on clearly erroneous 
review described above apply only during Regular Trading Hours. 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 11.15(c)(1)
    To implement this change, the Exchange proposes to add several 
definitions to Rule 11.15(c)(1). First, the Exchange would add that the 
term ``LULD Protected Hours'' includes Regular Trading Hours 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 Regular Trading Hours) 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 
11.15(c)(1) to replace the phrase ``Regular Trading Hours'' 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 Regular Trading Hours to the Overnight 
Protected Hours.
    The Exchange also proposes to amend Rule 11.15(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 Regular Trading Hours) 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

[[Page 68200]]

11.15(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 11.15(c)(1).
Proposed Changes to Rule 11.15(c)(2), (d)(3), and (f)
    As noted above, current Rule 11.15(c)(1)(A) permits clearly 
erroneous review even during Regular Trading Hours 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 11.15(c)(2), 
including the Numerical Guidelines set out in the table accompanying 
Rule 11.15(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 and Post-Market Sessions.
    The heading of Rule 11.15(c)(2) addresses ``[r]eview of 
transactions occurring during 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 Regular Trading Hours 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 Regular Trading Hours 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).\10\ In 
each case, the Exchange proposes to replace the 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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    \10\ Rule 11.15(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 11.15(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 
11.15(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 11.15(c)(2)(A). The Exchange 
proposes to change the heading of the second column from ``Regular 
Trading Hours Numerical Guidelines for transactions eligible for review 
pursuant to paragraph (c)(1)(A)'' to ``Numerical Guidelines for 
Transactions Executed During Regular Trading 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 
Regular Trading 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 Regular Trading Hours--but 
at the Numerical Guidelines that apply outside of Regular Trading 
Hours.
    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 Regular Trading Hours 
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 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.\11\ Specifically, the Exchange believes the proposed rule change 
is consistent with the Section 6(b)(5) \12\ requirements that the rules 
of an exchange 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, to protect investors and the 
public interest.
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    \11\ 15 U.S.C. 78f(b).
    \12\ 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 Regular Trading 
Hours, meaning that the restrictions on clearly erroneous review 
described above apply only during Regular Trading Hours. With the 
Commission's approval of Overnight Price Bands, the Exchange believes 
that 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 Regular Trading Hours 
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.\13\
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    \13\ See 87 FR 55060 at 55063, supra note 10.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does believe that the proposed rule change will impose 
any

[[Page 68201]]

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.

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 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 pursuant 
to Section 19(b)(3)(A) of the Act \14\ and Rule 19b-4(f)(6) \15\ 
thereunder.
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    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 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 this 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.

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#fb898e979ed6989496969e958f88bb889e98d59c948d"><span class="__cf_email__" data-cfemail="087a7d646d256b6765656d667c7b487b6d6b266f677e">[email&#160;protected]</span></a>. Please include 
file number SR-MX2-2026-10 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-MX2-2026-10. 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 also 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-MX2-2026-10 and should be submitted on 
or before November 19, 2026.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2026-22025 Filed 10-28-26; 8:45 am]
BILLING CODE 8011-01-P


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