Federal Register / Vol. 87, No. 75 / Tuesday, April 19, 2022 / Notices 23291 

the Commission written notice of its intent to file 

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. 

22 17 CFR 240.19b–4(f)(6). 

23 17 CFR 240.19b–4(f)(6)(iii). 

24 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). 

25 15 U.S.C. 78s(b)(2)(B). 26 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3 17 CFR 240.19b–4(f)(6). 

A proposed rule change filed under 

Rule 19b–4(f)(6) 22 normally does not 

become operative prior to 30 days after 

the date of the filing. However, pursuant 

to Rule 19b–4(f)(6)(iii),23 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 allow the Exchange to 

immediately provide the protections 

included in this proposal in the event of 

a MWCB halt, which is consistent with 

the protection of investors and the 

public interest. Therefore, the 

Commission hereby waives the 30-day 

operative delay and designates the 

proposed rule change as operative upon 

filing.24

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) 25 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– 

BX–2022–007 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–BX–2022–007. 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–BX–2022–007 and 

should be submitted on or before May 

10, 2022. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.26

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–08284 Filed 4–18–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–94710; File No. SR–FINRA– 

2022–010] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Adopt on a Permanent 

Basis the Pilot Program for MarketWide Circuit Breakers in FINRA Rule 

6121.02 (Market-Wide Circuit Breakers 

in NMS Stocks) 

April 13, 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 April 13, 

2022, the Financial Industry Regulatory 

Authority, Inc. (‘‘FINRA’’) 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 FINRA. FINRA has 

designated the proposed rule change as 

constituting a ‘‘non-controversial’’ rule 

change under paragraph (f)(6) of Rule 

19b–4 under the Act,3 which renders 

the proposal effective upon receipt of 

this filing by the Commission. 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 

FINRA is proposing to adopt on a 

permanent basis the pilot program for 

Market-Wide Circuit Breakers in FINRA 

Rule 6121.02 (Market-wide Circuit 

Breakers in NMS Stocks). 

The text of the proposed rule change 

is available on FINRA’s website at 

http://www.finra.org, at the principal 

office of FINRA 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, 

FINRA 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. FINRA has prepared 

summaries, set forth in sections A, B, 


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4See Securities Exchange Act Release No. 94441 

(March 16, 2022), 87 FR 16286 (March 22, 2022) 

(Order Approving File No. SR–NYSE–2021–40). 

The proposed rule change would also make two 

non-substantive, technical changes. First, the 

proposed rule change would update the citation in 

Rule 6121 for the definition of ‘‘NMS stock’’ under 

Regulation NMS from Rule 600(b)(47) to Rule 

600(b)(55) to reflect recent reorganization of the 

defined terms in Rule 600 of Regulation NMS. 

Second, consistent with FINRA rulebook style, the 

proposed rule change would change the reference 

to the ‘‘Securities and Exchange Commission’’ in 

Rule 6121 to the ‘‘SEC.’’ 

5See 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’’). 

6The rules of the equity options exchanges 

similarly provide for a halt in trading if the cash 

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

NYSE Arca Rule 6.65–O(d)(4). 

7See 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. 

8See Securities Exchange Act Release Nos. 67090 

(May 31, 2012), 77 FR 33531 (June 6, 2012) (Order 

Approving File No. SR–FINRA–2011–054); and 

68778 (January 31, 2013), 78 FR 8668 (February 6, 

2013) (Notice of Filing and Immediate Effectiveness 

of File No. SR–FINRA–2013–011). 

9See Securities Exchange Act Release No. 85623 

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

(Order Approving the Eighteenth Amendment to 

the National Market System Plan To Address 

Extraordinary Market Volatility). 

10See Securities Exchange Act Release No. 85547 

(April 8, 2019), 84 FR 14981 (April 12, 2019) 

(Notice of Filing and Immediate Effectiveness of 

File No. SR–FINRA–2019–010). 

11See Securities Exchange Act Release No. 87078 

(September 24, 2019), 84 FR 51669 (September 30, 

2019) (Notice of Filing and Immediate Effectiveness 

of File No. SR–FINRA–2019–023). 

12See Securities Exchange Act Release No. 90160 

(October 13, 2020), 85 FR 67072 (October 21, 2020) 

(Notice of Filing and Immediate Effectiveness of 

File No. SR–FINRA–2020–033). 

13See Securities Exchange Act Release No. 93300 

(October 13, 2021), 86 FR 57867 (October 19, 2021) 

(Notice of Filing and Immediate Effectiveness of 

File No. SR–FINRA–2021–027). 

14See Securities Exchange Act Release No. 

Release No. 94428 (March 16, 2022), 87 FR 16265 

(March 22, 2022) (Notice of Filing and Immediate 

Effectiveness of File No. SR–FINRA–2022–005). 

15See 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. 

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 

On March 16, 2022, the Commission 

approved the proposal of the New York 

Stock Exchange LLC (‘‘NYSE’’) to adopt 

on a permanent basis the pilot program 

for Market-Wide Circuit Breakers 

(‘‘MWCB’’) in NYSE Rule 7.12.4 FINRA 

now proposes to adopt the MWCB pilot 

program as permanent in FINRA Rule 

6121.02. 

The Pilot Rules 

The MWCB rules, including FINRA’s 

Rule 6121.02, 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., Rule 6121.02 (a)–(c)).5 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’’).6 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’’),7

including any extensions to the pilot 

period for the LULD Plan.8 In April 

2019, the Commission approved an 

amendment to the LULD Plan for it to 

operate on a permanent, rather than 

pilot, basis.9 In light of the proposal to 

make the LULD Plan permanent, FINRA 

amended Rule 6121.02 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, 2019.10 FINRA then filed to 

extend the pilot to the close of business 

on October 18, 2020,11 October 18, 

2021,12 March 18, 2022,13 and April 18, 

2022.14

The MWCB Working Group Study 

Beginning in February 2020, at the 

outset of the COVID–19 pandemic, the 

markets experienced increased 

volatility, culminating in four MWCB 

Level 1 halts on March 9, 12, 16, and 18, 

2020. In each instance, pursuant to the 

Pilot Rules, the markets halted as 

intended upon a 7% drop in SPX and 

did not start the process to resume 

trading until the prescribed 15-minute 

halt period ended. 

On September 17, 2020, the Director 

of the Commission’s Division of Trading 

and Markets asked the SROs to conduct 

a study of the design and operation of 

the Pilot Rules and the LULD Plan 

during the period of volatility in March 

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. 

On March 31, 2021, the MWCB 

Working Group submitted its study (the 

‘‘Study’’) to the Commission.15 The 

Study included an evaluation of the 

operation of the Pilot Rules during the 

March 2020 events and an evaluation of 

the design of the current MWCB system. 

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 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 those conclusions, the 

MWCB Working Group also made 

several recommendations, including 


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16See the Study, supra note 15, at 46. 

17See Securities Exchange Act Release No. 92428 

(July 16, 2021), 86 FR 38776 (July 22, 2021) ((Notice 

of Filing File No. SR–NYSE–2021–40). 

18See supra note 4. 

19See Regulatory Notice 19–15 (April 19, 2019) 

(‘‘Designation Notice’’). 

20The TRFs provide FINRA members with a 

mechanism to report over-the-counter (‘‘OTC’’) 

transactions in NMS stocks. There are currently 

three active TRFs: (1) FINRA/Nasdaq TRF Carteret, 

(2) FINRA/Nasdaq TRF Chicago and (3) FINRA/ 

NYSE TRF. While each TRF is operated by an 

affiliate of a registered national securities exchange, 

each TRF is a FINRA facility and subject to FINRA’s 

oversight. 

21The ADF is a display-only facility operated by 

FINRA that provides FINRA members with a 

mechanism to display quotations and report OTC 

transactions in NMS stocks. 

22For the TRFs, FINRA will designate those TRF 

participants that account for five percent or more 

of the total number of trades reported to the TRF 

over the six-month period immediately preceding 

designation, provided that the cumulative trade 

volume represented by designated firms amounts to 

at least 50 percent of all trade volume reported to 

the TRF during the applicable six-month period. 

Trade volume for purposes of Rule 4380 is 

separately calculated for each TRF. For the ADF, 

there currently are not any active participants. If the 

ADF becomes active, FINRA will then study the 

system’s activity to establish appropriate criteria for 

member designation. See Designation Notice, supra 

note 19, at 2. 

that (1) the Pilot Rules should be made 

permanent without any changes, and (2) 

SROs should adopt a rule requiring all 

designated Regulation SCI firms to 

participate in at least one Level 1/Level 

2 MWCB test each year and to verify 

their participation via attestation.16

Proposal To Make the Pilot Rules 

Permanent 

On July 16, 2021, NYSE proposed a 

rule change to make the Pilot Rules 

permanent, consistent with the Working 

Group’s recommendations.17 On March 

16, 2022, the Commission approved 

NYSE’s proposal.18

Consistent with the Commission’s 

approval of NYSE’s proposal, FINRA 

now proposes that paragraphs (a) 

through (c) of Rule 6121.02 be made 

permanent. To accomplish this, FINRA 

proposes to remove the text of existing 

paragraph (d) of Rule 6121.02, which 

currently provides that the provisions of 

Rule 6121.02 shall be in effect during a 

pilot period that expires at the close of 

business on April 18, 2022. FINRA does 

not propose any changes to paragraphs 

(a) through (c) of Rule 6121.02. 

Consistent with the Commission’s 

approval of NYSE’s proposal, FINRA 

proposes to add new paragraphs (d), (e), 

and (f) to Rule 6121.02, as follows: 

(d) Market-Wide Circuit Breaker 

(‘‘MWCB’’) Testing. 

(1) FINRA will participate in all 

industry-wide tests of the MWCB 

mechanism. Members designated 

pursuant to Rule 4380 (Mandatory 

Participation in FINRA BC/DR Testing 

Under Regulation SCI) with respect to a 

FINRA Trade Reporting Facility (‘‘TRF’’) 

or the Alternative Display Facility 

(‘‘ADF’’) to participate in FINRA’s 

periodic, scheduled testing of their 

business continuity and disaster 

recovery (‘‘BC/DR’’) plans are required 

to participate in at least one industrywide MWCB test each year and to verify 

their participation in that test by 

attesting that they are able to or have 

attempted to: 

(A) Receive and process MWCB halt 

messages from the securities 

information processors (‘‘SIPs’’); 

(B) receive and process resume 

messages from the SIPs following a 

MWCB halt; 

(C) receive and process market data 

from the SIPs relevant to MWCB halts; 

and 

(D) send quotes, trades or both, as 

applicable, to the facility or facilities for 

which the member has been designated 

pursuant to Rule 4380 following a Level 

1 or Level 2 MWCB halt in a manner 

consistent with their usual trading 

behavior. 

(2) To the extent that a member 

participating in a MWCB test is unable 

to receive and process any of the 

messages identified in paragraph 

(d)(1)(A) through (D) above, its 

attestation should notify FINRA which 

messages it was unable to process and, 

if known, why. 

(3) Members not designated pursuant 

to Rule 4380 are permitted to participate 

in any MWCB test. 

(e) In the event that a MWCB is 

triggered following a Level 1, Level 2, or 

Level 3 Market Decline, FINRA, together 

with other SROs and industry 

representatives (the ‘‘MWCB Working 

Group’’), will review such event. The 

MWCB Working Group will prepare a 

report that documents its analysis and 

recommendations and will provide that 

report to the SEC within six months of 

the event. 

(f) In the event that there is (1) a 

Market Decline of more than five 

percent, or (2) an SRO implements a 

rule that changes its reopening process 

following a MWCB Halt, FINRA, 

together with the MWCB Working 

Group, will review such event and 

consider whether any modifications 

should be made to FINRA Rule 6121.02. 

If the MWCB Working Group 

recommends that a modification should 

be made to FINRA Rule 6121.02, the 

MWCB Working Group will prepare a 

report that documents its analysis and 

recommendations and provide that 

report to the SEC. 

The MWCB testing requirement that 

FINRA is proposing to add as the new 

text of paragraph (d) of Rule 6121.02 is 

consistent with the MWCB testing 

obligation adopted by the exchanges 

(e.g., NYSE Rule 7.12(e)) that requires 

all designated Regulation SCI firms to 

participate in at least one MWCB test 

each year. However, the language of 

proposed Rule 6121.02(d) has been 

modified from the language of NYSE 

Rule 7.12(e) in two regards to account 

for FINRA’s unique role in the equity 

markets, as follows. 

First, FINRA’s testing requirement 

would apply on a facility-by-facility 

basis. Like the exchanges, Regulation 

SCI requires that FINRA designate firms 

that must participate in the testing of 

the firm’s business continuity and 

disaster recovery BC/DR plans. To 

comply with this Regulation SCI 

requirement, FINRA adopted Rule 4380, 

which authorizes FINRA to designate 

member firms that must participate in 

annual BC/DR testing according to 

established criteria designed to ensure 

participation by firms FINRA reasonably 

determines are, taken as a whole, the 

minimum necessary for maintaining fair 

and orderly markets in the event of the 

activation of its BC/DR plan. As 

summarized in Regulatory Notice 19– 

15,19 FINRA applies specified criteria to 

designate firms under Rule 4380 on a 

facility-by-facility basis, including 

designation of participants of the 

TRFs 20 and the ADF.21 As the TRFs and 

ADFs are the FINRA facilities relevant 

to quoting and trading NMS stocks, 

FINRA believes that firms designated 

under Rule 4380 with respect to any 

TRF or the ADF should be required to 

participate in annual MWCB testing.22

Therefore, in line with the exchanges’ 

MWCB testing rule, paragraph (d)(1) of 

Rule 6121.02 would provide that 

members designated pursuant to Rule 

4380 for BC/DR testing with respect to 

a TRF or the ADF are required to 

participate in at least one industry-wide 

MWCB test each year. 

Second, consistent with the 

exchanges’ rules, such designated 

members would be required to verify 

their participation in the annual MWCB 

test by attesting that they are able to or 

have attempted to undertake four 

specified actions related to operation of 

MWCB halts. The first three of these 

actions, set forth in paragraphs (d)(1)(A) 

through (C) of proposed Rule 6121.02, 

would be identical to the exchanges’ 

testing rules and would require that 

such members attest that they are able 

to or have attempted to: (A) Receive and 

process MWCB halt messages from the 

SIPs; (B) receive and process resume 

messages from the SIPs following a 


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23 15 U.S.C. 78o–3(b)(6). 

MWCB halt; and (C) receive and process 

market data from the SIPs relevant to 

MWCB halts. The fourth element 

specified in the exchanges’ rules 

requires that designated member 

organizations attest that they are able to 

or have attempted to send orders 

following a Level 1 or Level 2 MWCB 

halt in a manner consistent with their 

usual trading behavior. The TRFs and 

the ADF are facilities for reporting OTC 

transactions in NMS stocks and, in the 

case of the ADF, displaying quotations 

in NMS stocks. Therefore, FINRA is 

proposing a modified requirement in 

paragraph (d)(1)(D) for designated 

members to attest that they are able to 

or have attempted to send quotes, trades 

or both, as applicable, to the facility or 

facilities for which they have been 

designated pursuant to Rule 4380 in a 

manner consistent with their usual 

trading behavior. 

FINRA has filed the proposed rule 

change for immediate effectiveness and 

has requested that the SEC waive the 

requirement that the proposed rule 

change not become operative for 30 days 

after the date of the filing, so FINRA can 

implement the proposed rule change 

immediately. 

2. Statutory Basis 

FINRA believes that the proposed rule 

change is consistent with the provisions 

of Section 15A(b)(6) of the Act,23 which 

requires, among other things, that 

FINRA rules must be 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 Pilot Rules set out in Rule 

6121.02 (a) through (c) are an important, 

automatic mechanism that is invoked to 

promote stability and investor 

confidence during periods of significant 

market stress when securities markets 

experience broad-based declines. The 

four MWCB halts that occurred in 

March 2020 provided FINRA, the other 

SROs, and market participants with 

real-world experience as to how the 

Pilot Rules actually function in practice. 

Based on the Working Group’s Study 

and FINRA’s own analysis of those 

events, FINRA believes that making the 

Pilot Rules permanent would benefit 

market participants, 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, and 

protect investors and the public interest. 

Specifically, FINRA believes that 

making the Pilot Rules permanent 

would benefit market participants, 

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, and protect investors and the 

public interest, because the Pilot Rules 

worked as intended during the March 

2020 events. As detailed above, the 

markets were in communication before, 

during, and after each of the MWCB 

Halts that occurred in March 2020. All 

9,000+ equity symbols were 

successfully halted in a timely manner 

when SPX declined 7% from the 

previous day’s closing value, as 

designed. FINRA believes that market 

participants would benefit from having 

the Pilot Rules made permanent because 

such market participants are familiar 

with the design and operation of the 

MWCB mechanism set out in the Pilot 

Rules, and know from experience that it 

has functioned as intended on multiple 

occasions under real-life stress 

conditions. Accordingly, FINRA 

believes that making the Pilot Rules 

permanent would enhance investor 

confidence in the ability of the markets 

to successfully halt as intended when 

under extreme stress. 

FINRA further believes that making 

the Pilot Rules permanent would benefit 

market participants, 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, and 

protect investors and the public interest, 

because the halts that were triggered 

pursuant to the Pilot Rules in March 

2020 appear to have had the intended 

effect of calming volatility in the market 

without causing harm. As detailed 

above, after studying a variety of metrics 

concerning opening and reopening 

auctions, quote volatility, and other 

factors, FINRA concluded that there was 

no significant difference in the 

percentage of securities that opened on 

a trade versus on a quote for the four 

days in March 2020 with MWCB Halts, 

versus the other periods studied. In 

addition, while the post-MWCB Halt 

reopening auctions were smaller than 

typical opening auctions, the size of 

those post-MWCB Halt reopening 

auctions plus the earlier initial opening 

auctions in those symbols was on 

average equal to opening auctions in 

January 2020. FINRA believes this 

indicates that the MWCB Halts on the 

four March 2020 days did not cause 

liquidity to evaporate. Finally, FINRA 

observes that, while quote volatility was 

generally higher on the four days in 

March 2020 with MWCB Halts as 

compared to the other periods studied, 

quote volatility stabilized following the 

MWCB Halts at levels similar to the 

January 2020 levels, and LULD Trading 

Pauses worked as designed to address 

any additional volatility later in the day. 

From this evidence, FINRA concludes 

that the Pilot Rules actually calmed 

volatility on the four MWCB Halt days 

in March 2020, without causing 

liquidity to evaporate or otherwise 

harming the market. As such, FINRA 

believes that making the Pilot Rules 

permanent would remove impediments 

to and perfect the mechanism of a free 

and open market and a national market 

system, and protect investors and the 

public interest. 

FINRA believes that making the Pilot 

Rules permanent without any changes 

would benefit market participants, 

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, and protect investors and the 

public interest, because the current 

design of the MWCB mechanism as set 

out in the Pilot Rules remains 

appropriate. As detailed above, FINRA 

considered whether SPX should be 

replaced as the reference value, whether 

the current trigger levels (7%/13%/ 

20%) and halt times (15 minutes for 

Level 1 and 2 halts) should be modified, 

and whether changes should be made to 

prevent the market from halting shortly 

after the opening of regular trading 

hours at 9:30 a.m., and concluded that 

the MWCB mechanism set out in the 

Pilot Rules remains appropriate, for the 

reasons cited above. FINRA believes 

that public confidence in the MWCB 

mechanism would be enhanced by the 

Pilot Rules being made permanent 

without any changes, given investors’ 

familiarity with the Pilot Rules and their 

successful functioning in March 2020. 

FINRA believes that proposed new 

paragraph (d) regarding MWCB testing 

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 Working Group 

recommended that all cash equities 

exchanges adopt a rule requiring all 

designated Regulation SCI firms to 

participate in MWCB testing and to 

attest to their participation. FINRA 

believes that these requirements would 

promote the stability of the markets and 

enhance investor confidence in the 

MWCB mechanism and the protections 

that it provides to the markets and to 

investors. FINRA further believes that 


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Federal Register / Vol. 87, No. 75 / Tuesday, April 19, 2022 / Notices 23295 

24See 17 CFR 240.17a–1. 

25 15 U.S.C. 78s(b)(3)(A). 

26 17 CFR 240.19b–4(f)(6). 

27 17 CFR 240.19b–4(f)(6). 

28 17 CFR 240.19b–4(f)(6)(iii). 

29For 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). 

requiring firms participating in a MWCB 

test to identify any inability to process 

messages pertaining to such MWCB test 

would contribute to a fair and orderly 

market by flagging potential issues that 

should be corrected. FINRA would 

preserve such attestations pursuant to 

its obligations to retain books and 

records of FINRA.24

FINRA believes that proposed 

paragraph (e) would benefit market 

participants, 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, and 

protect investors and the public interest. 

Having the MWCB Working Group 

review any halt triggered under Rule 

6121.02 and prepare a report of its 

analysis and recommendations would 

permit FINRA, along with other market 

participants and the Commission, to 

evaluate such event and determine 

whether any modifications should be 

made to Rule 6121.02 in the public 

interest. Preparation of such a report 

within six months of the event would 

permit FINRA, along with the MWCB 

Working Group, sufficient time to 

analyze such halt and prepare their 

recommendations. 

FINRA believes that proposed 

paragraph (f) would benefit market 

participants, 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, and 

protect investors and the public interest. 

Having the MWCB Working Group 

review instances of a Market Decline of 

more than 5% or an SRO implementing 

a rule that changes its reopening process 

following a MWCB Halt would allow 

the MWCB Working Group to identify 

situations where it would recommend 

that Rule 6121.02 be modified in the 

public interest. In such situations where 

the MWCB Working Group recommends 

that a modification should be made to 

Rule 6121.02, the MWCB Working 

Group would prepare a report that 

documents its analysis and 

recommendations and provide that 

report to the Commission, thereby 

removing impediments to and 

perfecting the mechanism of a free and 

open market and a national market 

system while protecting investors and 

the public interest. 

For the foregoing reasons, FINRA 

believes that the proposed rule change 

is consistent with the Act. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

FINRA does not believe that the 

proposed rule change will result in any 

burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. The 

proposed rule change is not intended to 

address competition, but rather, makes 

permanent the current MWCB Pilot 

Rules for the protection of the markets. 

FINRA believes that making the current 

MWCB Pilot Rules permanent would 

have no discernable burden on 

competition at all, since the Pilot Rules 

have already been in effect since 2012 

and would be made permanent without 

any changes. Moreover, because the 

MWCB mechanism contained in the 

Pilot Rules requires all exchanges and 

all market participants to cease trading 

at the same time, making the Pilot Rules 

permanent would not provide a 

competitive advantage to any exchange 

or any class of market participants. 

Further, FINRA understands that the 

other SROs have or will submit 

substantively identical proposals to the 

Commission. Thus, the proposed rule 

change will help to ensure consistency 

across SROs without implicating any 

competitive issues. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

Written comments were neither 

solicited nor received. 

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 25 and Rule 19b– 

4(f)(6) thereunder.26

A proposed rule change filed under 

Rule 19b–4(f)(6) 27 normally does not 

become operative prior to 30 days after 

the date of the filing. However, pursuant 

to Rule 19b–4(f)(6)(iii),28 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 allow the Exchange to 

immediately provide the protections 

included in this proposal in the event of 

a MWCB halt, which is consistent with 

the protection of investors and the 

public interest. Therefore, the 

Commission hereby waives the 30-day 

operative delay and designates the 

proposed rule change as operative upon 

filing.29

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 rule-comments@

sec.gov. Please include File Number SR– 

FINRA–2022–010 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–FINRA–2022–010. 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 


lotter on DSK11XQN23PROD with NOTICES1
23296 Federal Register / Vol. 87, No. 75 / Tuesday, April 19, 2022 / Notices 

30 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 94441 

(March 16, 2022) (SR–NYSE–2021–40). 

4See 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’’). 

5The 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). 

6See 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. 

7See Securities Exchange Act Release Nos. 67090 

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

NASDAQ–2011–131) (Approval Order); and 68786 

(January 31, 2013), 78 FR 8666 (February 6, 2013) 

(SR–NASDAQ–2013–021) (Notice of Filing and 

Immediate Effectiveness of Proposed Rule Change 

to Delay the Operative Date). 

8See Securities Exchange Act Release No. 85623 

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

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–FINRA–2022–010 

and should be submitted on or before 

May 10, 2022. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.30

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–08283 Filed 4–18–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–94713; File No. SR– 

NASDAQ–2022–031] 

Self-Regulatory Organizations; The 

Nasdaq Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Make the 

Market Wide Circuit Breaker Pilot a 

Permanent Program 

April 13, 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 April 12, 

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 adopt on a 

permanent basis the pilot program for 

market-wide circuit breakers in Equity 

4, Rule 4121. 

The text of the proposed rule change 

is available on the Exchange’s website at 

https://listingcenter.nasdaq.com/ 

rulebook/nasdaq/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 

On March 16, 2022, the Commission 

approved the proposal of the New York 

Stock Exchange (‘‘NYSE’’) to adopt on a 

permanent basis the pilot program for 

market-wide circuit breakers (‘‘MWCB’’) 

in NYSE Rule 7.12.3 The Exchange now 

proposes to adopt the same change to 

make permanent the MWCB pilot 

program in Equity 4, Rule 4121. 

Rules Overview 

The MWCB rules, including the 

Exchange’s Rule 4121 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 equities exchanges 

and FINRA amended their cash equities 

uniform rules on a pilot basis (the ‘‘Pilot 

Rules,’’ i.e., Equity 4, Rule 4121(a)–(c) 

and (f)).4 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’’).5

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 marketwide 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’’),6

including any extensions to the pilot 

period for the LULD Plan.7 In April 

2019, the Commission approved an 

amendment to the LULD Plan for it to 

operate on a permanent, rather than 

pilot, basis.8 In conjunction with the 

proposal to make the LULD Plan 

permanent, the Exchange amended 

Equity 4, Rule 4121 to untie the Pilot 

Rules’ effectiveness from that of the 

LULD Plan and to extend the Pilot 

Rules’ effectiveness to the close of 


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