[Federal Register Volume 84, Number 186 (Wednesday, September 25, 2019)]
[Notices]
[Pages 50502-50504]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-20709]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-87016; File No. SR-NYSE-2019-51]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Extend the Pilot Related to the Market-Wide Circuit Breaker in Rules 
80B and 7.12

September 19, 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 September 17, 2019, New York Stock Exchange LLC (``NYSE'' 
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 the market-
wide circuit breaker in Rules 80B and 7.12. 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 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
    Rules 80B and 7.12 provide 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 
(``MWCB'') mechanism under Rule 80B was approved by the Commission to 
operate on a pilot basis,\4\ 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''),\5\ 
including any extensions to the pilot period for the LULD Plan.\6\ The 
Commission recently approved an amendment to the LULD Plan for it to 
operate on a permanent, rather than pilot, basis.\7\ In light of the 
proposal to make the LULD Plan permanent, the Exchange amended Rule 80B 
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.\8\
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    \4\ See Securities Exchange Act Release No. 67090 (May 31, 
2012), 77 FR 33531 (June 6, 2012) (SR-NYSE-2011-48).
    \5\ See Securities Exchange Act Release No. 67091 (May 31, 
2012), 77 FR 33498 (June 6, 2012). The LULD Plan provides a 
mechanism to address extraordinary market volatility in individual 
securities.
    \6\ See Securities Exchange Act Release Nos. 67090 (May 31, 
2012), 77 FR 33531 (June 6, 2012) (SR-NYSE-2011-48) (Approval 
Order); and 68784 (January 31, 2013), 78 FR 8662 (February 6, 2013) 
(SR-NYSE-2013-10) (Notice of Filing and Immediate Effectiveness of 
Proposed Rule Change Delaying the Operative Date of a Rule Change to 
NYSE Rule 80B).
    \7\ See Securities Exchange Act Release No. 85623 (April 11, 
2019), 84 FR 16086 (April 17, 2019).
    \8\ See Securities Exchange Act Release No. 85560 (April 9, 
2019), 84 FR 15247 (April 15, 2019) (SR-NYSE-2019-19) (``Rule 80B 
pilot extension filing''). At the time of the Rule 80B pilot 
extension filing, Rule 7.12 existed but was not operative with 
respect to Exchange-listed securities and was not amended to extend 
its effectiveness through October 18, 2019. Now that all Exchange-
listed securities have transitioned to the Pillar trading platform, 
Rule 7.12 is operative with respect to all securities trading on the 
Exchange. See Securities Exchange Act Release No. 85962 (May 29, 
2019), 84 FR 26188 (June 5, 2019) (SR-NYSE-2019-05). Although Rule 
80B is not applicable to trading of any securities on the Exchange, 
the Exchange believes that amending Rule 80B in this filing would 
reduce the potential for confusion.
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    The Exchange now proposes to amend Rules 80B and 7.12 to extend the 
pilot to the close of business on October 18, 2020. This filing does 
not propose any substantive or additional changes to Rules 80B or 7.12. 
The Exchange will use the extension period to develop with the other 
SROs rules and procedures that would allow for the periodic testing of 
the performance of the MWCB mechanism, with industry member 
participation in such testing. The extension will also permit the 
exchanges to consider enhancements to the MWCB processes such as 
modifications to the Level 3 process.
    The market-wide circuit breaker under Rules 80B and 7.12 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 and FINRA adopted uniform rules on a pilot basis 
relating to market-wide circuit breakers in 2012 (``MWCB Rules''), 
which are designed to slow the effects of extreme price movement 
through coordinated trading halts across securities markets when severe 
price

[[Page 50503]]

declines reach levels that may exhaust market liquidity.\9\ 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.
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    \9\ See Securities Exchange Act Release No. 67090 (May 31, 
2012), 77 FR 33531 (June 6, 2012) (SR-BATS-2011-038; SR-BYX-2011-
025; SR-BX-2011-068; SR-CBOE-2011-087; SR-C2-2011-024; SR-CHX-2011-
30; SR-EDGA-2011-31; SR-EDGX-2011-30; SR-FINRA-2011-054; SR-ISE-
2011-61; SR-NASDAQ-2011-131; SR-NSX-2011-11; SR-NYSE-2011-48; SR-
NYSEAmex-2011-73; SR-NYSEArca-2011-68; SR-Phlx-2011-129) (``MWCB 
Approval Order'').
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    Pursuant to Rules 80B and 7.12, 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 halt 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 halt, at any time 
during the trading day, would halt market-wide trading until the 
primary listing market opens the next trading day.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\10\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\11\ in particular, in that it is designed to 
promote just and equitable principles of trade, 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. The market-wide circuit breaker mechanism under Rules 80B and 
7.12 is 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. 
Extending the market-wide circuit breaker pilot for an additional year 
would ensure the continued, uninterrupted operation of a consistent 
mechanism to halt trading across the U.S. markets while the Exchange, 
with the other SROs, consider and develop rules and procedures that 
would allow for the periodic testing of the performance of the MWCB 
mechanism, which would include industry member participation in such 
testing. The extension will also permit the exchanges to consider 
enhancements to the MWCB processes such as modifications to the Level 3 
process.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(5).
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    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. Based on 
the foregoing, the Exchange believes the benefits to market 
participants from the MWCB under Rules 80B and 7.12 should continue on 
a pilot basis because the MWCB will promote fair and orderly markets, 
and protect investors and the public interest.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act because the proposal would 
ensure the continued, uninterrupted operation of a consistent mechanism 
to halt trading across the U.S. markets while the Exchange, in 
conjunction with the other SROs, consider and develop rules and 
procedures that would allow for the periodic testing of the performance 
of the MWCB mechanism. Furthermore, as noted above, the extension will 
permit the exchanges to consider enhancements to the MWCB processes 
such as modifications to the Level 3 process.
    Further, the Exchange understands that FINRA and other national 
securities exchanges will file proposals to extend their rules 
regarding the market-wide circuit breaker pilot. Thus, the proposed 
rule change will help to ensure consistency across market centers 
without implicating any competitive issues.

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 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, it has become effective pursuant to 
Section 19(b)(3)(A) of the Act and Rule 19b-4(f)(6)(iii) 
thereunder.\12\
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    \12\ 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 short 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 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) \13\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \13\ 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

     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-NYSE-2019-51 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-NYSE-2019-51. 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

[[Page 50504]]

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-
NYSE-2019-51 and should be submitted on or before October 16, 2019.
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    \14\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-20709 Filed 9-24-19; 8:45 am]
BILLING CODE 8011-01-P