[Federal Register Volume 86, Number 123 (Wednesday, June 30, 2021)]
[Notices]
[Pages 34806-34807]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-13917]



[[Page 34806]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-92257; File Nos. SR-CboeBYX-2021-012, SR-CboeBZX-2021-
035, SRCboeEDGA-2021-011, SR-CboeEDGX-2021-025]


Self-Regulatory Organizations; Cboe BYX Exchange, Inc.; Cboe BZX 
Exchange, Inc.; Cboe EDGA Exchange, Inc.; Cboe EDGX Exchange, Inc.; 
Order Granting Approval of Proposed Rule Changes, as Modified by 
Amendments No. 1, Relating to the Exchanges' Process for Re-Opening 
Securities Listed on Other National Securities Exchanges Following the 
Resumption of Trading After a Halt, Suspension, or Pause Outside of 
Regular Trading Hours

June 24, 2021.

I. Introduction

    On April 26, 2021, Cboe BYX Exchange, Inc. (``CboeBYX''), Cboe BZX 
Exchange, Inc. (``CboeBZX''), Cboe EDGA Exchange, Inc. (``CboeEDGA'') 
and Cboe EDGX Exchange, Inc. (``CboeEDGX,'' and collectively, the 
``Exchanges'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ 
proposed rule changes to amend each Exchange's process for re-opening 
trading of securities listed on other national securities exchanges 
outside of regular trading hours. The proposed rule changes were 
published for comment in the Federal Register on May 14, 2021.\3\ On 
June 21, 2021, the Exchanges each filed an Amendment No. 1 to their 
respective proposed rule changes (``Amendments No. 1'').\4\ The 
Commission received no comments on the proposed rule changes. This 
order approves the proposed rule changes, as modified by Amendments No. 
1.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release Nos. 91804 (May 10, 
2021), 86 FR 26583 (May 14, 2021) (SR-CboeBYX-2021-012); 91801 (May 
10, 2021), 86 FR 26594 (May 14, 2021) (SR-CboeBZX-2021-035); 91802 
(May 10, 2021), 86 FR 26574 (May 14, 2021) (SR-CboeEDGA-2021-011) 
(``CboeEDGA Notice''); 91803 (May 10, 2021), 86 FR 26558 (May 14, 
2021) (SR-CboeEDGX-2021-025) (``CboeEDGX Notice'') (collectively, 
``Notices''). The proposed rule changes are nearly identical.
    \4\ In the Amendments No. 1, the Exchanges: (i) Added additional 
justification for the proposed rule changes, stating that the 
proposed re-opening process would provide certainty as to how orders 
will be handled across Tape A, B, and C securities and promote 
consistency with the re-opening process used by the Exchanges in 
other circumstances; (ii) stated that allowing one second to elapse 
prior to initiating the mid-point re-opening would ensure sufficient 
time for the midpoint to accurately reflect the market; and (iii) 
made technical and conforming edits. Because the Amendments No. 1 do 
not materially alter the substance of the proposed rule changes and 
make conforming and technical changes, the Amendments No. 1 are not 
subject to notice and comment. The Amendments No. 1 are available on 
the Commission's website at: https://www.sec.gov/comments/sr-cboebyx-2021-012/srcboebyx2021012-8931890-245403.pdf; https://www.sec.gov/comments/sr-cboebzx-2021-035/srcboebzx2021035-8931888-245385.pdf; https://www.sec.gov/comments/sr-cboeedga-2021-011/srcboeedga2021011-8931893-245388.pdf; and https://www.sec.gov/comments/sr-cboeedgx-2021-025/srcboeedgx2021025-8931886-245402.pdf.
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II. Description of the Proposed Rule Changes, as Modified by Amendments 
No. 1

    The Exchanges have proposed to harmonize the manner by which they 
re-open trading in a security listed on other national securities 
exchanges if the trading halt, suspension or pause in that security is 
lifted during one of the Exchanges' extra-hours sessions.\5\ The 
Exchanges' respective processes for the re-opening of trading in 
securities listed on other national security exchanges under such 
circumstances vary depending on whether the securities are listed on 
the New York Stock Exchange LLC (``NYSE'') (``Tape A''), or are listed 
on exchanges other than NYSE (``Tape B'' and ``Tape C'').\6\ 
Specifically, Tape A securities that resume trading after a halt, 
suspension, or pause during an extra-hours trading session will be 
automatically re-opened pursuant each of the Exchanges' contingent 
opening procedures, as described in each of the Exchanges' rules,\7\ 
after one second has passed following an Exchange's receipt of the 
first NBBO following such resumption of trading.\8\ As a result, when 
the Exchanges re-open Tape A securities during their respective extra-
hours sessions today, orders are handled in time sequence and placed on 
each Exchange's book, routed, cancelled, or executed in accordance with 
the terms of the order.
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    \5\ Outside of regular trading hours, the Exchanges operate 
certain extra-hours sessions. See CboeBYX Rules 1.5(c), (r), and 
(ee); CboeBZX Rules 1.5(c), (r), and (ee); CboeEDGA Rules 1.5(r), 
(s), and (ii); CboeEDGX Rules 1.5(r), (s), and (ii).
    \6\ The Exchanges state that Tape B securities are those listed 
on exchanges other than NYSE and Nasdaq and Tape C securities are 
those listed on Nasdaq. See Notices, supra note 3.
    \7\ See CboeBYX Rule 11.23(d); CboeBZX Rule 11.24(d); CboeEDGA 
Rule 11.7(d); CboeEDGX Rule 11.7(d).
    \8\ See CboeBYX Rule 11.23(e)(3); CboeBZX Rule 11.24(e)(3); 
CboeEDGA Rule 11.7(e)(3); CboeEDGX Rule 11.7(e)(3).
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    With respect to Tape B and C securities, the Exchanges' rules \9\ 
provide that the re-opening process following the resumption of trading 
after a trading halt, suspension, or pause during each of the 
Exchanges' extra-hours sessions will occur at the midpoint of the: (i) 
First NBBO subsequent to the first reported trade and first two-sided 
quotation on the listing exchange following the resumption of trading 
after a halt, suspension, or pause; or (ii) NBBO when the first two-
sided quotation is published by the listing exchange following the 
resumption of trading after a halt, suspension, or pause if no first 
trade is reported by the listing exchange within one second of 
publication of the first two-sided quotation by the listing exchange.
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    \9\ See CboeBYX Rule 11.23(e)(1); CboeBZX Rule 11.24(e)(1); 
CboeEDGA Rule 11.7(e)(1); CboeEDGX Rule 11.7(e)(1).
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    The Exchanges have proposed to harmonize the different processes 
for re-opening Tape A, and Tape B and C securities during the extra-
hours sessions by: (1) Amending the Exchanges' automated re-opening 
processes for Tape A securities to provide for the execution of orders 
at the midpoint of the NBBO; and (2) eliminating unnecessary 
differences between the process utilized for Tape A securities and the 
process used for Tape B and C securities. Thus, as proposed, each of 
the Exchanges' relevant rules \10\ would provide that during extra-
hours sessions, the re-opening process for Tape A securities will occur 
at the midpoint of the NBBO after one second has passed following the 
Exchange's receipt of the first NBBO following the resumption of 
trading after a halt, suspension, or pause. In addition, the Exchanges 
propose to amend their respective processes for re-opening Tape B and C 
securities to mirror their proposed processes for Tape A securities, 
except that the Exchanges would require the primary listing market to 
have begun quoting a security before it initiates its own re-opening 
process. As amended, each of the Exchanges' rules \11\ would provide 
that, during extra-hours trading sessions, the re-opening process for 
Tape B and C securities will occur at the midpoint of the NBBO after 
one second has passed following the publication of the first two-sided 
quotation by the listing exchange following the resumption of trading 
after a halt, suspension, or pause. The Exchanges have stated that, to 
simplify the re-opening during these timeframes, the Exchanges are not

[[Page 34807]]

proposing to retain a separate trigger that would allow the re-opening 
process to be initiated immediately when the Exchanges receive both a 
two-sided quotation and a trade from the listing exchange.\12\
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    \10\ See proposed rules CboeBYX Rule 11.23(e)(1)(C); CboeBZX 
Rule 11.24(e)(1)(C); CboeEDGA Rule 11.7(e)(1)(C); CboeEDGX Rule 
11.7(e)(1)(C).
    \11\ See proposed rules CboeBYX Rule 11.23(e)(1)(C); CboeBZX 
Rule 11.24(e)(1)(C); CboeEDGA Rule 11.7(e)(1)(C); CboeEDGX Rule 
11.7(e)(1)(C).
    \12\ In addition to these proposed changes to the reopening 
process, the Exchanges also proposed other technical and non-
substantive changes to their rules in order to facilitate the 
substantive changes explained above. See Notices, supra note 3. 
CboeEDGA and CboeEDGX also proposed non-substantive changes to 
conform CboeEDGA Rule 11.7 and CboeEDGX 11.7 to CboeBZX Rule 11.24. 
See CboeEDGA Notice and CboeEDGX Notice, supra note 3.
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III. Discussion and Commission's Findings

    The Commission has carefully reviewed the proposed rule changes, as 
modified by Amendments No. 1, and finds that they are consistent with 
the requirements of the Act and the rules and regulations thereunder 
applicable to a national securities exchange, in particular, the 
requirements of Section 6(b) of the Act and the rules and regulations 
thereunder.\13\ Specifically, the Commission finds that the proposals, 
as modified by Amendments No. 1, are consistent with Section 6(b)(5) of 
the Act,\14\ which requires, among other things, that the rules of a 
national securities exchange be designed to prevent fraudulent and 
manipulative acts and practices, 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.
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    \13\ 15 U.S.C. 78f. In approving these proposed rule changes, 
the Commission has considered the proposed rule changes' impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
    \14\ 15 U.S.C. 78f(b)(5).
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    As described above, the Exchanges seek to harmonize their 
respective processes for re-opening trading in a security when a 
trading halt, suspension, or pause in that security is lifted and 
trading in that security resumes outside regular trading hours. In the 
Exchanges' view, applying their midpoint re-opening procedures in these 
circumstances, regardless of whether a security is a Tape A, B, or C 
security, would: (1) Provide greater consistency with the process 
currently used by the each of the Exchanges in other circumstances, (2) 
provide greater certainty as to how orders will be handled across 
security types, and (3) potentially provide executions that better 
reflect the applicable market for the security.\15\ The Exchanges have 
stated that the proposal to not retain a separate trigger whereby the 
reopening process for Tape B and C securities would be initiated 
immediately when the Exchange receives both a two-sided quotation and a 
trade from the listing exchange would harmonize the reopening process 
with that for Tape A securities, simplify the re-opening process to be 
followed during these timeframes, and ensure that sufficient time is 
provided for the midpoint to accurately reflect the market in those 
securities.\16\
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    \15\ See Notices, supra note 3, and Amendments No. 1, supra note 
4.
    \16\ See Amendments No. 1, supra note 4.
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    The Commission believes that the proposals are reasonably designed 
to facilitate a more orderly and efficient re-opening process following 
the resumption of trading after a trading halt, suspension, or pause 
during each of the Exchanges' extra-hours sessions. By providing a more 
consistent and harmonized approach to each of the Exchanges' re-opening 
procedures, the proposals should promote greater certainty, reduce the 
likelihood of confusion, and facilitate the resumption of orderly 
trading under such circumstances.
    Therefore, the Commission finds that the proposals, as modified by 
Amendments No. 1, are consistent with the Act.

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\17\ that the proposed rule changes (SR-CboeBYX-2021-012, SR-
CboeBZX-2021-035, SR-CboeEDGA-2021-011, and SR-CboeEDGX-2021-025), as 
modified by Amendments No. 1, be, and hereby are, approved.
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    \17\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-13917 Filed 6-29-21; 8:45 am]
BILLING CODE 8011-01-P