[Federal Register Volume 84, Number 206 (Thursday, October 24, 2019)]
[Notices]
[Pages 57063-57065]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-23165]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-87352; File No. SR-NYSENAT-2019-24]


Self-Regulatory Organizations; NYSE National, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Extend 
the Current Pilot Program Related to Rule 7.10

October 18, 2019.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given 
that on October 16, 2019, NYSE National, Inc. (``NYSE National'' or 
``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\ 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 current pilot program related 
to Rule 7.10 (Clearly Erroneous Executions) to the close of business on 
April 20, 2020. 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
    The purpose of the proposed rule change is to extend the current 
pilot program related to Rule 7.10 (Clearly Erroneous Executions) to 
the close of business on April 20, 2020. The pilot program is currently 
due to expire on October 18, 2019.
    On September 10, 2010, the Commission approved, on a pilot basis, 
changes to Rule 11.19 (Clearly Erroneous Executions) that, among other 
things: (i) Provided for uniform treatment of clearly 
erroneous[thinsp]execution reviews in multi-stock events involving 
twenty or more securities; and (ii) reduced the ability of the Exchange 
to deviate from the objective standards set forth in the rule.\4\ In 
2013, the Exchange adopted a provision designed to address the 
operation of the Plan.\5\ Finally, in 2014, the Exchange adopted two 
additional provisions providing that: (i) A Series of transactions in a 
particular security on one or more trading days may be viewed as one 
event if all such transactions were effected based on the same 
fundamentally incorrect or grossly misinterpreted issuance information 
resulting in a severe valuation error for all such transactions; and 
(ii) in the event of any disruption or malfunction in the operation of 
the electronic communications and trading facilities of an Exchange, 
another SRO, or responsible single plan processor in connection with 
the transmittal or receipt of a trading halt, an Officer, acting on his 
or her own motion, shall nullify any transaction that occurs after a 
trading halt has been declared by the primary listing market for a 
security and before such trading halt has officially ended according to 
the primary listing market.\6\ Rule 11.19 is no longer applicable to 
any securities that trade on the Exchange and has been replaced with 
Rule 7.10, which is substantively identical to Rule 11.19.\7\
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    \4\ See Securities Exchange Act Release No. 62886 (Sept. 10, 
2010), 75 FR 56613 (Sept. 16, 2010) (SR-NSX-2010-07).
    \5\ See Securities Exchange Act Release No. 68803 (Feb. 1, 
2013), 78 FR 9078 (Feb. 7, 2013) (SR-NSX-2013-06).
    \6\ See Securities Exchange Act Release No. 72434 (June 19, 
2014), 79 FR 36110 (June 25, 2014) (SR-NSX-2014-08).
    \7\ See Securities Exchange Act Release No. 83289 (May 17, 
2018), 83 FR 23968 (May 23, 2018) (SR-NYSENAT-2018-02).
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    These changes were originally scheduled to operate for a pilot 
period to coincide with the pilot period for the Plan to Address 
Extraordinary Market Volatility (the ``Limit Up-Limit Down Plan'' or 
``LULD Plan''),\8\ including any extensions to the pilot period for the 
LULD Plan.\9\ In April 2019, the Commission approved an amendment to 
the LULD Plan for it to operate on a permanent, rather than pilot, 
basis.\10\ In light of that change, the Exchange amended Rule 7.10 to 
untie the pilot program's effectiveness from that of the LULD Plan and 
to extend the pilot's effectiveness to the close of business on October 
18, 2019.\11\
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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'').
    \9\ See Securities Exchange Act Release No. 71797 (March 25, 
2014), 79 FR 18108 (March 31, 2014) (SR-NSX-2014-07).
    \10\ See Securities Exchange Act Release No. 85623 (April 11, 
2019), 84 FR 16086 (April 17, 2019) (approving Eighteenth Amendment 
to LULD Plan).
    \11\ See Securities Exchange Act Release No. 85522 (April 5, 
2019), 84 FR 14704 (April 11, 2019) (SR-NYSENAT-2019-07).
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    The Exchange now proposes to amend Rule 7.10 to extend the pilot's 
effectiveness for a further six months to the close of business on 
April 20, 2020. If the pilot period is not either extended, replaced or 
approved as permanent, the prior versions of paragraphs (c), (e)(2), 
(f), and (g) as described in former Rule 11.19 will be in effect, and 
the provisions of paragraphs (i) through (k) shall be null and 
void.\12\ In such an event, the remaining sections of Rule 7.10 would 
continue to apply to all transactions executed on the Exchange. The 
Exchange understands that the other national securities exchanges and 
Financial Industry Regulatory Authority (``FINRA'') will also file 
similar proposals to extend their respective clearly erroneous 
execution pilot

[[Page 57064]]

programs, the substance of which are identical to Rule 7.10.
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    \12\ See supra notes 4-6. The prior versions of paragraphs (c), 
(e)(2), (f), and (g) generally provided greater discretion to the 
Exchange with respect to breaking erroneous trades.
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    The Exchange does not propose any additional changes to Rule 7.10. 
Extending the effectiveness of Rule 7.10 for an additional six months 
will provide the Exchange and other self-regulatory organizations 
additional time to consider whether further amendments to the clearly 
erroneous execution rules are appropriate.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the requirements of Section 6(b) of the Act,\13\ in general, and 
Section 6(b)(5) of the Act,\14\ in particular, in that it is designed 
to remove impediments to and perfect the mechanism of a free and open 
market and a national market system, to promote just and equitable 
principles of trade, and, in general, to protect investors and the 
public interest and not to permit unfair discrimination between 
customers, issuers, brokers, or dealers. The Exchange believes that the 
proposed rule change promotes just and equitable principles of trade in 
that it promotes transparency and uniformity across markets concerning 
review of transactions as clearly erroneous. The Exchange believes that 
extending the clearly erroneous execution pilot under Rule 7.10 for an 
additional six months would help assure that the determination of 
whether a clearly erroneous trade has occurred will be based on clear 
and objective criteria, and that the resolution of the incident will 
occur promptly through a transparent process. The proposed rule change 
would also help assure consistent results in handling erroneous trades 
across the U.S. equities markets, thus furthering fair and orderly 
markets, the protection of investors and the public interest. Based on 
the foregoing, the Exchange believes the amended clearly erroneous 
executions rule should continue to be in effect on a pilot basis while 
the Exchange and other self-regulatory organizations consider whether 
further amendments to these rules are appropriate.
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    \13\ 15 U.S.C. 78f(b).
    \14\ 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 would 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. The proposal would ensure 
the continued, uninterrupted operation of harmonized clearly erroneous 
execution rules across the U.S. equities markets while the Exchange and 
other self-regulatory organizations consider whether further amendments 
to these rules are appropriate. The Exchange understands that the other 
national securities exchanges and FINRA will also file similar 
proposals to extend their respective clearly erroneous execution pilot 
programs. 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 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 \15\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\16\
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    \15\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \16\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change, along 
with a brief description and text of 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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    A proposed rule change filed under Rule 19b-4(f)(6) \17\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, Rule 19b-4(f)(6)(iii) \18\ permits the Commission to 
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 proposed 
rule change may become effective and operative immediately upon filing. 
The Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest, as 
it will allow the current clearly erroneous execution pilot program to 
continue uninterrupted, without any changes, while the Exchange and the 
other national securities exchanges consider a permanent proposal for 
clearly erroneous execution reviews. For this reason, the Commission 
hereby waives the 30-day operative delay and designates the proposed 
rule change as operative upon filing.\19\
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    \17\ 17 CFR 240.19b-4(f)(6).
    \18\ 17 CFR 240.19b-4(f)(6)(iii).
    \19\ 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: (i) 
Necessary or appropriate in the public interest; (ii) for the 
protection of investors; or (iii) 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-NYSENAT-2019-24 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-NYSENAT-2019-24. 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 (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

[[Page 57065]]

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-
NYSENAT-2019-24 and should be submitted on or before November 14, 2019.
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    \20\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\20\
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-23165 Filed 10-23-19; 8:45 am]
 BILLING CODE 8011-01-P