Equity Market Structure Advisory Committee — Market Quality Subcommittee

Summary Minutes of January 8, 2016 Meeting

The Market Quality Subcommittee held a call on January 8, 2016, to discuss the market volatility on August 24, 2015, Limit Up Limit Down ("LULD") trading halts, opening processes across exchanges, the impact of short selling restrictions during market stress, and the relationship between ETPs and their underlying securities.

The call convened at approximately 9:00 a.m. via telephone. The following Subcommittee Members were on the call:

Matt Andresen
Reginald Browne
Kevin Cronin
Ted Kaufman
Mehmet Kinak
Jamil Nazarali
Eric Noll
Maureen O'Hara

The following staff from the Division of Trading and Markets were on the call:

David Shillman
Daniel Gray
Mark Donohue
Arun Manoharan
Charles Collver
Barry Pershkow
Arisa Kettig
Alex Jadin
Benjamin Kalish
Vince Vuong

The first order of business was to identify potential topics to be reviewed by the Subcommittee. Suggestions were made of potential issues the Subcommittee could focus on related to the SEC Research Note on Equity Market Volatility on August 24, 2015.

The members discussed the Research Note and potential solutions to volatility, particularly with respect to ETPs. Members focused on the effects of LULD trading halts, the various tools market makers employ to provide liquidity, differences in exchange opening procedures, short selling restrictions, the relationship between volatility controls on futures products and the equity markets, distribution of market data, and the relationship between ETPs and their underlying securities, including arbitrage mechanisms. The Subcommittee further discussed Commission relief from short-sale restrictions for bona fide market making activities. The Subcommittee also discussed harmonizing the rules governing clearly erroneous transactions and LULD.

The final order of business discussed was next steps. The Subcommittee plans to schedule a meeting to discuss market making, opening procedures on the exchanges, and the interaction between futures and equities.

The call concluded at approximately 10:45 a.m.