Document ID: SEC-2020-1525-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: MEMX, LLC
Posted Date: 2020-09-24T04:00Z

[Federal Register Volume 85, Number 186 (Thursday, September 24, 2020)]
[Notices]
[Pages 60274-60276]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-21046]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-89924; File No. SR-MEMX-2020-08]

Self-Regulatory Organizations; MEMX LLC; Notice of Filing and 
Immediate Effectiveness of a Proposed Rule Change To Update Rule 
13.4(a) To Add the Sources of Data for MIAX PEARL, LLC and Long-Term 
Stock Exchange, Inc.

September 18, 2020.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on September 11, 2020, MEMX LLC (``MEMX'' 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 Exchange. The Exchange filed the 
proposal as a ``non-controversial'' proposed rule change pursuant to 
Section 19(b)(3)(A)(iii) of

[[Page 60275]]

the Act \3\ and Rule 19b-4(f)(6) thereunder.\4\ 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\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 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 is filing with the Commission a proposed rule change 
to update MEMX Rule 13.4(a) regarding the public disclosure of the 
sources of data that the Exchange utilizes when performing: (i) Order 
handling; (ii) order routing; (iii) order execution; and (iv) related 
compliance processes to reflect the planned operation of MIAX PEARL, 
LLC (``MIAX PEARL'') as an equities exchange beginning on September 25, 
2020 \5\ and the operation of Long-Term Stock Exchange, Inc. (``LTSE'') 
as a registered national securities exchange, which began on August 28, 
2020.\6\ The text of the proposed rule change is provided in Exhibit 5.
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    \5\ See MIAX PEARL Equities--MIAX PEARL Receives Approval to 
Operate Equites Exchange; Launch Date Confirmed for September 25, 
2020, dated August 18, 2020 (https://miaxequities.com/alerts/2020/08/18/miax-pearl-receives-approval-operate-equities-exchange-launch-date-confirmed-0) (stating that MIAX PEARL will begin equities 
trading on September 25, 2020).
    \6\ See LTSE Market Announcement: MA-2020-022--LTSE Production 
Securities Phase-in set for Friday, August 28, dated August 24, 2020 
(https://longtermstockexchange.com/market) (stating that LTSE will 
begin phase-in of production securities on August 28, 2020).
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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 update Rule 13.4(a) regarding the public 
disclosure of the sources of data that the Exchange utilizes when 
performing: (i) Order handling; (ii) order routing; (iii) order 
execution; and (iv) related compliance processes to reflect the 
operation of MIAX PEARL as an equities exchange and LTSE as a 
registered national securities exchange.
    On May 10, 2019, the Commission approved LTSE's application to 
register as a national securities exchange.\7\ LTSE began its phase-in 
of production securities on August 28, 2020.\8\ On August 14, 2020, the 
Commission approved MIAX PEARL's proposed rule change to establish 
rules governing the trading of equities securities.\9\ MIAX PEARL 
announced that it plans to launch equities trading on September 25, 
2020.\10\ The Exchange, therefore, proposes to update Rule 13.4(a) 
regarding the public disclosure of the sources of data that the 
Exchange utilizes when performing: (i) Order handling; (ii) order 
routing; (iii) order execution; and (iv) related compliance processes 
to reflect the operation of MIAX PEARL as an equities exchange 
beginning on September 25, 2020 and LTSE as a registered national 
securities exchange, which began on August 28, 2020. Specifically, the 
Exchange proposes to amend Rule 13.4(a) to include each of MIAX PEARL 
and LTSE by stating it will utilize MIAX PEARL's direct data feed for 
market data and LTSE market data from the Consolidated Quotation System 
(``CQS'')/UTP Quotation Data Feed (``UQDF''), for purposes of order 
handling, routing, execution, and related compliance processes. The 
Exchange will use CQS/UQDF as a secondary source for MIAX PEARL data. 
At this stage, no secondary source for LTSE market data will be used.
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    \7\ See Securities Exchange Act Release No. 85828 (May 10, 
2019), 84 FR 21841 (May 15, 2019).
    \8\ See supra note 6.
    \9\ See Securities Exchange Act Release No. 89563 (August 14, 
2020), 85 FR 51510 (August 20, 2020) (SR-PEARL-2020-03).
    \10\ See supra note 5.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\11\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\12\ in particular, in that it 
is designed to prevent fraudulent and manipulative acts and practices, 
to promote just and equitable principles of trade, to foster 
cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities, 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.
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    \11\ 15 U.S.C. 78f.
    \12\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that its proposal to update MEMX Rule 13.4(a) 
to include each of MIAX PEARL and LTSE is consistent with the Act 
because it will ensure that the Rule correctly identifies and publicly 
states on a market-by-market basis all of the specific network 
processor and proprietary data feeds that the Exchange utilizes for the 
handling, routing, and execution of orders, and for performing the 
regulatory compliance checks related to each of those functions. In 
particular, the Exchange receives and processes data feeds to 
facilitate compliance with the applicable requirements of Regulation 
NMS, including SEC Rule 611 (i.e., the Order Protection Rule).\13\ The 
proposed rule change also removes impediments to and perfects the 
mechanism of a free and open market and protects investors and the 
public interest because it provides additional specificity, clarity and 
transparency.
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    \13\ 17 CFR 242.611.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange believes its proposed rule change would not impose any 
burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act. To the contrary, the Exchange 
believes the proposal would enhance competition because including all 
of the exchanges enhances transparency and enables investors to better 
assess the quality of the Exchange's execution and routing services.

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

    The Exchange neither solicited nor received comments on 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 after the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to 19(b)(3)(A)

[[Page 60276]]

of the Act \14\ and Rule 19b-4(f)(6) \15\ thereunder.
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    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give 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.
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    A proposed rule change filed pursuant to Rule 19b-4(f)(6) normally 
does not become operative for 30 days after the date of its filing. 
However, Rule 19b-4(f)(6)(iii) permits the Commission to 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 proposed 
rule change may become operative immediately. MEMX stated that the 
proposed rule change would provide clarity to market participants with 
respect to the specific network processor and proprietary data feeds 
that MEMX utilizes for the handling, routing, and execution of orders, 
and for performing the regulatory compliance checks related to each of 
those functions. The Commission believes that waiving the 30-day 
operative delay is consistent with the protection of investors and the 
public interest, as doing so will ensure that the proposed rule change 
becomes operative by the date of MEMX's planned launch as a national 
securities exchange, September 21, 2020, which, in turn, will ensure 
that MEMX's rulebook accurately and clearly reflects the market data 
sources it utilizes for the above-specified functions from the date of 
its launch. Accordingly, the Commission hereby waives the operative 
delay and designates the proposed rule change operative upon 
filing.\16\
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    \16\ For purposes only of waiving the 30-day operative delay, 
the Commission also has 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 rule-comments@sec.gov. Please include 
File Number SR-MEMX-2020-08 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-MEMX-2020-08. 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-MEMX-2020-08 and should be submitted on 
or before October 15, 2020.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12) and (59).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-21046 Filed 9-23-20; 8:45 am]
BILLING CODE 8011-01-P