Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change by International Securities Exchange, LLC That Constitutes a Stated Interpretation With Respect to the Meaning, Administration, and Enforcement of Rule 2128, 47332-47333 [2010-19266]

Download as PDF 47332 Federal Register / Vol. 75, No. 150 / Thursday, August 5, 2010 / Notices should be submitted on or before August 26, 2010. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.7 Florence E. Harmon, Deputy Secretary. [FR Doc. 2010–19247 Filed 8–4–10; 8:45 am] BILLING CODE 8010–01–P places specified in Item IV below. The self-regulatory organization 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 the Statutory Basis for, the Proposed Rule Change 1. Purpose SECURITIES AND EXCHANGE COMMISSION [Release No. 34–62607; File No. SR–ISE– 2010–80] Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change by International Securities Exchange, LLC That Constitutes a Stated Interpretation With Respect to the Meaning, Administration, and Enforcement of Rule 2128 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 29, 2010, International Securities Exchange, LLC (the ‘‘Exchange’’ or ‘‘ISE’’) 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. mstockstill on DSKH9S0YB1PROD with NOTICES I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes a rule change that constitutes a stated interpretation with respect to the meaning, administration, and enforcement of Rule 2128. The proposed rule change is available on the Exchange’s Web site at https://www.ise.com, at the Exchange’s principal office, and at the Public Reference Room of the Commission. 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 7 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 VerDate Mar<15>2010 17:52 Aug 04, 2010 Jkt 220001 The Exchange proposes to adopt a stated interpretation with respect to the meaning, administration, and enforcement of Rule 2128(g), concerning the ability of an Exchange Officer to act on his or her own motion to review potentially erroneous executions. Rule 2128(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 Market Session of the Exchange on the trading day following the date of execution(s) under review. For purposes of Rule 2128(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 circumstances, the Event may be considered to constitute extraordinary circumstances pursuant to Rule 2128(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 a New York Stock Exchange LLC (‘‘NYSE’’) offer (‘‘NYSE 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. PO 00000 Frm 00075 Fmt 4703 Sfmt 4703 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 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 $85.00 per share. There were additional executions on the ISE Stock Exchange in the $79.00 to $85.00 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 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 3 15 4 15 E:\FR\FM\05AUN1.SGM U.S.C. 78f(b). U.S.C. 78f(b)(5). 05AUN1 Federal Register / Vol. 75, No. 150 / Thursday, August 5, 2010 / Notices 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. B. Self-Regulatory Organization’s Statement on Burden on Competition The proposed rule change does not 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 The Exchange has not solicited, and does not intend to solicit, comments on this proposed rule change. The Exchange has not received any unsolicited written comments from members or other interested parties. 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. 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: 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–ISE–2010–80. 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 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–ISE–2010–80 and should be submitted on or before August 26, 2010. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.7 Florence E. Harmon, Deputy Secretary. [FR Doc. 2010–19266 Filed 8–4–10; 8:45 am] BILLING CODE 8010–01–P mstockstill on DSKH9S0YB1PROD with NOTICES 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–ISE–2010–80 on the subject line. 5 15 6 17 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(6). VerDate Mar<15>2010 17:52 Aug 04, 2010 Jkt 220001 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–62599; File No. SR– NYSEAmex–2010–75] Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by NYSE Amex LLC To Amend Certain of Its Rules in Connection With the Decommissioning of the Odd-Lot System July 29, 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 29, 2010, NYSE Amex LLC (the ‘‘Exchange’’ or ‘‘NYSE Amex’’) 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. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend certain of its NYSE Amex Equities Rule 500 Series to correspond with rule changes filed by the Exchange and approved by the Commission.3 The text of the proposed rule change is available at the Exchange’s principal office, from the Commission’s Public Reference Room, on the Commission’s Web site at https://www.sec.gov, and at https:// 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. 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 See Securities Exchange Act Release No. 62578 (July 27, 2010) (order approving SR–NYSE–2010–43 and SR–NYSEAmex–2010–53). 2 17 7 17 PO 00000 CFR 200.30–3(a)(12). Frm 00076 Fmt 4703 47333 Sfmt 4703 E:\FR\FM\05AUN1.SGM 05AUN1

Agencies

[Federal Register Volume 75, Number 150 (Thursday, August 5, 2010)]
[Notices]
[Pages 47332-47333]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-19266]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62607; File No. SR-ISE-2010-80]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of a Proposed Rule Change by International Securities 
Exchange, LLC That Constitutes a Stated Interpretation With Respect to 
the Meaning, Administration, and Enforcement of Rule 2128

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 29, 2010, International Securities Exchange, LLC (the 
``Exchange'' or ``ISE'') 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.
---------------------------------------------------------------------------

    \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 proposes a rule change that constitutes a stated 
interpretation with respect to the meaning, administration, and 
enforcement of Rule 2128. The proposed rule change is available on the 
Exchange's Web site at https://www.ise.com, at the Exchange's principal 
office, and at the Public Reference Room of the Commission.

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 self-regulatory organization 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 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 Rule 2128(g), 
concerning the ability of an Exchange Officer to act on his or her own 
motion to review potentially erroneous executions.
    Rule 2128(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 Market Session of 
the Exchange on the trading day following the date of execution(s) 
under review.
    For purposes of Rule 2128(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 circumstances, the Event may be 
considered to constitute extraordinary circumstances pursuant to Rule 
2128(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 a New York Stock Exchange LLC 
(``NYSE'') offer (``NYSE 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 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 $85.00 per 
share. There were additional executions on the ISE Stock Exchange in 
the $79.00 to $85.00 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 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

[[Page 47333]]

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.
---------------------------------------------------------------------------

    \3\ 15 U.S.C. 78f(b).
    \4\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    The proposed rule change does not 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

    The Exchange has not solicited, and does not intend to solicit, 
comments on this proposed rule change. The Exchange has not received 
any unsolicited written comments from members or other interested 
parties.

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.
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78s(b)(3)(A).
    \6\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

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 (https://www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-ISE-2010-80 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-ISE-2010-80. 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 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-ISE-2010-80 and should be submitted on or before August 
26, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\7\
---------------------------------------------------------------------------

    \7\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-19266 Filed 8-4-10; 8:45 am]
BILLING CODE 8010-01-P
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