Document ID: SEC-2022-0886-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Financial Industry Regulatory Authority, Inc.
Posted Date: 2022-07-07T04:00Z

[Federal Register Volume 87, Number 129 (Thursday, July 7, 2022)]
[Notices]
[Pages 40571-40575]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-14398]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-95191; File No. SR-FINRA-2022-016]

Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change To Amend FINRA Rule 6120 (Trading Halts) To 
Conform to Recent Amendments to the SIP Plans and To Make Technical and 
Clarifying Changes to the Rule

June 30, 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 June 22, 2022, the Financial Industry Regulatory Authority, Inc. 
(``FINRA'') filed with the Securities and Exchange Commission 
(``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 amend FINRA Rule 6120 (Trading Halts) to 
conform to recent amendments to the NMS plans governing the collection, 
consolidation and dissemination of quotation and transaction 
information for NMS stocks and to make technical and clarifying changes 
to the rule.\4\
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    \4\ See CTA/CQ Approval Order and UTP Approval Order, infra note 
10.
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    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
Background
    FINRA Rule 6120 provides FINRA with the authority to halt trading 
otherwise than on an exchange in NMS stocks under the circumstances 
specified in Rule 6120(a) and pursuant to the procedures set forth in 
Rule 6120(b). Rule 6120(a)(1) provides that FINRA shall halt trading 
otherwise than on an exchange in any NMS stock whenever any market that 
has the authority to call a regulatory halt in the security imposes a 
trading halt, or suspends a listing, to: (a) permit dissemination of 
material news; (b) obtain information from the issuer relating to 
material news; (c) obtain information relating to the issuer's ability 
to meet listing qualification requirements; or (d) obtain any other 
information that is necessary to protect investors and the public 
interest.
    In addition, Rule 6120(a)(2) provides that FINRA shall halt trading 
otherwise than on an exchange in any NMS stock when extraordinary 
market activity in the security is occurring, such as the execution of 
a series of transactions for a significant dollar value at prices 
substantially unrelated to the current market for the security, as 
measured by the national best bid or offer. To halt trading under this 
provision, FINRA must determine that such extraordinary market activity 
is likely to have a material effect on the market for the security and 
either (i) FINRA determines that such extraordinary market activity is 
caused by the misuse or malfunction of an electronic quotation, 
communication, reporting, or execution system operated by, or linked 
to, FINRA, or (ii) after consultation with a national securities 
exchange trading the security, FINRA determines that such extraordinary 
market activity is caused by the misuse or malfunction of an electronic 
quotation, communication, reporting, or execution system operated by, 
or linked to, such other national securities exchange. Rule 6120(a)(3) 
addresses FINRA's authority to close its quotation display and trade 
reporting facilities for NMS stocks under specified circumstances. 
Specifically, Rule 6120(a)(3) provides that FINRA shall close the 
Alternative Display Facility (``ADF'') \5\ or any Trade Reporting 
Facility (``TRF'') \6\ to quotation or trade reporting activity, as 
applicable, whenever the ADF or TRF is unable to transmit real-time 
trade reporting information to the applicable Securities Information 
Processor (SIP'').\7\ If the ADF or any TRF closes pursuant to this 
provision, members are not prohibited from trading through other 
markets for which trading is not halted.\8\
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    \5\ The ADF is a display-only facility operated by FINRA that 
provides FINRA members with a mechanism to display quotations and 
report over-the-counter (``OTC'') transactions in NMS stocks.
    \6\ The TRFs provide FINRA members with a mechanism to report 
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.
    \7\ Currently, there are two SIPs that are responsible for 
collecting, consolidating and disseminating quotation and 
transaction information in NMS stocks that is collected pursuant to 
the following three NMS plans: (1) the Joint Self-Regulatory 
Organization Plan Governing the Collection, Consolidation and 
Dissemination of Quotation and Transaction Information for Nasdaq-
Listed Securities Traded on Exchanges on an Unlisted Trading 
Privileges Basis (the ``UTP Plan''), (2) the Second Restatement of 
the CTA Plan (the ``CTA Plan''), and (3) the Restated CQ Plan (the 
``CQ Plan'' and, collectively with the UTP Plan and the CTA Plan, 
the ``SIP Plans''). FINRA and the national securities exchanges are 
participants of the SIP Plans (collectively, the ``Participants'').
    \8\ Rule 6120(a) also requires members to promptly notify FINRA 
whenever they have knowledge of any matter related to an NMS stock 
or the issuer thereof that has not been adequately disclosed to the 
public or where they have knowledge of a regulatory problem relating 
to such security. FINRA is not proposing any changes to this 
requirement.

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[[Page 40572]]

    Rule 6120(b) sets forth the procedures for commencement and 
termination of trading halts and closures declared under Rule 6120(a). 
Rule 6120(b)(1) provides that the commencement of a trading halt or 
closure, as applicable, will be effective simultaneously with 
appropriate notice. Rule 6120(b)(2) provides that trading shall resume 
upon appropriate notice that a trading halt or closure is no longer in 
effect.
    In February 2021, the Participants filed proposed amendments to the 
provisions of the SIP Plans governing regulatory and operational halts 
(the ``SIP Plan Amendments'').\9\ The Commission approved the SIP Plan 
Amendments on May 28, 2021.\10\ Among other things, the SIP Plan 
Amendments updated and clarified the process for Regulatory Halts under 
the SIP Plans. Under the SIP Plan Amendments, the Primary Listing 
Market may also declare a Regulatory Halt in any security for which it 
is the Primary Listing Market,\11\ as provided for in the rules of the 
Primary Listing Market, if it determines that there is a SIP 
Outage,\12\ Material SIP Latency,\13\ Extraordinary Market 
Activity,\14\ or in the event of national, regional, or localized 
disruption that necessitates a Regulatory Halt to maintain a fair and 
orderly market.\15\ The SIP Plan Amendments also clarified that the 
start time of a Regulatory Halt is when the Primary Listing Market 
declares the halt, regardless of whether an issue with communications 
impacts the dissemination of the notice.\16\ For Regulatory Halts other 
than SIP Halts, the Primary Listing Market will declare the resumption 
of trading when it determines that trading may resume in a fair and 
orderly manner and in accordance with its rules.\17\ Where such a 
Regulatory Halt is initiated by another Participant that is a Primary 
Listing Market, a Participant may resume trading after the Participant 
receives notification from the Primary Listing Market that the 
Regulatory Halt has been terminated.\18\ For SIP Halts, the Primary 
Listing Market will terminate the halt with a notification that 
specifies a SIP Halt Resume Time.\19\
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    \9\ See Securities Exchange Act Release No. 91189 (February 23, 
2021), 86 FR 12038 (March 1, 2021) (``CTA/CQ Amendments Release''); 
Securities Exchange Act Release No. 91190 (February 23, 2021), 86 FR 
12045 (March 1, 2021) (``UTP Amendments Release'').
    \10\ See Securities Exchange Act Release No. 92070 (May 28, 
2021), 86 FR 29849 (June 3, 2021) (``CTA/CQ Approval Order''); 
Securities Exchange Act Release No. 92071 (May 28, 2021), 86 FR 
29846 (June 3, 2021) (``UTP Approval Order'').
    \11\ See, e.g., UTP Amendments Release, supra note 9, at 12046. 
``Regulatory Halt'' is defined in the SIP Plan Amendments as ``a 
halt declared by the Primary Listing Market in trading in one or 
more securities on all Trading Centers for regulatory purposes, 
including for the dissemination of material news, news pending, 
suspensions, or where otherwise necessary to maintain a fair and 
orderly market. A Regulatory Halt includes a trading pause triggered 
by Limit Up Limit Down, a halt based on Extraordinary Market 
Activity, a trading halt triggered by a Market-Wide Circuit Breaker, 
and a SIP Halt.'' See id. at 12046 n.8. The ``Primary Listing 
Market'' is defined as ``the national securities exchange on which 
an Eligible Security is listed. If an Eligible Security is listed on 
more than one national securities exchange, Primary Listing Market 
means the exchange on which the security has been listed the 
longest.'' See id. at 12046 n.9. All capitalized terms not otherwise 
defined herein have the meaning given to them in the SIP Plans, as 
amended by the SIP Plan Amendments.
    \12\ ``SIP Outage'' is defined as ``a situation in which the 
Processor has ceased, or anticipates being unable, to provide 
updated and/or accurate quotation or last sale price information in 
one or more securities for a material period that exceeds the time 
thresholds for an orderly failover to backup facilities established 
by mutual agreement among the Processor, the Primary Listing Market 
for the affected securities, and the Operating Committee unless the 
Primary Listing Market, in consultation with the Processor and the 
Operating Committee, determines that resumption of accurate data is 
expected in the near future.'' See, e.g., UTP Amendments Release, 
supra note 9, at 12046 n.10.
    \13\ ``Material SIP Latency'' is defined as ``a delay of 
quotation or last sale price information in one or more securities 
between the time data is received by the Processor and the time the 
Processor disseminates the data over the high speed line or over the 
`high speed line' under the CQ Plan, which delay the Primary Listing 
Market determines, in consultation with, and in accordance with, 
publicly disclosed guidelines established by the Operating 
Committee, to be (a) material and (b) unlikely to be resolved in the 
near future.'' See, e.g., UTP Amendments Release, supra note 9, at 
12046 n.11. A ``SIP Halt'' includes any Regulatory Halt in one or 
more securities that a Primary Listing Market declares in the event 
of a SIP Outage or Material SIP Latency.
    \14\ ``Extraordinary Market Activity'' is defined as ``a 
disruption or malfunction of any electronic quotation, 
communication, reporting, or execution system operated by, or linked 
to, the Processor or a Trading Center or a member of such Trading 
Center that has a severe and continuing negative impact, on a 
market-wide basis, on quoting, order, or trading activity or on the 
availability of market information necessary to maintain a fair and 
orderly market. For purposes of this definition, a severe and 
continuing negative impact on quoting, order, or trading activity 
includes (i) a series of quotes, orders, or transactions at prices 
substantially unrelated to the current market for the security or 
securities; (ii) duplicative or erroneous quoting, order, trade 
reporting, or other related message traffic between one or more 
Trading Centers or their members; or (iii) the unavailability of 
quoting, order, transaction information, or regulatory messages for 
a sustained period.'' See, e.g., UTP Amendments Release, supra note 
9, at 12046 n.12.
    \15\ See, e.g., UTP Amendments Release, supra note 9, at 12046.
    \16\ See, e.g., UTP Plan, Section X.D.1.
    \17\ See, e.g., UTP Amendments Release, supra note 9, at 12046.
    \18\ See, e.g., UTP Plan, Section X.E.2.
    \19\ See, e.g., UTP Amendments Release, supra note 9, at 12046.
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    FINRA is proposing to amend FINRA Rule 6120 to conform to the 
updated Regulatory Halt provisions for NMS stocks as set forth in the 
SIP Plan Amendments. Under the proposed rule change, Rule 6120 would be 
amended as described below to incorporate the definitions, notice and 
timing requirements for Regulatory Halts under the SIP Plan Amendments, 
as well as to make related organizational, clarifying, and technical 
changes.
Authority To Initiate Halts and Facility Closures
    The purpose of Rule 6120(a)(1) is to provide authority for FINRA to 
halt OTC trading in an NMS stock when a Primary Listing Market declares 
a Regulatory Halt in that NMS stock, so that trading is halted both on 
the equity exchanges and in the OTC market. FINRA is proposing 
amendments to simplify the text of Rule 6120(a) to delete the list of 
specific types of Regulatory Halts and instead provide FINRA with 
authority to declare a halt in trading otherwise than on an exchange in 
an NMS stock whenever a Primary Listing Market declares any type of 
halt that meets the definition of a ``Regulatory Halt'' under the SIP 
Plans.\20\ Thus, for example, instead of explicitly adding ``SIP Halt'' 
to Rule 6120(a)(1), FINRA is amending the rule to tie FINRA's authority 
for declaring OTC halts in any NMS stock to the declaration of any 
``Regulatory Halt,'' as that term is defined in the SIP Plans, by a 
Primary Listing Market.\21\ FINRA believes that using the same terms 
(and cross-referencing the definitions) used in the SIP Plan Amendments 
would simplify and streamline the rule, as well as avoid any potential 
confusion about differences between FINRA's authority under Rule 
6120(a)(1) and Regulatory

[[Page 40573]]

Halts that are declared by a Primary Listing Market.\22\
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    \20\ The proposed rule change would also update the citation in 
Rule 6120(a)(1) 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.
    \21\ The proposed rule change would also add new paragraph (c) 
to Rule 6120 providing that, for purposes of Rule 6120, the 
following terms have the meanings set forth in the applicable SIP 
Plan: ``Primary Listing Market,'' ``Processor,'' ``Regulatory 
Halt,'' ``SIP Halt Resume Time,'' and ``Trading Center.''
    \22\ The proposed updates should ensure that Rule 6120(a)(1) 
remains consistent with the SIP Plans and avoid the need to update 
the FINRA rule to account for any changes in the types of Regulatory 
Halts covered under the SIP Plans.
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    In addition, Rule 6120(a)(2) would be updated to align FINRA's 
authority to declare an OTC trading halt in an NMS stock due to 
``extraordinary market activity'' with the scope of that term as 
provided for in the SIP Plan Amendments. As described above, Rule 
6120(a)(2) provides that FINRA shall halt OTC trading in an NMS stock 
when extraordinary market activity is occurring, FINRA determines that 
such activity is likely to have a material effect on the market for the 
security, and FINRA determines that the activity is caused by the 
misuse or malfunction of a system operated by, or linked to, FINRA or a 
national securities exchange. Under the proposed rule change, FINRA is 
amending this provision to incorporate the elements of the definition 
of Extraordinary Market Activity under the SIP Plan Amendments.\23\ 
Specifically, Rule 6120(a)(2)(A) would be revised to provide halt 
authority where extraordinary market activity in a security is 
occurring that has a severe and continuing negative impact, on a 
market-wide basis, on quoting, order, or trading activity or on the 
availability of market information necessary to maintain a fair and 
orderly market. Consistent with the SIP Plan Amendments, Rule 
6120(a)(2)(A) would further provide that, for purposes of FINRA Rule 
6120(a)(2), a severe and continuing negative impact on quoting, order, 
or trading activity includes (i) a series of quotes, orders, or 
transactions at prices substantially unrelated to the current market 
for the security or securities; (ii) duplicative or erroneous quoting, 
order, trade reporting, or other related message traffic between one or 
more Trading Centers or members; or (iii) the unavailability of 
quoting, order, transaction information, or regulatory messages for a 
sustained period. Rules 6120(a)(2)(C)(i) and (ii) (to be redesignated 
as Rules 6120(a)(2)(B)(i) and (ii)) would also be adjusted in two ways 
to further align FINRA's authority with the authority for a Primary 
Listing Market to declare a Regulatory Halt in an NMS stock due to 
Extraordinary Market Activity under the SIP Plan Amendments. First, 
both provisions would be amended to refer to the ``disruption'' or 
malfunction of an applicable system, rather than the ``misuse'' or 
malfunction of such system. Second, Rule 6120(a)(2)(B)(i) would be 
amended to refer to a system operated by, or linked to, a FINRA member 
(in addition to a system operated by, or linked to, FINRA itself), and 
Rule 6120(a)(2)(B)(ii) would be similarly amended to refer to a system 
operated by, or linked to, a member of the exchange trading the 
security with which FINRA has consulted (in addition to a system 
operated by, or linked to, the exchange itself). FINRA believes that 
these proposed conforming amendments would enhance consistency between 
FINRA's authority to halt trading in the OTC market for NMS stocks due 
to extraordinary market activity with the exchanges' authority to halt 
trading due to extraordinary market activity, as set forth in the SIP 
Plan Amendments.
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    \23\ To reflect these changes and incorporate the new definition 
of ``extraordinary market activity'' within paragraph (a)(2)(A), 
paragraph (a)(2)(B) would be deleted and current paragraph (a)(2)(C) 
would be redesignated as paragraph (a)(2)(B).
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    FINRA is also proposing several clarifying changes to Rule 
6120(a)(3), which provides FINRA with authority to close the ADF or a 
TRF to quotation or trade reporting activity in certain 
circumstances.\24\ Rule 6120(a)(3) would be amended in several 
instances to refer to both quoting and trading, rather than just 
trading, since, among other things, the ADF provides FINRA members with 
a facility for the display of quotations.\25\ Finally, the proposed 
rule change would add a clause to the first sentence of Rule 6120(a)(3) 
to further clarify that in addition to circumstances where the ADF or a 
TRF is unable to accept quotes or trade reports from participants or 
transmit real-time quotation or trade reporting information to the 
Processor,\26\ FINRA has the authority to close the relevant facility 
in the event of other internal or external systems issues that cause a 
severe and continuing negative impact on the functioning of the 
facility. For example, a system linked to the ADF or a TRF may cause a 
severe and continuing negative impact on the facility. This proposed 
additional language would clarify that FINRA's authority to close the 
ADF or a TRF extends to instances where a facility's ability to 
properly function is impacted by a system linked to the facility (e.g., 
a member's execution or reporting system), as well as malfunctions or 
disruptions originating within the facility itself.\27\
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    \24\ As described above, Rule 6120(a) provides authority with 
respect to both trading halts and facility closures. Therefore, as 
an additional clarifying change, FINRA is also proposing to add a 
reference to facility closures in the title of paragraph (a).
    \25\ Specifically, clause (i) in the first sentence would be 
amended to provide that FINRA may close a facility when it is unable 
to ``accept quotes or trade reports from participants or transmit 
real-time quotation or trade reporting information to the applicable 
Processor'' and the last sentence would be revised to provide that 
if a facility closes ``to quoting or trading . . . members would not 
be prohibited from quoting or trading through other markets for 
which quoting or trading is not halted.'' In addition, the rule 
would be amended to clarify that FINRA shall, ``in its discretion,'' 
close the ADF or any TRF in such circumstances. This change is a 
non-substantive clarification, as FINRA is already responsible for 
determining whether circumstances exist that would merit closing the 
ADF or a TRF.
    \26\ The existing reference to the applicable ``Securities 
Information Processor'' would be amended to refer to the 
``Processor'' as defined in the SIP Plan Amendments. See supra note 
21.
    \27\ FINRA reminds members that firms must establish, maintain 
and enforce written policies and procedures that include a pre-
determined response addressing OTC trading and reporting in the 
event of a systems issue during the trading day that prevents the 
firm from reporting OTC trades within the timeframe prescribed by 
FINRA rules. A firm's procedures should address the firm's response 
to a FINRA facility systems issue, as well as an issue with its own 
or its vendor's systems. In the event of a widespread FINRA facility 
systems issue, firms may only continue to directly execute OTC 
trades in NMS stocks if they have connectivity and the ability to 
report to another FINRA facility. See Trade Reporting Notice, 
January 20, 2016 (OTC Equity Trading and Reporting in the Event of 
Systems Issues (``Systems Issues Notice'')). The proposed rule 
change would not affect these obligations.
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Commencement and Termination of Halts or Facility Closures
    With respect to the process for initiating and terminating halts or 
facility closures, the proposed rule change would amend Rule 6120(b) to 
align FINRA's process related to Regulatory Halts declared under Rule 
6120(a)(1) with the process specified in the SIP Plan Amendments. 
Existing Rule 6120(b) would be reorganized to address Regulatory Halts 
initiated under Rule 6120(a)(1) under paragraph (b)(1), and separately 
address FINRA halts and facility closures initiated under Rules 
6120(a)(2) or (3), respectively, under paragraph (b)(2).\28\ Consistent 
with the SIP Plan Amendments, proposed Rule 6120(b)(1) would provide 
that, in the case of a Regulatory Halt, the start time of the trading 
halt shall be when the Primary Listing Market declares the Regulatory 
Halt, regardless of whether an issue with communications impacts the 
dissemination of the notice. Further, unless otherwise specified in 
Rule 6121,\29\ trading following a Regulatory

[[Page 40574]]

Halt shall resume upon notice from the Primary Listing Market that the 
Regulatory Halt has been terminated or at the SIP Halt Resume Time 
specified in such notice, as applicable. These changes would conform 
FINRA's language regarding the commencement and termination of 
Regulatory Halts with the language specified in the SIP Plan 
Amendments.\30\
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    \28\ In connection with this reorganization, the title of Rule 
6120(b) would be updated to include a reference to facility 
closures, Rule 6120(b)(1) would be titled ``Regulatory Halts'' and 
Rule 6120(b)(2) would be titled ``FINRA Halts and Closures.''
    \29\ Rule 6121 (Trading Halts Due to Extraordinary Market 
Activity) sets forth requirements specifically relating to the 
resumption of trading following a trading pause pursuant to the 
Regulation NMS Plan to Address Extraordinary Market Volatility (the 
``Limit Up Limit Down'' Plan). Under the SIP Plan Amendments, a 
Limit Up Limit Down trading pause is a type of Regulatory Halt.
    \30\ See supra note 19 and accompanying text.
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    Proposed Rule 6120(b)(2) would incorporate the existing 
commencement and termination language under current Rules 6120(b)(1) 
and (2), and specify that such provisions apply to trading halts and 
facility closures initiated by FINRA under Rule 6120(a)(2) and 
(a)(3).\31\ The proposed rule change would also make non-substantive, 
clarifying edits to the language of Rule 6120(b)(2).\32\
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    \31\ As noted above, firms must establish, maintain and enforce 
written policies and procedures that include a pre-determined 
response addressing OTC trading and reporting in the event that a 
FINRA facility experiences a widespread systems issue during the 
trading day. FINRA has provided guidance regarding how it will 
announce when it believes that firms should invoke such procedures. 
See Systems Issues Notice, supra note 27, at 2. The proposed rule 
change would not affect such guidance.
    \32\ Specifically, Rule 6120(b)(2) would be amended to provide 
that ``the commencement of the trading halt or closure will be 
effective simultaneously with appropriate notice from FINRA, and the 
halt or closure will terminate upon appropriate notice from FINRA 
that the trading halt or closure is no longer in effect,'' rather 
than ``the commencement of the trading halt or closure will be 
effective simultaneously with appropriate notice'' and ``[t]rading 
shall resume upon appropriate notice that a trading halt or closure 
is no longer in effect.''
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    FINRA has filed the proposed rule change for immediate 
effectiveness. The operative date of the proposed rule change will be 
30 days from the date of filing.
2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(6) of the Act,\33\ 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, 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. FINRA believes that 
conforming its trading halt authority under Rule 6120 with the updated 
provisions of the SIP Plans will promote consistency between the 
treatment of off-exchange and on-exchange trading in NMS stocks, 
thereby enhancing coordination among FINRA and the national securities 
exchanges. FINRA further believes that the other proposed technical, 
clarifying, and organizational updates to Rule 6120 are in furtherance 
of the objectives of the Act by clarifying the scope and operation of 
the rule.
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    \33\ 15 U.S.C. 78o-3(b)(6).
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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. Further, the proposed rule 
change is expected to have little impact on how FINRA executes trading 
halts. Thus, FINRA does not expect the proposed rule change to impose 
any additional costs on member firms or the investing public, or to 
convey material benefits beyond providing additional clarity and 
avoiding potential confusion about differences between FINRA's 
authority under Rule 6120 and Regulatory Halts that are declared by a 
Primary Listing Market.

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 after the date of the filing, or such 
shorter time as the Commission may designate if consistent with the 
protection of investors and the public interest, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \34\ and Rule 19b-
4(f)(6) thereunder.\35\
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    \34\ 15 U.S.C. 78s(b)(3)(A).
    \35\ 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, along 
with a brief description and text of the proposed rule change, at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
FINRA has satisfied this requirement.
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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-2022-016 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-2022-016. 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 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

[[Page 40575]]

information that you wish to make available publicly. All submissions 
should refer to File Number SR-FINRA-2022-016 and should be submitted 
on or before July 28, 2022.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\36\
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    \36\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2022-14398 Filed 7-6-22; 8:45 am]
BILLING CODE 8011-01-P