Document ID: SEC-2017-1694-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Financial Industry Regulatory Authority, Inc.
Posted Date: 2017-10-12T04:00Z

[Federal Register Volume 82, Number 196 (Thursday, October 12, 2017)]
[Notices]
[Pages 47586-47588]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-21994]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81824; File No. SR-FINRA-2017-031]

Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change To Amend FINRA Rule 6121 To Reflect Recent 
Amendments to the Regulation NMS Plan To Address Extraordinary Market 
Volatility

October 5, 2017.
    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 September 29, 2017, 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, 
II, and III 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 6121 (Trading Halts Due to 
Extraordinary Market Volatility) to reflect recent amendments to the 
Regulation NMS Plan to Address Extraordinary Volatility (``Plan'') 
regarding the resumption of trading in a security subject to the 
Plan.\4\
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    \4\ Unless otherwise specified, the capitalized terms used 
herein have the same meanings as set forth in the Plan.
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    The text of the proposed rule change is available on FINRA's Web 
site 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 Rule 6121.01 (Resumption of Trading in Securities Subject to 
the Regulation NMS Plan to Address Extraordinary Market Volatility) 
(``Rule'') 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.
    The Rule currently provides that, following a Trading Pause or 
Regulatory Halt in an NMS Stock that is subject to the Plan, a member 
may resume trading otherwise than on an exchange if trading has 
commenced on the Primary Listing Exchange (or on another national 
securities exchange in the case of the resumption of trading following 
a ten-minute Trading Pause) and either: (1) The member has received the 
Price Bands from the Processor; or (2) if immediately following a 
Trading Pause or Regulatory Halt the member has not yet received the 
Price Bands from the Processor, the member has calculated an upper 
price band and lower price band consistent with the methodology 
provided for in Section V of the Plan and ensures that any transactions 
prior to the receipt of the Price Bands from the Processor are within 
the ranges provided for pursuant to the Plan. In addition, the Rule 
provides that, where the Primary Listing Exchange does not reopen for 
trading at the end of a ten-minute Trading Pause (and has issued notice 
that it cannot resume trading for a reason other than a significant 
imbalance), a member may resume trading otherwise than on an exchange 
if trading has commenced in such NMS Stock on at least one other 
national securities exchange.
    On January 19, 2017, the Commission approved the Twelfth Amendment 
to the Plan, which provides, among other things, that a Trading Pause 
will continue until the Primary Listing Exchange has reopened trading 
using its established reopening procedures, even if such reopening is 
more than 10 minutes after the beginning of a Trading

[[Page 47587]]

Pause.\5\ The Twelfth Amendment generally provides that the only time 
trading may resume in the absence of a Reopening Price from the Primary 
Listing Exchange is if the Primary Listing Exchange notifies the 
Processor that it is unable to reopen due to a systems or technology 
issue.
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    \5\ See Securities Exchange Act Release No. 79410 (November 28, 
2016), 81 FR 87114 (December 2, 2016) (Notice of Filing of the 
Twelfth Amendment to the National Market System Plan to Address 
Extraordinary Market Volatility) (``Twelfth Amendment''); see also 
Securities Exchange Act Release No. 79845 (January 19, 2017), 82 FR 
8551 (January 26, 2017) (Order Approving the Twelfth Amendment to 
the National Market System Plan to Address Extraordinary Market 
Volatility) (``Approval Order'').
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    To conform to this change, FINRA is amending Rule 6121.01 to 
provide that a member may not resume trading otherwise than on an 
exchange following a Trading Pause or Regulatory Halt in an NMS Stock 
that is subject to the Plan unless trading has commenced on the Primary 
Listing Exchange and either: (1) The member has received the Price 
Bands from the Processor; or (2) if the Processor hasn't yet 
disseminated Price Bands, but a Reference Price is available, the 
member calculates and applies Price Bands based on the same Reference 
Price that the Processor would use for calculating such Price Bands 
until such member receives Price Bands from the Processor, consistent 
with Section V(A)(1) \6\ of the Plan (i.e., ``Synthetic Price Bands''). 
Thus, consistent with the Twelfth Amendment, the proposed amendments 
provide that a member may only use Synthetic Price Bands in the limited 
circumstance where a Reference Price is available but Price Bands have 
not yet been disseminated by the Processor.\7\
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    \6\ FINRA is correcting a reference to the Plan in the existing 
rule text by replacing ``Section VI(A)(1)'' with ``Section 
V(A)(1).''
    \7\ See supra note 5.
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    Finally, the proposed amendments provide that a member may, 
nonetheless, resume trading otherwise than on an exchange in an NMS 
Stock that is subject to the Plan if the Primary Listing Exchange 
notifies the Processor that it is unable to reopen the security due to 
a systems or technology issue, or if the Primary Listing Exchange 
reopens trading with a quotation that has a zero bid or zero offer, or 
both, and: (1) The member has received the Price Bands from the 
Processor; and (2) trading has commenced on at least one other national 
securities exchange. In these limited circumstances, trading may resume 
otherwise than on an exchange in the absence of a Reopening Price from 
the Primary Listing Exchange, but only where the member has received 
the Price Bands from the Processor and at least one other national 
security exchange has already resumed trading. FINRA believes that 
requiring trading to first commence on at least one other national 
securities exchange prior to the resumption of trading over the counter 
continues to be appropriate and is consistent with existing FINRA rules 
and guidance regarding the resumption of over-the-counter trading in a 
paused security.\8\
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    \8\ See FAQ #6 (When can trading in a paused security resume?) 
in Regulatory Notice 10-30 (June 2010); see also Regulatory Notice 
13-12 (March 2013).
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    FINRA has filed the proposed rule change for immediate 
effectiveness. The operative date of the proposed rule change will be 
the same as the implementation date of the Twelfth Amendment to the 
Plan.\9\
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    \9\ See Securities Exchange Act Release No. 81720 (September 26, 
2017), https://www.sec.gov/rules/sro/nms/2017/34-81720.pdf (Notice 
of Filing and Immediate Effectiveness of the Fifteenth Amendment to 
the National Market System Plan to Address Extraordinary Market 
Volatility) (providing that the implementation date for the changes 
to the Plan set forth in the Twelfth and Thirteenth Amendment would 
be changed to no later than November 30, 2017).
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2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(6) of the Act,\10\ 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.
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    \10\ 15 U.S.C. 78o-3(b)(6).
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    The proposed rule change is designed to conform to the Twelfth 
Amendment to the Plan, which was approved by the Commission as being 
consistent with Section 11A of the Act \11\ and Rule 608 thereunder 
\12\ because it is appropriate in the public interest, for the 
protection of investors and the maintenance of fair and orderly 
markets, and that it removes impediments to, and perfects the mechanism 
of, a national market system.\13\ The proposed rule change seeks to 
help ensure that the goals of the Plan are met; thus, FINRA believes 
that the proposed rule change will further the goals of investor 
protection and fair and orderly markets.
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    \11\ 15 U.S.C. 78k-1.
    \12\ 17 CFR 242.608.
    \13\ See Approval Order at 8552.
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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 seeks 
to conform the requirements applicable to member trading otherwise than 
on an exchange under the Rule to the Twelfth Amendment to the Plan.

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 \14\ and Rule 19b-
4(f)(6) thereunder.\15\
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    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 17 CFR 240.19b-4(f)(6).
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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-FINRA-2017-031 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.

[[Page 47588]]

All submissions should refer to File Number SR-FINRA-2017-031. 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 Web site (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 Web site 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; the Commission does not edit 
personal identifying information from submissions. You should submit 
only information that you wish to make available publicly. All 
submissions should refer to File Number SR-FINRA-2017-031 and should be 
submitted on or before November 2, 2017.
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    \16\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-21994 Filed 10-11-17; 8:45 am]
BILLING CODE 8011-01-P