[Federal Register Volume 75, Number 116 (Thursday, June 17, 2010)]
[Notices]
[Pages 34510-34512]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-14604]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-62270; File No. SR-NASDAQ-2010-071]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by NASDAQ Stock Market LLC
Relating to Trading Halts in Options During a Trading Pause in the
Underlying Security
June 10, 2010.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 \2\ thereunder, notice is hereby given
that on June 10, 2010, The NASDAQ Stock Market LLC (``NASDAQ'' or
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') the proposed rule change as described in
Items I and II below, which Items have been prepared by the NASDAQ. The
Exchange has designated the proposed rule change as constituting a
``non-controversial'' rule change under paragraph (f)(6) of Rule 19b-4
under the Act,\3\ which renders the proposal effective upon receipt of
this filing by the Commission. The Commission is publishing this notice
to solicit comments on the proposed rule change from interested
persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 17 CFR 240.19b-4(f)(6).
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[[Page 34511]]
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The NASDAQ Stock Market LLC proposes to modify NASDAQ Options
Market (``NOM'') Rule Chapter V, Section 3 by adopting new sub-
paragraph (3)(a)vi to state that Trading on the Exchange in any option
contract shall be halted whenever trading in the underlying security
has been paused by the primary listing market. Trading in such options
contracts may be resumed upon a determination by the Exchange that the
conditions that led to the pause are no longer present and that the
interests of a fair and orderly market are best served by a resumption
of trading, which in no circumstances will be before the Exchange has
received notification that the underlying security has resumed trading
on at least one exchange.
The text of the proposed rule change is available on the Exchange's
Web site at http://www.nasdaq.cchwallstreet.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. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of the proposed rule change is to ensure that the
Exchange maintains fair and orderly markets in options upon the
imposition of a single stock pause (``trading pause'') \4\ by the
listing market for the underlying security. Accordingly, as proposed,
if such a trading pause is imposed, it will be considered a halt or
suspension on the primary market for the underlying security and a
trading halt in the overlying option will be imposed.
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\4\ For an example of the use of the term ``trading pause,'' see
Securities Exchange Act Release No. 62129 (May 19, 2010), 75 FR
28839 (May 24, 2010) (SR-NASDAQ-2010-061); and Securities Exchange
Act Release No. 62124 (May 19, 2010), 75 FR 28828 (May 24, 2010)
(SR-BX-2010-037).
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Transactions that occur between the time the pause is imposed on
the listing market and the halt is processed on NOM may be nullified
pursuant to NOM Rules, Chapter V, Section 6.\5\
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\5\ Chapter V, Section 6 is the NOM rule governing Obvious
Errors.
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Trading in the affected option will resume upon a determination by
Nasdaq that the conditions that led to the pause are no longer present
and that the interests of a fair and orderly market are best served by
a resumption of trading, which in no circumstances will be before the
Exchange has received notification that the underlying security has
resumed trading on at least one exchange.
Orders in the affected option that are received during the halt on
NOM will be treated as pre-opening orders and will be re-opened upon
resumption of trading on the listing market for the underlying security
using the opening cross process described in NOM Rules, Chapter VI,
Section 8.
2. Statutory Basis
NASDAQ believes that the proposed rule change is consistent with
the provisions of Section 6(b) of the Act \6\ in general, and furthers
the objectives of Section 6(b)(5) of the Act \7\ in particular, in that
it is designed 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. Specifically, NASDAQ believes that
the proposal benefits customers by halting trading in options during
times of uncertainty regarding the price of the underlying security due
to a trading pause in such underlying security.
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\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
NASDAQ does not believe that the proposed rule change will impose
any burden on competition not necessary or appropriate in furtherance
of the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not:
(i) Significantly affect the protection of investors or the public
interest;
(ii) impose any significant burden on competition; and
(iii) become operative for 30 days from the date on which it was
filed, or such shorter time as the Commission may designate, if
consistent with the protection of investors and the public interest, it
has become effective pursuant to Section 19(b)(3)(A) of the Act \8\ and
Rule 19b-4(f)(6) thereunder.\9\
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\8\ 15 U.S.C. 78s(b)(3)(A).
\9\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires the self-regulatory organization to submit to the
Commission written notice of its intent to file the proposed rule
change, along with a brief description and text of the proposed rule
change, at least five business days prior to the date of filing of
the proposed rule change, or such shorter time as designated by the
Commission. The Exchange has satisfied this requirement.
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The Exchange requested that the Commission waive the 30-day
operative delay. The Exchange notes that such a waiver will permit it
to immediately implement the proposed rule change in order to benefit
customers by halting trading in options during times of uncertainty
regarding the price of the underlying security due to a trading pause
in such underlying security. The Commission approved filings from the
exchanges and the Financial Industry Regulatory Authority to institute
a single stock trading pause for equity securities that experience a
10% change in price during a five minute period.\10\ The Commission
hereby grants the Exchange's request and believes such waiver is
consistent with the protection of investors and the public interest as
it will allow the Exchange to honor pauses triggered on individual
equity securities.\11\ Accordingly, the Commission designates the
proposed rule change operative upon filing with the Commission.
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\10\ See Securities Exchange Act Release Nos. 62251 and 62252
(June 10, 2010).
\11\ For purposes only of waiving the 30-day operative delay of
this proposal, the Commission has considered the proposed rule's
impact on efficiency, competition, and capital formation. See 15
U.S.C. 78c(f).
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At any time within 60 days of the filing of the proposed rule
change, the Commission may summarily abrogate 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.
[[Page 34512]]
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-NASDAQ-2010-071 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 20549-1090.
All submissions should refer to File Number SR-NASDAQ-2010-071. This
file number should be included on the subject line if e-mail 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 on
official business days between the hours of 10 a.m. and 3 p.m. Copies
of such filing also will 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-NASDAQ-2010-071 and should be submitted on or before
July 8, 2010.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-14604 Filed 6-16-10; 8:45 am]
BILLING CODE 8010-01-P