Federal Register / Vol. 87, No. 55 / Tuesday, March 22, 2022 / Notices 16281 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 67090 

(May 31, 2012), 77 FR 33531 (June 6, 2012) (SR– 

BATS–2011–038; SR–BYX–2011–025; SR–BX– 

2011–068; SR–CBOE–2011–087; SR–C2–2011–024; 

SR–CHX–2011–30; SR–EDGA–2011–31; SR–EDGX– 

2011–30; SR–FINRA–2011–054; SR–ISE–2011–61; 

SR–NASDAQ–2011–131; SR–NSX–2011–11; SR– 

NYSE–2011–48; SR–NYSEAmex–2011–73; SR– 

NYSEArca–2011–68; SR–Phlx–2011–129) (‘‘Pilot 

Rules Approval Order’’). 

4The rules of the equity options exchanges 

similarly provide for a halt in trading if the cash 

equities exchanges invoke a MWCB Halt. See, e.g., 

Options 3, Section 9(e). 

5See Securities Exchange Act Release No. 67091 

(May 31, 2012), 77 FR 33498 (June 6, 2012). The 

LULD Plan provides a mechanism to address 

extraordinary market volatility in individual 

securities. 

6See Securities Exchange Act Release Nos. 67090 

(May 31, 2012), 77 FR 33531 (June 6, 2012) (SR– 

Phlx–2011–129) (Approval Order); and 68816 

(February 1, 2013), 78 FR 9760 (February 11, 2013) 

(SR–Phlx–2013–11) (Notice of Filing and Immediate 

Effectiveness of Proposed Rule Change to Delay the 

Operative Date). 

7See Securities Exchange Act Release No. 85623 

(April 11, 2019), 84 FR 16086 (April 17, 2019). 

8See Securities Exchange Act Release No. 85579 

(April 9, 2019), 84 FR 15258 (April 15, 2019) (SR– 

Phlx–2019–12). 

9See Securities Exchange Act Release No. 87206 

(October 3, 2019), 84 FR 54234 (October 9, 2019) 

(SR–Phlx–2019–40). 

10See Securities Exchange Act Release No. 90153 

(October 9, 2020), 85 FR 65451 (October 15, 2020) 

(SR–Phlx–2020–46). 

11See Securities Exchange Act Release No. 93281 

(October 8, 2021), 86 FR 57216 (October 14, 2021) 

(SR–Phlx–2021–60). 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–94435; File No. SR–Phlx– 

2022–11] 

Self-Regulatory Organizations; Nasdaq 

PHLX LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Extend the MarketWide Circuit Breaker Pilot to April 18, 

2022 

March 16, 2022. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on March 10, 

2022, Nasdaq PHLX LLC (‘‘Phlx’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission (‘‘SEC’’ or 

‘‘Commission’’) the proposed rule 

change as described in Items I and II, 

below, which Items have been prepared 

by the Exchange. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

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 the market-wide circuit 

breaker in Equity 4, Rule 3101 to the 

close of business on April 18, 2022. 

The text of the proposed rule change 

is available on the Exchange’s website at 

https://listingcenter.nasdaq.com/ 

rulebook/phlx/rules, 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 

Exchange 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 these 

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 aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to extend the 

pilot related to the market-wide circuit 

breaker in Equity 4, Rule 3101 to the 

close of business on April 18, 2022. 

Background 

The market-wide circuit breaker 

(‘‘MWCB’’) rules, including the 

Exchange’s Rule 3101 under Equity 4, 

provide an important, automatic 

mechanism that is invoked to promote 

stability and investor confidence during 

periods of significant stress when cash 

equities securities experience extreme 

market-wide declines. The MWCB rules 

are designed to slow the effects of 

extreme price declines through 

coordinated trading halts across both 

cash equity and equity options 

securities markets. 

The cash equities rules governing 

MWCBs were first adopted in 1988 and, 

in 2012, all U.S. cash equity exchanges 

and FINRA amended their cash equities 

uniform rules on a pilot basis (the ‘‘Pilot 

Rules,’’ i.e., Equity 4, Rule 3101).3 The 

Pilot Rules currently provide for trading 

halts in all cash equity securities during 

a severe market decline as measured by 

a single-day decline in the S&P 500 

Index (‘‘SPX’’).4 Under the Pilot Rules, 

a market-wide trading halt will be 

triggered if SPX declines in price by 

specified percentages from the prior 

day’s closing price of that index. 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 halt 

after 9:30 a.m. and before 3:25 p.m. 

would halt market-wide trading for 15 

minutes, while a similar market decline 

at or after 3:25 p.m. would not halt 

market-wide trading. (Level 1 and Level 

2 halts may occur only once a day.) A 

market decline that triggers a Level 3 

halt at any time during the trading day 

would halt market-wide trading for the 

remainder of the trading day. 

The Commission approved the Pilot 

Rules, 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’’),5

including any extensions to the pilot 

period for the LULD Plan.6 In April 

2019, the Commission approved an 

amendment to the LULD Plan for it to 

operate on a permanent, rather than 

pilot, basis.7 In light of the proposal to 

make the LULD Plan permanent, the 

Exchange amended Equity 4, Rule 3101 

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, 2019.8 The 

Exchange subsequently filed to extend 

the Pilot Rules’ effectiveness for an 

additional year to the close of business 

on October 18, 2020,9 and later, on 

October 18, 2021.10 The Exchange last 

extended the pilot to the close of 

business on March 18, 2022.11

The Exchange now proposes to amend 

Equity 4, Rule 3101 to extend the pilot 

to the close of business on April 18, 

2022. This filing does not propose any 

substantive or additional changes to 

Rule 3101. 

The MWCB Task Force and the March 

2020 MWCB Events 

In late 2019, Commission staff 

requested the formation of a MWCB 

Task Force (‘‘Task Force’’) to evaluate 

the operation and design of the MWCB 

mechanism. The Task Force included 

representatives from the SROs, the 

Commission, CME, the Commodity 

Futures Trading Commission (‘‘CFTC’’), 

and the securities industry and 

conducted several organizational 

meetings in December 2019 and January 

2020. 

In Spring 2020, the MWCB 

mechanism proved itself to be an 

effective tool for protecting markets 

through turbulent times. In March 2020, 

at the outset of the worldwide COVID– 

19 pandemic, U.S. equities markets 

experienced four MWCB Level 1 halts, 

on March 9, 12, 16, and 18, 2020. In 

each instance, the markets halted as 


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16282 Federal Register / Vol. 87, No. 55 / Tuesday, March 22, 2022 / Notices 

12See https://www.cmegroup.com/content/dam/ 

cmegroup/market-regulation/rule-filings/2020/9/20- 

392_1.pdf; https://www.cmegroup.com/content/ 

dam/cmegroup/market-regulation/rule-filings/2020/ 

9/20-392_2.pdf. 

13See Report of the Market-Wide Circuit Breaker 

(‘‘MWCB’’) Working Group Regarding the March 

2020 MWCB Events, submitted March 31, 2021 (the 

‘‘Study’’), available at https://www.nyse.com/ 

publicdocs/nyse/markets/nyse/Report_of_the_

Market-Wide_Circuit_Breaker_Working_Group.pdf. 

14See id. at 46. 

15See Securities Exchange Act Release No. 92428 

(July 16, 2021), 86 FR 38776 (July 22, 2021) (SR– 

NYSE–2021–40). 

16See Securities Exchange Act Release No. 

92785A (August 27, 2021), 86 FR 50202 (September 

7, 2021) (SR–NYSE–2021–40). 

17See Securities Exchange Act Release No. 93212 

(September 30, 2021), 86 FR 55066 (October 5, 

2021) (SR–NYSE–2021–40). 

18See Securities Exchange Act Release No. 93933 

(January 7, 2022), 87 FR 2189 (January 13, 2022) 

(SR–NYSE–2021–40). 

19Partial Amendment No. 1 is available at: 

https://www.sec.gov/comments/sr-nyse-2021-40/ 

srnyse202140-20117319-268536.pdf. 

20 15 U.S.C. 78f(b). 

21 15 U.S.C. 78f(b)(5). 

intended upon a 7% drop in the S&P 

500 Index, and resumed as intended 15 

minutes later. 

In response to these events, in the 

Spring and Summer of 2020, the Task 

Force held ten meetings that were 

attended by Commission staff, with the 

goal of performing an expedited review 

of the March 2020 halts and identifying 

any areas where the MWCB mechanism 

had not worked properly. Given the risk 

of unintended consequences, the Task 

Force did not recommend changes that 

were not rooted in a noted deficiency. 

The Task Force recommended creating 

a process for a backup reference price in 

the event that SPX were to become 

unavailable, and enhancing functional 

MWCB testing. The Task Force also 

asked CME to consider modifying its 

rules to enter into a limit-down state in 

the futures pre-market after a 7% 

decline instead of 5%. CME made the 

requested change, which became 

effective on October 12, 2020.12

The MWCB Working Group’s Study 

On September 17, 2020, the Director 

of the Commission’s Division of Trading 

and Markets asked the SROs to conduct 

a more complete study of the design and 

operation of the Pilot Rules and the 

LULD Plan during the period of 

volatility in the Spring of 2020. 

In response to the request, the SROs 

created a MWCB ‘‘Working Group’’ 

composed of SRO representatives and 

industry advisers that included 

members of the advisory committees to 

both the LULD Plan and the NMS Plans 

governing the collection, consolidation, 

and dissemination of last-sale 

transaction reports and quotations in 

NMS Stocks. The Working Group met 

regularly from September 2020 through 

March 2021 to consider the 

Commission’s request, review data, and 

compile its study. The Working Group’s 

efforts in this respect incorporated and 

built on the work of the MWCB Task 

Force. 

The Working Group submitted its 

study to the Commission on March 31, 

2021 (the ‘‘Study’’).13 In addition to a 

timeline of the MWCB events in March 

2020, the Study includes a summary of 

the analysis and recommendations of 

the MWCB Task Force; an evaluation of 

the operation of the Pilot Rules during 

the March 2020 events; an evaluation of 

the design of the current MWCB system; 

and the Working Group’s conclusions 

and recommendations. 

In the Study, the Working Group 

concluded: (1) The MWCB mechanism 

set out in the Pilot Rules worked as 

intended during the March 2020 events; 

(2) the MWCB halts triggered in March 

2020 appear to have had the intended 

effect of calming volatility in the 

market, without causing harm; (3) the 

design of the MWCB mechanism with 

respect to reference value (SPX), trigger 

levels (7%/13%/20%), and halt times 

(15 minutes) is appropriate; (4) the 

change implemented in Amendment 10 

to the Plan to Address Extraordinary 

Market Volatility (the ‘‘Limit Up/Limit 

Down Plan’’ or ‘‘LULD Plan’’) did not 

likely have any negative impact on 

MWCB functionality; and (5) no changes 

should be made to the mechanism to 

prevent the market from halting shortly 

after the opening of regular trading 

hours at 9:30 a.m. 

In light of the foregoing conclusions, 

the Working Group also made several 

recommendations, including that the 

Pilot Rules should be permanent 

without any changes.14

Proposal To Extend the Operation of the 

Pilot Rules Pending the Commission’s 

Consideration of the Exchange’s Filing 

To Make the Pilot Rules Permanent 

On July 16, 2021, the New York Stock 

Exchange (‘‘NYSE’’) proposed a rule 

change to make the Pilot Rules 

permanent, consistent with the Working 

Group’s recommendations.15 On August 

27, 2021, the Commission extended its 

time to consider the proposed rule 

change to October 20, 2021.16 On 

September 30, 2021, the Commission 

initiated proceedings to determine 

whether to approve or disapprove the 

proposed rule change by January 18, 

2022.17 On January 7, 2022, the 

Commission extended its time to issue 

an order approving or disapproving the 

proposed rule change, designating 

March 19, 2022 as the date by which the 

Commission would either approve or 

disapprove the proposed rule change.18

On February 18, 2022, NYSE filed 

Partial Amendment No. 1 to SR–NYSE– 

2021–40.19 The Exchange now proposes 

to extend the expiration date of the Pilot 

Rules to the end of business on April 18, 

2022. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act,20 in general, and furthers the 

objectives of Section 6(b)(5) of the Act,21

in particular, in that it is designed 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. The 

market-wide circuit breaker mechanism 

under Rule 3101 is 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. Extending the market-wide 

circuit breaker pilot for an additional 

month would ensure the continued, 

uninterrupted operation of a consistent 

mechanism to halt trading across the 

U.S. markets while the Commission 

reviews the Exchange’s proposed rule 

change to make the Pilot Rules 

permanent. 

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. 

Based on the foregoing, the Exchange 

believes the benefits to market 

participants from Pilot Rules should 

continue on a pilot basis because they 

will promote fair and orderly markets 

and protect investors and the public 

interest. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition not 

necessary or appropriate in furtherance 

of the purposes of the Act because the 

proposal would ensure the continued, 

uninterrupted operation of a consistent 

mechanism to halt trading across the 

U.S. markets while the Commission 

reviews the Exchange’s proposed rule 

change to make the Pilot Rules 

permanent. 

Further, the Exchange understands 

that FINRA and other national securities 


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Federal Register / Vol. 87, No. 55 / Tuesday, March 22, 2022 / Notices 16283 

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 requires a self-regulatory organization to give the 

Commission written notice of its intent to file a 

proposed rule change under that subsection at least 

five business days prior to the date of filing, or such 

shorter time as designated by the Commission. The 

Commission has waived this requirement. 

26 17 CFR 240.19b–4(f)(6). 

27 17 CFR 240.19b–4(f)(6)(iii). 

28For 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). 

29 15 U.S.C. 78s(b)(2)(B). 

30 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

exchanges will file proposals to extend 

their rules regarding the market-wide 

circuit breaker pilot. 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 either 

solicited or received. 

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 

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 

prior to 30 days from the date on which 

it was filed, or such shorter time as the 

Commission may designate, if 

consistent with the protection of 

investors and the public interest, the 

proposed rule change has become 

effective pursuant to Section 19(b)(3)(A) 

of the Act 24 and Rule 19b–4(f)(6)(iii) 

thereunder.25

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. 

Extending the Pilot Rules’ effectiveness 

to the close of business on April 18, 

2022 will extend the protections 

provided by the Pilot Rules, which 

would otherwise expire in less than 30 

days. Waiver of the operative delay 

would therefore permit uninterrupted 

continuation of the MWCB pilot while 

the Commission reviews the NYSE’s 

proposed rule change to make the Pilot 

Rules permanent. Therefore, the 

Commission hereby waives the 30-day 

operative delay and designates the 

proposed rule change as operative upon 

filing.28

At any time within 60 days of the 

filing of such 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 

under Section 19(b)(2)(B) 29 of the Act to 

determine whether the proposed rule 

change 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 rule-comments@

sec.gov. Please include File Number SR– 

Phlx–2022–11 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–Phlx–2022–11. 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–Phlx–2022–11 and should 

be submitted on or before April 12, 

2022. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.30

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–05984 Filed 3–21–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–94433; File No. SR– 

NASDAQ–2022–026] 

Self-Regulatory Organizations; The 

Nasdaq Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Extend the 

Market-Wide Circuit Breaker Pilot to 

April 18, 2022 

March 16, 2022. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on March 10, 

2022, The Nasdaq Stock Market LLC 

(‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘SEC’’ or ‘‘Commission’’) the proposed 

rule change as described in Items I and 

II, below, which Items have been 

prepared by the Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

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 the market-wide circuit 

breaker in Equity 4, Rule 4121 to the 

close of business on April 18, 2022. 


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