Self-Regulatory Organizations; Notice of Filing of a Proposed Rule Change by NASDAQ OMX BX, Inc. To Amend IM-4120-3, 39086-39089 [2010-16409]
Download as PDF
<![CDATA[
39086
Federal Register / Vol. 75, No. 129 / Wednesday, July 7, 2010 / Notices
cprice-sewell on DSK8KYBLC1PROD with NOTICES
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.10
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning all aspects of the
foregoing, including whether the
proposed rule change is consistent with
the Act.
The Commission notes that ETF
trades constituted a substantial majority
of the trades that were cancelled on May
6, and the proposed amendments would
bring certain ETFs within the scope of
the trading pause pilot for the first time.
The Commission solicits comment
regarding the inclusion of ETFs within
the trading pause pilot. The
Commission requests comment in
particular on the implications of
including in the trading pause pilot
ETFs on broad-based indices that also
underlie options and futures products.
What are the potential benefits and risks
of including those ETFs in the pilot
under circumstances where other
products based on the same index may
not be subject to any trading pause, or
may be subject to a different type of
trading pause? Are existing mechanisms
available in the markets for those other
products sufficient to address any crossmarket linkage concerns? What are the
potential effects on price discovery and
trading behavior in the different
markets?
Similarly, the Commission solicits
comments on the potential benefits and
risks of excluding such ETFs from the
pilot, particularly under circumstances
where the securities underlying the ETF
are included in the pilot. If there are
trading pauses for the component
securities of an index but not for an ETF
based on that index, what consequences
might that have for the ETF or for other
products based on that index? If there
are trading pauses in an ETF but not in
the stocks that underlie that ETF, what
10 The Commission notes that the Exchange has
requested accelerated approval of the filing.
VerDate Mar<15>2010
15:28 Jul 06, 2010
Jkt 220001
consequences might that have for the
underlying stocks or other products?
What are the potential effects on price
discovery for the ETF, the underlying
stocks and other products?
Are there other market-based
characteristics or metrics that should be
considered for purposes of determining
which ETFs should be included in the
trading pause pilot, or for re-calibrating
particular features of the trading pause?
In addition, the Commission solicits
comments regarding the operation of the
trading pause pilot to date with respect
to stocks in the S&P 500.
Comments may be submitted by any
of the following methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–EDGX–2010–05 on the
subject line.
should refer to File Number SR–EDGX–
2010–05 and should be submitted on or
before July 19, 2010.11
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.12
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–16412 Filed 7–6–10; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–62415; File No. SR–BX–
2010–044]
Self-Regulatory Organizations; Notice
of Filing of a Proposed Rule Change by
NASDAQ OMX BX, Inc. To Amend IM–
4120–3
June 30, 2010.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
Paper Comments
notice is hereby given that on June 30,
• Send paper comments in triplicate
2010, NASDAQ OMX BX, Inc. (the
to Elizabeth M. Murphy, Secretary,
‘‘Exchange’’ or ‘‘BX’’) filed with the
Securities and Exchange Commission,
Securities and Exchange Commission
Station Place, 100 F Street, NE.,
(‘‘Commission’’) the proposed rule
Washington, DC 20549–1090.
change as described in Items I, II, and
All submissions should refer to File
III below, which Items have been
Number SR–EDGX–2010–05. This file
prepared by the Exchange. The
number should be included on the
Commission is publishing this notice to
subject line if e-mail is used. To help the solicit comments on the proposed rule
Commission process and review your
change from interested persons.
comments more efficiently, please use
only one method. The Commission will I. Self-Regulatory Organization’s
post all comments on the Commission’s Statement of the Terms of Substance of
the Proposed Rule Change
Internet Web site (https://www.sec.gov/
The Exchange is filing this proposed
rules/sro.shtml). Copies of the
rule change to amend BX IM–4120–3 to
submission, all subsequent
add securities included in the Russell
amendments, all written statements
1000® Index (‘‘Russell 1000’’) and
with respect to the proposed rule
specified Exchange Traded Products
change that are filed with the
(‘‘ETP’’) to the definition of Circuit
Commission, and all written
Breaker Securities.
communications relating to the
The text of the proposed rule change
proposed rule change between the
Commission and any person, other than is below. Proposed new language is
underlined and proposed deletions are
those that may be withheld from the
in brackets.
public in accordance with the
provisions of 5 U.S.C. 552, will be
*
*
*
*
*
available for Web site viewing and
4120. Trading Halts
printing in the Commission’s Public
(a)–(c) No change.
Reference Room, 100 F Street, NE.,
IM–4120–1. No change.
Washington, DC 20549, on official
IM–4120–2. No change.
business days between the hours of 10
IM–4120–3. Circuit Breaker Securities
a.m. and 3 p.m. Copies of such filing
Pilot
The provisions of paragraph (a)(11) of
also will be available for inspection and
this Rule shall be in effect during a pilot
copying at the principal office of the
Exchange. All comments received will
11 The Commission believes that a 10-day
be posted without change; the
comment period is reasonable, given the urgency of
Commission does not edit personal
the matter. It will provide adequate time for
identifying information from
comment.
submissions. You should submit only
12 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
information that you wish to make
2 17 CFR 240.19b–4.
publicly available. All submissions
PO 00000
Frm 00112
Fmt 4703
Sfmt 4703
E:\FR\FM\07JYN1.SGM
07JYN1
Federal Register / Vol. 75, No. 129 / Wednesday, July 7, 2010 / Notices
set to end on December 10, 2010. During
the pilot, the term ‘‘Circuit Breaker
Securities’’ shall mean the securities
included in the Standard & Poor’s 500
Index, the Russell 1000 Index, as well as
a pilot list of Exchange Traded
Products.
*
*
*
*
*
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
cprice-sewell on DSK8KYBLC1PROD with NOTICES
The Exchange proposes to amend BX
IM–4120–3 to add securities included in
the Russell 1000® Index (‘‘Russell 1000’’)
and specified Exchange Traded
Products (‘‘ETPs’’) to the definition of
Circuit Breaker Securities. For purposes
of this filing, ETPs include Exchange
Traded Funds (‘‘ETFs’’),3 Exchange
Traded Vehicles (‘‘ETVs’’),4 and
Exchange Traded Notes (‘‘ETNs’’).5
The primary listing markets for U.S.
stocks recently amended their rules so
that they may, from time to time, issue
a trading pause for an individual
security if the price of such security
moves 10% or more from a sale in a
preceding five-minute period. In this
3 An ETF is an open-ended registered investment
company under the Investment Company Act of
1940 that has received certain exemptive relief from
the Commission to allow secondary market trading
in the ETF shares. ETFs are generally index-based
products, in that each ETF holds a portfolio of
securities that is intended to provide investment
results that, before fees and expenses, generally
correspond to the price and yield performance of
the underlying benchmark index.
4 An ETV tracks the underlying performance of an
asset or index, allowing investor’s exposure to
underlying assets such as futures contracts,
commodities, and currency without actually trading
futures or taking physical delivery of the underlying
asset. An ETV is traded intraday like an ETF. An
ETV is an open-ended trust or partnership unit that
is registered under the Securities Act of 1933.
5 An ETN is a senior unsecured debt obligation
designed to track the total return of an underlying
index, benchmark or strategy, minus investor fees.
ETNs are registered under the Securities Act of
1933 and are redeemable to the issuer.
VerDate Mar<15>2010
15:28 Jul 06, 2010
Jkt 220001
regard, the Exchange recently proposed
to amend its Rule 4120 to pause trading
in an individual stock when the primary
listing market for such stock issues a
trading pause in any Circuit Breaker
Securities, as defined in IM–4120–3 of
Rule 4120. The amendment to BX Rule
4120 was approved by the Commission
on June 10, 2010 on a pilot basis set to
end on December 10, 2010.6
Currently, the pilot list of securities is
all securities included in the S&P 500®
Index (‘‘S&P 500’’). As noted in comment
letters to the original filing to amend BX
Rule 4120 as described above, concerns
were raised that including only
securities in the S&P 500 in the pilot
rule was too narrow. In particular,
commenter’s noted that securities that
experienced volatility on May 6, 2010,
including ETFs, should be included in
the pilot. The Exchange agrees with the
commenter’s that the pilot list of
securities should be expanded.
In consultation with other markets,
the Exchange proposes to add the
securities included in the Russell 1000
and specified ETPs to the pilot
beginning in July 2010, subject to
Commission approval. The Exchange
believes that adding these securities
would begin to address concerns that
the scope of the pilot may be too
narrow, while at the same time
recognizing that during the pilot period,
the markets will continue to review
whether and when to add additional
securities to the pilot and whether the
parameters of the rule should be
adjusted for different securities.
In particular, the Exchange proposes
to add securities included in the Russell
1000 because the Exchange believes that
the securities included in that index
have similar trading characteristics to
securities included in the S&P 500
(many of which are the same securities)
and therefore the existing 10% price
movement applicable before invoking a
trading pause would be appropriate for
the Russell 1000 securities. Because the
Exchange does not propose to modify
the 10% price movement at this time,
the Exchange believes that expanding to
the Russell 1000 is an appropriate next
step. Based on our analysis, the number
of times that the Trading Pause would
be triggered for Russell 1000 securities
would be similar to the instances for the
S&P 500 securities.
In addition, the Exchange, in
consultation with other markets,
proposes to add to the pilot a selected
list of ETPs. The Exchange developed
the proposed pilot list of ETPs first by
6 See BX Rule 4120(a)(11); see also Securities
Exchange Act Release No. 62252 (June 10, 2010), 75
FR 34186 (June 16, 2010) (SR–BX–2010–037).
PO 00000
Frm 00113
Fmt 4703
Sfmt 4703
39087
identifying all ETPs across multiple
asset classes and issuers, including
domestic equity, international equity,
fixed income, currency, and
commodities and futures. The Exchange
next excluded the leveraged ETPs and
sorted the list by notional consolidated
average daily volume (‘‘CADV’’) using
year-to-date CADV ending May 5, 2010,
multiplied by the closing price on May
5, 2010. The Exchange then selected
those symbols, including inverse ETPs,
that trade over $2,000,000 CADV year to
date through May 5, 2010. To ensure
that ETPs that track similar benchmarks
but that do not meet this volume
criterion do not become subject to
pricing volatility when a component
security is the subject of a trading pause,
the Exchange proposes to include
certain non-leveraged ETPs that have
traded below this volume criterion, but
that track the same benchmark as an
ETP that does meet the volume
criterion.
The Exchange believes that the
proposed list of ETPs is appropriate
because it identifies those ETPs that
have component securities that largely
track the securities included in the S&P
500 and Russell 1000. Accordingly, if an
S&P 500 or Russell 1000 security
experiences a trading pause, any
resulting price volatility in a related
ETP, regardless of the CADV of the ETP,
would also be subject to a trading pause
trigger. As with the proposal to add the
Russell 1000 securities, the Exchange
selected the proposed ETPs because it
believes that the existing 10% price
movement would be an appropriate
price movement before invoking a
trading pause for ETPs with these
characteristics. The Exchange does not
believe that the 10% price movement is
an appropriate threshold for leveraged
ETPs because by definition, leveraged
ETPs are based on multiples of price
movements in the underlying index.
Accordingly, a 10% percent price
movement in a leveraged ETP may not
signify extraordinary volatility. Because
the Exchange is not proposing to adopt
revised price movement thresholds at
this time, the Exchange is therefore not
proposing to include leveraged ETPs for
now.
As proposed, the list includes broadbased ETPs, which the Exchange
recognizes has raised some debate. In
particular, concerns have been raised
about whether halting an index-based
ETP may impact an index-based option
or future. However, the Exchange
believes that including broad-based
ETPs is appropriate so that ETP
investors are protected should the
component securities experience such
volatility that trading in the broad-based
E:\FR\FM\07JYN1.SGM
07JYN1
39088
Federal Register / Vol. 75, No. 129 / Wednesday, July 7, 2010 / Notices
ETP is impacted, as it was on May 6,
2010. Because this is a pilot rule, the
markets can continue to assess whether
it is appropriate to have a trading pause
in broad-based ETPs when there is not
a similar trading pause in related indexbased options or futures.
During the pilot, the Exchange will
continue to re-assess whether specific
ETPs should be added or removed from
the pilot list. The Exchange will also
assess whether the parameters for
invoking a trading pause continue to be
the appropriate standard and whether
the parameters should be modified.
To effect this change, the Exchange
proposes to amend IM–4120–3 to BX
Rule 4120 to provide that the pilot
applies to securities in the S&P 500,
securities in the Russell 1000, as well as
specified ETPs. The pilot list of ETPs
are identified in Exhibit 3.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
the provisions of Section 6 of the Act,7
in general, and with Sections 6(b)(5) of
the Act,8 in particular, in that the
proposal is designed to prevent
fraudulent and manipulative acts and
practices, to promote just and equitable
principles of trade, to foster cooperation
and coordination with persons engaged
in regulating, clearing, settling,
processing information with respect to,
and facilitating transactions in
securities, 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 is also designed to
support the principles of Section
11A(a)(1) 9 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 uniformity across
markets concerning decisions to pause
trading in a security when there are
significant price movements.
cprice-sewell on DSK8KYBLC1PROD with NOTICES
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.
U.S.C. 78f.
U.S.C. 78f(b)(5).
9 15 U.S.C. 78k–1(a)(1).
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
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.10
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.
The Commission notes that ETF
trades constituted a substantial majority
of the trades that were cancelled on May
6, and the proposed amendments would
bring certain ETFs within the scope of
the trading pause pilot for the first time.
The Commission solicits comment
regarding the inclusion of ETFs within
the trading pause pilot. The
Commission requests comment in
particular on the implications of
including in the trading pause pilot
ETFs on broad-based indices that also
underlie options and futures products.
What are the potential benefits and risks
of including those ETFs in the pilot
under circumstances where other
products based on the same index may
not be subject to any trading pause, or
may be subject to a different type of
trading pause? Are existing mechanisms
available in the markets for those other
products sufficient to address any crossmarket linkage concerns? What are the
potential effects on price discovery and
trading behavior in the different
markets?
Similarly, the Commission solicits
comments on the potential benefits and
risks of excluding such ETFs from the
pilot, particularly under circumstances
where the securities underlying the ETF
are included in the pilot. If there are
trading pauses for the component
7 15
8 15
VerDate Mar<15>2010
15:28 Jul 06, 2010
10 The Commission notes that the Exchange has
requested accelerated approval of the filing.
Jkt 220001
PO 00000
Frm 00114
Fmt 4703
Sfmt 4703
securities of an index but not for an ETF
based on that index, what consequences
might that have for the ETF or for other
products based on that index? If there
are trading pauses in an ETF but not in
the stocks that underlie that ETF, what
consequences might that have for the
underlying stocks or other products?
What are the potential effects on price
discovery for the ETF, the underlying
stocks and other products?
Are there other market-based
characteristics or metrics that should be
considered for purposes of determining
which ETFs should be included in the
trading pause pilot, or for re-calibrating
particular features of the trading pause?
In addition, the Commission solicits
comments regarding the operation of the
trading pause pilot to date with respect
to stocks in the S&P 500.
Comments may be submitted by any
of the following methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–BX–2010–044 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–BX–2010–044. 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
(https://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 offices of the Exchange.
All comments received will be posted
without change; the Commission does
E:\FR\FM\07JYN1.SGM
07JYN1
Federal Register / Vol. 75, No. 129 / Wednesday, July 7, 2010 / Notices
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–BX–2010–044, and should
be submitted on or before July 19,
2010.11
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.12
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–16409 Filed 7–6–10; 8:45 am]
BILLING CODE 8010–01–P
DEPARTMENT OF STATE
[Public Notice: 7008]
cprice-sewell on DSK8KYBLC1PROD with NOTICES
Shipping Coordinating Committee;
Notice of Committee Meeting
The Shipping Coordinating
Committee (SHC) will conduct an open
meeting at 0930 on Wednesday July 22,
2010, in Room 51309 of the United
States Coast Guard Headquarters
Building, 2100 Second Street, SW.,
Washington, DC 20593–0001. The
primary purpose of the meeting is to
prepare for the fifty-sixth Session of the
International Maritime Organization
(IMO) Subcommittee on Safety of
Navigation to be held at the IMO
Headquarters, London, United
Kingdom, from July 26 to July 30, 2010.
The primary matters to be considered
include:
—Adoption of the agenda
—Decisions of other IMO bodies
—Routing of ships, ship reporting and
related matters
—Guidelines for consideration of
requests for safety zones larger than
500 meters around artificial islands,
installations and structures in the EEZ
—Amendments to the Performance
standards for Voyage Data Recorders
(VDR) and Simplified VDR (S–VDR)
—Development of procedures for
updating shipborne navigation and
communications equipment
—International Telecommunication
Union (ITU) matters, including
Radiocommunication ITU–R Study
Group 8
—Development of an e-navigation
strategy implementation plan
—Guidelines on the layout and
ergonomic design of safety centers on
passenger ships
11 The Commission believes that a 10-day
comment period is reasonable, given the urgency of
the matter. It will provide adequate time for
comment.
12 17 CFR 200.30–3(a)(12).
VerDate Mar<15>2010
15:28 Jul 06, 2010
Jkt 220001
—Review of vague expressions in the
International Convention for the
Safety of Life at Sea (SOLAS)
regulation V/22
—New symbols for AIS aids to
navigation
—Amendments to the Worldwide
Radionavigation System
—Review of the principles for
establishing the safe manning level of
ships including mandatory
requirements for determining safe
manning
—Amendments to the 1966 Loadline
Convention (LL) and the 1988 LL
Protocol related to seasonal zone
—Casualty analysis
—Consideration of International
Association of Classification Societies
(IACS) unified interpretations
Members of the public may attend
this meeting up to the seating capacity
of the room. To facilitate the building
security process and to request
reasonable accommodation, those who
plan to attend should contact the
meeting coordinator, Mr. Edward J.
LaRue Jr., by e-mail at
Edward.J.LaRue@uscg.mil, by phone at
(202) 372–1564, by fax at (202) 372–
1930, or in writing at Commandant (CG–
5533), U.S. Coast Guard, 2100 2nd
Street, SW., Stop 7581, Washington, DC
20593–7581, 7 days prior to the
meeting. Please note that due to security
considerations, two valid, government
issued photo identifications must be
presented to gain entrance to the
Headquarters building. The
Headquarters building is accessible by
taxi and privately owned conveyance
(public transportation is not generally
available). However, parking in the
vicinity of the building is extremely
limited. Additional information
regarding this and other IMO SHC
public meetings may be found at:
https://www.uscg.mil/imo.
Dated: June 30, 2010.
Jon Trent Warner,
Executive Secretary, Shipping Coordinating
Committee, Department of State.
[FR Doc. 2010–16516 Filed 7–6–10; 8:45 am]
BILLING CODE 4710–09–P
DEPARTMENT OF STATE
[Public Notice: 7006]
U.S. National Commission for
UNESCO; Notice of Closed Meeting
The U.S. National Commission for
UNESCO will hold a conference call on
Thursday, August 19, 2010, beginning at
3 p.m. Eastern Time. The teleconference
meeting will be closed to the public to
allow the Commission to discuss
PO 00000
Frm 00115
Fmt 4703
Sfmt 4703
39089
applications for the U.S. National
Commission for UNESCO Laura W.
Bush Traveling Fellowship, a fellowship
funded through privately donated
funds. This call will be closed pursuant
to Section 10(d) of the Federal Advisory
Committee Act and 5 U.S.C. 552b(c)(6)
because it is likely to involve discussion
of information of a personal nature
regarding the relative merits of
individual applicants where disclosure
would constitute a clearly unwarranted
invasion of personal privacy.
For more information contact
Elizabeth Kanick, Executive Director of
the U.S. National Commission for
UNESCO, Washington, DC 20037.
Telephone: (202) 663–0026; Fax: (202)
663–0035; E-mail:
DCUNESCO@state.gov.
Dated: June 25, 2010.
Elizabeth Kanick,
Executive Director, U.S. National Commission
for UNESCO, Department of State.
[FR Doc. 2010–16521 Filed 7–6–10; 8:45 am]
BILLING CODE 4710–19–P
DEPARTMENT OF STATE
[Public Notice: 7076]
Notice of Receipt of Request To
Amend the Presidential Permit for an
International Bridge on the U.S.-Mexico
Border at Eagle Pass, Texas and
Piedras Negras, Coahuila, Mexico
Department of State.
Notice.
AGENCY:
ACTION:
SUMMARY: The Department of State
hereby gives notice that, on June 1,
2010, it received from Eagle Pass, Texas,
a request to amend the Presidential
permit that the Department issued in
1996 for the Eagle Pass II International
Bridge on the U.S.-Mexico border at
Eagle Pass, Texas and Piedras Negras,
Coahuila, Mexico. The permittee
proposes to revise article 10 of the
permit so it may begin to collect rent
from the Federal government for the
continued use of the bridge’s inspection
facilities.
Article 10 states that ‘‘[t]he permittee
shall provide to the United States
Customs Service and to other Federal
Inspection Agencies, as appropriate, at
no cost to the Federal government,
temporary inspectional facilities, at a
mutually agreed upon site, that are
adequate and acceptable to the Federal
Inspection Agencies. In providing the
inspectional facilities, including
selection of the site, the permittee shall
fully comply with all National
Environmental Policy Act and National
Historic Preservation Act mitigation
provisions and stipulations.’’
E:\FR\FM\07JYN1.SGM
07JYN1
]]>Agencies
[Federal Register Volume 75, Number 129 (Wednesday, July 7, 2010)]
[Notices]
[Pages 39086-39089]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-16409]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-62415; File No. SR-BX-2010-044]
Self-Regulatory Organizations; Notice of Filing of a Proposed
Rule Change by NASDAQ OMX BX, Inc. To Amend IM-4120-3
June 30, 2010.
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 June 30, 2010, NASDAQ OMX BX, Inc. (the ``Exchange'' or ``BX'')
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 comments on the proposed rule change from
interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange is filing this proposed rule change to amend BX IM-
4120-3 to add securities included in the Russell 1000[supreg] Index
(``Russell 1000'') and specified Exchange Traded Products (``ETP'') to
the definition of Circuit Breaker Securities.
The text of the proposed rule change is below. Proposed new
language is underlined and proposed deletions are in brackets.
* * * * *
4120. Trading Halts
(a)-(c) No change.
IM-4120-1. No change.
IM-4120-2. No change.
IM-4120-3. Circuit Breaker Securities Pilot
The provisions of paragraph (a)(11) of this Rule shall be in effect
during a pilot
[[Page 39087]]
set to end on December 10, 2010. During the pilot, the term ``Circuit
Breaker Securities'' shall mean the securities included in the Standard
& Poor's 500 Index, the Russell 1000 Index, as well as a pilot list of
Exchange Traded Products.
* * * * *
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
The Exchange proposes to amend BX IM-4120-3 to add securities
included in the Russell 1000[supreg] Index (``Russell 1000'') and
specified Exchange Traded Products (``ETPs'') to the definition of
Circuit Breaker Securities. For purposes of this filing, ETPs include
Exchange Traded Funds (``ETFs''),\3\ Exchange Traded Vehicles
(``ETVs''),\4\ and Exchange Traded Notes (``ETNs'').\5\
---------------------------------------------------------------------------
\3\ An ETF is an open-ended registered investment company under
the Investment Company Act of 1940 that has received certain
exemptive relief from the Commission to allow secondary market
trading in the ETF shares. ETFs are generally index-based products,
in that each ETF holds a portfolio of securities that is intended to
provide investment results that, before fees and expenses, generally
correspond to the price and yield performance of the underlying
benchmark index.
\4\ An ETV tracks the underlying performance of an asset or
index, allowing investor's exposure to underlying assets such as
futures contracts, commodities, and currency without actually
trading futures or taking physical delivery of the underlying asset.
An ETV is traded intraday like an ETF. An ETV is an open-ended trust
or partnership unit that is registered under the Securities Act of
1933.
\5\ An ETN is a senior unsecured debt obligation designed to
track the total return of an underlying index, benchmark or
strategy, minus investor fees. ETNs are registered under the
Securities Act of 1933 and are redeemable to the issuer.
---------------------------------------------------------------------------
The primary listing markets for U.S. stocks recently amended their
rules so that they may, from time to time, issue a trading pause for an
individual security if the price of such security moves 10% or more
from a sale in a preceding five-minute period. In this regard, the
Exchange recently proposed to amend its Rule 4120 to pause trading in
an individual stock when the primary listing market for such stock
issues a trading pause in any Circuit Breaker Securities, as defined in
IM-4120-3 of Rule 4120. The amendment to BX Rule 4120 was approved by
the Commission on June 10, 2010 on a pilot basis set to end on December
10, 2010.\6\
---------------------------------------------------------------------------
\6\ See BX Rule 4120(a)(11); see also Securities Exchange Act
Release No. 62252 (June 10, 2010), 75 FR 34186 (June 16, 2010) (SR-
BX-2010-037).
---------------------------------------------------------------------------
Currently, the pilot list of securities is all securities included
in the S&P 500[supreg] Index (``S&P 500''). As noted in comment letters
to the original filing to amend BX Rule 4120 as described above,
concerns were raised that including only securities in the S&P 500 in
the pilot rule was too narrow. In particular, commenter's noted that
securities that experienced volatility on May 6, 2010, including ETFs,
should be included in the pilot. The Exchange agrees with the
commenter's that the pilot list of securities should be expanded.
In consultation with other markets, the Exchange proposes to add
the securities included in the Russell 1000 and specified ETPs to the
pilot beginning in July 2010, subject to Commission approval. The
Exchange believes that adding these securities would begin to address
concerns that the scope of the pilot may be too narrow, while at the
same time recognizing that during the pilot period, the markets will
continue to review whether and when to add additional securities to the
pilot and whether the parameters of the rule should be adjusted for
different securities.
In particular, the Exchange proposes to add securities included in
the Russell 1000 because the Exchange believes that the securities
included in that index have similar trading characteristics to
securities included in the S&P 500 (many of which are the same
securities) and therefore the existing 10% price movement applicable
before invoking a trading pause would be appropriate for the Russell
1000 securities. Because the Exchange does not propose to modify the
10% price movement at this time, the Exchange believes that expanding
to the Russell 1000 is an appropriate next step. Based on our analysis,
the number of times that the Trading Pause would be triggered for
Russell 1000 securities would be similar to the instances for the S&P
500 securities.
In addition, the Exchange, in consultation with other markets,
proposes to add to the pilot a selected list of ETPs. The Exchange
developed the proposed pilot list of ETPs first by identifying all ETPs
across multiple asset classes and issuers, including domestic equity,
international equity, fixed income, currency, and commodities and
futures. The Exchange next excluded the leveraged ETPs and sorted the
list by notional consolidated average daily volume (``CADV'') using
year-to-date CADV ending May 5, 2010, multiplied by the closing price
on May 5, 2010. The Exchange then selected those symbols, including
inverse ETPs, that trade over $2,000,000 CADV year to date through May
5, 2010. To ensure that ETPs that track similar benchmarks but that do
not meet this volume criterion do not become subject to pricing
volatility when a component security is the subject of a trading pause,
the Exchange proposes to include certain non-leveraged ETPs that have
traded below this volume criterion, but that track the same benchmark
as an ETP that does meet the volume criterion.
The Exchange believes that the proposed list of ETPs is appropriate
because it identifies those ETPs that have component securities that
largely track the securities included in the S&P 500 and Russell 1000.
Accordingly, if an S&P 500 or Russell 1000 security experiences a
trading pause, any resulting price volatility in a related ETP,
regardless of the CADV of the ETP, would also be subject to a trading
pause trigger. As with the proposal to add the Russell 1000 securities,
the Exchange selected the proposed ETPs because it believes that the
existing 10% price movement would be an appropriate price movement
before invoking a trading pause for ETPs with these characteristics.
The Exchange does not believe that the 10% price movement is an
appropriate threshold for leveraged ETPs because by definition,
leveraged ETPs are based on multiples of price movements in the
underlying index. Accordingly, a 10% percent price movement in a
leveraged ETP may not signify extraordinary volatility. Because the
Exchange is not proposing to adopt revised price movement thresholds at
this time, the Exchange is therefore not proposing to include leveraged
ETPs for now.
As proposed, the list includes broad-based ETPs, which the Exchange
recognizes has raised some debate. In particular, concerns have been
raised about whether halting an index-based ETP may impact an index-
based option or future. However, the Exchange believes that including
broad-based ETPs is appropriate so that ETP investors are protected
should the component securities experience such volatility that trading
in the broad-based
[[Page 39088]]
ETP is impacted, as it was on May 6, 2010. Because this is a pilot
rule, the markets can continue to assess whether it is appropriate to
have a trading pause in broad-based ETPs when there is not a similar
trading pause in related index-based options or futures.
During the pilot, the Exchange will continue to re-assess whether
specific ETPs should be added or removed from the pilot list. The
Exchange will also assess whether the parameters for invoking a trading
pause continue to be the appropriate standard and whether the
parameters should be modified.
To effect this change, the Exchange proposes to amend IM-4120-3 to
BX Rule 4120 to provide that the pilot applies to securities in the S&P
500, securities in the Russell 1000, as well as specified ETPs. The
pilot list of ETPs are identified in Exhibit 3.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the provisions of Section 6 of the Act,\7\ in general, and with
Sections 6(b)(5) of the Act,\8\ in particular, in that the proposal is
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, to foster cooperation
and coordination with persons engaged in regulating, clearing,
settling, processing information with respect to, and facilitating
transactions in securities, 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 is also designed to support the principles of Section
11A(a)(1) \9\ 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 uniformity across markets concerning decisions to pause
trading in a security when there are significant price movements.
---------------------------------------------------------------------------
\7\ 15 U.S.C. 78f.
\8\ 15 U.S.C. 78f(b)(5).
\9\ 15 U.S.C. 78k-1(a)(1).
---------------------------------------------------------------------------
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
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.\10\
---------------------------------------------------------------------------
\10\ The Commission notes that the Exchange has requested
accelerated approval of the filing.
---------------------------------------------------------------------------
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.
The Commission notes that ETF trades constituted a substantial
majority of the trades that were cancelled on May 6, and the proposed
amendments would bring certain ETFs within the scope of the trading
pause pilot for the first time. The Commission solicits comment
regarding the inclusion of ETFs within the trading pause pilot. The
Commission requests comment in particular on the implications of
including in the trading pause pilot ETFs on broad-based indices that
also underlie options and futures products. What are the potential
benefits and risks of including those ETFs in the pilot under
circumstances where other products based on the same index may not be
subject to any trading pause, or may be subject to a different type of
trading pause? Are existing mechanisms available in the markets for
those other products sufficient to address any cross-market linkage
concerns? What are the potential effects on price discovery and trading
behavior in the different markets?
Similarly, the Commission solicits comments on the potential
benefits and risks of excluding such ETFs from the pilot, particularly
under circumstances where the securities underlying the ETF are
included in the pilot. If there are trading pauses for the component
securities of an index but not for an ETF based on that index, what
consequences might that have for the ETF or for other products based on
that index? If there are trading pauses in an ETF but not in the stocks
that underlie that ETF, what consequences might that have for the
underlying stocks or other products? What are the potential effects on
price discovery for the ETF, the underlying stocks and other products?
Are there other market-based characteristics or metrics that should
be considered for purposes of determining which ETFs should be included
in the trading pause pilot, or for re-calibrating particular features
of the trading pause?
In addition, the Commission solicits comments regarding the
operation of the trading pause pilot to date with respect to stocks in
the S&P 500.
Comments may be submitted by any of the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-BX-2010-044 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-BX-2010-044. 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 (https://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 offices of the Exchange. All comments received will be posted
without change; the Commission does
[[Page 39089]]
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-BX-2010-044, and should be
submitted on or before July 19, 2010.\11\
---------------------------------------------------------------------------
\11\ The Commission believes that a 10-day comment period is
reasonable, given the urgency of the matter. It will provide
adequate time for comment.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
---------------------------------------------------------------------------
\12\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-16409 Filed 7-6-10; 8:45 am]
BILLING CODE 8010-01-P
