[Federal Register Volume 85, Number 172 (Thursday, September 3, 2020)]
[Notices]
[Pages 55052-55054]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-19454]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-89710; File No. SR-LTSE-2020-14]


Self-Regulatory Organizations; Long-Term Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
to Temporarily Suspend the Application of Order Price Collars in Rule 
11.190(f)(1) Until September 8, 2020

August 28, 2020.
    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 August 28, 2020, Long-Term Stock Exchange, Inc. (``LTSE'' 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\ 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

    LTSE proposes to temporarily suspend until September 8, 2020, the 
provisions of Rule 11.190(f)(1) pending further systems development 
work.
    The text of the proposed rule change is available at the Exchange's 
website at https://longtermstockexchange.com/, at the principal office 
of the Exchange, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement on 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 statements 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.

[[Page 55053]]

A. Self-Regulatory Organization's Statement on the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change 3
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    \3\ Unless otherwise defined, capitalized terms are used herein 
as defined in the LTSE Rulebook.
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1. Purpose
    LTSE Rule 11.190(f)(1) prevents an incoming order or order resting 
on the Order Book, including those marked ISO, from executing at a 
price outside the Order Collar price range (i.e., prevents buy orders 
from trading at prices above the collar and prevents sell orders from 
trading at prices below the collar). The Order Collar price range is 
calculated using the numerical guidelines for clearly erroneous 
executions (``CEE'').\4\ Under Rule 11.190(f)(1), executions are 
permitted at prices within the Order Collar price range, inclusive of 
the boundaries. Thus, Rule 11.190(f)(1) seeks to prevent an execution 
that would otherwise be handled under the CEE procedures.
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    \4\ See LTSE Rule 11.270(f)(1)(D).
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    The Exchange is set to become operational on August 28, 2020.\5\ 
However, the automated processes to set the Order Collar price range 
pursuant to Rule 11.190(f)(1) are not yet fully operational and it is 
anticipated that they will not be fully operational when the Exchange 
launches. Therefore, to ensure the Exchange operates in conformity with 
its Rule Book, the Exchange proposes to temporarily suspend Rule 
11.190(f)(1) until September 8, 2020, pending further systems 
development work. The Exchange will continue to work diligently to 
finalize the implementation of the Order Collar price range as 
described in Rule 11.190(f)(1). Additionally, the Exchange will inform 
its Members of the proposed rule change in a Regulatory Information 
Circular.
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    \5\ See LTSE Production Securities Phase-In Set for Friday, 
August 28, LTSE (August 24, 2010), available at https://assets.ctfassets.net/cchj2z2dcfyd/4Ul3ygPsrihSz4lpQnBThu/56a54c087891a5aa20152398bdb51cea/MA-2020-022__Reminder_Production_Securities_Launching_August_28_-_Google_Docs.pdf.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Act,\6\ in general, and 
furthers the objectives of Section 6(b)(5) of the Act,\7\ in 
particular, in that it is designed to prevent fraudulent and 
manipulative acts and practices, promote just and equitable principles 
of trade, to foster cooperation and coordination with persons engaged 
in facilitating transactions in securities, 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.
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    \6\ 15 U.S.C. 78f.
    \7\ 15 U.S.C. 78f(b)(5).
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    The Order Collar provisions of Rule 11.190(f)(1) are a prophylactic 
measure to prevent trade executions outside of certain price bands. The 
Exchange has in effect other provisions to address trade executions at 
prices outside of these price bands, such as Rule 11.270 (Clearly 
Erroneous Executions). Additionally, Rule 11.281 (Limit-Up Limit-Down) 
prevents trades in NMS Stocks from occurring outside specified price 
bands.\8\ The Exchange further notes that other national securities 
exchanges operate without order price collars during their regular, 
continuous market trading sessions.\9\ Moreover, the proposed rule 
change would only suspend the application of Rule 11.190(f) for a short 
period of time during which the Exchange will only be offering trading 
in a limited number of securities.\10\ After that time, the Exchange 
expects to implement Rule 11.190(f)(1).
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    \8\ Rule 11.281 was adopted under the LULD Plan, see Securities 
Exchange Act Release No. 85623 (April 11, 2019), 84 FR 16086 (April 
17, 2019), and is designed to prevent trades in NMS Stocks from 
occurring outside specified price bands, which are set at a 
percentage level above and below the average reference price of a 
security over the preceding five-minute period.
    \9\ See, e.g., MEMX Rulebook (8.17.20), available at https://info.memxtrading.com/wp-content/uploads/2020/08/MEMX-Rulebook-8.17.20.pdf; Rulebook--The Nasdaq Stock Market, available at https://listingcenter.nasdaq.com/rulebook/nasdaq/rules (last accessed 
August 27, 2020).
    \10\ See supra note 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 will 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. The proposed 
change is not designed to address any competitive issue, but rather 
would provide the public and market participants with clarity and 
certainty regarding the operations of the Exchange. Additionally, the 
proposed rule change would not be an inappropriate burden on 
intramarket competition as it would be applied equally to all Members. 
It also is not a burden on intermarket competition as other exchange 
similarly operate without order price collars.

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 \11\ and Rule 19b-
4(f)(6) thereunder.\12\
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 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 Commission has waived the five business day notification 
requirement for this proposed rule change.
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    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \13\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \14\ 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 operative immediately. According to 
the Exchange, waiver of the 30-day operative delay provisions will 
avoid the disruption associated with delaying the commencement of 
trading on the Exchange, which is anticipated to occur on August 28, 
2020. The Exchange believes that the proposed rule change does not 
significantly affect the protection of investors or the public interest 
or impose a significant burden on competition because it is designed to 
temporarily suspend application of a prophylactic rule and that the 
proposed rule change does not impose any burden on Members or market 
participants. The Commission believes that waiving the 30-day operative 
delay is consistent with the protection of investors and the public 
interest, as doing so will ensure that the rule change becomes 
operative on the day that LTSE commences trading on the Exchange. 
Accordingly, the Commission hereby waives the

[[Page 55054]]

operative delay and designates the proposed rule change operative upon 
filing.\15\
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    \13\ 17 CFR 240.19b-4(f)(6).
    \14\ 17 CFR 240.19b-4(f)(6)(iii).
    \15\ For purposes only of waiving the 30-day operative delay, 
the Commission also has 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 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

     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-LTSE-2020-14 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-LTSE-2020-14. 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-LTSE-2020-14 and should be submitted on 
or before September 24, 2020.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\

Jill M. Peterson,
Assistant Secretary.


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    \16\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2020-19454 Filed 9-2-20; 8:45 am]
BILLING CODE 8011-01-P