[Federal Register Volume 76, Number 68 (Friday, April 8, 2011)]
[Notices]
[Pages 19823-19825]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-8375]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-64175; File No. SR-Phlx-2011-44]
Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Extend
the Pilot Period of the Trading Pause for Individual Stocks Contained
in the Standard & Poor's 500 Index, Russell 1000 Index, and Specified
Exchange Traded Products That Experience a Price Change of 10% or More
During a Five-Minute Period
April 4, 2011.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on March 31, 2011, NASDAQ OMX PHLX LLC (``Exchange''), filed with the
Securities and Exchange Commission (``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 the
Substance of the Proposed Rule Change
The Exchange proposes to extend the pilot period of the trading
pause for individual stocks contained in the Standard & Poor's 500
Index, Russell 1000 Index, and specified Exchange Traded Products that
experience a price change of 10% or more during a five-minute period,
so that the pilot will now expire on the earlier of August 11, 2011 or
the date on which a limit up/limit down mechanism to address
extraordinary market volatility, if adopted, applies.
The text of the proposed rule change is below. Proposed new
language is italicized; proposed deletions are in brackets.
* * * * *
[[Page 19824]]
Rule 3100. Trading Halts on PSX
(a) Authority to Initiate Trading Halts or Pauses
In circumstances in which the Exchange deems it necessary to
protect investors and the public interest, and pursuant to the
procedures set forth in paragraph (c):
(1)-(3) No change.
(4) If a primary listing market issues an individual stock
trading pause in any of the Circuit Breaker Securities, as defined
herein, the Exchange will pause trading in that security until
trading has resumed on the primary listing market. If, however,
trading has not resumed on the primary listing market and ten
minutes have passed since the individual stock trading pause message
has been received from the responsible single plan processor, the
Exchange may resume trading in such stock. The provisions of this
paragraph (a)(4) shall be in effect during a pilot set to end on the
earlier of August 11, 2011 or the date on which a limit up/limit
down mechanism to address extraordinary market volatility, if
adopted, applies [April 11, 2011]. During the pilot, the term
``Circuit Breaker Securities'' shall mean the securities included in
the S&P 500[reg] Index and the Russell
1000[reg] Index, as well as a pilot list of Exchange
Traded Products.
(b)-(c) No change.
* * * * *
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 aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
On June 10, 2010, the Commission granted accelerated approval, for
a pilot period to end December 10, 2010, of proposed rule changes
submitted by the of the BATS Exchange, Inc., NASDAQ OMX BX, Inc.,
Chicago Board Options Exchange, Incorporated, Chicago Stock Exchange,
Inc., EDGA Exchange, Inc., EDGX Exchange, Inc., International
Securities Exchange LLC, The NASDAQ Stock Market LLC (``NASDAQ''), New
York Stock Exchange LLC (``NYSE''), NYSE Amex LLC (``NYSE Amex''), NYSE
Arca, Inc. (``NYSE Arca''), and National Stock Exchange, Inc.
(collectively, the ``Exchanges''), to pause trading during periods of
extraordinary market volatility in S&P 500 stocks.\3\ The rules require
the Listing Markets \4\ to issue five-minute trading pauses for
individual securities for which they are the primary Listing Market if
the transaction price of the security moves ten percent or more from a
price in the preceding five-minute period. The Listing Markets are
required to notify the other Exchanges and market participants of the
imposition of a trading pause by immediately disseminating a special
indicator over the consolidated tape. Under the rules, once the Listing
Market issues a trading pause, the other Exchanges are required to
pause trading in the security on their markets. On September 10, 2010,
the Commission approved the respective rule filings of the Exchanges to
expand application of the pilot to securities comprising the Russell
1000[reg] Index and specified Exchange Traded Products.\5\
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\3\ Securities Exchange Act Release No. 62252 (June 10, 2010),
75 FR 34186 (June 16, 2010).
\4\ The term ``Listing Markets'' refers collectively to NYSE,
NYSE Amex, NYSE Arca, and NASDAQ.
\5\ Securities Exchange Act Release No. 62884 (September 10,
2010), 75 FR 56618 (September 16, 2010).
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In connection with its resumption of trading of NMS Stocks through
the NASDAQ OMX PSX system, the Exchange adopted Rule 3100(a)(4) so that
it could participate in the pilot program.\6\ On September 29, 2010,
the Exchange amended Rule 3100(a)(4) to include stocks comprising the
Russell 1000[reg] Index and specified Exchange Traded
Products.\7\ On December 7, 2010, the Exchange filed an immediately
effective filing to extend the existing pilot program for four months,
so that the pilot would expire on April 11, 2011.\8\
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\6\ Securities Exchange Act Release No. 62877 (September 9,
2010), 75 FR 56633 (September 16, 2010) (SR-Phlx-2010-79).
\7\ Securities Exchange Act Release No. 63004 (September 29,
2010), 75 FR 61547 (October 5, 2010) (SR-Phlx-2010-126).
\8\ Securities Exchange Act Release No. 63504 (December 9,
2010), 75 FR 78304 (December 15, 2010) (SR-Phlx-2010-174).
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The Exchange believes that the pilot program has been successful in
reducing the negative impacts of sudden, unanticipated price movements
in the securities covered by the pilot. The Exchange also believes that
an additional four month extension of the pilot is warranted so that it
may continue to assess whether circuit breakers are the best means to
reduce the negative impacts of sudden, unanticipated price movements or
whether alternative mechanisms would be more effective in achieving
this goal. In this regard, the Exchange notes that the Exchanges are
developing a ``limit up/limit down'' mechanism to reduce the negative
impacts of sudden, unanticipated price movements in securities traded
on the Exchanges. As such, the proposed extension may be shorter in
duration should the Exchange adopt a limit up/limit down mechanism to
address extraordinary market volatility. Accordingly, the Exchange is
filing to further extend the pilot program until the earlier of August
11, 2011 or the date on which a limit up/limit down mechanism to
address extraordinary market volatility, if adopted, applies.
2. Statutory Basis
The statutory basis for the proposed rule change is Section 6(b)(5)
of the Securities Exchange Act of 1934 (the ``Act''),\9\ 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) \10\ 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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\9\ 15 U.S.C. 78f(b)(5).
\10\ 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
result in any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act, as amended.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor 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
[[Page 19825]]
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 \11\ and Rule 19b-4(f)(6)
thereunder.\12\
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\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 17 CFR 240.19b-4(f)(6). When filing a proposed rule change
pursuant to Rule 19b-4(f)(6) under the Act, an exchange is required
to give 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 Commission notes that the Exchange
has satisfied this requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) normally may
not become operative prior to 30 days after the date of filing.\13\
However, Rule 19b-4(f)(6) \14\ permits the Commission to designate a
shorter time if such action is consistent with the protection of
investors and the public interest. The Exchange has requested that the
Commission waive the 30-day operative delay.
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\13\ 17 CFR 240.19b-4(f)(6)(iii).
\14\ Id.
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The Commission has considered the Exchange's request to waive the
30-day operative delay. The Commission believes that waiving the 30-day
operative delay is consistent with the protection of investors and the
public interest, as it will allow the pilot program to continue
uninterrupted, thereby avoiding the investor confusion that could
result from a temporary interruption in the pilot program.\15\ For this
reason, the Commission designates the proposed rule change to be
operative upon filing.
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\15\ For the purposes only of waiving the 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 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. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change, as amended, 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-Phlx-2011-44 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-Phlx-2011-44. 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, 100 F Street, NE.,
Washington, DC 20549, 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 offices 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-Phlx-2011-44, and
should be submitted on or before April 29, 2011.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-8375 Filed 4-7-11; 8:45 am]
BILLING CODE 8011-01-P