[Federal Register Volume 75, Number 99 (Monday, May 24, 2010)]
[Notices]
[Pages 28845-28847]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-12424]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-62131; File No. SR-NSX-2010-05]
Self-Regulatory Organizations; National Stock Exchange, Inc.;
Notice of Filing of a Proposed Rule Change To Establish a Trading Halt
for Individual Stocks Contained in the Standard & Poor's 500 Index That
Experience a 10 Percent Price Change of 10% or More During a Five-
Minute Period Pursuant to Exchange Rule 11.20
May 19, 2010.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on May 18, 2010, National Stock Exchange, Inc. 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 Exchange. The Commission is publishing this notice
to solicit comment on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
National Stock Exchange, Inc. (``NSX[supreg]'' or the ``Exchange'')
is proposing to establish a trading halt for individual stocks
contained in the Standard & Poor's 500 Index (``S&P 500'') that
experience a price change of 10% or more during a five-minute period.
The text of the proposed rule change is available on the Exchange's
Web site at http://www.nsx.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 Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant parts of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
Purpose
The Exchange proposes to add NSX Rule 11.20B to provide for a
trading pause for individual securities for which the Exchange is the
primary listing market if the price of such security moves 10% or more
from a sale in a preceding five-minute period. The Exchange is
proposing this rule addition in consultation with other listing markets
and staff of the Securities and Exchange Commission to provide for
uniform market-wide trading pause standards for individual securities
in the S&P 500[supreg] Index (for which the Exchange is the primary
listing market) that experience rapid price movement, as set forth
below (``Circuit Breaker Securities''). Consistent with the other
markets, the Exchange is proposing that this rule be implemented as a
six-month pilot so that all of the markets may assess the effect of
this rule proposal on the national market system.
As proposed, Rule 11.20B would enable the Exchange to pause trading
in an individual security that is primary listed [sic] on the Exchange
(a ``Listed Circuit Breaker Security'') if the price moves by 10% as
compared to prices of that security in the preceding five-minute period
during a trading day, which period is defined as a ``Trading Pause.''
To enable the market to absorb the opening price of a security and to
participate in the close, as proposed, the proposed rule would be in
effect from 9:45 a.m. to 3:35 p.m., Eastern time (all times referenced
in the Rule have now been converted to reflect Eastern time).
Proposed Rule 11.20B(b) sets forth the re-opening procedures of a
Listed Circuit Breaker Security following a Trading Pause. As proposed,
the Exchange will re-open trading in the Listed Circuit Breaker
Security at the end of the Trading Pause subject to Exchange
procedures. As proposed, in the event of a significant imbalance, the
Exchange may delay the re-opening of the security past the five-minute
Trading Pause period. The Exchange will notify other markets if it
cannot reopen because of system changes, thereby enabling other market
to resume
[[Page 28846]]
trading even if the primary listing market has not re-opened.
The 10% or more move in price will be calculated by comparing the
last consolidated sale price of a Listed Circuit Breaker Security
(``Trigger Trade'') to a reference price every second. For purposes of
this calculation, the reference price shall be any transaction in that
security printed to the Consolidated Tape during a five-minute period
before the Trigger Trade. Because the calculation period begins at 9:45
a.m., trades occurring after 9:45 a.m. may be a Trigger Trade; however,
the reference price(s) for such Trigger Trades will begin at 9:45 a.m.
In such case, in the first five minutes of the calculation period, the
reference prices for a Trigger Trade will not be based on five minutes
of trading in that security. For example, a trade at 9:45:05 will be
compared only to trades between 9:45:00 and 9:45:05. The last potential
Trigger Trade will be at 3:35 p.m., so that such Trading Pause will end
at 3:40 p.m.
As proposed, only regular way, in-sequence transactions qualify as
either a Trigger Trade or a reference price. To ensure that erroneous
executions do not trigger a Trading Pause, the Exchange also proposes
that it can exclude a transaction price from use as a reference price
or Trigger Trade if it concludes that the transaction price resulted
from an erroneous trade.
The proposed rule further provides that if a Trading Pause is
triggered for a Listed Circuit Breaker Security, the Exchange will
immediately notify the single plan processor responsible for
consolidation of information for the security.
In addition, proposed Rule 11.20B(f) would allow the Exchange to
pause trading in an individual security when the primary listing market
for such security issues a trading pause in any Circuit Breaker
Security. If, however, trading has not resumed on the primary listing
market and ten minutes have passed since the individual security
trading pause message has been received from the responsible single
plan processor, the Exchange may resume trading in such security.
The proposed rule would apply to trading pauses issued by primary
listing markets in ``Circuit Breaker Securities,'' as defined in
proposed Commentary .05. Specifically, on a pilot basis, set to end on
December 10, 2010, Circuit Breaker Securities would mean the securities
included in the S&P 500[supreg] Index. Thus, proposed Rule 11.20B would
be in effect only with respect to securities in the S&P 500[supreg]
Index.
In addition to proposing the addition of new Rule 11.20B, the text
of the prior Rule 11.20 would be reformatted to make clear that newly
formatted Rule 11.20A applies to market-wide halts whereas proposed new
Rule 11.20B applies to individual security pauses. The time periods
specified in Rule 11.20A are also revised to make Eastern time the
uniform time zone referenced in the rule. Further, the text of Rule
11.20A(d) is proposed to be moved to a new Rule 11.20C to make clear
that the NSX book is cleared of all outstanding orders in the context
of both individual security pauses and market-wide halts. Similarly,
the commentary to Rule 11.20 is proposed to be edited in conformity
with the edits proposed elsewhere in the rule. As proposed, nothing in
the rule would be construed to affect or limit in any way the ability
of the Exchange to halt or suspend trading n [sic] one or more
securities pursuant to any other Exchange rule or policy.
Statutory Basis
The statutory basis for the proposed rule change is Section 6(b)(5)
of the Act,\3\ which requires the rules of an exchange to promote just
and equitable principles of trade, 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. The
proposed rule change also is designed to support the principles of
Section 11A(a)(1) \4\ of the Act in that it seeks to assure fair
competition among brokers and dealers and among exchange markets. The
Exchange believes that the proposed rule meets these requirements in
that it promotes transparency and uniformity across markets concerning
decisions to pause trading in a security when there are significant
price movements.
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\3\ 15 U.S.C. 78f(b)(5).
\4\ 15 U.S.C. 78k-1(a)(1).
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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 Exchange Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others
The Exchange has neither solicited nor received written comments on
the proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 35 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
A. By order approve such proposed rule change, or
B. Institute proceedings to determine whether the proposed rule
change should be disapproved.\5\
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\5\ The Commission notes that the exchange has requested
accelerated approval of the filing.
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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 e-mail to [email protected]. Please include
File Number SR-NSX-2010-05 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-9303.
All submissions should refer to File No. SR-NSX-2010-05. This file
number should be included in the subject line if e-mail is used. To
help the Commission process and review 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
[[Page 28847]]
Reference Section, 100 F Street, NE., Washington, DC 20549. Copies of
such filings will also be available for inspection and copying at the
principal office of the Exchange. All comments received will be posted
without change; the Commission does not edit personal identifying
information from submissions. You should submit only information that
you wish to make available publicly. All submissions should refer to
file number SR-NSX-2010-05 and should be submitted on or before June 3,
2010.
For the Commission by the Division of Trading and Markets,
pursuant to the delegated authority.\6\
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\6\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-12424 Filed 5-21-10; 8:45 am]
BILLING CODE 8010-01-P