[Federal Register Volume 84, Number 72 (Monday, April 15, 2019)]
[Notices]
[Pages 15237-15239]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-07364]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-85576; File No. SR-IEX-2019-04]
Self-Regulatory Organizations; Investors Exchange LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Amend IEX
Rule 11.280 (Limit Up-Limit Down Plan and Trading Halts) To Extend the
Pilot Period for the Regulation NMS Plan To Address Extraordinary
Market Volatility to the Close of Business on October 18, 2019
April 9, 2019.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that, on April 8, 2019, the Investors Exchange LLC (``IEX'' 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
Pursuant to the provisions of Section 19(b)(1) under the Securities
Exchange Act of 1934 (``Act''),\4\ and Rule 19b-4 thereunder,\5\ IEX is
filing with the Commission a proposed rule change to amend IEX Rule
11.280 (Limit Up-Limit Down Plan and Trading Halts) to extend the pilot
period for the Regulation NMS Plan to Address Extraordinary Market
Volatility, to the close of business on October 18, 2019. IEX has
designated this rule change as ``non-controversial'' under Section
19(b)(3)(A) of the Act \6\ and provided the Commission with the notice
required by Rule 19b-4(f)(6) thereunder.\7\ The text of the proposed
rule change is available at the Exchange's website at
www.iextrading.com, at the principal office of the Exchange, and at the
Commission's Public Reference Room.
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\4\ 15 U.S.C. 78s(b)(1).
\5\ 17 CFR 240.19b-4.
\6\ 15 U.S.C. 78s(b)(3)(A).
\7\ 17 CFR 240.19b-4.
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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 these statement [sic] 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 purpose of this proposed rule change is to amend IEX Rule
11.280 (Limit Up-Limit Down Plan and Trading Halts) (``Rule 11.280'')
to extend the pilot period for the Regulation NMS Plan to Address
Extraordinary Market Volatility, to the close of business on October
18, 2019. Rule 11.280 provides a methodology for determining when to
halt trading in all stocks due to extraordinary market volatility,
i.e., market-wide circuit breakers. The market-wide circuit breaker
mechanism under Rule 11.280 was approved by the Commission to operate
on a pilot basis, the term of which was to coincide with the pilot
period for the Plan to Address Extraordinary Market Volatility Pursuant
to Rule 608 of Regulation NMS (the ``LULD Plan''),\8\ including any
extensions to the pilot period for the LULD Plan. The Commission
published an amendment to the LULD Plan for it to operate on a
permanent, rather than pilot, basis.\9\
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\8\ See Securities Exchange Act Release No. 67091 (May 31,
2012), 77 FR 33498 (June 6, 2012) (the ``Limit Up-Limit Down
Release''). An amendment to the LULD Plan adding IEX as a
Participant was filed with the Commission on August 11, 2016, and
became effective upon filing pursuant to Rule 608(b)(3)(iii) of the
Act because it involves solely technical or ministerial matters.
\9\ See Securities Exchange Act Release No. 84843 (December 18,
2018), 83 FR 66464 (December 26, 2018) (Amendment No. 18 Proposing
Release).
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The Exchange proposes to amend Rule 11.280 to untie the pilot's
effectiveness from that of the LULD Plan and to extend the pilot's
effectiveness to the close of business on October 18, 2019. The
Exchange does not propose any additional changes to Rule 11.280.
Market-wide circuit breakers under Rule 11.280 provide an
important, automatic mechanism that is invoked to promote stability and
investor confidence during a period of significant stress when
securities markets experience extreme broad-based declines. All U.S.
equity exchanges have rules relating to market-wide circuit breakers,
which are designed to slow the effects of extreme price movement
through coordinated trading halts across securities markets when severe
price declines reach levels that may exhaust market liquidity. Market-
wide circuit breakers provide for trading halts in all equities and
options markets during a severe market decline as measured by a single-
day decline in the S&P 500 Index.
Pursuant to Rule 11.280, a market-wide trading halt will be
triggered if the S&P 500 Index declines in price by specified
percentages from the prior day's closing price of that index.
Currently, the triggers are set at three circuit breaker thresholds: A
7% market decline (Level 1), a 13% market decline (Level 2) and a 20%
market decline (Level 3). A market decline that triggers a Level 1 or
Level 2 circuit breaker after 9:30 a.m. ET and before 3:25 p.m. ET
would halt market-wide trading for 15 minutes, while a similar market
decline at or after 3:25 p.m. ET would not halt market-wide trading. A
market decline that triggers a Level 3 circuit breaker, at
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any time during the trading day, would halt market-wide trading for the
remainder of the trading day.
The Exchange intends to file a separate proposed rule change with
the Commission to operate Rule 11.280 on a permanent, rather than
pilot, basis. Extending the effectiveness of Rule 11.280 to the close
of business on October 18, 2019 should provide the Commission adequate
time to consider whether to approve the Exchange's separate proposal to
operate the market-wide circuit breaker mechanism under Rule 11.280 on
a permanent basis.
2. Statutory Basis
The Exchange believes that its proposal is consistent with the
requirements of Sections 6(b) \10\ and 6(b)(5) of the Act,\11\ in
particular, 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. The Exchange also believes
that the proposed rule change promotes just and equitable principles of
trade in that it promotes transparency and uniformity across markets
concerning when and how to halt trading in all stocks as a result of
extraordinary market volatility. Extending the market-wide circuit
breaker pilot under Rule 11.280 an additional six months would ensure
the continued, uninterrupted operation of a consistent mechanism to
halt trading across the U.S. markets while the Commission considers
whether to approve the pilot on a permanent basis. The proposed rule
change would thus promote fair and orderly markets and the protection
of investors and the public interest. Based on the foregoing, the
Exchange believes the benefits to market participants from the market-
wide circuit breaker mechanism under Rule 11.280 should continue on a
pilot basis while the Commission considers whether to permanently
approve the market-wide circuit breaker.
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\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
IEX does not believe that the proposed rule change implicates any
competitive issues because the proposal would ensure the continued,
uninterrupted operation of a consistent mechanism to halt trading
across the U.S. markets while the Commission considers whether to
permanently approve the market-wide circuit breaker mechanism under
Rule 11.280. Further, IEX understands that FINRA and other national
securities exchanges will file proposals to extend their rules
regarding the market-wide circuit breaker pilot with the Commission so
that the market-wide circuit breaker mechanism may continue
uninterrupted while the Commission considers whether to approve its
operation on a permanent basis.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor received.
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) of the Act \12\ and Rule 19b-
4(f)(6) thereunder.\13\
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\12\ 15 U.S.C. 78s(b)(3)(A).
\13\ 17 CFR 240.19b-4(f)(6).
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A proposed rule change filed under Rule 19b-4(f)(6) \14\ normally
does not become operative for 30 days after the date of filing.
However, pursuant to Rule 19b-4(f)(6)(iii),\15\ the Commission may
designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has asked
the Commission to waive the 30-day operative delay so that the proposal
may become operative upon filing. Extending the pilot for an additional
six months will allow the uninterrupted operation of the existing pilot
to halt trading across the U.S. markets while the Commission considers
whether to approve the pilot on a permanent basis. The extension simply
maintains the status quo. Therefore, the Commission believes that
waiving the 30-day operative delay is consistent with the protection of
investors and the public interest. The Commission hereby designates the
proposed rule change to be operative upon filing.\16\
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\14\ Id.
\15\ 17 CFR 240.19b-4(f)(g)(iii).
\16\ For purposes only of waiving the 30-day operative delay,
the Commission has also considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule 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
Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-IEX-2019-04 on the subject line.
Paper Comments
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-IEX-2019-04. 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 (http://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549 on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish
[[Page 15239]]
to make available publicly. All submissions should refer to File Number
SR-IEX-2019-04, and should be submitted on or before May 6, 2019.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
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\17\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-07364 Filed 4-12-19; 8:45 am]
BILLING CODE 8011-01-P