[Federal Register Volume 87, Number 180 (Monday, September 19, 2022)]
[Notices]
[Pages 57238-57244]
[FR Doc No: 2022-20144]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-95754; File No. SR-MEMX-2022-25]

Self-Regulatory Organizations; MEMX LLC; Notice of Filing and
Immediate Effectiveness of a Proposed Rule Change To Amend MEMX Rule
11.15, Clearly Erroneous Executions

September 13, 2022.
    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 [insert date], 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 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)(iii).
    \4\ 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

    The Exchange is filing with the Commission a proposed rule change
to extend the current pilot program related to amend MEMX Rule 11.15,
Clearly Erroneous Executions. The text of the proposed rule change is
provided in Exhibit 5.

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 purpose of the proposed rule change is to amend MEMX Rule
11.15, Clearly Erroneous Executions. On September 1, 2022, the
Commission approved the proposal of Cboe BZX Exchange, Inc. (``BZX''),
to adopt on a permanent basis the pilot program for Clearly Erroneous
Executions in BZX Rule 11.17.\5\ Based on the BZX Approval, the
Exchange proposes: (1) make the current clearly erroneous pilot program
permanent; and (2) limit the circumstances where clearly erroneous
review would continue to be available during Regular Trading Hours,\6\
when the LULD Plan to Address Extraordinary Market Volatility (the
``LULD Plan'') \7\ already provides similar protections for trades
occurring at prices that may be deemed erroneous. The Exchange believes
that these changes are appropriate as the LULD Plan has been approved
by the Commission on a permanent basis,\8\ and in light of amendments
to the LULD Plan, including changes to the applicable Price Bands \9\
around the open and close of trading. Further, the proposed rule change
is based on and substantively identical to BZX Rule 11.17. The only
differences between proposed MEMX Rule 11.15 and BZX Rule 11.17 relate
to different terms to define trading sessions (i.e., the Exchange uses
the terms Pre-Market Session and Post-Market Session whereas BZX uses
the terms Early Trading Session, Pre-Opening Session and After Hours
Trading Session), minor language differences for clarity, and the
omission of language related to halt auctions for securities listed on
the Exchange, as the Exchange does not list any securities or conduct
halt auctions while BZX does.
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    \5\ See Securities Exchange Act Release No. 95658 (September 1,
2022) (SR-CboeBZX-2022-037) (``BZX Approval'').
    \6\ The term ``Regular Trading Hours'' means the time between
9:30 a.m. and 4 p.m. eastern time. See MEMX Rule 1.5(bb).
    \7\ See Securities Exchange Act Release No. 67091 (May 31,
2012), 77 FR 33498 (June 6, 2012).
    \8\ See Securities Exchange Act Release No. 84843 (December 18,
2018), 83 FR 66464 (December 26, 2018) (``Notice''); 85623 (April
11, 2019), 84 FR 16086 (April 17, 2019) (File No. 4-631)
(``Amendment Eighteen'').
    \9\ ``Price Bands'' refers to the term provided in Section V of
the LULD Plan.
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Proposal To Make the Clearly Erroneous Pilot Permanent
    On May 4, 2020, the Commission approved MEMX's Form 1 Application
to register as a national securities exchange with rules including, on
a pilot basis, MEMX Rule 11.15.\10\ Rule 11.15, among other things (i)
provides for uniform treatment of clearly erroneous execution reviews
in multi-stock events involving twenty or more securities; and (ii)
reduces the ability of the Exchange to deviate from objective standards
set forth in the rule. The rule further provides that: (i) a series of
transactions in a particular security on one or more trading days may
be viewed as one event if all such transactions were effected based on
the same fundamentally incorrect or grossly misinterpreted issuance
information resulting in a severe valuation error for all such
transactions; and (ii) in the event of any disruption or malfunction in
the operation of the electronic communications and trading facilities
of the Exchange, another SRO, or responsible single plan processor in
connection with the transmittal or receipt of a trading halt, an
Officer of the Exchange or senior level employee designee, acting on
his or her own motion, shall nullify any transaction that occurs after
a trading halt has been declared by the primary listing market for a
security, and before such a trading halt has officially ended according
to the primary listing market.\11\
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    \10\ See Securities Exchange Release No. 88806 (May 4, 2020), 85
FR 27451 (May 8, 2020).
    \11\ See MEMX Rule 11.15.
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    When it originally approved the clearly erroneous pilot, the
Commission explained that the changes were ``being

implemented on a pilot basis so that the Commission and the Exchanges
can monitor the effects of the pilot on the markets and investors, and
consider appropriate adjustments, as necessary.'' \12\ In the 12 years
since that time, national securities exchanges have gained considerable
experience in the operation of the rule, as amended on a pilot basis.
Based on that experience, the Exchange believes that the program should
be allowed to continue on a permanent basis so that equities market
participants and investors can benefit from the increased certainty
provided by the amended rule.
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    \12\ See e.g., Securities Exchange Act Release No. 62886
(September 10, 2010), 75 FR 56613 (September 16, 2010) (SR-BATS-
2010-016).
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    The clearly erroneous pilot was implemented following a severe
disruption in the U.S. equities markets on May 6, 2010 (``Flash
Crash'') to ``provide greater transparency and certainty to the process
of breaking trades.'' \13\ Largely, the pilot reduced the discretion of
the Exchange, other national securities exchanges, and Financial
Industry Regulatory Authority (``FINRA'') to deviate from the objective
standards in their respective rules when dealing with potentially
erroneous transactions. The pilot has thus helped afford greater
certainty to Members and investors about when trades will be deemed
erroneous pursuant to self-regulatory organization (``SRO'') rules and
has provided a more transparent process for conducting such reviews.
The Exchange proposes to make the current pilot permanent so that
market participants can continue to benefit from the increased
certainty afforded by the current rule.
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    \13\ Id.
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Amendments to the Clearly Erroneous Rules
    When the Participants to the LULD Plan filed to introduce the Limit
Up-Limit Down (``LULD'') mechanism, itself a response to the Flash
Crash, a handful of commenters noted the potential discordance between
the clearly erroneous rules and the Price Bands used to limit the price
at which trades would be permitted to be executed pursuant to the LULD
Plan. For example, two commenters requested that the clearly erroneous
rules be amended so the presumption would be that trades executed
within the Price Bands would not be not subject to review.\14\ While
the Participants acknowledged that the potential to prevent clearly
erroneous executions would be a ``key benefit'' of the LULD Plan, the
Participants decided not to amend the clearly erroneous rules at that
time.\15\ In the years since, industry feedback has continued to
reflect a desire to eliminate the discordance between the LULD
mechanism and the clearly erroneous rules so that market participants
would have more certainty that trades executed with the Price Bands
would stand. For example, the Equity Market Structure Advisory
Committee (``EMSAC'') Market Quality Subcommittee included in its April
19, 2016, status report a preliminary recommendation that clearly
erroneous rules be amended to conform to the Price Bands--i.e., ``any
trade that takes place within the band would stand and not be broken
and trades outside the LU/LD bands would be eligible for the
consideration of the Clearly Erroneous rules.'' \16\
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    \14\ See Securities Exchange Act Release No. 67091 (May 31,
2012), 77 FR 33498 (June 6, 2012) (File No. 4-631) (n. 33505).
    \15\ Id.
    \16\ See EMSAC Market Quality Subcommittee, Recommendations for
Rulemaking on Issues of Market Quality (November 29, 2016),
available at https://www.sec.gov/spotlight/emsac/emsac-recommendations-rulemaking-market-quality.pdf.
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    The Exchange believes that it is important for there to be some
mechanism to ensure that investors' orders are either not executed at
clearly erroneous prices or are subsequently busted as needed to
maintain a fair and orderly market. At the same time, the Exchange
believes that the LULD Plan, as amended, would provide sufficient
protection for trades executed during Regular Trading Hours. Indeed,
the LULD mechanism could be considered to offer superior protection as
it prevents potentially erroneous trades from being executed in the
first instance. After gaining experience with the LULD Plan, the
Exchange now believes that it is appropriate to largely eliminate
clearly erroneous review during Regular Trading Hours when Price Bands
are in effect. Thus, as proposed, trades executed within the Price
Bands would stand, barring one of a handful of identified scenarios
where such review may still be necessary for the protection of
investors. The Exchange believes that this change would be beneficial
for the U.S. equities markets as it would ensure that trades executed
within the Price Bands are subject to clearly erroneous review in only
rare circumstances, resulting in greater certainty for Members and
investors.
    The current LULD mechanism for addressing extraordinary market
volatility is available solely during Regular Trading Hours. Thus,
trades during the Exchange's Pre-Market Session \17\ or Post-Market
Session \18\ would not benefit from this protection and could
ultimately be executed at prices that may be considered erroneous. For
this reason, the Exchange proposes that transactions executed during
the Pre-Market Session or Post-Market Session would continue to be
reviewable as clearly erroneous. Continued availability of the clearly
erroneous rule during pre- and post-market trading sessions would
therefore ensure that investors have appropriate recourse when
erroneous trades are executed outside of the hours where similar
protection can be provided by the LULD Plan. Further, the proposal is
designed to eliminate the potential discordance between clearly
erroneous review and LULD Price Bands, which does not exist outside of
Regular Trading Hours because the LULD Plan is not in effect. Thus, the
Exchange believes that it is appropriate to continue to allow
transactions to be eligible for clearly erroneous review if executed
outside of Regular Trading Hours.
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    \17\ The term ``Pre-Market Session'' means the time between 7
a.m. and 9:30 a.m. eastern time. See MEMX Rule 1.5(x).
    \18\ The term ``Post-Market Session'' means the time between 4
p.m. and 5 p.m. eastern time. See MEMX Rule 1.5(w).
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    On the other hand, there would be much more limited potential to
request that a transaction be reviewed as potentially erroneous during
Regular Trading Hours. With the introduction of the LULD mechanism in
2013, clearly erroneous trades are largely prevented by the requirement
that trades be executed within the Price Bands. In addition, in 2019,
Amendment Eighteen to the LULD Plan eliminated double-wide Price Bands:
(1) at the Open, and (2) at the Close for Tier 2 NMS Stocks 2 with a
Reference Price above $3.00.\19\ Due to these changes, the Exchange
believes that the Price Bands would provide sufficient protection to
investor orders such that clearly erroneous review would no longer be
necessary during Regular Trading Hours. As the Participants to the LULD
Plan explained in Amendment Eighteen: ``Broadly, the Limit Up-Limit
Down mechanism prevents trades from happening at prices where one party
to the trade would be considered `aggrieved,' and thus could be viewed
as an appropriate mechanism to supplant clearly erroneous rules.''
While the Participants also expressed concern that the Price Bands
might be too wide to afford meaningful protection around the open and
close of trading, amendments to the LULD Plan adopted in Amendment

Eighteen narrowed Price Bands at these times in a manner that the
Exchange believes is sufficient to ensure that investors' orders would
be appropriately protected in the absence of clearly erroneous review.
The Exchange therefore believes that it is appropriate to rely on the
LULD mechanism as the primary means of preventing clearly erroneous
trades during Regular Trading Hours.
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    \19\ See Amendment Eighteen, supra note 8.
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    At the same time, the Exchange is cognizant that there may be
limited circumstances where clearly erroneous review may continue to be
appropriate, even during Regular Trading Hours. Thus, the Exchange
proposes to amend its clearly erroneous rules to enumerate the specific
circumstances where such review would remain available during the
course of Regular Trading Hours, as follows. All transactions that fall
outside of these specific enumerated exceptions would be ineligible for
clearly erroneous review.
    First, pursuant to proposed paragraph (c)(1)(A), a transaction
executed during Regular Trading Hours would continue to be eligible for
clearly erroneous review if the transaction is not subject to the LULD
Plan. In such case, the Numerical Guidelines set forth in paragraph
(c)(2) of Rule 11.15 will be applicable to such NMS Stock. While the
majority of securities traded on the Exchange would be subject to the
LULD Plan, certain equity securities, such as rights and warrants, are
explicitly excluded from the provisions of the LULD Plan and would
therefore be eligible for clearly erroneous review instead.\20\
Similarly, there are instances, such as the opening auction on the
primary listing market,\21\ where transactions are not ordinarily
subject to the LULD Plan, or circumstances where a transaction that
ordinarily would have been subject to the LULD Plan is not--due, for
example, to some issue with processing the Price Bands. These
transactions would continue to be eligible for clearly erroneous
review, effectively ensuring that such review remains available as a
backstop when the LULD Plan would not prevent executions from occurring
at erroneous prices in the first instance.
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    \20\ See Appendix A of the LULD Plan.
    \21\ The initial Reference Price used to calculate Price Bands
is typically set by the Opening Price on the primary listing market.
See Section V(B) of the LULD Plan.
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    Second, investors would also continue to be able to request review
of transactions that resulted from certain systems issues pursuant to
proposed paragraph (c)(1)(B). This limited exception would help to
ensure that trades that should not have been executed would continue to
be subject to clearly erroneous review. Specifically, as proposed,
transactions executed during Regular Trading Hours would be eligible
for clearly erroneous review pursuant to proposed paragraph (c)(1)(B)
if the transaction is the result of an Exchange technology or systems
issue that results in the transaction occurring outside of the
applicable LULD Price Bands pursuant to Rule 11.15(g). A transaction
subject to review pursuant to this paragraph shall be found to be
clearly erroneous if the price of the transaction to buy (sell) that is
the subject of the complaint is greater than (less than) the Reference
Price, described in paragraph (d) of this Rule, by an amount that
equals or exceeds the applicable Percentage Parameter defined in
Appendix A to the LULD Plan (``Percentage Parameters'').
    Third, the Exchange proposes to narrowly allow for the review of
transactions during Regular Trading Hours when the Reference Price,
described in proposed paragraph (d), is determined to be erroneous by
an Officer of the Exchange. Specifically, a transaction executed during
Regular Trading Hours would be eligible for clearly erroneous review
pursuant to proposed paragraph (c)(1)(C) if the transaction involved,
in the case of (1) a corporate action or new issue or (2) a security
that enters a Trading Pause pursuant to the LULD Plan and resumes
trading without an auction,\22\ a Reference Price that is determined to
be erroneous by an Officer of the Exchange because it clearly deviated
from the theoretical value of the security. In such circumstances, the
Exchange may use a different Reference Price pursuant to proposed
paragraph (d)(2) of this Rule. A transaction subject to review pursuant
to this paragraph shall be found to be clearly erroneous if the price
of the transaction to buy (sell) that is the subject of the complaint
is greater than (less than) the new Reference Price, described in
paragraph (d)(2) below, by an amount that equals or exceeds the
applicable Numerical Guidelines or Percentage Parameters, as applicable
depending on whether the security is subject to the LULD Plan.
Specifically, the Percentage Parameters would apply to all transactions
except those in an NMS Stock that is not subject to the LULD Plan, as
described in paragraph (c)(1)(A).
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    \22\ The Exchange notes that the ``resumption of trading without
an auction'' provision of the proposed rule text applies only to
securities that enter a Trading Pause pursuant to LULD and does not
apply to a corporate action or new issue.
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    In the context of a corporate action or a new issue, there may be
instances where the security's Reference Price is later determined by
the Exchange to be erroneous (e.g., because of a bad first trade for a
new issue), and subsequent LULD Price Bands are calculated from that
incorrect Reference Price. In determining whether the Reference Price
is erroneous in such instances, the Exchange would generally look to
see if such Reference Price clearly deviated from the theoretical value
of the security. In such cases, the Exchange would consider a number of
factors to determine a new Reference Price that is based on the
theoretical value of the security, including but not limited to, the
offering price of the new issue, the ratio of the stock split applied
to the prior day's closing price, the theoretical price derived from
the numerical terms of the corporate action transaction such as the
exchange ratio and spin-off terms, and the prior day's closing price on
the OTC market for an OTC up-listing.\23\ In the foregoing instances,
the theoretical value of the security would be used as the new
Reference Price when applying the Percentage Parameters under the LULD
Plan (or Numerical Guidelines if the transaction is in an NMS Stock
that is not subject to the LULD Plan) to determine whether executions
would be cancelled as clearly erroneous.
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    \23\ Using transaction data reported to the FINRA OTC Reporting
Facility, FINRA disseminates via the Trade Data Dissemination
Service a final closing report for OTC equity securities for each
business day that includes, among other things, each security's
closing last sale price.
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    The following illustrate the proposed application of the rule in
the context of a corporate action or new issue:
Example 1
    1. ABCD is subject to a corporate action, 1 for 10 reverse split,
and the previous day close was $5, but the new theoretical price based
on the terms of the corporate action is $50.
    2. The security opens at $5, with LULD bands at $4.50 x $5.50.
    3. The bands will be calculated correctly but the security is
trading at an erroneous price based on the valuation of the remaining
outstanding shares.
    4. The theoretical price of $50 would be used as the new Reference
Price when applying LULD bands to determine if executions would be
cancelled as clearly erroneous.
Example 2
    1. ABCD is subject to a corporate action, the company is doing a
spin off where a new issue will be listed, BCDE. ABCD trades at $50,
and the spinoff company is worth \1/5\ of ABCD.

    2. BCDE opens at $50 in the belief it is the same company as ABCD.
    3. The theoretical values of the two companies are ABCD $40 and
BCDE $10.
    4. BCDE would be deemed to have had an incorrect Reference Price
and the theoretical value of $10 would be used as the new Reference
Price when applying the LULD Bands to determine if executions would be
cancelled as clearly erroneous.
Example 3
    1. ABCD is an uplift from the OTC market, the prior days close on
the OTC market was $20.
    2. ABCD opens trading on the new listing exchange at $0.20 due to
an erroneous order entry.
    3. The new Reference Price to determine clearly erroneous
executions would be $20, the theoretical value of the stock from where
it was last traded.
    In the context of the rare situation in which a security that
enters a LULD Trading Pause and resumes trading without an auction
(i.e., reopens with quotations), the LULD Plan requires that the new
Reference Price in this instance be established by using the mid-point
of the best bid and offer (``BBO'') on the primary listing exchange at
the reopening time.\24\ This can result in a Reference Price and
subsequent LULD Price Band calculation that is significantly away from
the security's last traded or more relevant price, especially in less
liquid names. In such rare instances, the Exchange is proposing to use
a different Reference Price that is based on the prior LULD Band that
triggered the Trading Pause, rather than the midpoint of the BBO.
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    \24\ See LULD Plan, Section I(U) and V(C)(1).
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    The following example illustrates the proposed application of the
rule in the context of a security that reopens without an auction:
Example 4:
    1. ABCD stock is trading at $20, with LULD Bands at $18 x $22.
    2. An incoming buy order causes the stock to enter a Limit State
Trading Pause and then a Trading Pause at $22.
    3. During the Trading Pause, the buy order causing the Trading
Pause is cancelled.
    4. At the end of the 5-minute halt, there is no crossed interest
for an auction to occur, thus trading would resume on a quote.
    5. Upon resumption, a quote that was available prior to the Trading
Pause (e.g., a quote was resting on the book prior to the Trading
Pause), is widely set at $10 x $90.
    6. The Reference Price upon resumption is $50 (mid-point of BBO).
    7. The SIP will use this Reference Price and publish LULD Bands of
$45 x $55 (i.e., far away from BBO prior to the halt).
    8. The bands will be calculated correctly, but the $50 Reference
Price is subsequently determined to be incorrect as the price clearly
deviated from where it previously traded prior to the Trading Pause.
    9. The new Reference Price would be $22 (i.e., the last effective
Price Band that was in a limit state before the Trading Pause), and the
LULD Bands would be applied to determine if the executions should be
cancelled as clearly erroneous.
    In all of the foregoing situations, investors would be left with no
remedy to request clearly erroneous review without the proposed
carveouts in paragraph (c)(1)(C) because the trades occurred within the
LULD Price Bands (albeit LULD Price Bands that were calculated from an
erroneous Reference Price). The Exchange believes that removing the
current ability for the Exchange to review in these narrow
circumstances would lessen investor protections.
Numerical Guidelines
    Today, paragraph (c)(1) defines the Numerical Guidelines that are
used to determine if a transaction is deemed clearly erroneous during
Regular Trading Hours, or during the Pre-Market Session and Post-Market
Session. With respect to Regular Trading Hours, trades are generally
deemed clearly erroneous if the execution price differs from the
Reference Price (i.e., last sale) by 10% if the Reference Price is
greater than $0.00 up to and including $25.00; 5% if the Reference
Price is greater than $25.00 up to and including $50.00; and 3% if the
Reference Price is greater than $50.00. Wider parameters are also used
for reviews for Multi-Stock Events, as described in paragraph (c)(2).
With respect to transactions in Leveraged ETF/ETN securities executed
during Regular Trading Hours, Pre-Market Session and Post-Market
Session, trades are deemed clearly erroneous if the execution price
exceeds the Regular Trading Hours Numerical Guidelines multiplied by
the leverage multiplier.
    Given the changes described in this proposed rule change, the
Exchange proposes to amend the way that the Numerical Guidelines are
calculated during Regular Trading Hours in the handful of instances
where clearly erroneous review would continue to be available.
Specifically, the Exchange would base these Numerical Guidelines, as
applied to the circumstances described in paragraph (c)(1)(A), on the
Percentage Parameters used to calculate Price Bands, as set forth in
Appendix A to the LULD Plan. Without this change, a transaction that
would otherwise stand if Price Bands were properly applied to the
transaction may end up being subject to review and deemed clearly
erroneous solely due to the fact that the Price Bands were not
available due to a systems or other issue. The Exchange believes that
it makes more sense to instead base the Price Bands on the same
parameters as would otherwise determine whether the trade would have
been allowed to execute within the Price Bands. The Exchange also
proposes to modify the Numerical Guidelines applicable to leveraged
ETF/ETN securities during Regular Trading Hours. As noted above, the
Numerical Guidelines will only be applicable to transactions eligible
for review pursuant paragraph (c)(1)(A) (i.e., to NMS Stocks that are
not subject to the LULD Plan). As leveraged ETF/ETN securities are
subject to LULD and thus the Percentage Parameters will be applicable
during Regular Trading Hours, the Exchange proposes to eliminate the
Numerical Guidelines for leveraged ETF/ETN securities traded during
Regular Trading Hours. However, as no Price Bands are available outside
of Regular Trading Hours, the Exchange proposes to keep the existing
Numerical Guidelines in place for transactions in leveraged ETF/ETN
securities that occur during the Pre-Market Session and Post-Market
Session.
    The Exchange also proposes to move existing paragraphs (c)(2),
(c)(3), and (d) to proposed paragraph (c)(2)(B), (c)(2)(C), and
(C)(2)(D), respectively, as Multi-Stock Events, Additional Factors, and
Outlier Transactions will only be subject to review if those NMS Stocks
are not subject to the LULD Plan or occur during the Pre-Market Session
and Post-Market Session. Proposed paragraph (c)(2)(B) is substantially
similar to existing paragraph (c)(2) except for a change in rule
reference to paragraph (c)(1) has been updated to paragraph (c)(1)(A).
Further, given the proposal to move existing paragraph (c)(2) to
paragraph (c)(2)(B), the Exchange also proposes to amend applicable
rule references throughout paragraph (c)(2)(A). Finally, the Exchange
proposes to update applicable rule references in paragraph (c)(2)(D)
based on the above-described structural changes to the Rule.
Reference Price
    As proposed, the Reference Price used would continue to be based on
last sale

and would be memorialized in proposed paragraph (d). Continuing to use
the last sale as the Reference Price is necessary for operational
efficiency as it may not be possible to perform a timely clearly
erroneous review if doing so required computing the arithmetic mean
price of eligible reported transactions over the past five minutes, as
contemplated by the LULD Plan. While this means that there would still
be some differences between the Price Bands and the clearly erroneous
parameters, the Exchange believes that this difference is reasonable in
light of the need to ensure timely review if clearly erroneous rules
are invoked. The Exchange also proposes to allow for an alternate
Reference Price to be used as prescribed in proposed paragraphs (d)(1),
(2), and (3). Specifically, the Reference Price may be a value other
than the consolidated last sale immediately prior to the execution(s)
under review (1) in the case of Multi-Stock Events involving twenty or
more securities, as described in paragraph (c)(2)(B) above, (2) in the
case of an erroneous Reference Price, as described in paragraph
(c)(1)(C) above,\25\ or (3) in other circumstances, such as, for
example, relevant news impacting a security or securities, periods of
extreme market volatility, sustained illiquidity, or widespread system
issues, where use of a different Reference Price is necessary for the
maintenance of a fair and orderly market and the protection of
investors and the public interest, provided that such circumstances
occurred during Pre-Market Session or Post-Market Session or the
execution(s) are eligible for review pursuant to paragraph (c)(1)(A).
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    \25\ As discussed above, in the case of (c)(1)(C)(1), the
Exchange would consider a number of factors to determine a new
Reference Price that is based on the theoretical value of the
security, including but not limited to, the offering price of the
new issue, the ratio of the stock split applied to the prior day's
closing price, the theoretical price derived from the numerical
terms of the corporate action transaction such as the exchange ratio
and spin-off terms, and the prior day's closing price on the OTC
market for an OTC up-listing. In the case of (c)(1)(C)(2), the
Reference Price will be the last effective Price Band that was in a
limit state before the Trading Pause.
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Appeals
    As described more fully below, the Exchange proposes to eliminate
paragraph (f), System Disruption or Malfunction. Accordingly, the
Exchange proposes to remove from paragraph (e)(2), Appeals, each
reference to paragraph (f), and include language referencing proposed
paragraph (g), Transactions Occurring Outside of the LULD Bands.
System Disruption or Malfunction
    To conform with the structural changes described above, the
Exchange now proposes to remove paragraph 11.15(f), System Disruption
or Malfunction, and proposes new paragraph (c)(1)(B). Specifically, as
described in paragraph (c)(1)(B), transactions occurring during Regular
Trading Hours that are executed outside of the LULD Price Bands due to
an Exchange technology or system issue, may be subject to clearly
erroneous review pursuant to proposed paragraph 11.15(g). Proposed
paragraph 11.15(c)(1)(B) further provides that a transaction subject to
review pursuant to this paragraph shall be found to be clearly
erroneous if the price of the transaction to buy (sell) that is the
subject of the complaint is greater than (less than) the Reference
Price, described in paragraph (d), by an amount that equals or exceeds
the applicable Percentage Parameter defined in Appendix A to the LULD
Plan.
Trade Nullification for UTP Securities That Are the Subject of Initial
Public Offerings
    Current paragraph (h) of Rule 11.15 provides different procedures
for conducting clearly erroneous review in initial public offering
(``IPO'') securities that are traded pursuant to unlisted trading
privileges (``UTP'') after the initial opening of such IPO securities
on the listing market. Specifically, this paragraph provides that a
clearly erroneous error may be deemed to have occurred in the opening
transaction of the subject security if the execution price of the
opening transaction on the Exchange is the lesser of $1.00 or 10% away
from the opening price on the listing exchange or association. The
Exchange no longer believes that this provision is necessary as opening
transactions on the Exchange following an IPO are subject to Price
Bands pursuant to the LULD Plan. The Exchange therefore proposes to
eliminate this provision in connection with the broader changes to
clearly erroneous review during Regular Trading Hours.
Securities Subject To Limit Up-Limit Down Plan
    The Exchange proposes to renumber paragraph (i) to paragraph (h)
based on the proposal to eliminate existing paragraph (h), and to
rename the paragraph to provide for transactions occurring outside of
LULD Price Bands. Given that proposed paragraph (c)(1) defines the LULD
Plan, the Exchange also proposes to eliminate redundant language from
proposed paragraph (h). Finally, the Exchange also proposes to update
references to the LULD Plan and Price Bands so that they are uniform
throughout the Rule and to update rule references throughout the
paragraph to conform to the structural changes to the Rule described
above.
Multi-Day Event and Trading Halts
    The Exchange proposes to renumber paragraphs (j) and (k) to
paragraphs (h) and (i), respectively, based on the proposal to
eliminate existing paragraph (h). Additionally, the Exchange proposes
to modify the text of both paragraphs to reference the Percentage
Parameters as well as the Numerical Guidelines. Specifically, the
existing text of proposed paragraphs (h) and (i) provides that any
action taken in connection with this paragraph will be taken without
regard to the Numerical Guidelines set forth in this Rule. The Exchange
proposes to amend the rule text to provide that any action taken in
connection with this paragraph will be taken without regard to the
Percentage Parameters or Numerical Guidelines set forth in this Rule,
with the Percentage Parameters being applicable to an NMS Stock subject
to the LULD Plan and the Numerical Guidelines being applicable to an
NMS Stock not subject to the LULD Plan.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with
the requirements of Section 6(b) of the Act,\26\ in general, and
Section 6(b)(5) of the Act,\27\ in particular, in that it is designed
to remove impediments to and perfect the mechanism of a free and open
market and a national market system, to promote just and equitable
principles of trade, and, in general, to protect investors and the
public interest and not to permit unfair discrimination between
customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------

    \26\ 15 U.S.C. 78f(b).
    \27\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    As explained in the purpose section of this proposed rule change,
the current pilot was implemented following the Flash Crash to bring
greater transparency to the process for conducting clearly erroneous
reviews, and to help assure that the review process is based on clear,
objective, and consistent rules across the U.S. equities markets. The
Exchange believes that the amended clearly erroneous rules have been
successful in that regard and have thus furthered fair and orderly
markets. Specifically, the Exchange believes that the pilot has
successfully ensured that

such reviews are conducted based on objective and consistent standards
across SROs and has therefore afforded greater certainty to Members and
investors. The Exchange therefore believes that making the current
pilot a permanent program is appropriate so that equities market
participants can continue to reap the benefits of a clear, objective,
and transparent process for conducting clearly erroneous reviews. In
addition, the Exchange understands that the other U.S. equities
exchanges and FINRA will also file largely identical proposals to make
their respective clearly erroneous pilots permanent. The Exchange
therefore believes that the proposed rule change would promote
transparency and uniformity across markets concerning review of
transactions as clearly erroneous and would also help assure consistent
results in handling erroneous trades across the U.S. equities markets,
thus furthering fair and orderly markets, the protection of investors,
and the public interest.
    Similarly, the Exchange believes that it is consistent with just
and equitable principles of trade to limit the availability of clearly
erroneous review during Regular Trading Hours. The Plan was approved by
the Commission to operate on a permanent rather than pilot basis. As a
number of market participants have noted, the LULD Plan provides
protections that ensure that investors' orders are not executed at
prices that may be considered clearly erroneous. Further, amendments to
the LULD Plan approved in Amendment Eighteen serve to ensure that the
Price Bands established by the LULD Plan are ``appropriately tailored
to prevent trades that are so far from current market prices that they
would be viewed as having been executed in error.'' \28\ Thus, the
Exchange believes that clearly erroneous review should only be
necessary in very limited circumstances during Regular Trading Hours.
Specifically, such review would only be necessary in instances where a
transaction was not subject to the LULD Plan, or was the result of some
form of systems issue, as detailed in the purpose section of this
proposed rule change. Additionally, in narrow circumstances where the
transaction was subject to the LULD Plan, a clearly erroneous review
would be available in the case of (1) a corporate action or new issue
or (2) a security that enters a Trading Pause pursuant to LULD and
resumes trading without an auction, where the Reference Price is
determined to be erroneous by an Officer of the Exchange because it
clearly deviated from the theoretical value of the security. Thus,
eliminating clearly erroneous review in all other instances will serve
to increase certainty for Members and investors that trades executed
during Regular Trading Hours would typically stand and would not be
subject to review.
---------------------------------------------------------------------------

    \28\ See Amendment Eighteen, supra note 8.
---------------------------------------------------------------------------

    Given the fact that clearly erroneous review would largely be
limited to transactions that were not subject to the LULD Plan, the
Exchange also believes that it is necessary to change the parameters
used to determine whether a trade is clearly erroneous. Specifically,
due to the different parameters currently used for clearly erroneous
review and for determining Price Bands, it is possible that a trade
that would have been permitted to execute within the Price Bands would
later be deemed clearly erroneous, if, for example, a systems issue
prevented the dissemination of the Price Bands. The Exchange believes
that this result is contrary to the principle that trades within the
Price Bands should stand and has the potential to cause investor
confusion if trades that are properly executed within the applicable
parameters described in the LULD Plan are later deemed erroneous. By
using consistent parameters for clearly erroneous reviews conducted
during Regular Trading Hours and the calculation of the Price Bands,
the Exchange believes that this change would also serve to promote
greater certainty with regards to when trades may be deemed erroneous.
    The Exchange believes that it is consistent with the protection of
investors and the public interest to remove the current provision of
the clearly erroneous rule dealing with UTP securities that are the
subject of IPOs. This provision applies specifically to opening
transactions on a non-listing market following an IPO on the listing
market. As such, review under this paragraph is limited to trades
conducted during Regular Trading Hours. As previously addressed, trades
executed during Regular Trading Hours would generally not be subject to
clearly erroneous review but would instead be protected by the Price
Bands. The Exchange therefore no longer believes that this paragraph is
necessary, as all trades subject to this provision today would either
be subject to the LULD Plan, or, in the event of some systems or other
issue, would be subject to the provisions that apply to transactions
that are not adequately protected by the LULD Plan.
    Finally, the proposed rule changes make organizational updates to
the Exchange's Clearly Erroneous Execution Rule as well as minor
updates and corrections to the Rule to improve readability and clarity.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change would
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The proposal would ensure
the continued, uninterrupted operation of harmonized clearly erroneous
execution rules across the U.S. equities markets while also amending
those rules to provide greater certainty to Members and investors that
trades will stand if executed during Regular Trading Hours where the
LULD Plan provides adequate protection against trading at erroneous
prices. The Exchange understands that the other national securities
exchanges and FINRA will also file similar proposals, the substance of
which are identical to this proposal. 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

    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 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 \29\ and Rule 19b-
4(f)(6) \30\ thereunder.
---------------------------------------------------------------------------

    \29\ 15 U.S.C. 78s(b)(3)(A).
    \30\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) \31\ normally
does not become operative prior to 30 days after the date of the
filing. However, Rule 19b-4(f)(6)(iii) \32\ 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 on

October 1, 2022. The Commission believes that waiving the 30-day
operative delay is consistent with the protection of investors and the
public interest, as it will allow the Exchange to coordinate its
implementation of the revised clearly erroneous execution rules with
the other national securities exchanges and FINRA, and will help ensure
consistency across the SROs.\33\ For this reason, the Commission hereby
waives the 30-day operative delay and designates the proposed rule
change as operative upon filing.\34\
---------------------------------------------------------------------------

    \31\ 17 CFR 240.19b-4(f)(6).
    \32\ 17 CFR 240.19b-4(f)(6)(iii).
    \33\ See SR-CboeBZX-2022-37 (July 8, 2022).
    \34\ 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).
---------------------------------------------------------------------------

    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 SR-MEMX-2022-25 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-2022-25. 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 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-2022-25
and should be submitted on or before October 11, 2022.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\35\
---------------------------------------------------------------------------

    \35\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-20144 Filed 9-16-22; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 76, Number 168 (Tuesday, August 30, 2011)]
[Rules and Regulations]
[Pages 53822-53824]
[FR Doc No: 2011-22073]

-----------------------------------------------------------------------

DEPARTMENT OF HOMELAND SECURITY

Coast Guard

33 CFR Part 165

[Docket No. USCG-2011-0709]
RIN 1625-AA00

Safety Zone; Labor Day at the Landing Santa Rosa Sound, Fort
Walton Beach, FL

AGENCY: Coast Guard, DHS.

ACTION: Temporary final rule.

-----------------------------------------------------------------------

SUMMARY: The Coast Guard is establishing a temporary safety zone for a
portion of the Santa Rosa Sound in Fort Walton Beach, Florida extending
150 yards around a fireworks barge that will be positioned between Fort
Walton Beach Landing and the Gulf Intracoastal Waterway. This action is
necessary for the protection of persons and vessels on navigable waters
during Fort Walton Beach's Labor Day at the Landing fireworks display.
Entry into, transiting or anchoring in this zone is prohibited to all
vessels, mariners, and persons unless specifically authorized by the
Captain of the Port (COTP) Mobile or a designated representative.

DATES: This rule is effective from 8:15 p.m. until 9:15 p.m. on
September 4, 2011.

ADDRESSES: Documents indicated in this preamble as being available in
the docket are part of docket USCG-2011-0709 and are available online
by going to http://www.regulations.gov, inserting USCG-2011-0709 in the
``Keyword'' box, and then clicking ``Search.'' They are also available
for inspection or copying at the Docket Management Facility (M-30),
U.S. Department of Transportation, West Building Ground Floor, Room
W12-140, 1200 New Jersey Avenue, SE., Washington, DC 20590, between 9
a.m. and 5 p.m., Monday through Friday, except Federal holidays and
U.S. Coast Guard Sector Mobile (spw), Building 102, Brookley Complex
South Broad Street, Mobile, AL 36615, between 8 a.m. and 3:30 p.m.,
Monday through Friday, except Federal holidays.

FOR FURTHER INFORMATION CONTACT: If you have questions on this
temporary rule, call or e-mail LT Lenell J. Carson, Coast Guard Sector
Mobile, Waterways Division; telephone<PHONE_NUMBER> or e-mail
<EMAIL_ADDRESS>If you have questions on viewing the docket,
call Renee V. Wright, Program Manager, Docket Operations, telephone
202-366-9826.

SUPPLEMENTARY INFORMATION:

Regulatory Information

    The Coast Guard is issuing this temporary final rule without prior
notice and opportunity to comment pursuant to authority under section
4(a) of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). This
provision authorizes an agency to issue a rule without prior notice and
opportunity to comment when the agency for good cause finds that those
procedures are ``impracticable, unnecessary, or contrary to the public
interest.'' Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good
cause exists for not publishing a notice of proposed rulemaking (NPRM)
with respect to this rule because there is insufficient time to publish
a NPRM. The Coast Guard received an application for a Marine Event
Permit on July 11, 2011, from the Greater Fort Walton Beach Chamber of
Commerce, noting their intention to hold their Labor Day at the Landing
fireworks display on September 4, 2011. Publishing a NPRM is
impracticable because it would unnecessarily delay the required safety
zone's effective date. The safety zone is needed to protect persons and
vessels from safety hazards associated with the fireworks display and
will be enforced with actual notice during a short period of time.
    Under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause
exists for making this rule effective less than 30 days after
publication in the Federal Register. The Coast Guard received an
application for a Marine Event Permit on July 11, 2011, from the
Greater Fort Walton Beach Chamber of Commerce, noting their intention
to hold their Labor Day at the Landing fireworks display on September
4, 2011. Additionally, this rule is temporary and will only be enforced
for a short period while the fireworks display is taking place.
Providing a 30 day notice period would unnecessarily delay the
effective date and is impracticable because immediate action is needed
to protect persons and vessels from safety hazards associated with the
fireworks display.

Basis and Purpose

    The Greater Fort Walton Beach Chamber of Commerce applied for a
Marine Event Permit to conduct a fireworks display on the Santa Rosa
Sound, in Fort Walton Beach, Florida from 8:15 p.m. until 9:15 p.m. on
September 4, 2011. This event will draw in a large number of pleasure
crafts and the fireworks display poses a significant safety hazard to
both vessels and mariners operating in or near the area. The COTP
Mobile is establishing a temporary safety zone for a portion of the
Santa Rosa Sound, Ft. Walton Beach, Florida, to protect persons and
vessels during the fireworks display.
    The COTP anticipates minimal impact on vessel traffic due to this
regulation. However, this safety zone is deemed necessary for the
protection of life and property within the COTP Mobile zone.

Discussion of Rule

    The Coast Guard is establishing a temporary safety zone for a
portion of the Santa Rosa Sound in Fort Walton Beach, Florida extending
150 yards around a fireworks barge that will be positioned between Fort
Walton Beach Landing and the Gulf Intracoastal Waterway. This temporary
safety zone will protect the safety of life and property in this area.
Entry into, transiting or anchoring in this zone is prohibited to all
vessels, mariners, and persons unless specifically authorized by the
COTP Mobile or a designated representative. The COTP may be contacted
by telephone at<PHONE_NUMBER>.
    The COTP Mobile or a designated representative will inform the
public through broadcast notice to mariners of changes in the effective
period and enforcement times for the safety zone. This rule is
effective from 8:15 p.m. until 9:15 p.m. on September 4, 2011.

Regulatory Analyses

    We developed this rule after considering numerous statutes and
executive orders related to rulemaking. Below we summarize our analyses
based on 13 of these statutes or executive orders.

Regulatory Planning and Review

    This rule is not a significant regulatory action under section 3(f)
of Executive Order 12866, Regulatory Planning and Review, as
supplemented by Executive Order 13563, Improving Regulation and
Regulatory Review, and does not require an assessment of potential
costs and benefits under section 6(a)(3) of that Executive Order 12866
or under section 1 of Executive Order 13563. The Office of Management
and Budget has not reviewed it under that those Orders.
    The temporary safety zone listed in this rule will restrict vessel
traffic from entering, transiting or anchoring in a small portion of
the Santa Rosa Sound during a short period of time. The effect of this
regulation will not be significant for several reasons: (1) This rule
will only affect vessel traffic for a short duration; (2) vessels may
request permission from the COTP to transit through the safety zone;
and (3) the impacts on routine navigation are expected to be minimal.
Notifications to the marine community will be made through local notice
to mariners and broadcast notice to mariners. These notifications will
allow the public to plan operations around the affected area.

Small Entities

    Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we have
considered whether this rule would have a significant economic impact
on a substantial number of small entities. The term ``small entities''
comprises small businesses, not-for-profit organizations that are
independently owned and operated and are not dominant in their fields,
and governmental jurisdictions with populations of less than 50,000.
    The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will
not have a significant economic impact on a substantial number of small
entities. This rule will affect the following entities, some of which
may be small entities: the owners or operators of vessels intending to
transit or anchor in affected portions of the Santa Rosa Sound during
the fireworks display. This safety zone will not have a significant
economic impact on a substantial number of small entities for the
following reasons. The zone is limited in size, is of short duration
and vessel traffic may request permission from the COTP Mobile or a
designated representative to enter or transit through the zone.

Assistance for Small Entities

    Under section 213(a) of the Small Business Regulatory Enforcement
Fairness Act of 1996 (Pub. L. 104-121), we offer to assist small
entities in understanding the rule so that they can better evaluate its
effects on them and participate in the rulemaking process.
    Small businesses may send comments on the actions of Federal
employees who enforce, or otherwise determine compliance with, Federal
regulations to the Small Business and Agriculture Regulatory
Enforcement Ombudsman and the Regional Small Business Regulatory
Fairness Boards. The Ombudsman evaluates these actions annually and
rates each agency's responsiveness to small business. If you wish to
comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR
(1-888-734-3247). The Coast Guard will not retaliate against small
entities that question or complain about this rule or any policy or
action of the Coast Guard.

Collection of Information

    This calls for no new collection of information under the Paperwork
Reduction Act of 1995 (44 U.S.C. 3501-3520).

Federalism

    A rule has implications for federalism under Executive Order 13132,
Federalism, if it has a substantial direct effect on State or local
governments and would either preempt State law or impose a substantial
direct cost of compliance on them. We have analyzed this rule under
that Order and have determined that it does not have implications for
federalism.

Unfunded Mandates Reform Act

    The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538)
requires Federal agencies to assess the effects of their discretionary
regulatory actions. In particular, the Act addresses actions that may
result in the expenditure by a State, local, or tribal government, in
the aggregate, or by the private sector of $100,000,000 (adjusted for
inflation) or more in any one year. Though this rule will not result in
such expenditure, we do discuss the effects of this rule elsewhere in
this preamble.

Taking of Private Property

    This rule will not cause a taking of private property or otherwise
have taking implications under Executive Order 12630, Governmental
Actions and Interference with Constitutionally Protected Property
Rights.

Civil Justice Reform

    This rule meets applicable standards in sections 3(a) and 3(b)(2)
of Executive Order 12988, Civil Justice Reform, to minimize litigation,
eliminate ambiguity, and reduce burden.

Protection of Children

    We have analyzed this rule under Executive Order 13045, Protection
of Children from Environmental Health Risks and Safety Risks. This rule
is not an economically significant rule and does not create an
environmental risk to

health or risk to safety that may disproportionately affect children.

Indian Tribal Governments

    This rule does not have tribal implications under Executive Order
13175, Consultation and Coordination with Indian Tribal Governments,
because it does not have a substantial direct effect on one or more
Indian tribes, on the relationship between the Federal Government and
Indian tribes, or on the distribution of power and responsibilities
between the Federal Government and Indian tribes.

Energy Effects

    We have analyzed this rule under Executive Order 13211, Actions
Concerning Regulations That Significantly Affect Energy Supply,
Distribution, or Use. We have determined that it is not a ``significant
energy action'' under that order because it is not a ``significant
regulatory action'' under Executive Order 12866 and is not likely to
have a significant adverse effect on the supply, distribution, or use
of energy. The Administrator of the Office of Information and
Regulatory Affairs has not designated it as a significant energy
action. Therefore, it does not require a Statement of Energy Effects
under Executive Order 13211.

Technical Standards

    The National Technology Transfer and Advancement Act (NTTAA) (15
U.S.C. 272 note) directs agencies to use voluntary consensus standards
in their regulatory activities unless the agency provides Congress,
through the Office of Management and Budget, with an explanation of why
using these standards would be inconsistent with applicable law or
otherwise impractical. Voluntary consensus standards are technical
standards (e.g., specifications of materials, performance, design, or
operation; test methods; sampling procedures; and related management
systems practices) that are developed or adopted by voluntary consensus
standards bodies.
    This rule does not use technical standards. Therefore, we did not
consider the use of voluntary consensus standards.

Environment

    We have analyzed this rule under Department of Homeland Security
Management Directive 023-01 and Commandant Instruction M16475.lD, which
guide the Coast Guard in complying with the National Environmental
Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4370f), and have concluded
this action is one of a category of actions which do not individually
or cumulatively have a significant effect on the human environment.
This rule is categorically excluded, under figure 2-1, paragraph
(34)(g), of the Instruction. This rule involves safety for the public
and environment and is not expected to result in any significant
adverse environmental impact as described in NEPA. An environmental
analysis checklist and a categorical exclusion determination are
available as directed under the ADDRESSES section.

List of Subjects in 33 CFR Part 165

    Harbors, Marine safety, Navigation (water), Reporting and
recordkeeping requirements, Security measures, Waterways.

    For the reasons discussed in the preamble, the Coast Guard amends
33 CFR part 165 as follows:

PART 165--REGULATED NAVIGATION AREAS AND LIMITED ACCESS AREAS

0
1. The authority citation for part 165 continues to read as follows:

    Authority: 33 U.S.C. 1231; 46 U.S.C. Chapter 701, 3306, 3703; 50
U.S.C. 191, 195; 33 CFR 1.05-1, 6.04-1, 6.04-6, 160.5; Pub. L. 107-
295, 116 Stat. 2064; Department of Homeland Security Delegation No.
0170.1.

0
2. Add Sec.  165.T08-0709 to read as follows:

Sec.  165.T08-0709  Safety Zone; Labor Day at the Landing Santa Rosa
Sound, Fort Walton Beach, FL.

    (a) Location. The following area is a safety zone: A portion of the
Santa Rosa Sound in Fort Walton Beach, FL extending 150 yards around
the fireworks barge positioned between Fort Walton Beach Landing and
the Gulf Intracoastal Waterway.
    (b) Enforcement dates. This rule will be enforced from 8:15 p.m.
until 9:15 p.m. on September 4, 2011.
    (c) Regulations. (1) In accordance with the general regulations in
33 CFR part 165, subpart C, entry into this zone is prohibited unless
authorized by the Captain of the Port Mobile or a designated
representative.
    (2) Vessels desiring to enter into or passage through the zone must
request permission from the Captain of the Port Mobile or a designated
representative. They may be contacted on VHF-FM channels 16 or by
telephone at<PHONE_NUMBER>.
    (3) If permission is granted, all persons and vessels shall comply
with the instructions of the Captain of the Port or designated
representative. Designated representatives include commissioned,
warrant, and petty officers of the U.S. Coast Guard.
    (d) Informational Broadcasts: The Captain of the Port or a
designated representative will inform the public through broadcast
notices to mariners of the enforcement period for the safety zone as
well as any changes in the planned schedule.

    Dated: August 4, 2011.
D.J. Rose,
Captain, U.S. Coast Guard, Captain of the Port Mobile.
[FR Doc. 2011-22073 Filed 8-29-11; 8:45 am]
BILLING CODE 9110-04-P