[Federal Register Volume 82, Number 211 (Thursday, November 2, 2017)]
[Notices]
[Pages 50898-50906]
[FR Doc No: 2017-23826]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81968; File No. SR-NYSEAMER-2017-30]

Self-Regulatory Organizations; NYSE American LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Amend
Exchange Rule 7.10E To Exclude Trading Halt Auctions From Being
Reviewed as Clearly Erroneous, Rule 7.11E To Conform to the Limit Up-
Limit Down NMS Plan, Rule 7.31E To Add a New Imbalance Only Order, and
Rule 7.35E To Enhance the Information Available Before an Auction and
Revise Procedures for Trading Halt Auctions

October 27, 2017.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that on October 20, 2017, NYSE American LLC (``Exchange'' or ``NYSE
American'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the self-regulatory
organization. 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\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange proposes to amend Rule 7.35E to enhance the
information available before an auction and revise its procedures for
Trading Halt

Auctions, Rule 7.10E to exclude Trading Halt Auctions from being
reviewed as clearly erroneous, Rule 7.31E to add a new Imbalance Only
Order, and Rule 7.11E. The proposed rule change is available on the
Exchange's Web site at www.nyse.com, at the principal office of the
Exchange, 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, the self-regulatory organization
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 those 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 parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend Rule 7.35E (Auctions) to enhance the
information available before an auction and revise its procedures for
Trading Halt Auctions, Rule 7.10E to exclude Trading Halt Auctions from
being reviewed as a clearly erroneous execution, Rule 7.31E (Orders and
Modifiers) to add a new Imbalance Only Order, and Rule 7.11E (Limit
Up--Limit Down Plan and Trading Pauses in Individual Securities Due to
Extraordinary Market Volatility) to conform the rule to approved
changes to the Regulation NMS Plan to Address Extraordinary Market
Volatility (``Plan'').\4\
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    \4\ See Securities Exchange Act Release No. 80455 (April 13,
2017), 82 FR 18519 (April 19, 2017) (File No. 4-631) (Order
approving 13th Amendment to the Plan).
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Overview
    The Operating Committee for the Plan with input from the Advisory
Committee to the Plan and staff of the Securities and Exchange
Commission (``SEC'' or ``Commission''), identified a number of
enhancements to the reopening process following a Trading Pause that
have been addressed in a combination of an amendment to the Plan and
amendments to the rules of the Primary Listing Exchanges.\5\ The
Exchange is a Participant of the Plan and a member of the Operating
Committee.
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    \5\ Unless otherwise specified, capitalized terms used herein
have the same meaning as set forth in the Plan or in Exchange rules.
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    With respect to the Plan, the Participants amended the Plan to
provide that a Trading Pause will continue until the Primary Listing
Exchange reopens trading using its established reopening procedures and
reports a Reopening Price.\6\ With LULD Amendment 12, the Participants
eliminated the current allowance for a trading center to resume trading
in an NMS Stock following a Trading Pause if the Primary Listing
Exchange has not reported a Reopening Price within ten minutes after
the declaration of a Trading Pause and has not declared a Regulatory
Halt. In addition, to close any gaps of potential scenarios when
trading may resume without Price Bands, LULD Amendment 12 provides that
a trading center may not resume trading in an NMS Stock following a
Trading Pause without Price Bands in such NMS Stock. To address
potential scenarios of when there may not be a Reopening Price from the
Primary Listing Exchange from which to calculate Price Bands, LULD
Amendment 12 further addresses when trading may resume if the Primary
Listing Exchange is unable to reopen due to a systems or technology
issue and how the Reference Price would be determined either under such
circumstances or if the Primary Listing Exchange reopens trading on a
zero bid or zero quote, or both.
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    \6\ See Securities Exchange Act Release No. 79845 (January 19,
2017), 82 FR 8551 (January 26, 2017) (File No. 4-631) (Order
approving the twelfth amendment to the Plan (``LULD Amendment
12'')).
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    In connection with LULD Amendment 12, the Participants agreed on a
standardized approach for how the Primary Listing Exchanges should
conduct certain aspects of an automated reopening following a Trading
Pause. Specifically, because trading centers will not be permitted to
resume trading in an NMS Stock until there is a Reopening Price, the
Participants believe it is appropriate for the Primary Listing
Exchanges to adopt uniform standards for determining whether and when
to conduct such automated reopenings, including what price collar
thresholds would be applicable to such automated reopenings and how to
provide for extensions of when a reopening auction would be conducted.
The goal of such changes is to ensure that all Market Order interest
could be satisfied in an automated reopening auction.
    More specifically, the Participants have agreed that if there is an
imbalance of market orders, or if the Reopening Price would be outside
of specified price collar thresholds, the Trading Pause would be
extended an additional five minutes in order to provide additional time
to attract offsetting liquidity. If at the end of such extension,
Market Orders still cannot be satisfied within price collar thresholds
or if the reopening auction would be priced outside of the applicable
price collar thresholds, the Primary Listing Exchange would extend the
Trading Pause an additional five minutes. With each such extension, the
Participants have agreed that it would be appropriate to widen the
price collar threshold on the side of the market on which there is
buying or selling pressure.
    With respect to price collar thresholds, the Participants have
agreed that the reference price for calculating price collar thresholds
would be the price of the limit state that preceded the Trading Pause,
i.e., either the Lower or Upper Price Band price. For NMS Stocks priced
more than $3.00,
     if there is selling pressure, the lower collar for the
auction would be the Lower Price Band minus five percent and the upper
collar would be the Upper Price Band;
     if there is buying pressure, the upper collar for the
auction would be the Upper Price Band plus five percent and the lower
collar would be the Lower Price Band.
    For each extension, the collars would be widened an additional five
percent, but only on the side of the imbalance.\7\ The Participants
believe that widening collars only in the direction of the imbalance
would address issues relating to the concept of mean reversion.
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    \7\ For NMS Stocks that are priced $3.00 and under, the price
collar threshold would be $0.15.
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    Finally, the Participants have agreed that the proposed new
procedures for reopening trading following a Trading Pause reduces the
potential that an order or orders entered by one or more ETP Holders
caused such execution to be clearly erroneous. Specifically, the
Participants believe that the proposed standardized procedures for
reopening trading following a Trading Pause incorporates a methodology
that allows for widened collars, which may result in a reopening price
away from prior trading prices, but which reopening price would be a
result of a measured and transparent process that eliminates the
potential that such trade would be considered erroneous.
    As a Primary Listing Exchange, the Exchange proposes to amend Rule
7.35E to implement the proposed uniform trading practices with respect
to

reopening a security following a Trading Pause, as described above. In
addition, the Exchange proposes to implement changes for automated
reopenings following a market-wide circuit breaker under Rule 7.12E and
any regulatory halts triggered in an Exchange-listed security. The
Exchange further proposes to amend Rule 7.10E to preclude ETP Holders
from requesting a review of a Trading Halt Auction as a clearly
erroneous execution. Finally, in connection with these proposed
changes, the Exchange proposes additional enhancements to its auction
processes, including adding a new Imbalance Only Order, an Auction
Freeze period before a Trading Halt Auction, and enhanced information
to be disseminated before an auction.
    The proposed rule changes are based on the rules of its affiliated
exchange, NYSE Arca, Inc. (``NYSE Arca''), without any substantive
differences.\8\
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    \8\ See Securities Exchange Act Release Nos. 79846 (January 19,
2017), 82 FR 8548 (January 26, 2017) (SR-NYSEArca-2016-130)
(Approval Order) (``NYSE Arca Trading Halt Auction Filing'') and
81603 (September 13, 2017), 82 FR 43609 (September 18, 2017) (SR-
NYSEArca-2017-102) (Notice of filing and immediate effectiveness of
proposed rule change).
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Uniform Primary Listing Exchange Proposed Rule Changes.
    To effect the proposed enhancements that will be implemented by all
Primary Listing Exchanges, the Exchange proposes to add new sub-
paragraphs (5)-(10) to Rule 7.35E(e), which governs Trading Halt
Auctions, re-number current Rule 7.35E(e)(5) as new Rule 7.35E(e)(11),
and amend Rule 7.35E(e)(2). The Exchange proposes to implement these
changes for all Trading Halt Auctions. The proposed standardized
trading practices agreed upon by the Operating Committee are intended
for Trading Halt Auctions following a trading pause under Rule 7.11E.
However, the Exchange believes that these proposed procedures would be
beneficial following all halts, including regulatory halts and halts
due to extraordinary market volatility. The proposed rule changes are
based on NYSE Arca Rule 7.35-E(e) without any substantive differences.
    Rule 7.35E(e)(2) currently provides that after trading in a
security has been halted or paused, the Exchange will disseminate the
estimated time at which trading in that security will re-open (``Re-
Opening Time''). The Exchange proposes to add to this rule that the
initial Re-Opening Time for a Trading Halt Auction following a trading
pause under Rule 7.11E (``Trading Pause'') or trading halt due to
extraordinary market volatility under Rule 7.12E (``MWCB Halt'') will
be at the scheduled end of the Trading Pause or MWCB Halt. This
proposed rule text clarifies that for Trading Pauses and MWCB Halts,
the length of the initial pause or halt period is as specified in those
rules. As specified in the Plan, the scheduled end of the Trading Pause
is five minutes after a Trading Pause has been declared. As specified
in Rule 7.12E(b), the scheduled end of a Level 1 or Level 2 Market
Decline is 15 minutes. If there is a Level 3 Market Decline, the
Exchange will not re-open.
    Proposed Rule 7.35E(e)(5) would provide that a Trading Halt Auction
would not be conducted if the Indicative Match Price, before being
adjusted based on Auction Collars, is below (above) the Lower (Upper)
Auction Collar or if there is a sell (buy) Market Imbalance, either of
which would be defined as an ``Impermissible Price.'' \9\ This proposed
rule text would implement the proposed standardized enhancement that
the Exchange would not conduct a Trading Halt Auction if there are
either unsatisfied Market Orders, or if the Indicative Match Price
would be outside the applicable Auction Collars.
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    \9\ The term ``Indicative Match Price'' is defined in Rule
7.35E(a)(8) to mean the best price at which the maximum volume of
shares, including the non-displayed quantity of Reserve Orders, is
tradable in the applicable auction, subject to Auction Collars. For
purposes of proposed Rule 7.35E(e)(5), the Indicative Match Price
would not be calculated subject to Auction Collars. The term
``Auction Collars'' is defined in Rule 7.35E(a)(10) to mean the
price collar thresholds for the Indicative Match Price for the Core
Open Auction, Trading Halt Auction, or Closing Auction. The term
``Market Imbalance'' is defined in Rule 7.35E(a)(7)(B) means the
imbalance of any buy (sell) Market Orders that are not matched for
trading in the applicable auction.
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    Extensions: Proposed Rule 7.35E(e)(6) would specify the
circumstances when the Exchange would extend the Re-Opening Time for a
Trading Halt Auction, as follows:
     Proposed Rule 7.35E(e)(6)(A) would provide that, if there
is an Impermissible Price at the initial Re-Opening Time, the pause or
halt would be extended an additional five minutes and a new Re-Opening
Time would be disseminated, which would be referred to as the ``First
Extension.'' The proposed rule would further provide that the Exchange
would not conduct a Trading Halt Auction before the Re-Opening Time for
the First Extension. As such, if the Exchange disseminates a First
Extension, consistent with the Plan in effect before LULD Amendment 12,
which provides that if the Primary Listing Exchange does not reopen,
trading centers may not resume trading until ten minutes after the
beginning of the Trading Pause, the Trading Pause would continue for
ten minutes and trading would not resume before that ten-minute marker.
     Proposed Rule 7.35E(e)(6)(B) would provide that if there
is an Impermissible Price at the end of the First Extension, the pause
or halt would be extended an additional five minutes and a new Re-
Opening Time would be disseminated (``Subsequent Extension''). As
further proposed, the Exchange would conduct a Trading Halt Auction
before the Re-Opening Time for a Subsequent Extension if the Indicative
Match Price, before being adjusted based on Auction Collars, would be
within the applicable Auction Collars and there is no Market Imbalance.
This proposed change would implement the Participant's proposal that
for Subsequent Extensions, if equilibrium of prices is reached, the
Exchange would conduct the Trading Halt Auction immediately and would
not extend the Trading Pause any further.
     Proposed Rule 7.35E(e)(6)(C) would provide that the
trading pause or halt would continue to be extended if there is an
Impermissible Price at the Re-Opening Time for a Subsequent Extension.
This proposed rule text makes clear that a halt or pause would continue
to be extended until a Trading Halt Auction can be conducted, as
provided for in proposed Rule 7.35E(e)(5).
    Auction Collars: Proposed Rule 7.35E(e)(7) would describe how
Auction Collars would function for Trading Halt Auctions. As provided
for in Rule 7.35E(a)(10), Auction Collars mean the price collar
thresholds for the Indicative Match Price for the Core Open Auction,
Trading Halt Auction, or Closing Auction. Currently, the price collar
thresholds for the Trading Halt Auction are the greater of $0.50 or 10%
away from the Auction Reference Price. These price collar thresholds
are in effect until a proposed rule change based on the NYSE Arca
Trading Halt Auction Filing is effective and operative.
    The Exchange proposes that the price collar threshold for Auction
Collars for securities with an Auction Reference Price above $3.00
would be the Auction Reference Price multiplied by five percent. The
price collar threshold for securities with an Auction Reference Price
$3.00 and below would be $0.15. This value would be defined as the
``Price Collar Threshold.'' For securities priced above $3.00, once
calculated, the Price Collar Threshold would be applicable for each
Subsequent Extension, described below. For securities with an Auction
Reference

Price of $3.00 and under, the Price Collar Threshold would be a static
$0.15 for each Subsequent Extension. The Exchange believes that using a
5 percent multiplier for stocks priced $3.00 or less would result in
too narrow of an Auction Collar. Similar to the Plan, which provides
for wider percentage parameters for stocks priced $3.00 or less, the
Exchange proposes a wider Price Collar Threshold for stocks with an
Auction Reference Price of $3.00 or less.
    The Exchange believes that the proposed Price Collar Thresholds are
designed to align the Auction Collars with the existing percentage
parameters as specified in the Plan. The Exchange proposes to use the
single 5% threshold for all securities priced above $3.00 and $0.15 for
all securities priced $3.00 or less, and not apply a separate
percentage parameter based on the tiers specified in the Plan, because
the Exchange believes it would be simpler and more transparent.
Moreover, the Exchange believes that because the proposed rule changes
would provide for the widening of collars, and would prevent trades at
an Impermissible Price, the specific size of the Price Collar Threshold
becomes less meaningful. For example, if the Market Imbalance is so
large that the proposed five percent price collar threshold is too
narrow to permit a Trading Halt Auction, the proposed extensions and
widening of Auction Collars, as described below, would provide for a
measured manner by which the collars would be widened either to permit
a trade at a permissible price or to attract additional offsetting
interest. If, at a later date, the Plan is amended and the applicable
tiers and percentage parameters are adjusted, the Exchange will
reevaluate the Price Collar Thresholds for Trading Halt Auctions and if
they should be changed, will file a separate proposed rule change.
    Because the Price Collar Thresholds for Auction Collars applicable
to a Trading Halt Auction would be specified in proposed Rule
7.35E(e)(7), the Exchange proposes to amend Rule 7.35E(a)(10)(A) to
specify that the Auction Collar price thresholds specified in that rule
would be applicable to the Core Trading and Closing Auctions only. The
Exchange further proposes to delete the following text: ``*The price
collar thresholds specified in this paragraph applicable to Trading
Halt Auctions are in effect until proposed rule change based on SR-
NYSEArca-2016-130 for the Exchange is effective and operative.'' The
Exchange believes that proposed Rule 7.35E(e)(7) obviates the current
price collar thresholds specified for Trading Halt Auctions, which were
adopted on an interim basis pending the outcome of the review that
resulted in LULD Amendment 12 and standardized trading practices among
the Primary Listing Exchanges for how to resume trading following a
Trading Pause.
    Trading Halt Auction Reference Price: Proposed Rule 7.35E(e)(7)(A)
would specify the Auction Reference Price that would be used for a
Trading Halt Auction following a Trading Pause. As provided for in Rule
7.35E(a)(8)(A), the Auction Reference Price for the Trading Halt
Auction is the last consolidated round-lot price of that trade day, and
if none, the prior day's Official Closing Price. As proposed, the
Auction Reference Price for a Trading Halt Auction following a Trading
Pause would be determined as follows: If the Limit State that preceded
the Trading Pause was at the Lower (Upper) Price Band, the Auction
Reference Price would be the Lower (Upper) Price Band. This proposed
change implements the standardized enhancement to use the Limit State
price as the Auction Reference Price for a Trading Halt Auction
following a Trading Pause.
    The Exchange proposes to make a related change to Rule
7.35E(a)(8)(A) to amend the chart that specifies Auction Reference
Prices for the Trading Halt Auction. As proposed, the Exchange would
add the clause ``except as provided for in Rule 7.35E(e)(7)(A)'' to
specify that the Auction Reference Price would be determined under that
subparagraph of the rule instead of the Auction Reference Price
specified in Rule 7.35E(a)(8)(A). For a Trading Halt Auction following
a MWCB Halt or regulatory halt, the Auction Reference Price would
continue to be as specified in Rule 7.35E(a)(8)(A).
    Initial Auction Collars: Proposed Rule 7.35E(e)(7)(B) would specify
the Auction Collars if a Trading Halt Auction is conducted at the
initial Re-Opening Time. Currently, as provided for in Rule
7.35E(a)(10)(A), the upper (lower) boundary of Auction Collars is the
Auction Reference Price increased (decreased) by the specified
percentage. As such, the price collar thresholds are applied on both
sides of the Auction Reference Price. The Exchange proposes to modify
how Auction Collars are calculated as proposed:
     Proposed Rule 7.35E(e)(7)(B)(i) would specify how Auction
Collars would be determined for a Trading Halt Auction following a
Trading Pause. As proposed, if the Auction Reference Price is the Lower
(Upper) Price Band, the lower (upper) Auction Collar would be the
Auction Reference Price decreased (increased) by the Price Collar
Threshold, rounded down to the nearest MPV,\10\ and the upper (lower)
Auction Collar would be the Upper (Lower) Price Band. This proposed
rule implements the proposed standardized trading practice that, for
Trading Halt Auctions following a Trading Pause, the Auction Collars
should be widened only in the direction of the trading that invoked the
Trading Pause. For example, if a Trading Pause is triggered following a
Limit State at the Lower Price Band, this would indicate selling
pressure in that NMS Stock. Accordingly, the proposed lower boundary
Auction Collar would be widened by subtracting the Price Collar
Threshold from the Auction Reference Price, i.e., the Lower Price Band.
To address the concept of mean reversion, i.e., that prices may revert
back to the mean or average price of the NMS Stock, and to avoid a
security from trading outside of where it would have been permitted to
trade before the Trading Pause, the Exchange proposes that the Auction
Collar on the opposite side of the trading pressure should be the Price
Band in place before the Trading Pause was triggered. Taking the above
example, the Upper Auction Collar would therefore be the Upper Price
Band. This way, if during the trading pause, the selling pressure
reverses and becomes buying pressure, the Auction Collars would not
permit a trade higher than would have been permitted under the Price
Bands before the Trading Pause.
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    \10\ See Rules 7.6E and 7.46E (specifying the minimum price
variation (``MPV'') for quoting and entry of orders).
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     Proposed Rule 7.35E(e)(7)(B)(ii) would specify how Auction
Collars would be determined for a Trading Halt Auction following a MWCB
Halt or regulatory halt. In this case, because there would not be a
security-specific pricing direction reason for the halt, the Exchange
proposes that the Price Collar Threshold would be applied on both sides
of the Auction Reference Price. Accordingly, for stocks priced above
$3.00, the upper (lower) boundary of the Auction Collar would be the
Auction Reference Price (as defined in Rule 7.35E(a)(8)(A)), plus
(minus) the Auction Reference Price multiplied by 5%. For stocks priced
$3.00 and under, the upper (lower) boundary of the Auction Collar would
be the Auction Reference Price (as defined in Rule 7.35E(a)(8)(A)),
plus (minus) $0.15. For Trading Halt Auctions following a MWCB Halt or
regulatory halt, if the Price Collar Threshold calculation results in a
price that is not in the applicable MPV for the security, the

Exchange proposes to round down to the nearest price in the applicable
MPV.
    Auction Collar for Extensions: Proposed Rule 7.35E(e)(7)(C) would
specify how the Exchange would adjust Auction Collars for each
Extension. As proposed, the Auction Collar on the side of the
Impermissible Price would be widened for each Extension. In other
words, if the Indicative Match Price is at or below the lower Auction
Collar for the initial Re-Opening Time or there is a sell Market
Imbalance, the Exchange would widen only the lower Auction Collar. As
further proposed, the Auction Collar on the opposite side of the
Impermissible Price would remain the same as the last-calculated
Auction Collar on that side. Thus, in the case of selling pressure that
would result in an Auction Extension, the upper Auction Collar would
remain as the last Upper Price Band.
     Proposed Rule 7.35E(e)(7)(C)(i) would further provide that
if the Impermissible Price is on the side of the Lower (Upper) Auction
Collar, the last-calculated Lower (Upper) Auction Collar would be
decreased (increased) by a Price Collar Threshold and the Upper (Lower)
Auction Collar would stay the same.
     To address the concept of mean reversion, proposed Rule
7.35E(e)(7)(C)(ii) would provide that if the side of the Impermissible
Price changes from the Lower (Upper) Auction Collar to the Upper
(Lower) Auction Collar, the last-calculated Upper (Lower) Auction
Collar would be widened for that Extension and the last-calculated
Lower (Upper) Auction Collar will remain the same. Therefore, if,
during an Extension, the directional trading pressure switches from
sell to buy, the upper Auction Collar would be widened, and the last-
Lower Auction Collar would remain the same.
    Proposed Rules 7.35E(e)(8) and (9) would specify the Exchange's
proposed handling of orders for a Trading Halt Auction, which are
discussed in greater detail below.
    Proposed Rule 7.35E(e)(10) would specify what the Exchange would do
if a Re-Opening Time for a Trading Pause would be in the last ten
minutes of trading before the end of Core Trading Hours. The
Participants have amended the Plan to provide that if an NMS Stock is
in a Trading Pause during the last ten minutes of trading before the
end of Regular Trading Hours, the Primary Listing Exchange would not
reopen trading and would attempt to execute a closing transaction using
its established closing procedures.\11\ To implement LULD Amendment 12,
proposed Rule 7.35E(e)(10) would provide that, if the Re-Opening Time
for a Trading Halt Auction is in the last ten minutes of trading before
the end of Core Trading Hours, the Exchange would not conduct a Trading
Halt Auction in that security and would not transition to continuous
trading. Instead, the Exchange would remain paused and would conduct a
Closing Auction in such security as provided for in Rule 7.35E(d).
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    \11\ See supra note 5.
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    In such circumstances, as specified in proposed Rule
7.35E(e)(10)(A), MOO Orders, LOO Orders, and IO Orders (described
below) entered during the pause would not participate in the Closing
Auction and would be cancelled. The Exchange proposes to add this rule
text to provide transparency to ETP Holders of how orders that are
designated to participate in a Trading Halt Auction only would be
processed if the Exchange transitions to a Closing Auction without
conducting that Trading Halt Auction. The Exchange believes this
proposed rule text would provide notice for ETP Holders to enter
closing-only interest, i.e., MOC or LOC Orders, to participate in the
Closing Auction.
    In addition, as specified in proposed Rule 7.35E(e)(10)(B), the
Auction Collars for the Closing Auction for such security would be the
most recently widened Auction Collars for the Trading Halt Auction that
did not occur. Currently, the Auction Collars for Closing Auctions are
the greater of $0.50 or 10% away from the Auction Reference Price. The
Exchange believes that if the Exchange goes directly from an unresolved
Trading Pause, MWCB Halt, or regulatory halt in an NMS Stock to a
Closing Auction, the price collar thresholds applicable to the Closing
Auction would result in Auction Collars that do not correlate to the
trading condition for that NMS Stock.
    The Exchange proposes to make a related amendment to Rule
7.35E(a)(10)(A) to add the clause ``except as provided for in Rule
7.35E(e)(10)(B)''. This proposed rule text makes clear that the price
collar thresholds for a Closing Auction are defined in Rule
7.35E(a)(10)(A), except as provided for in proposed Rule
7.35E(e)(10)(B).
    The Exchange proposes to amend Rule 7.10E(a) to provide that ETP
Holders may not request a review of a Trading Halt Auction under Rule
7.10E(b), which specifies the procedures for an ETP Holder to request a
review of an execution, as clearly erroneous. The Exchange believes
that this proposed rule text would implement the proposed standardized
trading practice that reopening auctions would not be eligible for
review by ETP Holders as a clearly erroneous execution.\12\
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    \12\ The Participants will be engaging in a more comprehensive
review of Rule 7.10E in connection with amendments to the Plan
relating to tiering of securities and applicable percentage
parameters. The Exchange proposes to make this limited amendment to
Rule 7.10E as an initial step to eliminating its clearly erroneous
executions rules in their current form.
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    Finally, the Exchange proposes to amend Rule 7.11E to delete
obsolete rule text and conform the remaining rule text to LULD
Amendment 12, as described above. First, the Exchange proposes to amend
Rule 7.11E(b) to delete the second and third sentences of this
paragraph as inconsistent with LULD Amendment 12, described above.\13\
Second, the Exchange proposes to renumber current Rule 7.11E(b)(1) as
proposed Rule 7.11E(b)(2) and amend the text to provide that if a
primary listing market issues a Trading Pause, the Exchange would
resume trading as provided for in Rule 7.18E(a).\14\ This proposed
amendment is consistent with LULD Amendment 12, described above.
Finally, the Exchange proposes to add new Rule 7.11E(b)(1) to provide
that if a Trading Pause is triggered under this Rule or if the Exchange
is unable to reopen trading at the end of the Trading Pause due to a
systems or technology issue, the Exchange would immediately notify the
single plan processor responsible for consolidation of information for
the security pursuant to Rule 603 of Regulation NMS under the
Securities Exchange Act of 1934. This proposed rule text is based on
NYSE Arca Rule 7.11-E(b)(1) and is consistent with LULD Amendment
12.\15\
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    \13\ The text that the Exchange would delete provides that
``[i]n the event of a significant imbalance at the end of a Trading
Pause, the Corporation may delay the re-opening of a security. The
Exchange will issue a notification if it cannot resume trading for a
reason other than a significant imbalance.''
    \14\ Rule 7.18E(a) provides that if the UTP Listing Market
declares a UTP Regulatory Halt, which includes a Trading Pause, the
Exchange will halt trading until it receives the first Price Band in
that security. Accordingly, following a Trading Pause declared by
another Primary Listing Market, the Exchange already waits to
receive Price Bands before it resumes trading in that UTP Security.
The Exchange proposes to delete the current rule text in Rule
7.11E(b)(1) that provides that the Exchange will ``pause trading in
that security until trading has resumed on the primary listing
market or notice has been received from the primary listing market
that trading may resume. If the primary listing market does not
reopen the security within 10 minutes of notification of a Trading
Pause, the Exchange may resume trading the security.''
    \15\ See NYSE Arca Trading Halt Auction Filing, supra note 8.
---------------------------------------------------------------------------

Other Proposed Rule Changes
    IO Order: The Exchange proposes to add a new order type, an
Imbalance

Only (``IO'') Order, that would be eligible to participate in Trading
Halt Auctions only. The Exchange proposes to amend Rule 7.31E(c), which
specifies the Exchange's Auction-Only Order types, to add new
subsection (5) to describe an IO Order. As proposed, an IO Order would
be a Limit Order to buy (sell) that is to be traded only in a Trading
Halt Auction.
    Proposed Rule 7.31E(c)(5)(A) would provide that an IO Order would
be accepted only during a halt or pause, including any extensions. This
proposed rule text is consistent with the Exchange's current rules that
MOO or LOO Orders designated to participate in a Trading Halt Auction
will be accepted only during the trading halt that precedes such
Trading Halt Auction.\16\
---------------------------------------------------------------------------

    \16\ See Rule 7.31E(c)(1) and (2).
---------------------------------------------------------------------------

    Proposed Rule 7.31E(c)(5)(B) would provide that an IO Order would
participate in a Trading Halt Auction only if: (i) There is an
imbalance in the security on the opposite side of the market from the
IO Order after taking into account all other orders eligible to trade
at the Indicative Match Price; and (ii) the limit price of the IO Order
to buy (sell) would be at or above (below) the Indicative Match Price.
Proposed Rule 7.31E(c)(5)(C) would provide that the working price of an
IO Order to buy (sell) would be adjusted to be equal to the Indicative
Match Price, provided that the working price of the IO Order would not
be higher (lower) than its limit price. Finally, proposed Rule
7.31E(c)(5)(D) would provide that an IO Order that participates in a
Trading Halt Auction would be ranked in time priority among IO Orders
after all other orders eligible to participate in the auction have been
allocated. The proposed IO Order is based on the IO Order offered by
NYSE Arca.\17\
---------------------------------------------------------------------------

    \17\ See NYSE Arca Rule 7.31-E(c)(5).
---------------------------------------------------------------------------

    For example, assume for a Trading Halt Auction that the lower
boundary of an Auction Collar is $10.00. Assume further that after
allocating all other orders eligible to participate in the Trading Halt
Auction, there is a sell Total Imbalance of 10,000 shares and absent
Auction Collars, the Indicative Match Price would be below $10.00. As
provided for in Rule 7.35E(a)(10)(B), once the Auction Collars are
applied, the Indicative Match Price for that Trading Halt Auction would
be $10.01 (i.e., one MPV above the lower Auction Collar). Assume now
there are seven IO Orders to buy, each for 2,000 shares, with limit
prices of $10.00, $10.01, $10.02, $10.03, $10.04, $10.05 and $10.06,
and they are entered in that order. In this scenario, the IO Order to
buy with a limit price of $10.00 would not be eligible to participate,
because the $10.01 Indicative Match Price is higher than the limit
price of the order. The remaining six IO Orders to buy would be
assigned a working price of $10.01. However, because the IO Order with
a limit price of $10.06 was entered last in time, it would not
participate in the Trading Halt Auction.
    Auction Imbalance Freeze: The Exchange proposes to add an Auction
Imbalance Freeze before a Trading Halt Auction. As defined in Rule
7.35E(a)(3), the Auction Imbalance Freeze means the period that begins
before the scheduled time for the Early Open Auction, Core Open
Auction, or Closing Auction, as specified in paragraphs (b), (c), and
(d) of Rule 7.35E, and that ends once the Auction Processing Period
begins. To effect the proposed rule change, the Exchange proposes to
add a reference to Trading Halt Auction and Rule 7.35E(e) to Rule
7.35E(a)(3).
    Proposed Rule 7.35E(e)(8) would describe how the Trading Halt
Auction Imbalance Freeze would function. As proposed, the Trading Halt
Auction Imbalance Freeze would begin five seconds before the Re-Opening
Time, including Re-Opening Times for each Extension. The Exchange
proposes to use the same period of time for the Trading Halt Auction
Imbalance Freeze, five seconds, as provided for in Rule 7.35E(c)(3) for
the Core Open Auction. Specifically, the Exchange believes that the
proposed five-second time period strikes the appropriate balance for
providing sufficient time for market participants to enter and cancel
orders before the Trading Halt Auction while at the same time having a
short period for any imbalance to stabilize before the auction is
conducted. The rule would further provide that if a pause or halt is
extended, the Trading Halt Auction Imbalance Freeze for the prior
period would end, new orders and order instructions received during the
prior period's Trading Halt Auction Imbalance Freeze would be
processed, and the Exchange would accept new order entry and
cancellation as provided for in Rule 7.18E(c) until the next Trading
Halt Auction Imbalance Freeze. In other words, if at the Re-Opening
Time, the Exchange extends the Trading Pause for five minutes, the
restrictions on order entry and cancellation from the prior freeze
would no longer be in effect, and any order instructions that were not
processed will be processed.
    The proposed rule would further provide how order entry and
cancellation during the Trading Halt Auction Imbalance Freeze would be
processed:
     As proposed in Rule 7.35E(e)(8)(A), MOO Orders and LOO
Orders that are on the same side as the Imbalance, would flip the
Imbalance, or would create a new Imbalance would be rejected. This
proposed rule text is based on how MOC Orders and LOC Orders are
processed during the Closing Auction Imbalance Freeze, as described in
Rule 7.35E(d)(2)(A).
     As proposed in Rule 7.35E(e)(8)(B), Market Orders (other
than MOO Orders) and Limit Orders would be accepted but would not be
included in the calculation of the Indicative Match Price or the
Trading Halt Auction Imbalance Information.\18\ Such orders would
participate in the Trading Halt Auction only to offset the Imbalance
that would be remaining after all orders entered before the Trading
Halt Auction Imbalance Freeze, including the non-display quantity of
Reserve Orders, are allocated in the Trading Halt Auction, and would be
allocated in price-time priority under Rule 7.36E(c)-(g) consistent
with the priority ranking associated with each order and ahead of any
IO Orders. This proposed rule text is based on how Market Orders (other
than MOO Orders) and Limit Orders that are entered during the Core Open
Auction Imbalance Freeze, as described in Rule 7.35E(c)(3)(B). As such,
these orders would participate in the Trading Halt Auction only to
offset the final Imbalance for the auction. Such orders would be ranked
in price-time priority after all other orders, except for IO Orders,
have been allocated. Because the Exchange would be accepting IO Orders
for the Trading Halt Auction and because IO Orders do not participate
until all other eligible interest has been allocated, the Exchange
proposes a substantive difference from the rule governing the Core Open
Auction to address how IO Orders would be processed relative to Market
Orders (other than MOO Orders) or Limit Orders entered during the
Trading Halt Auction Imbalance Freeze. As proposed, IO Orders would not
be allocated until Market Orders (other than MOO Orders) and Limit
Orders entered during the Trading Halt Auction Imbalance Freeze have
been allocated.
---------------------------------------------------------------------------

    \18\ Rule 7.35E(a) provides that unless otherwise specified,
references to the term ``Market Orders'' in Rule 7.35E also includes
MOO Orders. Proposed Rule 7.35E(e)(8)(B) is an example of when the
Exchange proposes that the term Market Orders would not include MOO
Orders. By contrast, in Rule 7.35E, Limit Orders are distinct from
LOO Orders and therefore the reference to Limit Orders in proposed
Rule 7.35E(e)(8)(B) would not include LOO Orders.
---------------------------------------------------------------------------

     Proposed Rule 7.35E(e)(8)(C) would provide that requests
to cancel and requests to cancel and replace Market

Orders, LOO Orders, Limit Orders, and IO Orders would be accepted but
not processed until either after the Trading Halt Auction concludes, as
provided for in Rule 7.35E(h), or if a pause or halt is extended, when
the Trading Halt Auction Imbalance Freeze for the prior period
ends.\19\ This proposed rule text is based on Rule 7.35E(c)(3)(C)
governing which order instructions will be accepted but not processed
during the Core Open Auction Imbalance Freeze. The Exchange proposes a
substantive difference to reference how requests to cancel IO Orders
would be processed if received during the freeze period.
---------------------------------------------------------------------------

    \19\ Because they are not specifically excluded, the reference
to Market Orders in proposed Rule 7.35E(e)(8)(C) would include MOO
Orders.
---------------------------------------------------------------------------

     Finally, proposed Rule 7.35E(e)(8)(D) would provide that
all other order instructions would be accepted. This proposed rule text
is based on Rules 7.35E(c)(3)(D) and (d)(2)(C), without any
differences.
    Unexecuted Limit Orders: The Exchange proposes to specify how it
would process Limit Orders that do not participate in the Trading Halt
Auction. As discussed above, an Impermissible Price would occur if
there is a Market Imbalance or if the Indicative Match Price were at or
outside the specified Price Collar Thresholds. However, if the
Indicative Match Price were within the specified Price Collar
Thresholds and there is no Market Imbalance, it is still possible to
have an imbalance of Limit Orders within the Auction Collars. In such
case, the Exchange proposes to transition such unexecuted Limit Orders
to continuous trading. The Exchange believes that because such Limit
Orders would have a limit price within the Auction Collars, having such
Limit Orders transition to continuous trading would not have
significant pricing impact on post-Trading Halt Auction trading.
Accordingly, proposed Rule 7.35E(e)(9) would provide that any Limit
Orders that were eligible to participate in the Trading Halt Auction,
but did not participate, would transition to continuous trading as
provided for in paragraph (h) of this Rule.
    Auction Imbalance Information: The Exchange proposes to enhance the
Auction Imbalance Information. Rule 7.35E(a)(4) defines Auction
Imbalance Information as the information that is disseminated by the
Exchange for an auction and includes, if applicable, the Total
Imbalance, Market Imbalance, Indicative Match Price, and Matched
Volume.\20\ The Exchange proposes to enhance the Auction Imbalance
Information to include the following additional information: Auction
Reference Price, Auction Collar, Book Clearing Price, Far Clearing
Price, Imbalance Freeze Indicator, and Auction Indicator. The Auction
Reference Price is defined in Rule 7.35E(a)(8)(A) and proposed Rule
7.35E(e)(7)(A), described above. The Auction Collar is defined in Rule
7.35E(a)(10) and proposed Rules 7.35E(e)(7) and (e)(10)(B), described
above. The Exchange proposes to define the additional terms as follows:
---------------------------------------------------------------------------

    \20\ See Rule 7.35E(a)(7) (defining the terms Total Imbalance
and Market Imbalance); 7.35E(a)(8) (defining the term Indicative
Match Price); and 7.35E(a)(9) (defining the term Matched Volume).
---------------------------------------------------------------------------

     Proposed Rule 7.35E(a)(11) would define the term ``Book
Clearing Price'' to mean the price at which all interest eligible to
participate in an auction could be traded if not subject to an Auction
Collar. The rule would further provide that the Book Clearing Price
would be zero if a sell (buy) imbalance cannot be filled by any buy
(sell) orders. For example, if there are only sell orders and no buy
orders, the Book Clearing Price would be zero.
     Proposed Rule 7.35E(a)(12) would define the term ``Far
Clearing Price'' to mean the price at which Auction-Only Orders could
be traded within the Auction Collar. Auction-Only Orders are defined in
Rule 7.31E(c).
     Proposed Rule 7.35E(a)(13) would define the term ``Auction
Indicator'' to mean an indicator of whether an auction could be
conducted, based on the applicable Auction Collar and Imbalance. This
information would be relevant for the Trading Halt Auction and provide
transparency regarding whether a Trading Pause, MWCB Halt, or
regulatory halt would be eligible to be conducted. If an Auction
Indicator is ``no,'' market participants would be on notice that
submitting offsetting interest may reduce the possibility of the
Exchange extending a Trading Halt Auction.
     Proposed Rule 7.35E(a)(14) would define the term
``Imbalance Freeze Indicator'' to mean an indicator of whether a
security is currently in an Auction Imbalance Freeze. This indicator
would put market participants on notice of whether there are order
entry and cancellation restrictions in place at any given time before
an auction.
    Finally, the Exchange proposes to replace the word ``truncated''
with the words ``rounded down'' \21\ in Rule 7.35E(a)(10)(A). The
Exchange believes that conforming the terminology used in Rules 7.31E
\22\ and 7.35E promotes clarity and transparency.
---------------------------------------------------------------------------

    \21\ See Rule 7.46E(f)(2)(A), which provides that references to
truncating to the MPV in Exchange rules instead mean rounding down
to the applicable quoting MPV.
    \22\ See Rules 7.31E(a)(1)(B)(i) (providing that when
calculating the Trading Collar, the specified percentage will be
rounded down) and 7.31E(a)(2)(B) (providing that ``Limit Order Price
Protection . . . will be rounded down to the nearest price at the
applicable MPV'').
---------------------------------------------------------------------------

* * * * *
    The Exchange proposes to implement the proposed rule change at the
same time that LULD Amendment 12 is implemented, which, subject to
technology changes and the effectiveness of the extension for the
implementation date for the LULD Amendment 12 changes, is anticipated
to be in the fourth quarter of 2017.\23\ The Exchange will announce the
implementation date via Trader Update.
---------------------------------------------------------------------------

    \23\ See Securities Exchange Act Release No. 81720 (September
26, 2017), 82 FR 45922 (October 2, 2017) (File No. 4-631) (Notice of
filing and immediate effectiveness of fifteenth amendment to the
Plan, extending the implementation date of LULD Amendment 12 to no
later than November 30, 2017).
---------------------------------------------------------------------------

2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the
Securities Exchange Act of 1934 (the ``Act''),\24\ in general, and
furthers the objectives of Section 6(b)(5),\25\ in particular, because
it is designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, to foster
cooperation and coordination with persons engaged in 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.
---------------------------------------------------------------------------

    \24\ 15 U.S.C. 78f(b).
    \25\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes the proposed changes would 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, because they are designed, together with LULD Amendment 12,
to address the issues experienced on August 24, 2015 by reducing the
number of repeat Trading Pauses in a single NMS Stock. LULD Amendment
12 is an essential component to Participants' goal of more standardized
processes across Primary Listing Exchanges in reopening trading
following a Trading Pause, and facilitates the production of an
equilibrium Reopening Price by centralizing the reopening process
through the Primary Listing Exchange, which would also improve the
accuracy of the reopening Price Bands. LULD

Amendment 12 supports this initiative by requiring trading centers to
wait to resume trading following Trading Pause until there is a
Reopening Price.
    This proposed rule change further supports this initiative by
proposing uniform trading practices for reopening trading following a
Trading Pause. The Exchange believes that the proposed standardized
approach for how the Primary Listing Exchanges would conduct certain
aspects of an automated reopening following a Trading Pause would
remove impediments to and perfect the mechanism of a free and open
market and a national market system because it would provide certainty
for market participants regarding how a security would reopen following
a Trading Pause, regardless of the listing exchange. The Exchange
further believes that the proposed changes would remove impediments to
and perfect the mechanism of a free and open market and a national
market system and protect investors and the public interest because the
goal of the proposed changes is to ensure that all Market Order
interest could be satisfied in an automated reopening auction while at
the same time reducing the potential for multiple Trading Pauses in a
single security due to a large order imbalance.
    The Exchange further believes that the standardized proposal to
extend a Trading Pause an additional five minutes would remove
impediments to and perfect the mechanism of a free and open market and
a national market system because it would provide additional time to
attract offsetting liquidity. If at the end of such extension, Market
Orders still cannot be satisfied within price collar thresholds or if
the reopening auction would be priced outside of the applicable price
collar thresholds, the Primary Listing Exchange would extend the
Trading Pause an additional five minutes, which the Exchange believes
would further protect investors and the public interest by reducing the
potential for significant price disparity in post-auction trading,
which could otherwise trigger another Trading Pause. With each such
extension, the Exchange believes that widening the price collar
threshold on the side of the market on which there is buying or selling
pressure would remove impediments to and perfect the mechanism of a
free and open market and a national market system because it would
provide additional time to attract offsetting interest while at the
same time addressing that an imbalance may not be resolved within the
prior Auction Collars.
    With respect to price collar thresholds, the Exchange believes that
using the price of the limit state that preceded the Trading Pause,
i.e., either the Lower or Upper Price Band price, would better reflect
the most recent price of the security and therefore should be used as
the reference price for determining the Auction Collars for such
Trading Halt Auction. The Exchange believes that widening Auction
Collars only in the direction of the imbalance would address issues
relating to the concept of mean reversion, which would protect
investors and the public interest by reducing the potential for wide
price swings following a Trading Halt Auction.
    The Exchange believes that applying the proposed changes to its
Trading Halt Auctions not only following a Trading Pause, but also
following a MWCB Halt or regulatory halt, would remove impediments to
and perfect the mechanism of a free and open market and a national
market system because it would promote consistency in how the Exchange
conducts its Trading Halt Auctions, thus reducing complexity in the
marketplace.
    The Exchange believes that precluding ETP Holders from requesting a
review of a Trading Halt Auction as a clearly erroneous execution would
remove impediments to and perfect the mechanism of a free and open
market and a national market system because the proposed new procedures
for reopening trading following a Trading Pause would reduce the
possibility that an order(s) from an ETP Holder(s) caused a Trading
Halt Auction to be clearly erroneous. Specifically, the Exchange
believes that the proposed standardized procedures for reopening
trading following a Trading Pause incorporates a methodology that
allows for widened collars, which may result in a reopening price away
from prior trading prices, but which reopening price would be a result
of a measured and transparent process that eliminates the potential
that such trade would be considered erroneous.
    The Exchange believes that the proposed amendments to Rule 7.11E
would remove impediments to and perfect the mechanism of a free and
open market and a national market system because the proposed changes
would remove obsolete rule text and amend the remaining rule text to
conform to LULD Amendment 12, as described above.
    The Exchange believes that the proposed rule change to add an IO
Order for Trading Halt Auctions would further remove impediments to and
perfect the mechanism of a free and open market and a national market
system because such order type is designed to attract offsetting
interest that would participate in the Trading Halt Auction. The
Exchange believes that offering such order type would provide an option
for market participants that are willing to participate in an auction
to offset an imbalance, but do not want such orders to participate in
continuous trading. The proposed order type is based on the CO Order
offered by NYSE Arca and are designed with the same purpose--to reduce
the imbalance to assist in achieving pricing equilibrium.
    The Exchange further believes that the proposed rule change to add
a Trading Halt Auction Imbalance Freeze would remove impediments to and
perfect the mechanism of a free and open market and a national market
system because it would provide market participants with a brief period
to assess the imbalance going into a Trading Halt Auction. During such
time, order entry and cancellation would be revised in a manner
designed to reduce the last-published imbalance. The proposed mechanism
for the Trading Halt Auction Imbalance Freeze is not novel, as it is
based in part on the existing Core Open Auction Imbalance Freeze, i.e.,
the length of the Auction Imbalance Freeze, and the Closing Auction
Imbalance Freeze, i.e., how new orders and order instructions would be
processed, with a proposed substantive difference to address how the
proposed new IO Order type would be processed during the Auction
Imbalance Freeze.
    The Exchange believes that the proposed manner of how it would
process Limit Orders that do not participate in a Trading Halt Auction,
but have a limit price within the applicable Auction Collars, in that
such orders would roll into continuous trading, would remove
impediments to and perfect the mechanism of a free and open market and
a national market system. Such Limit Orders likely would not impact the
pricing of post-auction trading and trigger another Trading Pause
because the limit price of such orders would be within the same price
range that trading would otherwise be permitted.
    The Exchange believes that the proposed amendments to enhance the
Auction Imbalance Information to add the Auction Reference Price, the
Auction Collar, the Book Clearing Price, the Far Clearing Price, the
Imbalance Freeze Indicator, and the Auction Indicator would remove
impediments to and perfect the mechanism of a free and open market and
a national market

system because they are designed to promote additional transparency
regarding the Exchange's auctions by providing additional detail
regarding what Auction Reference Price would be used in an auction, the
Auction Collars applicable to such auction, additional information
about potential pricing for such auction, and the status of the
applicable auction.
    The Exchange believes that the proposed amendments to Rule
7.31E(a)(10)(A) to replace ``truncated'' with ``rounded down'' would
remove impediments to and perfect the mechanism of a free and open
market and a national market system because the proposed rule change is
designed to promote clarity, consistency, and transparency in Exchange
rules.
    Finally, the Exchange believes that the proposed changes are
consistent with the Act because they are based on the rules of NYSE
Arca without any substantive differences.

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

    The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The Exchange believes that
the proposed rule change is not designed to address any competitive
issues, but rather, to achieve the Participants' goal of more
standardized processes across Primary Listing Exchanges in reopening
trading following a Trading Pause, and facilitates the production of an
equilibrium Reopening Price by centralizing the reopening process
through the Primary Listing Exchange, which would also improve the
accuracy of the reopening Price Bands. The Exchange believes that the
proposed rule change reduces the burden on competition for market
participants because it promotes a transparent and consistent process
for reopening trading following a Trading Pause regardless of where a
security may be listed. The Exchange further believes that the proposed
rule change would not impose any burden on competition because they are
designed to increase transparency regarding the Exchange's Trading Halt
Auction process while at the same time increasing the ability for
offsetting interest to participate in an auction, which would assist in
achieving pricing equilibrium for such an auction.

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

    No written comments were solicited or received with respect to the
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action

    The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \26\ and Rule 19b-4(f)(6) thereunder.\27\
Because the 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 prior to
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, if consistent with the protection of
investors and the public interest, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.
---------------------------------------------------------------------------

    \26\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \27\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) \28\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\29\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest.
---------------------------------------------------------------------------

    \28\ 17 CFR 240.19b-4(f)(6).
    \29\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of such 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 under
Section 19(b)(2)(B) \30\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \30\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

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-NYSEAMER-2017-30 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSEAMER-2017-30. 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
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change. Persons submitting
comments are cautioned that we do not redact or edit personal
identifying information from comment submissions. You should submit
only information that you wish to make available publicly. All
submissions should refer to File Number SR-NYSEAMER-2017-30 and should
be submitted on or before November 24, 2017.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\31\
---------------------------------------------------------------------------

    \31\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-23826 Filed 11-1-17; 8:45 am]
 BILLING CODE 8011-01-P


agree that it is necessary to address how FDA intends to harmonize with
the revised Common Rule's expedited and continuing review requirements
as part of this rulemaking, which finalizes our proposal to permit an
IRB to approve an informed consent procedure that waives or alters
certain informed consent elements, or to waive the requirement to
obtain informed consent, for certain minimal risk investigations. FDA
issued a separate proposed rule to amend its regulations at parts 50
and 56, including with respect to expedited and continuing review (87
FR 58733), and will consider all timely comments received as part of
that rulemaking, including those related to expedited review and/or
continuing review. We address below the more specific concerns raised
by the comments in relation to expedited or continuing review.
    Some of the comments appear concerned that any changes to the FDA
expedited review requirements intended to harmonize with the revised
Common Rule could be perceived by the research community as broadening
what qualifies as minimal risk or discourage determinations that a
study presents more than minimal risk. As an initial matter, the
revised Common Rule did not modify the current definition of ``minimal
risk'' that is found in HHS regulations (45 CFR 46.102(j)), so FDA
regulations (Sec.  50.3(k)) remain consistent with the definition of
``minimal risk'' provided in the revised Common Rule. In addition,
under FDA's regulations at Sec.  56.110(b)(1), for research to qualify
for expedited review, a determination must be made by an IRB that the
proposed research involves no more than minimal risk to human subjects.
In other words, under current FDA regulations, the categories of
activities appearing on the expedited review list are not presumed to
be minimal risk. FDA's proposed rule to amend parts 50 and 56 (87 FR
58733) does not propose to change this. In addition, the revised Common
Rule did not modify the 1998 expedited review list (63 FR 60364), so
HHS and FDA (63 FR 60353) maintain identical lists of categories of
research activities that may be reviewed by an IRB through the
expedited review procedure. As described in the revised Common Rule, an
IRB may use the expedited review procedure to review studies that
involve activities appearing on the expedited review list, unless the
IRB reviewer determines that the studies involve more than minimal risk
(see 45 CFR 46.110(b)(1)(i)). However, OHRP has clarified that, until a
new expedited review list is finalized, the entire 1998 HHS expedited
review list, including the ``Applicability'' section, remains in

effect for studies subject to the revised Common Rule (Ref. 16). Under
the current wording of the ``Applicability'' section, to be eligible
for expedited review, research must present no more than minimal risk
to subjects. Therefore, for research to qualify for expedited review
under the revised Common Rule, a determination must still be made by an
IRB that the specific circumstances of the proposed research involve no
more than minimal risk to human subjects. Under Sec.  50.22, as
finalized in this rule, an IRB must find and document that the clinical
investigation involves no more than minimal risk to subjects,
regardless of whether the study falls within a category on the
expedited review list, to waive or alter informed consent.
    As noted in comments, the revised Common Rule provision at 45 CFR
46.109(f)(1)(i) eliminates the requirement for an IRB to conduct
continuing review of research that is eligible for expedited review in
accordance with 45 CFR 46.110, unless the IRB determines otherwise.
FDA's IRB continuing review requirements are not being revised in this
rule. As explained above, FDA is engaged in separate rulemaking to
amend parts 50 and 56 to harmonize with the revised Common Rule in
accordance with section 3023 of the Cures Act. As part of that effort,
FDA proposed changes to eliminate the requirement for an IRB to conduct
continuing review of research, unless an IRB determines otherwise, that
has progressed to the point that it involves only data analysis,
including analysis of identifiable private information or identifiable
biospecimens, and/or accessing followup clinical data from procedures
that subjects would undergo as part of clinical care. However, FDA's
proposed rule to amend parts 50 and 56 (87 FR 58733) does not propose
to eliminate continuing review of all research eligible for expedited
review, unless the IRB determines otherwise, for the reasons described
in the preamble to that proposed rule. FDA will take into account the
comments urging that minimal risk studies for which an IRB waives
informed consent remain subject to IRB continuing review as part of
finalizing any changes to continuing review requirements in that
separate rulemaking.
    As HHS evaluates and amends, as appropriate, its current expedited
review list as required under 45 CFR 46.110(a), FDA intends to
participate in the process and will update our own expedited review
list, as appropriate, and will consider if any related changes to our
regulations are necessary.

I. Comments on the Cost Savings of the Proposed Rule

    (Comment 24) Some comments describe support for the rule because it
will reduce administrative burden and result in cost savings. Other
comments express the view that the proposed cost savings of the rule
are low and may not outweigh the negative impact of waiving informed
consent for certain minimal risk studies. One comment states that,
although the potential benefits cannot be fully quantified, the
analysis should focus on some of the drawbacks of this rule.
    (Response 24) As discussed in section VII, FDA believes that this
rule will reduce administrative burden and that any costs incurred are
outweighed by non-quantifiable benefits in the form of healthcare
advances resulting from research performed using a waiver or alteration
of informed consent, as well as a reduction in burden for the research
community arising from the harmonization of FDA's informed consent
regulations with the revised Common Rule's provision for waiver or
alteration of informed consent for certain minimal risk research.
    However, as part of developing a response to this comment, we
reanalyzed the proposed rule to consider potential additional costs
associated with the rulemaking. Based on that review, we determined
that there are some one-time costs associated with reading and
implementing the rule, which we anticipate to be small because the
final rule is harmonized with Common Rule provisions with which the
clinical research community is already familiar. We also determined
that there are some annual costs associated with drafting and reviewing
requests for a waiver or alteration of consent. In this final rule, we
include a revised analysis of cost and cost savings in the Economic
Analysis of Impacts (section VII). We also determined that some of
these costs are associated with collections of information subject to
review by the Office of Management and Budget (OMB) under the Paperwork
Reduction Act of 1995 (PRA). For further information, see section IX.

J. Comments on the Proposed Effective Date

    (Comment 25) We proposed that any final rule issued based on the
proposed rule would become effective 30 days after its date of
publication in the Federal Register. One comment requests clarification
on the application of the effective date. Specifically, the comment
asks whether the rule would apply only to clinical investigations that
receive initial IRB approval on or after the effective date, or if it
would apply to IRB review at any stage of the clinical investigation
(e.g., initial IRB approval or amendments) conducted on or after that
date.
    (Response 25) In response to this comment, we note that the rule
will apply to IRB review at any stage of an FDA-regulated clinical
investigation conducted on or after the effective date, including
initial IRB approval or review of any changes to a previously approved
clinical investigation.

VI. Effective Date

    This rule is effective 30 days after the date of its publication in
the Federal Register.

VII. Economic Analysis of Impacts

A. Introduction

    We have examined the impacts of the final rule under Executive
Order 12866, Executive Order 13563, Executive Order 14094, the
Regulatory Flexibility Act (5 U.S.C. 601-612), the Congressional Review
Act/Small Business Regulatory Enforcement Fairness Act (5 U.S.C. 801,
Pub. L. 104-121), and the Unfunded Mandates Reform Act of 1995 (Pub. L.
104-4).
    Executive Orders 12866, 13563, and 14094 direct us to assess all
benefits, costs, and transfers of available regulatory alternatives
and, when regulation is necessary, to select regulatory approaches that
maximize net benefits (including potential economic, environmental,
public health and safety, and other advantages; distributive impacts;
and equity). Rules are ``significant'' under Executive Order 12866
Section 3(f)(1) (as amended by Executive Order 14094) if they ``have an
annual effect on the economy of $200 million or more (adjusted every 3
years by the Administrator of the Office of Information and Regulatory
Affairs (OIRA) for changes in gross domestic product); or adversely
affect in a material way the economy, a sector of the economy,
productivity, competition, jobs, the environment, public health or
safety, or State, local, territorial, or tribal governments or
communities.'' OIRA has determined that this final rule is not a
significant regulatory action under Executive Order 12866 Section
3(f)(1).
    A rule is ``major'' under the Congressional Review Act/Small
Business Regulatory Enforcement Fairness Act if it has resulted or is
likely to result in an annual effect on the economy of $100 million or
more or meets other criteria specified in the Congressional Review Act
(5 U.S.C. 804(2)). OIRA has determined that this

final rule is not a major rule under the Congressional Review Act/Small
Business Regulatory Enforcement Fairness Act.
    The Regulatory Flexibility Act requires us to analyze regulatory
options that would minimize any significant impact of a rule on small
entities. Because the final rule is unlikely to impose a substantial
burden on the affected small entities, we certify that the final rule
will not have a significant economic impact on a substantial number of
small entities.
    The Unfunded Mandates Reform Act of 1995 (section 202(a)) requires
us to prepare a written statement, which includes an assessment of
anticipated impacts, before issuing ``any rule that includes any
Federal mandate that may result in the expenditure by State, local, and
tribal governments, in the aggregate, or by the private sector, of
$100,000,000 or more (adjusted annually for inflation) in any one
year.'' The current threshold after adjustment for inflation is $177
million, using the most current (2022) Implicit Price Deflator for the
Gross Domestic Product. This final rule would not result in an
expenditure in any year that meets or exceeds this amount.

B. Summary of Costs, Cost Savings, and Benefits

    We expect costs in the form of affected IRBs, as well as
investigators and sponsors of clinical investigations, reading and
learning the rule. We also expect costs in the form of drafting new
waiver or alteration requests, and additional recordkeeping burdens
associated with reviewing and documenting IRB decisions on waiver or
alteration requests. The net present value of the estimated costs of
the rule are approximately $10.1 million, with a lower bound of
approximately $8.1 million and an upper bound of approximately $14.0
million, discounted at 3 percent over 10 years. At a 7 percent discount
rate, the estimated costs of the rule are approximately $9.1 million,
with a lower bound of approximately $7.5 million and an upper bound of
approximately $12.4 million. The estimated annualized costs of the rule
are approximately $1.2 million, with a lower bound of approximately
$0.9 million and an upper bound of approximately $1.6 million,
discounted at 3 percent over 10 years. At a 7 percent discount rate,
the estimated annualized costs of the rule are approximately $1.3
million, with a lower bound of approximately $1.1 million and an upper
bound of approximately $1.8 million.
    We also expect that there will be cost savings to IRBs because the
time burdens of reviewing waiver or alterations requests would be
reduced from harmonization of FDA's informed consent regulations with
the provision for waiver or alteration of informed consent for certain
minimal risk research in the Common Rule. The estimated net present
value of the cost savings of the rule are approximately $1.7 million,
with a lower bound of approximately $0.9 million and an upper bound of
approximately $3.5 million, discounted at 3 percent over 10 years. At a
7 percent discount rate, the estimated cost savings of the rule are
approximately $1.4 million, with a lower bound of approximately $0.7
million and an upper bound of approximately $2.8 million. The estimated
annualized cost savings of the rule are approximately $0.2 million,
with a lower bound of approximately $0.1 million and an upper bound of
approximately $0.4 million, discounted at 3 percent over 10 years. At a
7 percent discount rate, the estimated annualized costs savings of the
rule are approximately $0.2 million, with a lower bound of
approximately $0.1 million and an upper bound of approximately $0.4
million.
    We expect benefits in the form of healthcare advances from minimal
risk clinical investigations for which the requirements for informed
consent are waived or altered under the final rule and that otherwise
would not be conducted. We cannot quantify all benefits that might
arise from such studies because of the lack of relevant data available
regarding the focus of these types of studies that will support
regulatory submissions to the Agency. The costs and cost savings of the
rule are summarized in table 1.

                                Table 1--Summary of Costs, Costs Savings, and Distributional Effects of the Proposed Rule
                                                                      [Millions $]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                Units
                                                                                ---------------------------------------
               Category                  Primary estimate   Low estimate    High estimate                               Period             Notes
                                                                                Year       Discount     covered
                                                                                dollars      rate (%)     (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Costs:
    Annualized Monetized millions/year  .................  ..............  ..............  ...........  ...........  ...........
    Annualized Quantified.............               $1.3            $1.1            $1.8         2020            7           10  ......................
                                                      1.2             0.9             1.6         2020            3           10  ......................
    Qualitative.......................  .................  ..............  ..............  ...........  ...........  ...........
    Annualized Monetized millions/year
    Annualized........................                0.2             0.1             0.4         2020            7           10  ......................
    Quantified........................                0.2             0.1             0.4         2020            3           10  ......................
                                       ---------------------------------------------------
    Qualitative.......................  Healthcare advances stemming from minimal risk     ...........  ...........  ...........  ......................
                                        clinical investigations that can proceed using a
                                        waiver or alteration of informed consent and that
                                        otherwise would not have been conducted.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Transfers:
    Federal Annualized................  .................  ..............  ..............  ...........  ...........  ...........  ......................
    Monetized $millions/year..........  .................  ..............  ..............  ...........  ...........  ...........  ......................
                                       -----------------------------------------------------------------------------------------------------------------
                                        From:
                                        To:
                                       -----------------------------------------------------------------------------------------------------------------
    Other Annualized..................  .................  ..............  ..............  ...........  ...........  ...........  ......................
    Monetized $millions/year..........  .................  ..............  ..............  ...........  ...........  ...........  ......................
                                       -----------------------------------------------------------------------------------------------------------------
                                        From:
                                        To:
--------------------------------------------------------------------------------------------------------------------------------------------------------
Effects:
    State, Local or Tribal Government:..................................................................................................................
--------------------------------------------------------------------------------------------------------------------------------------------------------

    We have developed a comprehensive Economic Analysis of Impacts that
assesses the impacts of the final rule. The full analysis of economic
impacts is available in the docket for this final rule (Docket No. FDA-
2018-N-2727) and at https://www.fda.gov/about-fda/reports/economic-impact-analyses-fda-regulations.

VIII. Analysis of Environmental Impact

    We have determined under 21 CFR 25.30(h) that this action is of a
type that does not individually or cumulatively have a significant
effect on the human environment. Therefore, neither an environmental
assessment nor an environmental impact statement is required.

IX. Paperwork Reduction Act of 1995

    In the proposed rule, FDA stated, ``This proposed rule refers to
previously approved collections of information found in FDA
regulations. . . . Therefore, FDA tentatively concludes the
requirements in this document are not subject to additional review by
OMB.'' In developing the final rule, FDA determined that there are
information collections contained in the rule that are subject to
review by OMB under the PRA (44 U.S.C. 3501-3521). Specifically, the
final rule adds Sec.  50.22 to part 50 to allow IRBs responsible for
the review, approval, and continuing review of clinical investigations
to approve an informed consent procedure that does not include or that
alters certain informed consent elements, or to waive the requirement
to obtain informed consent, for certain minimal risk clinical
investigations, provided the IRB finds and documents the criteria set
forth in Sec.  50.22(a)-(e). The information collections associated
with part 50 have been approved in accordance with the PRA under OMB
control number 0910-0130, but the additional provision at Sec.  50.22
will modify this information collection. We estimate the rulemaking
will result in an annual burden increase of 1,102 responses and 1,102
hours from recordkeeping and disclosure activity relating to the
revised regulations in 21 CFR part 50.
    With this exception, we conclude that the other provisions of this
rule do not require substantive revisions to information collections
already approved under the PRA. Provisions in part 312 (21 CFR part
312) of FDA's regulations set forth procedures for the conduct of
clinical investigations of drugs and provide for the protection of
human subjects involved in such investigations. Existing regulations at
Sec.  312.60 describe the general responsibilities of investigators
with regard to study conduct, including ensuring the rights, safety,
and welfare of human subjects. As part of these responsibilities, the
current regulations require that investigators obtain informed consent,
except as provided in exceptions from general requirements (Sec.
50.23) and exception from informed consent requirements for emergency
research (Sec.  50.24). This final rule, as noted above, adds an
additional exception to include waiver or alteration of informed
consent for minimal risk clinical investigations under Sec.  50.22.
Therefore, FDA made a conforming revision to Sec.  312.60 to cross-
reference part 50 generally, rather than list each specific exception
to the informed consent requirements, for simplicity and for accuracy
of the cross-references in the regulatory text. FDA does not expect
changes to the collections of information approved under OMB control
number 0910-0014 as a result of this final rule. In addition, FDA's
existing regulations at Sec.  812.2 describe abbreviated requirements
for IDEs, which require that investigators obtain and document informed
consent under part 50, unless documentation is waived under IRB
regulations at Sec.  56.109(c). This final rule amends Sec.
812.2(b)(1)(iii) to clarify that the investigator must obtain informed
consent in accordance with part 50, which includes the new provision
for waiver or alteration in Sec.  50.22. The final rule also simplifies
the regulatory text at Sec.  812.2(b)(1)(iii) by removing the cross-
reference to waiver of documentation of informed consent under Sec.
56.109(c). The relevant section of the regulations in part 50 (i.e.,
Sec.  50.27) already refers to Sec.  56.109(c), so the cross-reference
to Sec.  56.109(c) need not be repeated. FDA does not expect any
changes to the collections of information collection approved under OMB
control number 0910-0078 as a result of this final rule.
    Before the effective date of this final rule, FDA will publish a
notice in the Federal Register announcing OMB's decision to approve,
modify, or disapprove the information collection provisions in this
final rule. An Agency may not conduct or sponsor, and a person is not
required to respond to, a collection of information unless it displays
a currently valid OMB control number.

X. Federalism

    We have analyzed this final rule in accordance with the principles
set forth in Executive Order 13132. FDA has determined that the rule
does not contain policies that have substantial direct effects on the
States, on the relationship between the National Government and the
States, or on the distribution of power and responsibilities among the
various levels of government. Accordingly, we conclude that the rule
does not contain policies that have federalism implications as defined
in the Executive Order and, consequently, a federalism summary impact
statement is not required.

XI. Consultation and Coordination With Indian Tribal Governments

    We have analyzed this rule in accordance with the principles set
forth in Executive Order 13175. We have determined that the rule does
not contain policies that have substantial direct effects 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. Accordingly, we
conclude that the rule does not contain policies that have tribal
implications as defined in the Executive Order and, consequently, a
tribal summary impact statement is not required.

XII. References

    The following references are on display at the Dockets Management
Staff (see ADDRESSES) and are available for viewing by interested
persons between 9 a.m. and 4 p.m., Monday through Friday; they are also
available electronically at https://www.regulations.gov. FDA has
verified the website addresses, as of the date this document publishes
in the Federal Register, but websites are subject to change over time.

1. U.S. Department of State, ``Fourth Periodic Report of the United
States of America to the United Nations Committee on Human Rights
Concerning the International Covenant on Civil and Political
Rights'' (December 30, 2011). Available at https://2009-2017.state.gov/j/drl/rls/179781.htm. Accessed March 7, 2023.
2. Secretary's Advisory Committee on Human Research Protections,
``Recommendations Related to Waiver of Informed Consent and
Interpretation of `Minimal Risk' '' (January 31, 2008). Available
at: https://www.hhs.gov/ohrp/sachrp-committee/recommendations/2008-january-31-letter/index.html. Accessed March 7, 2023.
3. Executive Office of the President. Memorandum of March 27, 1997.
``Strengthened Protections for Human Subjects of Classified
Research.'' 62 FR 26369 (May 13, 1997). Available at: https://
www.federalregister.gov/documents/1997/05/13/97-12699/strengthened-
protections-for-human-

subjects-of-classified-research. Accessed March 22, 2023.
4. Baker, F.X. and J.F. Merz (2018), ``What Gives Them the Right?
Legal Privilege and Waivers of Consent for Research,'' Clinical
Trials, 15(6): 579-586. Available at: https://journals.sagepub.com/doi/10.1177/1740774518803122. Accessed on March 7, 2023.
5. van Zon, S.K.R, S. Schlotens, S.A. Reijneveld, et al. (2016),
``Active Recruitment and Limited Participant-load Related to High
Participation in Large Population-based Biobank Studies,'' Journal
of Clinical Epidemiology, 78: 52-62. Available at: https://www.sciencedirect.com/science/article/pii/S089543561630021X?via%3Dihub. Accessed on March 7, 2023.
6. Kripalani, S., K. Goggins, C. Couey, et al. (2021), ``Disparities
in Research Participation by Level of Health Literacy,'' Mayo Clinic
Proceedings, 96(2): 314-321. Available at: https://www.mayoclinicproceedings.org/article/S0025-6196(20)30856-9/
fulltext. Accessed on March 7, 2023.
7. Kraft, S.A., K.M. Porter, D.M. Korngiebel, et al. (2017),
``Research on Medical Practices: Why Patients Consider Participating
and the Investigational Misconception.'' IRB, 39(4): 10-16.
Available at: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7374557/#__ffn_sectitle. Accessed on March 7, 2023.
8. OHRP and FDA, ``Institutional Review Board (IRB) Written
Procedures: Guidance for Institutions and IRBs'' (May 2018).
Available at: https://www.fda.gov/regulatory-information/search-fda-guidance-documents/institutional-review-board-irb-written-procedures. Accessed on March 7, 2023.
9. FDA, ``Information Sheet Guidance for IRBs, Clinical
Investigators, and Sponsors: Significant Risk and Nonsignificant
Risk Medical Device Studies'' (January 2006). Available at: https://www.fda.gov/regulatory-information/search-fda-guidance-documents/significant-risk-and-nonsignificant-risk-medical-device-studies.
Accessed on March 7, 2023.
10. Council for International Organizations of Medical Sciences
(CIOMS), ``International Ethical Guidelines for Health-related
Research Involving Humans,'' prepared by the Council for
International Organizations of Medical Sciences in collaboration
with the World Health Organization (2016). Available at: https://cioms.ch/wp-content/uploads/2017/01/WEB-CIOMS-EthicalGuidelines.pdf.
Accessed on March 7, 2023.
11. World Medical Association, ``Declaration of Helsinki--Ethical
Principles for Medical Research Involving Human Subjects'' (October
2013). Available at: https://www.wma.net/policies-post/wma-declaration-of-helsinki-ethical-principles-for-medical-research-involving-human-subjects/. Accessed on March 7, 2023.
12. FDA, ``Guidance on Informed Consent for In Vitro Diagnostic
Device Studies Using Leftover Human Specimens that are Not
Individually Identifiable'' (April 2006). Available at: https://www.fda.gov/regulatory-information/search-fda-guidance-documents/guidance-informed-consent-in-vitro-diagnostic-device-studies-using-leftover-human-specimens-are-not. Accessed on March 7, 2023.
13. FDA, ``Guidance for Industry and FDA Staff: In Vitro Diagnostic
(IVD) Device Studies--Frequently Asked Questions'' (June 2010).
Available at: https://www.fda.gov/regulatory-information/search-fda-guidance-documents/in-vitro-diagnostic-ivd-device-studies-frequently-asked-questions. Accessed March 7, 2023.
14. OHRP, ``Protection of Human Subjects: Categories of Research
That May Be Reviewed by the Institutional Review Board (IRB) Through
an Expedited Review Procedure,'' 63 FR 60364, November 9, 1998.
15. SACHRP, Recommendation to the Secretary of HHS,
``Recommendations on the Expedited Review List'' (December 12,
2017). Available at: https://www.hhs.gov/ohrp/sachrp-committee/recommendations/attachment-a-december-12-2017/index.html. Accessed
on March 7, 2023.
16. OHRP, ``Revised Common Rule Q&As'' (December 2021). Available
at: https://www.hhs.gov/ohrp/education-and-outreach/revised-common-rule/revised-common-rule-q-and-a/index.html. Accessed on March 7,
2023.

List of Subjects

21 CFR Part 50

    Human research subjects, Prisoners, Reporting and recordkeeping
requirements, Safety.

21 CFR Part 312

    Drugs, Exports, Imports, Investigations, Labeling, Medical
research, Reporting and recordkeeping requirements, Safety.

21 CFR Part 812

    Health records, Medical devices, Medical research, Reporting and
recordkeeping requirements.

    Therefore, under the Federal Food, Drug, and Cosmetic Act, the
Public Health Service Act, and under authority delegated to the
Commissioner of Food and Drugs, 21 CFR parts 50, 312, and 812 are
amended as follows:

PART 50--PROTECTION OF HUMAN SUBJECTS

0
1. The authority citation for part 50 is revised to read as follows:

    Authority: 21 U.S.C. 321, 343, 346, 346a, 348, 350a, 350b, 352,
353, 355, 360, 360c-360f, 360h-360j, 371, 379e, 381; 42 U.S.C. 216,
241, 262.

0
2. In Sec.  50.20 revise the first sentence to read as follows:

Sec.  50.20  General requirements for informed consent.

    Except as provided in Sec. Sec.  50.22, 50.23, and 50.24, no
investigator may involve a human being as a subject in research covered
by these regulations unless the investigator has obtained the legally
effective informed consent of the subject or the subject's legally
authorized representative. * * *

0
3. Add Sec.  50.22 to subpart B to read as follows:

Sec.  50.22  Exception from informed consent requirements for minimal
risk clinical investigations.

    The IRB responsible for the review, approval, and continuing review
of the clinical investigation described in this section may approve an
informed consent procedure that does not include or that alters some or
all of the elements of informed consent set forth in Sec.  50.25(a) and
(b), or may waive the requirement to obtain informed consent, provided
the IRB finds and documents the following:
    (a) The clinical investigation involves no more than minimal risk
to the subjects;
    (b) The clinical investigation could not practicably be carried out
without the requested waiver or alteration;
    (c) If the clinical investigation involves using identifiable
private information or identifiable biospecimens, the clinical
investigation could not practicably be carried out without using such
information or biospecimens in an identifiable format;
    (d) The waiver or alteration will not adversely affect the rights
and welfare of the subjects; and
    (e) Whenever appropriate, the subjects or legally authorized
representatives will be provided with additional pertinent information
after participation.

PART 312--INVESTIGATIONAL NEW DRUG APPLICATION

0
4. The authority citation for part 312 continues to read as follows:

    Authority: 21 U.S.C. 321, 331, 351, 352, 353, 355, 360bbb, 371;
42 U.S.C. 262.

0
5. Revise Sec.  312.60 to read as follows:

Sec.  312.60  General responsibilities of investigators.

    An investigator is responsible for ensuring that an investigation
is conducted according to the signed investigator statement, the
investigational plan, and applicable regulations; for protecting the
rights, safety, and welfare of subjects under the investigator's care;
and for the control of drugs under investigation. An

investigator shall obtain the informed consent of each human subject to
whom the drug is administered, in accordance with part 50 of this
chapter. Additional specific responsibilities of clinical investigators
are set forth in this part and in parts 50 and 56 of this chapter.

PART 812--INVESTIGATIONAL DEVICE EXEMPTIONS

0
6. The authority citation for part 812 is revised to read as follows:

    Authority: 21 U.S.C. 331, 351, 352, 353, 355, 360, 360c-360f,
360h-360j, 360hh-360pp, 360rr-360ss, 360bbb-8b, 371, 372, 374, 379e,
381, 382; 42 U.S.C. 216, 241, 262.

0
7. Revise Sec.  812.2 (b)(1)(iii) to read as follows:

Sec.  812.2  Applicability.

* * * * *
    (b) * * *
    (1) * * *
    (iii) Ensures that each investigator participating in an
investigation of the device obtains from each subject under the
investigator's care, informed consent in accordance with part 50 of
this chapter.
* * * * *

    Dated: December 1, 2023.
Robert M. Califf,
Commissioner of Food and Drugs.
[FR Doc. 2023-27935 Filed 12-20-23; 8:45 am]
BILLING CODE 4164-01-P