
[Federal Register Volume 82, Number 85 (Thursday, May 4, 2017)]
[Notices]
[Pages 20928-20930]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-08970]



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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80549; File No. 4-631]


Joint Industry Plan; Notice of Filing and Immediate Effectiveness 
of the Fourteenth Amendment to the National Market System Plan To 
Address Extraordinary Market Volatility by Bats BZX Exchange, Inc., 
Bats BYX Exchange, Inc., Bats EDGA Exchange, Inc., Bats EDGX Exchange, 
Inc., Chicago Stock Exchange, Inc., Financial Industry Regulatory 
Authority, Inc., Investors Exchange LLC, NASDAQ BX, Inc., NASDAQ PHLX 
LLC, The Nasdaq Stock Market LLC, NYSE National, Inc., New York Stock 
Exchange LLC, NYSE MKT LLC, and NYSE Arca, Inc.

April 28, 2017.

I. Introduction

    On April 13, 2017, NYSE Group, Inc., on behalf of the following 
parties to the National Market System Plan to Address Extraordinary 
Market Volatility (``the Plan''): \1\ Bats BZX Exchange, Inc., Bats BYX 
Exchange, Inc., Bats EDGA Exchange, Inc., Bats EDGX Exchange, Inc., 
Chicago Stock Exchange, Inc., the Financial Industry Regulatory 
Authority, Inc. (``FINRA''), Investors Exchange LLC, NASDAQ BX, Inc., 
NASDAQ PHLX LLC, The NASDAQ Stock Market LLC (``Nasdaq''), New York 
Stock Exchange LLC (``NYSE''), NYSE Arca, Inc., NYSE MKT LLC, and NYSE 
National Inc. (collectively, the ``Participants'') filed with the 
Securities and Exchange Commission (``Commission'') pursuant to Section 
11A(a)(3) of the Securities Exchange Act of 1934 (``Exchange Act'') \2\ 
and Rule 608 thereunder,\3\ a proposal to amend the Plan (``Fourteenth 
Amendment'').\4\ The proposal reflects changes unanimously approved by 
the Participants. The Fourteenth Amendment proposes to change the 
implementation date for the twelfth amendment to the Plan (``Twelfth 
Amendment''), as discussed below. The proposed change does not alter 
the text of the Plan. The Participants are filing the Fourteenth 
Amendment for immediate effectiveness pursuant to Rule 608(b)(3)(iii) 
of Regulation NMS (``Rule 608'') under the Exchange Act.\5\ The 
Commission is publishing this notice to solicit comments from 
interested persons.\6\
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    \1\ On May 31, 2012, the Commission approved the Plan, as 
modified by Amendment No. 1. See Securities Exchange Act Release No. 
67091, 77 FR 33498 (June 6, 2012) (File No. 4-631). On February 20, 
2013, the Commission noticed for immediate effectiveness the Second 
Amendment to the Plan. See Securities Exchange Act Release No. 
68953, 78 FR 13113 (February 26, 2013). On April 3, 2013, the 
Commission approved the Third Amendment to the Plan. See Securities 
Exchange Act Release No. 69287, 78 FR 21483 (April 10, 2013). On 
August 27, 2013, the Commission noticed for immediate effectiveness 
the Fourth Amendment to the Plan. See Securities Exchange Act 
Release No. 70273, 78 FR 54321 (September 3, 2013). On September 26, 
2013, the Commission approved the Fifth Amendment to the Plan. See 
Securities Exchange Act Release No. 70530, 78 FR 60937 (October 2, 
2013). On January 7, 2014, the Commission noticed for immediate 
effectiveness the Sixth Amendment to the Plan. See Securities 
Exchange Act Release No. 71247, 79 FR 2204 (January 13, 2014). On 
April 3, 2014, the Commission approved the Seventh Amendment to the 
Plan. See Securities Exchange Act Release No. 71851, 79 FR 19687 
(April 9, 2014). On February 19, 2015, the Commission approved the 
Eight Amendment to the Plan. See Securities Exchange Act Release No. 
74323, 80 FR 10169 (February 25, 2015). On October 22, 2015, the 
Commission approved the Ninth Amendment to the Plan. See Securities 
Exchange Act Release No. 76244, 80 FR 66099 (October 28, 2015). On 
April 21, 2016, the Commission approved the Tenth Amendment to the 
Plan. See Securities Exchange Act Release No. 77679, 81 FR 24908 
(April 27, 2016). On August 26, 2016, the Commission noticed for 
immediate effectiveness the Eleventh Amendment to the Plan. See 
Securities Exchange Act Release No. 78703, 81 FR 60397 (September 1, 
2016). On January 19, 2017, the Commission approved the Twelfth 
Amendment to the Plan. See Securities Exchange Act Release No. 
79845, 82 FR 8551 (January 26, 2017). On April 13, 2017, the 
Commission approved the Thirteenth Amendment to the Plan. See 
Securities Exchange Act Release No. 80455, 82 FR 18519 (April 19, 
2017).
    \2\ 15 U.S.C 78k-1(a)(3).
    \3\ 17 CFR 242.608.
    \4\ See Letter from Elizabeth King, General Counsel and 
Corporate Secretary, NYSE, to Brent Fields, Secretary, Commission, 
dated April 12, 2017 (``Transmittal Letter'').
    \5\ 17 CFR 242.608.
    \6\ Id.
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II. Description of the Plan

    Set forth in this Section II is the statement of the purpose and 
summary of the Fourteenth Amendment, along with the information 
required by Rule 608(a)(4) and (5) under the Exchange Act,\7\ 
substantially prepared and submitted by the Participants to the 
Commission.\8\
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    \7\ See 17 CFR 242.608(a)(4) and (a)(5).
    \8\ See Transmittal Letter, supra note 4.
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A. Statement of Purpose and Summary of the Plan Amendment

    The Participants filed the Plan on April 5, 2011, to create a 
market-wide limit up-limit down mechanism intended to address 
extraordinary market volatility in NMS Stocks, as defined in Rule 
600(b)(47) of Regulation NMS under the Exchange Act. The Plan sets 
forth procedures that provide for market-wide limit up-limit down 
requirements that would prevent trades in individual NMS Stocks from 
occurring outside of the specified price bands. These limit up-limit 
down requirements are coupled with Trading Pauses,\9\ as defined in 
Section I(Y) of the Plan, to accommodate more fundamental price moves. 
In particular, the Participants adopted this Plan to address the type 
of sudden price movements that the market experienced on the afternoon 
of May 6, 2010.
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    \9\ Unless otherwise specified, the terms used herein have the 
same meaning as set forth in the Plan.
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    As set forth in more detail in the Plan, all trading centers in NMS 
Stocks, including both those operated by Participants and those 
operated by members of Participants, shall establish, maintain, and 
enforce written policies and procedures that are reasonably designed to 
comply with the limit up-limit down requirements specified in the Plan. 
More specifically, the single plan processor responsible for 
consolidation of information for an NMS Stock pursuant to Rule 603(b) 
of Regulation NMS under the Exchange Act will be responsible for 
calculating and disseminating a lower price band and upper price band, 
as provided for in Section V of the Plan. Section VI of the Plan sets 
forth the limit up-limit down requirements of the Plan, and in 
particular, that all trading centers in NMS Stocks, including both 
those operated by Participants and those operated by members of 
Participants, shall establish, maintain, and enforce written policies 
and procedures that are reasonably designed to prevent trades at prices 
that are below the lower price band or above the upper price band for 
an NMS Stock, consistent with the Plan.
    The changes approved by the Commission in the Twelfth Amendment 
provide that a Trading Pause will continue until the Primary Listing 
Exchange has reopened trading using its established reopening 
procedures, and to require that trading centers not resume trading in 
an NMS Stock following a Trading Pause without Price Bands for such NMS 
Stock. In the Statement of Purpose filed with the Twelfth Amendment, 
the Participants stated that the changes described in the Twelfth 
Amendment would be implemented no later than six months after approval 
of that amendment. Based on the date of the approval order of the 
Twelfth Amendment, the Twelfth Amendment must be implemented no later 
than July 19, 2017. Because the SIP technology changes necessary to 
implement the Twelfth Amendment will not be ready by July 19, 2017, the 
Participants are filing this proposal to change the implementation date 
for the changes to the Plan set forth in the Twelfth Amendment to 
September 30, 2017.

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    In addition, the Primary Listing Exchanges will not be ready to 
implement the changes to their automated reopening processes following 
a Trading Pause, which were made pursuant to exchange rule filings in 
conjunction with the Twelfth Amendment, by July 19, 2017. To provide 
for a standardized approach that would allow for extensions of a 
Trading Pause by the Primary Listing Exchange if equilibrium cannot be 
met to establish a Reopening Price within specified parameters 
(``automated reopening changes''), the Primary Listing Exchanges 
amended their rules for automated reopenings.\10\ The Primary Listing 
Exchanges anticipate implementing the automated reopening changes in 
the third quarter of 2017, assuming that the Processors have 
implemented their changes and each Primary Listing Exchange is able to 
implement their proposed rule changes simultaneously.\11\
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    \10\ See Securities Exchange Act Release Nos. 79846 (January 19, 
2017), 82 FR 8548 (January 26, 2017) (SR-NYSEArca-2016-130) 
(Approval Order); 79884 (January 26, 2017), 82 FR 8968 (February 1, 
2017) (SR-BatsBZX-2016-61) (Approval Order); 79876 (January 25, 
2017), 82 FR 8888 (January 31, 2017) (SR-Nasdaq-2016-131) (Approval 
Order).
    \11\ In other words, the Participants expect that both the 
changes pursuant to the Twelfth Amendment and the Primary Listing 
Exchange automated reopening changes would become operative at the 
same time.
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    Accordingly, both to provide time to support the technology changes 
for the Twelfth Amendment and to align the implementation date of the 
Twelfth Amendment with the implementation timeline for the automated 
reopening changes by the Primary Listing Exchanges, the Participants 
propose to change the implementation date for the changes in the 
Twelfth Amendment to no later than the end of the third quarter of 
2017.\12\ This proposed change does not require any changes to the text 
of the Plan.
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    \12\ The Participants anticipate that the Twelfth Amendment 
changes will be implemented in August 2017. However, to align the 
implementation schedule with the automated reopening changes, the 
Participants propose to specify the same implementation time frame 
as the Primary Listing Exchanges have proposed for the automated 
reopening changes. See supra note 10.
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    The Participants believe that the proposed modification to the 
implementation schedule is technical and ministerial in nature because 
it simply extends the implementation period for the Twelfth Amendment 
and does not change any substantive elements of the Plan.\13\ The 
Participants believe that the proposal to extend the implementation 
schedule is consistent with the goal of the Twelfth Amendment, which is 
to reduce the potential for sequential Trading Pauses in an NMS Stock 
by centralizing the reopening process through the Primary Listing 
Exchanges, because it would align the implementation schedule for the 
Twelfth Amendment with the implementation schedule for the automated 
reopening changes. The proposed amendment would therefore protect 
investors and the public interest and is appropriate to the maintenance 
of fair and orderly markets.
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    \13\ See, e.g., Securities Exchange Act Release Nos. 70273 
(amending Section VIII.B of the Plan to establish a new 
implementation schedule for Phase II of the Plan) and 71247 
(amending Section VIII.B of the Plan to establish a new 
implementation schedule for Phase II of the Plan), supra note 1.
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B. Governing or Constituent Documents

    The governing documents of the Processor, as defined in Section 
I(P) of the Plan, will not be affected by the Plan, but once the Plan 
is implemented, the Processor's obligations will change, as set forth 
in detail in the Plan.

C. Implementation of Plan

    The initial date of the Plan operations was April 8, 2013.

D. Development and Implementation Phases

    The Plan was initially implemented as a one-year pilot program in 
two Phases, consistent with Section VIII of the Plan: Phase I of Plan 
implementation began on April 8, 2013 and was completed on May 3, 2013. 
Implementation of Phase II of the Plan began on August 5, 2013 and was 
completed on February 24, 2014. The tenth amendment to the Plan was 
implemented on July 18, 2016. Pursuant to the thirteenth amendment to 
the Plan, the pilot period of the Plan was extended until April 16, 
2018.\14\ Currently, the Participants must implement the Twelfth 
Amendment no later than July 19, 2017. Pursuant to this proposed 
amendment, the Participants propose to extend the time frame to 
implement the Twelfth Amendment to no later than the end of the third 
quarter of 2017.
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    \14\ See Securities Exchange Act Release No. 80455 (order 
approving the thirteenth amendment to the Plan), supra note 1.
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E. Analysis of Impact on Competition

    The proposed Plan does not impose any burden on competition that is 
not necessary or appropriate in furtherance of the purposes of the 
Exchange Act. The Participants do not believe that the proposed Plan 
introduces terms that are unreasonably discriminatory for the purposes 
of Section 11A(c)(1)(D) of the Exchange Act.

F. Written Understanding or Agreements Relating to Interpretation of, 
or Participation in, Plan

    The Participants have no written understandings or agreements 
relating to interpretation of the Plan. Section II(C) of the Plan sets 
forth how any entity registered as a national securities exchange or 
national securities association may become a Participant.

G. Approval of Amendment of the Plan

    Each of the Plan's Participants has executed a written amended 
Plan.

H. Terms and Conditions of Access

    Section II(C) of the Plan provides that any entity registered as a 
national securities exchange or national securities association under 
the Exchange Act may become a Participant by: (1) Becoming a 
participant in the applicable Market Data Plans, as defined in Section 
I(F) of the Plan; (2) executing a copy of the Plan, as then in effect; 
(3) providing each then-current Participant with a copy of such 
executed Plan; and (4) effecting an amendment to the Plan as specified 
in Section III(B) of the Plan.

I. Method of Determination and Imposition, and Amount of, Fees and 
Charges

    Not applicable.

J. Method and Frequency of Processor Evaluation

    Not applicable.

K. Dispute Resolution

    Section III(C) of the Plan provides that each Participant shall 
designate an individual to represent the Participant as a member of an 
Operating Committee. No later than the initial date of the Plan, the 
Operating Committee shall designate one member of the Operating 
Committee to act as the Chair of the Operating Committee. Any 
recommendation for an amendment to the Plan from the Operating 
Committee that receives an affirmative vote of at least two-thirds of 
the Participants, but is less than unanimous, shall be submitted to the 
Commission as a request for an amendment to the Plan initiated by the 
Commission under Rule 608.
    On April 12, 2017, the Operating Committee, duly constituted and 
chaired by Mr. Robert Books of Bats, met and voted unanimously to amend 
the Plan as set forth herein in accordance with Section III(C) of the 
Plan. The Plan Advisory Committee was notified in connection with the 
Fourteenth Amendment and was in favor.

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III. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the amendment is 
consistent with the Exchange Act and the rules thereunder. 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 rule-comments@sec.gov. Please include 
File Number 4-631 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number 4-631.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 Web site (http://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed plan amendment that are filed 
with the Commission, and all written communications relating to the 
amendment 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 Web site 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 such filing also will be available for inspection 
and copying at the Participants' offices. All comments received will be 
posted without change; the Commission does not edit personal 
identifying information from submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number 4-631 and should be submitted on or before 
May 25, 2017.

    By the Commission.
Eduardo Aleman,
Assistant Secretary.
[FR Doc. 2017-08970 Filed 5-3-17; 8:45 am]
BILLING CODE 8011-01-P


