[Federal Register Volume 87, Number 140 (Friday, July 22, 2022)]
[Notices]
[Pages 43924-43926]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-15661]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-95306; File No. SR-NYSENAT-2022-13]


Self-Regulatory Organizations; NYSE National, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Extend 
the Current Pilot Program Related to Rule 7.10 (Clearly Erroneous 
Executions)

July 18, 2022.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given 
that, on July 13, 2022, 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 current pilot program related 
to Rule 7.10 (Clearly Erroneous Executions) to the close of business on 
October 20, 2022. 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
    The purpose of the proposed rule change is to extend the current 
pilot program related to Rule 7.10 (Clearly Erroneous Executions) to 
the close of business on October 20, 2022. The pilot program is 
currently due to expire on July 20, 2022.
    On September 10, 2010, the Commission approved, on a pilot basis, 
changes to Rule 11.19 (Clearly Erroneous Executions) that, among other 
things: (i) provided for uniform treatment of clearly erroneous 
execution reviews in multi-stock events involving twenty or more 
securities; and (ii) reduced the ability of the Exchange to deviate 
from the objective standards set forth in the rule.\4\ In 2013, the 
Exchange adopted a provision designed to address the operation of the 
Plan.\5\ Finally, in 2014, the Exchange adopted two additional 
provisions providing that: (i) a series of transactions in a particular 
security on one or more trading days may be viewed as one event if all 
such transactions were effected based on the same fundamentally 
incorrect or grossly misinterpreted issuance information resulting in a 
severe valuation error for all such transactions; and (ii) in the event 
of any disruption or malfunction in the operation of the electronic 
communications and trading facilities of an Exchange, another SRO, or 
responsible single plan processor in connection with the transmittal or 
receipt of a trading halt, an Officer, acting on his or her own motion, 
shall nullify any transaction that occurs after a trading halt has been 
declared by the primary listing market for a security and before such 
trading halt has officially ended according to the primary listing 
market.\6\ Rule 11.19 is no longer applicable to any securities that 
trade on the Exchange and has been replaced with Rule 7.10, which is 
substantively identical to Rule 11.19.\7\
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    \4\ See Securities Exchange Act Release No. 62886 (Sept. 10, 
2010), 75 FR 56613 (Sept. 16, 2010) (SR-NSX-2010-07).
    \5\ See Securities Exchange Act Release No. 68803 (Feb. 1, 
2013), 78 FR 9078 (Feb. 7, 2013) (SR-NSX-2013-06).
    \6\ See Securities Exchange Act Release No. 72434 (June 19, 
2014), 79 FR 36110 (June 25, 2014) (SR-NSX-2014-08).
    \7\ See Securities Exchange Act Release No. 83289 (May 17, 
2018), 83 FR 23968 (May 23, 2018) (SR-NYSENAT-2018-02).
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    These changes were originally scheduled to operate for a pilot 
period to coincide with the pilot period for the Plan to Address 
Extraordinary Market Volatility (the ``Limit Up-Limit Down Plan'' or 
``LULD Plan''),\8\ including any extensions to the pilot period for the 
LULD Plan.\9\ In April 2019, the Commission approved an amendment to 
the LULD Plan for it to operate on a permanent, rather than pilot, 
basis.\10\ In light of that change, the Exchange amended Rule 7.10 to 
untie the pilot program's effectiveness from that of the LULD Plan and 
to extend the pilot's effectiveness to the close of business on October 
18, 2019.\11\
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    \8\ See Securities Exchange Act Release No. 67091 (May 31, 
2012), 77 FR 33498 (June 6, 2012) (the ``Limit Up-Limit Down 
Release'').
    \9\ See Securities Exchange Act Release No. 71797 (March 25, 
2014), 79 FR 18108 (March 31, 2014) (SR-NSX-2014-07).
    \10\ See Securities Exchange Act Release No. 85623 (April 11, 
2019), 84 FR 16086 (April 17, 2019) (approving Eighteenth Amendment 
to LULD Plan).
    \11\ See Securities Exchange Act Release No. 85522 (April 5, 
2019), 84 FR 14704 (April 11, 2019) (SR-NYSENAT-2019-07).

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[[Page 43925]]

The Exchange later amended Rule 7.10 to extend the pilot's 
effectiveness to the close of business on April 20, 2020,\12\ October 
20, 2020,\13\ April 20, 2021,\14\ October 20, 2021,\15\ April 20, 
2022,\16\ and July 20, 2022.\17\
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    \12\ See Securities Exchange Act Release No. 87352 (October 18, 
2019), 84 FR 57063 (October 24, 2019) (SR-NYSENAT-2019-24).
    \13\ See Securities Exchange Act Release No. 88593 (April 8, 
2020), 85 FR 20728 (April 14, 2020) (SR-NYSENAT-2020-13).
    \14\ See Securities Exchange Act Release No. 90157 (October 13, 
2020), 85 FR 66393 (October 19, 2020) (SR-NYSENAT-2020-32).
    \15\ See Securities Exchange Act Release No. 91549 (April 14, 
2021), 86 FR 20548 (April 20, 2021) (SR-NYSENAT-2021-08).
    \16\ See Securities Exchange Act Release No. 93359 (October 15, 
2021), 86 FR 58322 (October 21, 2021) (SR-NYSENAT-2021-20).
    \17\ See Securities Exchange Act Release No. 94638 (April 7, 
2022), 87 FR 21938 (April 13, 2022) (SR-NYSENAT-2022-05).
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    The Exchange now proposes to amend Rule 7.10 to extend the pilot's 
effectiveness for a further three months to the close of business on 
October 20, 2022 while the Commission considers a proposal to make the 
pilot program permanent that has been filed by Cboe BZX.\18\ If the 
pilot period is not either extended, replaced or approved as permanent, 
the prior versions of paragraphs (c), (e)(2), (f), and (g) as described 
in former Rule 11.19 will be in effect, and the provisions of 
paragraphs (i) through (k) shall be null and void.\19\ In such an 
event, the remaining sections of Rule 7.10 would continue to apply to 
all transactions executed on the Exchange. The Exchange understands 
that the other national securities exchanges and Financial Industry 
Regulatory Authority (``FINRA'') will also file similar proposals to 
extend their respective clearly erroneous execution pilot programs, the 
substance of which are identical to Rule 7.10.
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    \18\ See SR-CboeBZX-2022-37 (July 8, 2022).
    \19\ See supra notes 4-6. The prior versions of paragraphs (c), 
(e)(2), (f), and (g) generally provided greater discretion to the 
Exchange with respect to breaking erroneous trades.
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    The Exchange does not propose any additional changes to Rule 7.10. 
Extending the effectiveness of Rule 7.10 for an additional three months 
will provide the Exchange and other self-regulatory organizations 
additional time to consider whether further amendments to the clearly 
erroneous execution rules are appropriate.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the requirements of Section 6(b) of the Act,\20\ in general, and 
Section 6(b)(5) of the Act,\21\ in particular, in that it is designed 
to remove impediments to and perfect the mechanism of a free and open 
market and a national market system, to promote just and equitable 
principles of trade, and, in general, to protect investors and the 
public interest and not to permit unfair discrimination between 
customers, issuers, brokers, or dealers. The Exchange believes that the 
proposed rule change promotes just and equitable principles of trade in 
that it promotes transparency and uniformity across markets concerning 
review of transactions as clearly erroneous. The Exchange believes that 
extending the clearly erroneous execution pilot under Rule 7.10 for an 
additional three months would help assure that the determination of 
whether a clearly erroneous trade has occurred will be based on clear 
and objective criteria, and that the resolution of the incident will 
occur promptly through a transparent process. The proposed rule change 
would also help assure consistent results in handling erroneous trades 
across the U.S. equities markets, thus furthering fair and orderly 
markets, the protection of investors and the public interest. Based on 
the foregoing, the Exchange believes the amended clearly erroneous 
executions rule should continue to be in effect on a pilot basis while 
the Exchange and other self-regulatory organizations consider whether 
further amendments to these rules are appropriate.
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    \20\ 15 U.S.C. 78f(b).
    \21\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change would 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. The proposal would ensure 
the continued, uninterrupted operation of harmonized clearly erroneous 
execution rules across the U.S. equities markets while the Exchange and 
other self-regulatory organizations consider whether further amendments 
to these rules are appropriate. The Exchange understands that the other 
national securities exchanges and FINRA will also file similar 
proposals to extend their respective clearly erroneous execution pilot 
programs. Thus, the proposed rule change will help to ensure 
consistency across market centers without implicating any competitive 
issues.

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

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \22\ and Rule 19b-4(f)(6) thereunder.\23\ 
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 \24\ and subparagraph (f)(6) of 
Rule 19b-4 thereunder.\25\
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    \22\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \23\ 17 CFR 240.19b-4(f)(6).
    \24\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \25\ 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 satisfied this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) \26\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\27\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange asked 
that the Commission waive the 30 day operative delay so that the 
proposal may become operative immediately upon filing. Waiver of the 
30-day operative delay would extend the protections provided by the 
current pilot program, without any changes, while a permanent proposal 
for clearly erroneous execution reviews is being considered.\28\ For 
this reason, the Commission hereby waives the 30-day operative delay 
and designates the proposed rule change as operative upon filing.\29\
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    \26\ 17 CFR 240.19b-4(f)(6).
    \27\ 17 CFR 240.19b-4(f)(6)(iii).
    \28\ See SR-CboeBZX-2022-37 (July 8, 2022).
    \29\ 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

[[Page 43926]]

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-2022-13 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-2022-13. 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 such 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-2022-13 and should be submitted 
on or before August 12, 2022.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\30\
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    \30\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-15661 Filed 7-21-22; 8:45 am]
BILLING CODE 8011-01-P


