[Federal Register Volume 84, Number 72 (Monday, April 15, 2019)]
[Notices]
[Pages 15257-15258]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-07366]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-85572; File No. SR-NYSENAT-2019-08]


Self-Regulatory Organizations; NYSE National, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Extend 
the Pilot Related to Rule 7.12, Trading Halts Due to Extraordinary 
Market Volatility

April 9, 2019.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that on April 5, 2019, NYSE National, Inc. (``NYSE National'' 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\ 15 U.S.C. 78a.
    \3\ 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 proposes to extend the pilot related to Rule 7.12, 
Trading Halts Due to Extraordinary Market Volatility, to the close of 
business on October 18, 2019. The proposed rule change is available on 
the Exchange's website at www.nyse.com, at the principal office of the 
Exchange, and at the Commission's Public Reference Room.

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 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 those 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 parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    Rule 7.12 provides a methodology for determining when to halt 
trading in all stocks due to extraordinary market volatility, i.e., 
market-wide circuit breakers. The market-wide circuit breaker mechanism 
under Rule 7.12 was approved by the Commission to operate on a pilot 
basis, the term of which was to coincide with the pilot period for the 
Plan to Address Extraordinary Market Volatility Pursuant to Rule 608 of 
Regulation NMS (the ``LULD Plan''),\4\ including any extensions to the 
pilot period for the LULD Plan.\5\ The Commission published an 
amendment to the LULD Plan for it to operate on a permanent, rather 
than pilot, basis.\6\
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    \4\ See Securities Exchange Act Release No. 67091 (May 31, 
2012), 77 FR 33498 (June 6, 2012) (the ``Limit Up-Limit Down 
Release'').
    \5\ See Securities Exchange Act Release Nos. 67090 (May 31, 
2012), 77 FR 33531 (June 6, 2012) (SR-NSX-2011-11) (Approval Order); 
and 68779 (January 31, 2013), 78 FR 8638 (February 6, 2013) (SR-NSX-
2013-04) (Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change Delaying the Operative Date of Rule 7.12 to April 8, 
2013).
    \6\ See Securities Exchange Act Release Nos. 84843 (December 18, 
2018), 83 FR 66464 (December 26, 2018) (Amendment No. 18 Proposing 
Release).
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    The Exchange proposes to amend Rule 7.12 to untie the pilot's 
effectiveness from that of the LULD Plan and to extend the pilot's 
effectiveness to the close of business on October 18, 2019. The 
Exchange does not propose any additional changes to Rule 7.12.
    Market-wide circuit breakers under Rule 7.12 provide an important, 
automatic mechanism that is invoked to promote stability and investor 
confidence during a period of significant stress when securities 
markets experience extreme broad-based declines. All U.S. equity 
exchanges have rules relating to market-wide circuit breakers, which 
are designed to slow the effects of extreme price movement through 
coordinated trading halts across securities markets when severe price 
declines reach levels that may exhaust market liquidity. Market-wide 
circuit breakers provide for trading halts in all equities and options 
markets during a severe market decline as measured by a single-day 
decline in the S&P 500 Index.
    Pursuant to Rule 7.12, a market-wide trading halt will be triggered 
if the S&P 500 Index declines in price by specified percentages from 
the prior day's closing price of that index. Currently, the triggers 
are set at three circuit breaker thresholds: 7% (Level 1), 13% (Level 
2) and 20% (Level 3). A market decline that triggers a Level 1 or Level 
2 circuit breaker after 9:30 a.m. ET and before 3:25 p.m. ET would halt 
market-wide trading for 15 minutes, while a similar market decline at 
or after 3:25 p.m. ET would not halt market-wide trading. A market 
decline that triggers a Level 3 circuit breaker, at any time during the 
trading day, would halt market-wide trading for the remainder of the 
trading day.
    The Exchange intends to file a separate proposed rule change with 
the Commission to operate Rule 7.12 on a permanent, rather than pilot, 
basis. Extending the effectiveness of Rule 7.12 to the close of 
business on October 18, 2019 should provide the Commission adequate 
time to consider whether to approve the Exchange's separate proposal to 
operate the market-wide circuit breaker mechanism under Rule 7.12 on a 
permanent basis.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with the 
requirements of Sections 6(b) \7\ and 6(b)(5) of the Act,\8\ in 
particular, because it would promote just and equitable principles of 
trade, remove impediments to, and perfect the mechanism of, a free and 
open market and a national market system. The Exchange also believes 
that the proposed rule change promotes just and equitable principles of 
trade in that it promotes transparency and uniformity across markets 
concerning when and how to halt trading in all stocks as a result of 
extraordinary market volatility. Extending the market-wide circuit 
breaker pilot under Rule 7.12 an additional six months would ensure the 
continued, uninterrupted operation of a consistent mechanism to halt 
trading across the U.S. markets while the Commission considers whether 
to approve the pilot on a permanent basis. The proposed rule change 
would thus promote fair and orderly markets and the protection of 
investors and the public interest. Based on the foregoing, the Exchange 
believes the benefits to market participants from the market-wide 
circuit breaker mechanism under Rule 7.12 should continue on a pilot 
basis while the Commission considers whether to permanently approve 
Rule 7.12.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).

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[[Page 15258]]

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change 
implicates any competitive issues because the proposal would ensure the 
continued, uninterrupted operation of a consistent mechanism to halt 
trading across the U.S. markets while the Commission considers whether 
to permanently approve the market-wide circuit breaker mechanism under 
Rule 7.12. Further, the Exchange understands that FINRA and other 
national securities exchanges will file proposals to extend their rules 
regarding the market-wide circuit breaker pilot so that the market-wide 
circuit breaker mechanism may continue uninterrupted while the 
Commission considers whether to approve its operation on a permanent 
basis.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

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 \9\ and Rule 19b-
4(f)(6) thereunder.\10\
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) \11\ normally 
does not become operative for 30 days after the date of filing. 
However, pursuant to Rule 19b-4(f)(6)(iii),\12\ 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 become operative upon filing. Extending the pilot for an additional 
six months will allow the uninterrupted operation of the existing pilot 
to halt trading across the U.S. markets while the Commission considers 
whether to approve the pilot on a permanent basis. The extension simply 
maintains the status quo. Therefore, the Commission believes that 
waiving the 30-day operative delay is consistent with the protection of 
investors and the public interest. The Commission hereby designates the 
proposed rule change to be operative upon filing.\13\
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    \11\ Id.
    \12\ 17 CFR 240.19b-4(f)(g)(iii).
    \13\ 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 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 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-NYSENAT-2019-08 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-NYSENAT-2019-08. 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-NYSENAT-2019-08, and should be submitted 
on or before May 6, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-07366 Filed 4-12-19; 8:45 am]
BILLING CODE 8011-01-P


