[Federal Register Volume 75, Number 150 (Thursday, August 5, 2010)]
[Notices]
[Pages 47330-47332]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-19247]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-62610; File No. SR-NYSEArca-2010-73]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by NYSE Arca, Inc. That
Constitutes a Stated Interpretation With Respect to the Meaning,
Administration, and Enforcement of NYSE Arca Equities Rule 7.10(g)
July 30, 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 July 28, 2010, NYSE Arca, Inc. (``NYSE Arca'' or the
``Exchange'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I and II
below, which Items have been prepared by the Exchange. 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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes that constitutes [sic] a stated
interpretation with respect to the meaning, administration, and
enforcement of NYSE Arca Equities Rule 7.10(g). The text of the
proposed rule change is available at the Exchange, the Commission's
Public Reference Room, and http://www.nyse.com.
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 adopt a stated interpretation with respect
to the meaning, administration, and enforcement of NYSE Arca Equities
Rule 7.10(g), concerning the ability of an Exchange Officer to act on
his or her own motion to review potentially erroneous executions.
Rule 7.10(g) provides that an Officer, acting on his or her own
motion, may review potentially erroneous executions that occur on the
Exchange and may, among other things, declare such transaction(s) null
and void. When extraordinary circumstances exist, any such action must
be taken by no later than the start of the Regular Trading Hours of the
Exchange on the trading day following the date of execution(s) under
review.
For purposes of Rule 7.10(g), the Exchange believes that a series
of transactions in a particular security on one or more trading days
may be viewed as one event if all such transactions were effected based
on incorrect or grossly misinterpreted structural or issuance
information, resulting in a severe pricing dislocation for all such
transactions (the ``Event''). In such
[[Page 47331]]
circumstances, the Event may be considered to constitute extraordinary
circumstances pursuant to Rule 7.10(g). An Officer acting on his or her
own motion may take action to declare all transactions that occurred
during the Event null and void not later than before the start of the
next trading date following the last such transaction in the Event. If
the security is halted immediately following the last transaction in
the Event, and before pricing ceases to be dislocated, the next trading
date for all transactions comprising the Event will be the date on
which trading resumes following the halt.
In particular, the Exchange believes that the interpretation is
applicable to a recent event involving an exchange offer (``Exchange
Offer'') made by U.S. Bancorp in which there were a series of
executions based on incorrect or grossly misinterpreted structural or
issuance information, as a result of which the securities traded at
severely dislocated prices.
In May 2010, U.S. Bancorp commenced an offer to exchange up to
1,250,000 Depositary Shares, each representing a 1/100 the interest in
a share of Series A Non-Cumulative Perpetual Preferred Stock, $100,000
liquidation preference per share (the ``Depositary Shares'') for any
and all of the 1,250,000 outstanding 6.189% Fixed-to-Floating Rate
Normal ITS issued by U.S. Bancorp Capital IX, each with a liquidation
amount of $1,000 (the ``Normal ITS''). The Depositary Shares were
approved for listing on the New York Stock Exchange LLC (``NYSE'')
under the symbol USB PRA. On June 11, 2010, the NYSE opened the shares
on a quote, but trading did not commence until June 16, 2010 at prices
in the range of $79.00 per share. There were additional executions on
the Exchange in that price range on June 17 and 18, 2010.
On June 18, 2010, the NYSE halted trading in the Depositary Shares
on all markets and alerted U.S. Bancorp and other exchanges that traded
the Depositary Shares of the pricing discrepancy.
For purposes of this stated interpretation, the Exchange believes
that the trading in Depository Shares from June 16 to June 18
constituted a single event because that trading was based on incorrect
or grossly misinterpreted structural or issuance information that
resulted in severe price dislocation (the ``U.S. Bancorp Event'').
Because the Depository Shares were halted before the price of the
Depository Shares ceased to be dislocated, and remain halted, the
Exchange believes that, pursuant to this interpretation, an Officer may
review trading in Depository Shares and may declare null and void all
trading in the U.S. Bancorp Event, provided such declaration is made
before the security resumes trading following the trading halt.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Securities Exchange Act of 1934 (the ``Act''),\3\ in
general, and furthers the objectives of Section 6(b)(5) of the Act,\4\
in particular, in that it is designed to prevent fraudulent and
manipulative acts and practices, 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 Exchange
believes that the proposed stated interpretation promotes just and
equitable principles of trade because it ensures that a potentially
erroneous execution may be reviewed if such executions are based on
incorrect or grossly misinterpreted structural or issuance information,
resulting in a severe pricing dislocation for all such transactions.
The stated interpretation also enables the Exchange to declare null and
void such potentially erroneous executions during a halt in trading,
but before trading resumes at a price based on the corrected
information.
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\3\ 15 U.S.C. 78f(b).
\4\ 15 U.S.C. 78f(b)(5).
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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 Act.
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 foregoing rule change has become effective pursuant to Section
19(b)(3)(A) \5\ of the Act and Rule 19b-4(f)(1) \6\ thereunder. At any
time within the 60-day period beginning on the date of the filing of
the 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.
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\5\ 15 U.S.C. 78s(b)(3)(A).
\6\ 17 CFR 240.19b-4(f)(6).
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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-NYSEArca-2010-73 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-NYSEArca-2010-73. 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 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; 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-NYSEArca-2010-73 and
[[Page 47332]]
should be submitted on or before August 26, 2010.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\7\
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\7\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-19247 Filed 8-4-10; 8:45 am]
BILLING CODE 8010-01-P