Self-Regulatory Organizations Response to SEC for Strengthening Critical Market Infrastructure

  Self-Regulatory Organizations Response to SEC for Strengthening Critical
  Market Infrastructure

  --Collaborative effort to protect the integrity of US trading markets and
                        enhance investor confidence--

            --Focus on the safeguards critical to strong markets--

Business Wire

NEW YORK -- November 12, 2013

Self-regulatory organizations (SROs) for the equities and options markets have
been working with Securities and Exchange Commission (SEC) staff on their
collective plans to strengthen the resilience, performance, disaster recovery
capability and governance of the critical infrastructure of the US capital
markets, including the Securities Information Processors (UTP, CTA and OPRA).

The SROs have come to general agreement on certain recommendations and
preliminary implementation timetables in response to the September 12, 2013
meeting between leaders of the equities and options exchanges, FINRA, DTCC and
Options Clearing Corporation and SEC Chair Mary Jo White.

Specific details of the SROs’ proposals will be presented in subsequent SRO
rule filings and NMS Plan Amendments and will be subject to public comment and
SEC approval. The multi-pronged proposals address each of the following areas
identified in the SEC’s September 12, 2013, press release:

1.Securities Information Processor (SIP): The SROs and SIP Committees have
    compiled a series of proposals designed to improve operational resiliency,
    strengthen interoperability standards and disaster recovery capabilities,
    enhance governance, accountability and transparency and establish a clear
    testing framework for the industry. These proposals set out a process for
    sharing best practices, reviewing policies and procedures of all Operating
    Committees, and updating technology change procedures, as well as
    improving audit and assessment processes.
2.Critical Infrastructure: The SROs have established a pathway to identify
    contingencies related to critical infrastructure items such as essential
    regulatory messaging (LULD, SSR, Halts), the open/close of the markets,
    initial public offerings, DTCC/OCC outages, singly-listed options and
    industry testing and connectivity to exchange disaster recovery
    facilities.
3.Halts/Resumptions: The SROs have agreed to three core principles for
    halting the equities and options market (transparency, limited discretion,
    and the coordination of halts/resumptions by the primary markets) and
    proposed rules and metrics incorporating these key principles are under
    consideration among the SROs.
4.Trade Breaks: The SROs are reconciling trade-break rules among the
    exchanges for both equities and options markets. Subsequent changes will
    be submitted in a series of rule proposals for public comment and SEC
    approval.
5.Kill Switch: Work continues in the equities markets on a year-long
    industry effort to reach a consensus on a proposed common “kill switch”
    functionality to prevent risk and disruption to the markets. Likewise, the
    options exchanges have agreed to each refine and enhance their existing
    kill switch functionality. In addition to kill switches, the options
    exchanges also agreed to enhance or develop functionality for price
    filters, drill-through protections, and activity-based kick outs.

The self-regulatory organizations have been working collaboratively in
developing these recommendations. We look forward to continuing dialogue and
engagement with the Commission and the industry as we work collectively to
finalize and execute on these recommendations.

Contact:

For media inquiries, here is contact information for each Self-Regulatory
Organization:
BATS Global Markets
Randy Williams, 212-378-8522
comms@bats.com
or
BOX Exchange
Janice Foley, 617-823-5555
janifoley@verizon.net
or
Chicago Board Options Exchange
Gail Osten, 312-786-7123
osten@cboe.com
or
Chicago Stock Exchange
Dave Herron, 312-663-2270
dherron@chx.com
or
Direct Edge
James Gorman, 201-942-8234
jgorman@directedge.com
or
Financial Industry Regulatory Authority
George Smaragdis, 202-728-8988
George.Smaragdis@finra.org
or
International Securities Exchange
Molly McGregor, 212-897-0275
mmcgregor@ise.com
or
MIAX Options
Dominique Prunetti-Miller, 609-897-1465
dprunetti@miami-holdings.com
or
National Stock Exchange
Francis Corcoran, 202-499 -1843
or
NASDAQ OMX
Joe Christinat, 646-441-5121
Joseph.christinat@nasdaqomx.com
or
NYSE Euronext
Eric Ryan, 212-656-2411
eryan@nyx.com
 
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