[Federal Register Volume 85, Number 198 (Tuesday, October 13, 2020)]
[Notices]
[Pages 64536-64539]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-22640]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-90119; File No. SR-MEMX-2020-11)


Self-Regulatory Organizations; MEMX LLC; Notice of Filing and 
Immediate Effectiveness of a Proposed Rule Change To Shorten the 
Exchange's Post-Market Session To End at 5:00 p.m. Eastern Time

October 7, 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 October 2, 2020, MEMX LLC (``MEMX'' 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 Exchange. The Exchange filed the proposal as 
a ``non-controversial'' proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-4(f)(6) thereunder.\4\ The

[[Page 64537]]

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.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 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 is filing with the Commission a proposed rule change 
to proposed rule change to amend Exchange Rule 1.5(w) to shorten the 
length of the Exchange's after-hours trading session (i.e., the Post-
Market Session \5\) to end at 5:00 p.m. Eastern Time \6\ rather 8:00 
p.m., and to make conforming changes to Exchange Rules 1.5(k) and 
11.1(a). The text of the proposed rule change is provided in Exhibit 5.
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    \5\ ``Post-Market Session'' means the time between 4:00 p.m. and 
8:00 p.m. Eastern Time. See Exchange Rule 1.5(w).
    \6\ All time references in this filing are to Eastern Time 
unless otherwise noted.
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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 Exchange 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 Exchange 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 Exchange offers three distinct trading sessions in which the 
Exchange accepts orders from members of the Exchange (``Members'') for 
potential execution: (1) The ``Pre-Market Session,'' which begins at 
7:00 a.m. and continues until 9:30 a.m.,\7\ (2) ``Regular Trading 
Hours,'' which begin at 9:30 a.m. and continue until 4:00 p.m.,\8\ and 
(3) the ``Post-Market Session,'' which begins at 4:00 p.m. and 
continues until 8:00 p.m.\9\ Members may designate when their orders 
are eligible for execution by selecting their desired Time-in-Force 
instruction.\10\
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    \7\ ``Pre-Market Session'' means the time between 7:00 a.m. and 
9:30 a.m. See Exchange Rule 1.5(x).
    \8\ ``Regular Trading Hours'' means the time between 9:30 a.m. 
and 4:00 p.m. See Exchange Rule 1.5(bb).
    \9\ See supra note 5.
    \10\ See Exchange Rule 11.6(o).
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    The purpose of the proposed rule change is to shorten the length of 
the Exchange's after-hours trading session by amending Exchange Rule 
1.5(w), which defines Post-Market Session, to end the Post-Market 
Session at 5:00 p.m. rather than 8:00 p.m. The Exchange submits that 
shortening the Post-Market Session would allow the Exchange to utilize 
its staff and resources in a more efficient manner while continuing to 
provide Members with an after-hours trading session for one hour after 
the close of the Regular Hours Session.
    The Exchange believes the proposal to reduce the operating time of 
its Post-Market Session to end at 5:00 p.m. rather than 8:00 p.m. is 
reasonable and appropriate given that only a very small percentage 
(approximately 0.65%) of daily trading volume in NMS stocks occurs 
during those hours,\11\ and as such the Exchange believes that the 
costs to the Exchange associated with operating during those hours 
outweigh the benefits to Members and other market participants. 
Moreover, since the Exchange commenced trading operations on September 
21, 2020 (supporting trading in seven NMS stocks), the Exchange has 
received very few orders in the Post-Market Session, and all such 
orders were received between 4:00 p.m. and 5:00 p.m. The Exchange 
expects that it will continue to receive very few orders in the Post-
Market Session even after the Exchange completes its rollout of 
supporting trading in all NMS stocks, and that the large majority of 
such orders would continue to be received between 4:00 p.m. and 5:00 
p.m. rather than between 5:00 p.m. and 8:00 p.m. To the extent the 
Exchange in the future believes there is adequate demand to justify 
operating a longer after-hours trading session, it will consider again 
extending its hours to accommodate such demand.
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    \11\ Percentage calculated based on data from the week of 
September 21, 2020. The Exchange receives and processes data made 
available through consolidated data feeds (i.e., CTS and UTDF).
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    The Exchange notes that other exchanges offer a longer after-hours 
trading session after the close of Regular Trading Hours and that 
Members and other market participants can choose to direct their orders 
to those exchanges if they wish to participate in an after-hours 
trading session extending beyond 5:00 p.m.\12\ The Exchange also notes 
that other exchanges currently end their after-hours trading sessions 
prior to 8 p.m., including three exchanges that close at 5:00 p.m. 
consistent with the Exchange's proposal.\13\ Thus, the Exchange 
believes that its proposal will adequately address the needs of Members 
by providing for a one-hour Post-Market Session, which trade data show 
is the period in which most of the after-hours trading activity occurs, 
as described above, and would allow the Exchange to conserve resources 
and staff time that would otherwise be dedicated to supporting the 
Exchange's after-hours trading session for a four-hour period on every 
trading day.
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    \12\ See, e.g., Cboe BZX Exchange, Inc. Rule 1.5(c), which 
provides for an ``After Hours Trading Session'' from 4:00 p.m. to 
8:00 p.m.; Cboe EDGX Exchange, Inc. Rule 1.5(r), which provides for 
a ``Post-Closing Session'' from 4:00 p.m. to 8:00 p.m.; NYSE Arca 
Equities, Inc. Rule 7.34-E.(a)(3), which provides for a ``Late 
Trading Session'' that concludes at 8:00 p.m. Eastern Time; Nasdaq 
Rule 4701(g), which provides for ``Post-Market Hours'' that end at 
8:00 p.m. Eastern Time.
    \13\ See, e.g., New York Stock Exchange LLC Rule 51, which 
provides that the trading session concludes at 4:00 p.m.; MIAX 
PEARL, LLC Equities Rule 2600(a), which provides that orders may be 
entered on such exchange until 4:00 p.m.; Investors Exchange LLC 
Rule 1.160(aa), which provides for a ``Post-Market Session'' that 
concludes at 5:00 p.m.; Long-Term Stock Exchange, Inc. Rule 
1.160(ee), which provides for a ``Post-Market Session'' that 
concludes at 5:00 p.m.; Nasdaq PHLX LLC Rule 3301(g), which provides 
for ``Post-Market Hours'' that end at 5:00 p.m. Eastern Time.
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    The Exchange also proposes to make conforming changes to Exchange 
Rules 1.5(k) and 11.1(a) to reflect the Post-Market Session ending at 
5:00 p.m. Specifically, the Exchange proposes to amend Exchange Rule 
1.5(k), which defines ``Exchange Operating Hours'' or ``Exchange 
Hours,'' to reflect that the Exchange's daily trading hours, comprised 
of all three trading sessions offered by the Exchange, would begin at 
7:00 a.m. and continue until 5:00 p.m.\14\ The Exchange also proposes 
to amend Exchange Rule 11.1(a) to update the hours of operations 
referenced in that Rule consistent with the changes described above.
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    \14\ ``Exchange Operating Hours'' or ``Exchange Hours'' 
currently means the time between 7:00 a.m. and 8:00 p.m. See 
Exchange Rule 1.5(k).
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6(b) \15\ of the Act, in general, and 
furthers the objectives of Sections and 6(b)(5) \16\ of the Act, in 
particular, in that it is designed to promote just and equitable 
principles of trade and, in general, to protect investors and the 
public interest; furthermore, the proposed rule change is not designed 
to permit unfair discrimination between customers, issuers, brokers, or 
dealers.
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    \15\ 15 U.S.C. 78f.
    \16\ 15 U.S.C. 78f(b)(5).
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    Specifically, the Exchange believes its proposal to amend Rule 
1.5(w) to shorten the length of its Post-Market

[[Page 64538]]

Session to end at 5:00 p.m. rather than 8:00 p.m. would allow the 
Exchange to conserve its resources and staff time and focus these on 
the Exchange's core business, which is providing an efficient and cost-
effective marketplace for trading in equity securities during Regular 
Trading Hours, and other aspects of the Exchange's operations, 
including its regulatory function, while maintaining a facility for 
Members to execute trades for one hour after Regular Trading Hours. 
Reducing the time during which the Post-Market Session operates would 
allow the Exchange to maximize efficiencies and eliminate costs that 
are associated with supporting trading operations during the longer 
after-hours trading session but are not expected to yield a sufficient 
economic return. The Exchange believes that the proposed rule change is 
therefore consistent with Section 6(b)(5) of the Act in that, by 
seeking to operate in a more efficient manner that focuses on trading 
during Regular Trading Hours and other aspects of the Exchange's 
operations, including its regulatory function, it will operate to 
promote just and equitable principles of trade and, in general, protect 
investors and the public interest. The Exchange also believes that the 
proposed rule change would not permit unfair discrimination between 
customers, issuers, brokers, or dealers because it would affect all 
Members and market participants in the same way and to the same extent, 
and is therefore consistent with Section 6(b)(5) of the Act. Moreover, 
the Exchange notes that there is precedent for an exchange shortening 
the hours of its after-hours trading session (also changing from 8:00 
p.m. to 5:00 p.m.) to allow it to utilize its staff time and resources 
in a more efficient manner and focus these on other aspects of its 
operations, so this aspect of the proposed rule change does not raise 
any new or novel issues that have not previously been considered by the 
Commission.\17\
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    \17\ See Securities Exchange Act Release No. 72215 (May 21, 
2014), 79 FR 30678 (May 28, 2014) (rule change of National Stock 
Exchange, Inc. shortening its after-hours trading session from 8:00 
p.m. to 5:00 p.m.).
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    In addition, the Exchange believes that the proposed amendment to 
Exchange Rule 1.5(w) furthers the objectives of Sections 6(b)(1) \18\ 
of the Act in that it would conserve Exchange resources, which are 
expended to support trading operations during the Exchange's trading 
hours, and would allow the Exchange to utilize these resources for 
other purposes, including the Exchange's regulatory function, thereby 
enabling it to be so organized as to have the capacity to be able to 
carry out the purposes of the Act and to comply, and to enforce 
compliance by its members, with the provisions of the Act, the rules 
and regulations thereunder, and the rules of the Exchange.
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    \18\ 15 U.S.C. 78(f)(b)(1).
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    The Exchange also believes that the proposed amendments to Exchange 
Rules 1.5(k) and 11.1(a) are consistent with the Act because the 
amendments update those Rules to reference the proposed 5:00 p.m. time 
as the time until which the Exchange would accept orders in the Post-
Market Session. No further substantive changes to those Rules are 
proposed. The Exchange believes that it is appropriate to update all of 
its rules that specifically reference the Exchange's operating hours so 
that the Exchange's rules properly reflect the change to the Post-
Market Session being implemented in this proposed rule change.

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 Act. By shortening the time period 
during which its Post-Market Session operates, the Exchange is reducing 
the number of equity exchanges offering an after-hours trading session 
extending from after the close of Regular Trading Hours until 8:00 p.m. 
However, the Exchange does not believe that this will inappropriately 
burden competition in that, as proposed, the Exchange will continue to 
offer a Post-Market Session until 5:00 p.m. and other exchanges offer 
an after-hours trading session extending until 8:00 p.m.\19\ The 
Exchange therefore believes that the availability of an after-hours 
trading facility at other exchanges will provide Members and other 
market participants with venues to which they can direct their after-
hours activity after the Exchange's proposed 5:00 p.m. Post-Market 
Session end time and the reduction in the time frame during which the 
Exchange's after-hours facility operates will not impair competition.
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    \19\ See supra note 12.
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    Furthermore, the Exchange does not believe that the proposed rule 
change would have any significant impact on inter-market competition as 
there are other exchanges that already end their after-hours trading 
sessions prior to 8:00 p.m., including at 5:00 p.m.,\20\ and other 
marketplaces are free to provide similar trading hours. The Exchange 
also does not believe that the proposed rule change would have any 
significant impact on intra-market competition as all Members would be 
subject to the modified hours of the Post-Market Session.
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    \20\ See supra note 13.
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C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Exchange neither solicited nor received comments on the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \21\ and Rule 19b-4(f)(6) thereunder.\22\ 
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 \23\ and subparagraph (f)(6) of 
Rule 19b-4 thereunder.\24\
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    \21\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \22\ 17 CFR 240.19b-4(f)(6).
    \23\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \24\ 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 fulfilled this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) \25\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\26\ 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 take effect immediately. The Exchange states that waiver of the 30-
day operative delay would allow the Exchange to immediately implement 
the proposed change to the Post-Market Session, which would better 
align the expenses of operating the Post-Market Session with the 
expected volume and revenue associated with that trading session, 
thereby allowing the Exchange to conserve resources and staff time and

[[Page 64539]]

focus these on the Exchange's core business and other aspects of the 
Exchange's operations, including the Exchange's regulatory function. 
The Commission believes that the proposed rule change raises no new or 
novel issues and that waiver of the operative delay is consistent with 
the protection of investors and the public interest. Therefore, the 
Commission hereby waives the operative delay and designates the 
proposal operative upon filing.\27\
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    \25\ 17 CFR 240.19b-4(f)(6).
    \26\ 17 CFR 240.19b-4(f)(6)(iii).
    \27\ 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 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) \28\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \28\ 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-MEMX-2020-11 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-MEMX-2020-11. 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-MEMX-2020-11 and should be submitted on 
or before November 3, 2020.
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    \29\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\29\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-22640 Filed 10-9-20; 8:45 am]
BILLING CODE 8011-01-P