[Federal Register Volume 84, Number 72 (Monday, April 15, 2019)]
[Notices]
[Pages 15269-15271]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-07373]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-85564; File No. SR-NYSEAMER-2019-14]
Self-Regulatory Organizations; NYSE American LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Extend
the Pilot Related to Rule 7.12E, Trading Halts Due to Extraordinary
Market Volatility
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 5, 2019, NYSE American LLC (``NYSE American'' 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 extend the pilot related to Rule 7.12E,
Trading Halts Due to Extraordinary Market Volatility, to the close of
business on October 18, 2019. The proposed rule change is available on
the Exchange's website at www.nyse.com, at the principal office of the
Exchange, and at the Commission's Public Reference Room.
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
[[Page 15270]]
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
Statutory Basis for, the Proposed Rule Change
1. Purpose
Rule 7.12E 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 7.12E 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''),\4\ including any extensions to the
pilot period for the LULD Plan.\5\ The Commission published an
amendment to the LULD Plan for it to operate on a permanent, rather
than pilot, basis.\6\
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\4\ See Securities Exchange Act Release No. 67091 (May 31,
2012), 77 FR 33498 (June 6, 2012) (the ``Limit Up-Limit Down
Release'').
\5\ See Securities Exchange Act Release Nos. 67090 (May 31,
2012), 77 FR 33531 (June 6, 2012) (SR-NYSEAmex-2011-73) (Approval
Order); and 68787 (January 31, 2013), 78 FR 8615 (February 6, 2013)
(SR-NYSEMKT-2013-08) (Notice of Filing and Immediate Effectiveness
of Proposed Rule Change Delaying the Operative Date of Rule 7.12E to
April 8, 2013).
\6\ See Securities Exchange Act Release Nos. 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 7.12E 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 7.12E.
Market-wide circuit breakers under Rule 7.12E 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 7.12E, 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: 7%
(Level 1), 13% (Level 2) and 20% (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 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 7.12E on a permanent, rather than pilot,
basis. Extending the effectiveness of Rule 7.12E 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 7.12E on a
permanent basis.
2. Statutory Basis
The Exchange believes that its proposal is consistent with the
requirements of Sections 6(b) \7\ and 6(b)(5) of the Act,\8\ 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 7.12E 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 7.12E should continue on a
pilot basis while the Commission considers whether to permanently
approve Rule 7.12E.
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\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange 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 7.12E. Further, the Exchange understands that FINRA and other
national securities exchanges will file similar proposals to extend
their rules regarding the market-wide circuit breaker pilot 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
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
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 \9\ and Rule 19b-
4(f)(6) thereunder.\10\
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\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 17 CFR 240.19b-4(f)(6).
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A proposed rule change filed under Rule 19b-4(f)(6) \11\ normally
does not become operative for 30 days after the date of filing.
However, pursuant to Rule 19b-4(f)(6)(iii),\12\ 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
[[Page 15271]]
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.\13\
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\11\ Id.
\12\ 17 CFR 240.19b-4(f)(g)(iii).
\13\ 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-NYSEAMER-2019-14 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-NYSEAMER-2019-14. 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 to make available publicly. All submissions
should refer to File Number SR-NYSEAMER-2019-14, and should be
submitted on or before May 6, 2019.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-07373 Filed 4-12-19; 8:45 am]
BILLING CODE 8011-01-P