
[Federal Register Volume 80, Number 208 (Wednesday, October 28, 2015)]
[Notices]
[Pages 66099-66100]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-27396]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76244; File No. 4-631]


Joint Industry Plan; Order Approving the Ninth Amendment to the 
National Market System Plan to Address Extraordinary Market Volatility 
by BATS Exchange, Inc., BATS Y-Exchange, Inc., Chicago Board Options 
Exchange, Incorporated, Chicago Stock Exchange, Inc., EDGA Exchange, 
Inc., EDGX Exchange, Inc., Financial Industry Regulatory Authority, 
Inc., NASDAQ OMX BX, Inc., NASDAQ OMX PHLX LLC, The Nasdaq Stock Market 
LLC, National Stock Exchange, Inc., New York Stock Exchange LLC, NYSE 
MKT LLC, and NYSE Arca, Inc.

October 22, 2015.

I. Introduction

    On July 31, 2015, New York Stock Exchange LLC (``NYSE''), on behalf 
of the following parties to the National Market System Plan to Address 
Extraordinary Market Volatility (``Plan''): BATS Exchange, Inc., BATS 
Y-Exchange, Inc., Chicago Board Options Exchange, Incorporated, Chicago 
Stock Exchange, Inc., EDGA Exchange, Inc., EDGX Exchange, Inc., 
Financial Industry Regulatory Authority, Inc., NASDAQ OMX BX, Inc., 
NASDAQ OMX PHLX LLC, the Nasdaq Stock Market LLC, National Stock 
Exchange, Inc., NYSE MKT LLC, and NYSE Arca, Inc. (collectively with 
NYSE, the ``Participants''), filed with the Securities and Exchange 
Commission (``Commission'') pursuant to Section 11A of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 608 thereunder,\2\ a 
proposal to amend the Plan.\3\ The proposal represents the ninth 
amendment to the Plan, and reflects proposed changes unanimously 
approved by the Participants. The amendment was published for comment 
in the Federal Register on September 18, 2015.\4\ The Commission 
received one comment letter regarding the amendment.\5\ This order 
approves the amendment to the Plan.
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    \1\ 15 U.S.C. 78k-1.
    \2\ 17 CFR 242.608.
    \3\ See Letter from Elizabeth King, General Counsel, NYSE, to 
Brent Fields, Secretary, Commission, dated July 31, 2015 
(``Transmittal Letter'').
    \4\ See Securities Exchange Act Release No. 75917 (September 14, 
2015), 80 FR 56515 (``Notice'').
    \5\ See Letter from Donald Bollerman, Head of Markets and Sales, 
IEX, to Brent Fields, Secretary, Commission, dated October 16, 2015 
(``IEX Letter''). IEX did not comment on the proposals set forth in 
the proposed amendment. In its comment letter, IEX suggested that 
the Commission evaluate the operation of the Plan and the experience 
of trading on August 24, 2015 prior to making the Plan permanent. In 
addition, IEX identified other areas for the Commission to consider, 
such as SRO opening procedures, floor-based rules, and imbalance 
information, in relation to trading on August 24, 2015.
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II. Description of the Proposal

    The amendment proposes to extend the pilot period of the Plan from 
October 23, 2015 to April 22, 2016. In addition, on March 30, 2015, 
Chicago Board Options Exchange, Incorporated (``CBOE'') provided 
written notice to the Participants of CBOE's intent to withdraw from 
the Plan. Notice of withdrawal was made pursuant to Section IX of the 
Plan. CBOE became a Participant due to the operation of its facility, 
the CBOE Stock Exchange, LLC (``CBSX''), which engaged in NMS stock 
transactions. The last day of trading on CBSX was April 30, 2014. 
Therefore, because CBOE no longer operates a facility engaged in NMS 
stock transactions, CBOE would have no additional NMS stock data to 
provide nor any reason to avail itself of any further right under the 
Plan. Accordingly, CBOE proposes to be removed from the Plan.

III. Discussion and Commission Findings

    The Commission finds that the amendment is consistent with the 
requirements of the Act and the rules and regulations thereunder. 
Specifically, the Commission finds that the amendment is consistent 
with Section 11A of the Act \6\ and Rule 608 thereunder \7\ in that it 
is appropriate in the public interest, for the protection of investors 
and the maintenance of fair and orderly markets, and that it removes 
impediments to, and perfects the mechanism of, a national market 
system.
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    \6\ 15 U.S.C. 78k-1.
    \7\ 17 CFR 242.608.
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    Pursuant to the Plan, the Participants are required to provide the 
Commission with certain assessments relating to the impact of the Plan 
and the calibration of the Percentage Parameters.\8\ On September 29, 
2014, the Participants submitted a Participant Impact Assessment,\9\ 
which provided the Commission with the Participants' initial 
observations in each area required to be addressed under Appendix B to 
the Plan. On May 28, 2015, the Participants submitted a Supplemental 
Joint Assessment, in which the Participants provided additional 
analysis required under

[[Page 66100]]

Appendix B and recommended that the Plan be adopted on a permanent 
basis with certain modifications.\10\
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    \8\ See Appendix B.III of the Plan.
    \9\ See Joint SROs letter to Brent J. Fields, Secretary, SEC, 
dated September 29, 2014 (``Participant Impact Assessment'').
    \10\ See Letter from Christopher B. Stone, Vice President, 
FINRA, to Brent J. Fields, Secretary, SEC, dated May 28, 2015. The 
Supplemental Joint Assessment is available at http://www.sec.gov/comments/4-631/4631-39.pdf.
    The areas of analysis in Appendix B are intended to capture the 
key measures necessary to assess the impact of the Plan and to 
support recommendations relating to the calibration of the 
Percentage Parameters to help ensure that the stated objectives of 
the Plan are achieved--particularly: liquidity when approaching 
price bands; clearly erroneous trades; the appropriateness of the 
percentage parameters; the attributes of limit states; the impact of 
limit states on the options markets; whether process adjustments are 
needed when entering/exiting a limit state; and the length of 
trading pauses.
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    The Participants propose to amend Section VIII(C) of the Plan to 
extend the pilot period through April 22, 2016, to allow the 
Participants to conduct, and the Commission to consider, further 
analysis of data in support of the recommendations made in the 
Supplemental Joint Assessment. The Participants note that an extension 
of the pilot period would allow the Participants to finalize and file 
with the Commission any proposed amendments to the Plan resulting from 
such recommendations and further analysis.\11\
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    \11\ See Notice, supra note 4 at 56516.
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    The Commission believes that it is appropriate in the public 
interest, for the protection of investors and the maintenance of a fair 
and orderly market to approve the amendment to extend the pilot period 
to April 22, 2016 so that the Participants can conduct further analysis 
to support any recommendations to amend the Plan.\12\ In addition, 
because CBOE no longer operates a facility for NMS Stocks, the 
Commission believes it is appropriate for CBOE to be removed from the 
Plan.
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    \12\ Extending the pilot period will allow the Participants time 
to consider various substantive issues regarding the operation of 
the Plan, such as those raised in the IEX Letter, supra note 5.
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    For the reasons noted above, the Commission finds that the 
amendment to the Plan is consistent with Section 11A of the Act \13\ 
and Rule 608 thereunder.\14\ The Commission reiterates its expectation 
that the Participants will continue to monitor the scope and operation 
of the Plan and study the data produced, and will propose any 
modifications to the Plan that may be necessary or appropriate.\15\
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    \13\ 15 U.S.C. 78k-1.
    \14\ 17 CFR 242.608.
    \15\ See Securities Exchange Act Release No. 67091 (May 31, 
2012), 77 FR 33498 (June 6, 2012).
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IV. Conclusion

    It is therefore ordered, pursuant to Section 11A of the Act \16\ 
and Rule 608 thereunder,\17\ that the Ninth Amendment to the Plan (File 
No. 4-631) be, and it hereby is approved.
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    \16\ 15 U.S.C. 78k-1.
    \17\ 17 CFR 242.608.

    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)(29).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-27396 Filed 10-27-15; 8:45 am]
 BILLING CODE 8011-01-P


