Document ID: SEC-2019-0559-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Financial Industry Regulatory Authority, Inc.
Posted Date: 2019-04-24T04:00Z

[Federal Register Volume 84, Number 79 (Wednesday, April 24, 2019)]
[Notices]
[Pages 17222-17224]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-08203]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-85685; File No. SR-FINRA-2019-013]

Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change Relating to the Regulation NMS Plan To Address 
Extraordinary Market Volatility

April 18, 2019.
    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, 2019, 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    FINRA is proposing to make permanent FINRA Rules 6190 (Compliance 
with Regulation NMS Plan to Address Extraordinary Market Volatility) 
and 6121.01 (Resumption of Trading in Securities Subject to the 
Regulation NMS Plan to Address Extraordinary Market Volatility) in 
light of the permanent approval of the Regulation NMS Plan to Address

[[Page 17223]]

Extraordinary Market Volatility (``Plan'' or ``LULD Plan'').
    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, 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
    FINRA proposes to amend FINRA Rules 6190 and 6121.01, which 
implement the provisions of the LULD Plan, to reflect that these 
provisions now operate on a permanent basis, consistent with the 
approval of the LULD Plan to operate on a permanent basis.\4\ FINRA is 
not proposing any substantive changes to the text of these rules.
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    \4\ See Securities Exchange Act Release No. 83044 [sic] (April 
11, 2019) (File No. 4-631) (Order Approving Eighteenth Amendment); 
see also Securities Exchange Act Release No. 84843 (December 18, 
2018), 83 FR 66464 (December 26, 2018) (File No. 4-631) (Notice of 
Filing of Eighteenth Amendment).
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    Rule 6190 requires members that are trading centers \5\ in NMS 
Stocks to establish, maintain and enforce written policies and 
procedures that are reasonably designed to comply with the requirements 
of the Plan and specifically to prevent: (1) The execution of trades at 
prices that are below the lower price band or above the upper price 
band for an NMS Stock, except as permitted under the Plan; (2) the 
display of offers below the lower price band and bids above the upper 
price band for an NMS Stock; and (3) the execution of trades in an NMS 
Stock during a trading pause; however, bids and offers may be displayed 
during a Trading Pause, as permitted under the Plan.\6\ FINRA Rule 
6121.01 addresses the circumstances under which a member may resume 
trading otherwise than on an exchange following a Trading Pause or 
Regulatory Halt in an NMS Stock that is subject to the Plan.\7\
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    \5\ Unless otherwise specified, the terms used herein have the 
same meaning as set forth in the Plan.
    \6\ See Securities Exchange Act Release No. 68985 (February 25, 
2013), 78 FR 13922 (March 1, 2013) (Notice of Filing and Immediate 
Effectiveness of File No. SR-FINRA-2013-016).
    \7\ See Securities Exchange Act Release No. 81824 (October 5, 
2017), 82 FR 47586 (October 12, 2017) (Notice of Filing and 
Immediate Effectiveness of File No. SR-FINRA-2017-031).
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    Rules 6190 and 6121.01 both currently contain provisions stating 
that these rules will be in effect for a pilot period to coincide with 
the pilot period for the LULD Plan (including any extensions to the 
pilot period for the Plan). Because the LULD Plan now operates on a 
permanent basis, the proposed rule change is necessary to delete the 
pilot period language from Rules 6190 and 6121.01 to make clear that 
these rules also now operate on a permanent basis, consistent with the 
Plan.
    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 that the operative date of the proposed rule 
change will be the same as the date of SEC approval of the Eighteenth 
Amendment to the Plan.
2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(6) of the Act,\8\ which requires, among 
other things, that FINRA rules must be designed to prevent fraudulent 
and manipulative acts and practices, to promote just and equitable 
principles of trade and, in general, to protect investors and the 
public interest. The proposed rule change also is designed to support 
the principles of Section 11A(a)(1) of the Act \9\ in that it seeks to 
assure fair competition among brokers and dealers and among exchange 
markets. FINRA believes that the proposed rule change meets these 
requirements in that it facilitates compliance with the Plan, which has 
been approved and found by the Commission to be reasonably designed to 
prevent potentially harmful price volatility in NMS Stocks. 
Accordingly, FINRA believes that the proposed rules will further the 
goals of investor protection and fair and orderly markets.
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    \8\ 15 U.S.C. 78o-3(b)(6).
    \9\ 15 U.S.C. 78k-1(a)(1).
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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 
necessary to reflect that the LULD Plan no longer operates as a pilot 
and has been approved to operate on a permanent basis by the 
Commission; likewise, Rules 6190 and 6121.01, which implement the 
requirements of the Plan, must be amended to operate on a permanent 
basis.

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 \10\ and Rule 19b-
4(f)(6) thereunder.\11\
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 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 Commission has waived the pre-filing requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) \12\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\13\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay so that FINRA may 
implement the proposed rule change immediately. The Commission believes 
that waiving the 30-day operative delay is consistent with the 
protection of investors and the public interest because the Commission 
approved making the Plan pilot permanent on April 11, 2019, and 
therefore FINRA's proposed changes to its rules reflecting

[[Page 17224]]

that the Plan is now permanent should go into effect immediately. 
Therefore, the Commission hereby waives the 30-day operative delay and 
designates the proposed rule change to be operative upon filing with 
the Commission.\14\
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    \12\ 17 CFR 240.19b-4(f)(6).
    \13\ 17 CFR 240.19b-4(f)(6)(iii).
    \14\ For purposes only of waiving the operative delay for this 
proposal, the Commission 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 [email protected]. Please include 
File Number SR-FINRA-2019-013 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-2019-013. 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 a.m. and 3 
p.m. Copies of such filing also will be available for inspection and 
copying at the principal office of FINRA. 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-2019-013 and should be submitted on or before May 15, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-08203 Filed 4-23-19; 8:45 am]
 BILLING CODE 8011-01-P