Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending Rule 440B (Short Sales) To Modify the Exchange's Procedures for Early Termination of the Short Sale Price Test Restrictions of Rule 201 of Regulation SHO Based on a Triggering Transaction that Another Exchange or a Self-Regulatory Organization Has Determined Was a Clearly Erroneous Execution, 24943-24945 [2011-10657]

Download as PDF Federal Register / Vol. 76, No. 85 / Tuesday, May 3, 2011 / Notices TAF rate for covered equity securities from $0.000075 per share to $0.000090 per share, with a corresponding increase to the per-transaction cap for covered equity securities from $3.75 to $4.50.9 As noted above, FINRA has not adjusted the TAF rate for covered equity securities in over six years,10 and FINRA believes that increasing the TAF rate on these securities by $0.000015 per share is the minimum increase necessary to bring the revenue from the TAF to its needed levels to adequately fund FINRA’s member regulatory obligations. As with the prior restructuring of the GIA and PA described above, the proposed increase to the TAF rate on transactions in covered equity securities seeks to remain revenue neutral to FINRA (i.e., as adjusted, FINRA would aim to receive a substantially similar amount in revenue from the TAF as the TAF has generated in prior years). The effective date of the proposed rule change will be July 1, 2011. FINRA will announce the effective date of the proposed rule change in a Regulatory Notice. 2. Statutory Basis FINRA believes that the proposed rule change is consistent with the provisions of Section 15A(b)(5) of the Act,11 which requires, among other things, that FINRA rules provide for the equitable allocation of reasonable dues, fees, and other charges among members and issuers and other persons using any facility or system that FINRA operates or controls. As noted above, FINRA has not adjusted the TAF rate for transactions in covered equity securities for over six years. Because of the recent decrease in trading volumes in the equity markets, FINRA believes that the proposed rate change to the TAF is now necessary to ensure that FINRA can continue to maintain a robust regulatory program and meet its regulatory obligations effectively while attempting to remain revenue neutral. srobinson on DSKHWCL6B1PROD with NOTICES 9 Because, as noted above, transactions in covered equity securities account for over 95% of TAF revenues, FINRA is not proposing adjustments to the TAF rates for other types of securities. 10 In 2004, FINRA decreased the TAF rate for covered equity securities. Before the adjustment, the TAF rate for covered equity securities was $0.0001 per share with a maximum charge of $10 per trade. In 2004, FINRA also expanded the scope of the TAF to cover transactions in corporate debt securities reportable to TRACE and transactions in municipal securities subject to the MSRB reporting requirements. See NASD Notice to Members 04–84 (November 2004). 11 15 U.S.C. 78o-3(b)(5). VerDate Mar<15>2010 20:39 May 02, 2011 Jkt 223001 B. Self-Regulatory Organization’s Statement on Burden on Competition FINRA 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. 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 45 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 or disapprove such proposed rule change, or (b) Institute proceedings to determine whether the proposed rule change should be 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 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 rulecomments@sec.gov. Please include File Number SR–FINRA–2011–020 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–FINRA–2011–020. 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 PO 00000 Frm 00096 Fmt 4703 Sfmt 4703 24943 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 website 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 office of FINRA. 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 No. SR–FINRA–2011–020 and should be submitted on or before May 24, 2011. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.12 Cathy H. Ahn, Deputy Secretary. [FR Doc. 2011–10716 Filed 5–2–11; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–64351; File No. SR–NYSE– 2011–19] Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending Rule 440B (Short Sales) To Modify the Exchange’s Procedures for Early Termination of the Short Sale Price Test Restrictions of Rule 201 of Regulation SHO Based on a Triggering Transaction that Another Exchange or a Self-Regulatory Organization Has Determined Was a Clearly Erroneous Execution April 27, 2011. Pursuant to Section 19(b)(1)1 of the Securities Exchange Act of 1934 (the ‘‘Act’’) 2 and Rule 19b–4 thereunder,3 notice is hereby given that April 25, 2011, New York Stock Exchange LLC (‘‘NYSE’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the 12 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 15 U.S.C. 78a. 3 17 CFR 240.19b–4. 1 15 E:\FR\FM\03MYN1.SGM 03MYN1 24944 Federal Register / Vol. 76, No. 85 / Tuesday, May 3, 2011 / Notices proposed rule change as described in Items I and II below, which Items have been substantially prepared by the selfregulatory organization. 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 Rule 440B (Short Sales) to modify the Exchange’s procedures for early termination of the short sale price test restrictions of Rule 201 of Regulation SHO (‘‘Rule 201’’) 4 under the Act based on a triggering transaction that another exchange or a self-regulatory organization (‘‘SRO’’) has determined was a clearly erroneous execution pursuant to the rules of that exchange or SRO. 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 srobinson on DSKHWCL6B1PROD with NOTICES 1. Purpose On February 26, 2010, the Commission adopted amendments to Rule 201.5 In order to implement the provisions of revised Rule 201, the Exchange amended Rule 440B (Short Sales) to (1) Establish procedures for the Exchange, as a listing market, to determine that the short sale price test restrictions of Rule 201 have been triggered for a covered security, (2) establish the protocols for the handling 4 17 CFR 242.201. Securities Exchange Act Release No. 61595 (February 26, 2010), 75 FR 11232 (March 10, 2010) (File No. S7–08–09; Amendments to Regulation SHO) (‘‘Rule 201 Adopting Release’’). In the Rule 201 Adopting Release, the Commission also adopted amendments to Rule 200(g) of Regulation SHO to include a ‘‘short exempt’’ marking requirement. 17 CFR 242.200(g). 5 See VerDate Mar<15>2010 20:39 May 02, 2011 Jkt 223001 of short sale orders by the Exchange, as a trading center, in the event the short sale price test restrictions of Rule 201 are triggered, including establishing what types of short sale orders will be re-priced to achieve a Permitted Price (as defined and calculated in Rule 440B(e)), in accordance with Rule 201, during a period when the short sale price test restrictions of Rule 201 are in effect (‘‘Short Sale Period’’), (3) establish the Exchange’s procedures regarding the execution and display of permissible orders during a Short Sale Period, and the execution and display of orders marked ‘‘short exempt’’ during such a period, (4) establish the Exchange’s procedures regarding the permissible execution price of short sale orders in single-priced opening, re-opening and closing transactions during a Short Sale Period, and (5) provide that, during a Short Sale Period, Exchange systems will not execute or display a short sale order with respect to that security at a price that is less than or equal to the current national best bid, except as otherwise provided by Rule 440B and consistent with Rule 201.6 Under Rule 440B(c), when the Exchange is the listing market for a covered security, Exchange systems will determine whether the short sale price test restrictions of Rule 201 have been triggered (i.e., that a covered security has experienced a decrease in price of 10% or more from the security’s closing price as of the end of regular trading hours on the prior day) and will notify the single plan processor responsible for consolidation of information for the covered security pursuant to Rule 603(b) of Regulation NMS.7 Once the short sale price test restrictions of Rule 201 are triggered by the listing market, those restrictions will remain in effect until the close of trading on the next trading day.8 If, however, the Exchange determines that the short sale price test for a covered security was triggered because of a clearly erroneous execution on the 6 See Securities Exchange Act Release No. 63977 (February 25, 2011), 76 FR 12165 (March 4, 2011) (SR–NYSE–2011–05). 7 See 17 CFR 242.201(b)(3); 17 CFR 242.603(b). See also Rule 201(a)(6) of Regulation SHO, which defines the term ‘‘plan processor’’ to have the same meaning as in Rule 600(b)(55) of Regulation NMS. 17 CFR 242.600(b)(55). The single plan processors are ‘‘exclusive processors’’ as defined under Section 3(a)(22) of the Act. See 15 U.S.C. 78c(a)(22). 8 The short sale price test restrictions will remain in effect at all times when quotation information and the national best bid is collected, processed and disseminated pursuant to a national market system plan. This may extend beyond regular trading hours. Division of Trading & Markets: Responses to Frequently Asked Questions Concerning Rule 201 of Regulation SHO, at Q&A 2.1. PO 00000 Frm 00097 Fmt 4703 Sfmt 4703 Exchange,9 pursuant to Rule 440B(d)(1), the Exchange may lift the short sale price test restrictions before the Short Sale Period ends for a security for which the Exchange is the listing market or, for a security listed on another market, notify the other market of the Exchange’s determination that the triggering transaction was a clearly erroneous execution. For securities for which the Exchange is the listing market, Exchange Rule 440B currently addresses only clearly erroneous triggering transactions deemed to be clearly erroneous executions under the Exchange’s rules, and does not address situations where another exchange or a SRO determines, under its respective rules, that a triggering transaction was a clearly erroneous execution. To address this scenario, the Exchange proposes to amend Rule 440B(d)(1) to provide that the Exchange may also lift the short sale price test restrictions before the Short Sale Period ends, for covered securities for which the Exchange is the listing market, if the Exchange has been informed by another exchange or a SRO that a transaction in the covered security that occurred at the Trigger Price 10 was a clearly erroneous execution, as determined by that exchange or SRO under its rules.11 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,12 in general, and furthers the objectives of Section 6(b)(5) of the Act,13 in particular, in that it is designed to, among other things, prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, and, in general, to protect investors and the public interest. The proposal is designed to refine the Exchange’s written policies and procedures reasonably designed to prevent the execution or display of a 9 Determination of a ‘‘clearly erroneous’’ execution will be made in accordance with Exchange Rule 128. 10 The term ‘‘Trigger Price’’ is used in Rule 440B to refer to a decrease of 10% or more in a security’s price from the security’s closing price on the listing market as of the end of regular trading hours on the prior day. Under Rule 440B(c), the short sale price test restrictions of Rule 201 are triggered if a transaction in a covered security occurs at a Trigger Price. 11 The Exchange will only lift the short sale price test restrictions before the Short Sale Period ends under these circumstances when informed by another exchange or a SRO that a triggering transaction has been determined to be a clearly erroneous execution under the rules of the exchange or SRO, consistent with the authority of that exchange or SRO for making such determinations. 12 15 U.S.C. 78f(b). 13 15 U.S.C. 78f(b)(5). E:\FR\FM\03MYN1.SGM 03MYN1 Federal Register / Vol. 76, No. 85 / Tuesday, May 3, 2011 / Notices short sale order of a covered security in violation of the short sale price test restrictions established in Rule 201. To that end, the proposed rule change expands the ability of the Exchange, as a listing market, to lift short sale price test restrictions to include situations where another exchange or a SRO has determined that a triggering transaction was a clearly erroneous execution under the rules of that exchange or SRO. 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. srobinson on DSKHWCL6B1PROD with NOTICES III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The Exchange has filed the proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act 14 and Rule 19b–4(f)(6) thereunder.15 Because the 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 prior to 30 days from the date on which it was filed, or such shorter time as the Commission may designate, if consistent with the protection of investors and the public interest, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b–4(f)(6)(iii) thereunder. A proposed rule change filed under Rule 19b–4(f)(6)16 normally does not become operative prior to 30 days after the date of the filing. However, pursuant to Rule 19b4(f)(6)(iii),17 the Commission may designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange has asked the Commission to waive the 30-day operative delay so that the proposal may become operative immediately upon filing. The Commission has considered the Exchange’s request to waive the 30-day operative delay, and hereby grants the U.S.C. 78s(b)(3)(A)(iii). CFR 240.19b–4(f)(6). 16 17 CFR 240.19b–4(f)(6). 17 17 CFR 240.19b–4(f)(6)(iii). 15 17 20:39 May 02, 2011 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 rulecomments@sec.gov. Please include File Number SR–NYSE–2011–19 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–NYSE–2011–19. 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 18 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). 14 15 VerDate Mar<15>2010 request. The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest, as it will permit the Exchange to lift Rule 201’s short sale price test restrictions, in a covered security for which the Exchange is the listing market, when such restrictions were triggered by a transaction that another exchange or a SRO has determined to be a clearly erroneous execution, pursuant to the rules of that exchange or SRO.18 For this reason, the Commission designates the proposed rule change to be operative upon filing. At any time within 60 days of the filing of such 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. Jkt 223001 PO 00000 Frm 00098 Fmt 4703 Sfmt 4703 24945 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 20549–1090. Copies of the filing will also be available for inspection and copying at the NYSE’s principal office and on its Internet Web site at http://www.nyse.com. 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–NYSE–2011–19 and should be submitted on or before May 24, 2011. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.19 Cathy H. Ahn, Deputy Secretary. [FR Doc. 2011–10657 Filed 5–2–11; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–64350; File No. SR– NYSEAmex–2011–29] Self-Regulatory Organizations; NYSE Amex LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending NYSE Amex Equities Rule 440B (Short Sales) To Modify the Exchange’s Procedures for Early Termination of the Short Sale Price Test Restrictions of Rule 201 of Regulation SHO Based on a Triggering Transaction That Another Exchange or a Self-Regulatory Organization Has Determined Was a Clearly Erroneous Execution April 27, 2011. Pursuant to Section 19(b)(1) 1 of the Securities Exchange Act of 1934 (the ‘‘Act’’) 2 and Rule 19b–4 thereunder,3 notice is hereby given that on April 25, 2011, 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 substantially prepared by the self19 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 15 U.S.C. 78a. 3 17 CFR 240.19b–4. 1 15 E:\FR\FM\03MYN1.SGM 03MYN1

Agencies

[Federal Register Volume 76, Number 85 (Tuesday, May 3, 2011)]
[Notices]
[Pages 24943-24945]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-10657]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-64351; File No. SR-NYSE-2011-19]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Amending Rule 440B (Short Sales) To Modify the Exchange's Procedures 
for Early Termination of the Short Sale Price Test Restrictions of Rule 
201 of Regulation SHO Based on a Triggering Transaction that Another 
Exchange or a Self-Regulatory Organization Has Determined Was a Clearly 
Erroneous Execution

April 27, 2011.
    Pursuant to Section 19(b)(1)\1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that April 25, 2011, New York Stock Exchange LLC (``NYSE'' or the 
``Exchange'') filed with the Securities and Exchange Commission (the 
``Commission'') the

[[Page 24944]]

proposed rule change as described in Items I and II below, which Items 
have been substantially prepared by the self-regulatory organization. 
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\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Rule 440B (Short Sales) to modify 
the Exchange's procedures for early termination of the short sale price 
test restrictions of Rule 201 of Regulation SHO (``Rule 201'') \4\ 
under the Act based on a triggering transaction that another exchange 
or a self-regulatory organization (``SRO'') has determined was a 
clearly erroneous execution pursuant to the rules of that exchange or 
SRO. The text of the proposed rule change is available at the Exchange, 
the Commission's Public Reference Room, and http://www.nyse.com.
---------------------------------------------------------------------------

    \4\ 17 CFR 242.201.
---------------------------------------------------------------------------

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
    On February 26, 2010, the Commission adopted amendments to Rule 
201.\5\ In order to implement the provisions of revised Rule 201, the 
Exchange amended Rule 440B (Short Sales) to (1) Establish procedures 
for the Exchange, as a listing market, to determine that the short sale 
price test restrictions of Rule 201 have been triggered for a covered 
security, (2) establish the protocols for the handling of short sale 
orders by the Exchange, as a trading center, in the event the short 
sale price test restrictions of Rule 201 are triggered, including 
establishing what types of short sale orders will be re-priced to 
achieve a Permitted Price (as defined and calculated in Rule 440B(e)), 
in accordance with Rule 201, during a period when the short sale price 
test restrictions of Rule 201 are in effect (``Short Sale Period''), 
(3) establish the Exchange's procedures regarding the execution and 
display of permissible orders during a Short Sale Period, and the 
execution and display of orders marked ``short exempt'' during such a 
period, (4) establish the Exchange's procedures regarding the 
permissible execution price of short sale orders in single-priced 
opening, re-opening and closing transactions during a Short Sale 
Period, and (5) provide that, during a Short Sale Period, Exchange 
systems will not execute or display a short sale order with respect to 
that security at a price that is less than or equal to the current 
national best bid, except as otherwise provided by Rule 440B and 
consistent with Rule 201.\6\
---------------------------------------------------------------------------

    \5\ See Securities Exchange Act Release No. 61595 (February 26, 
2010), 75 FR 11232 (March 10, 2010) (File No. S7-08-09; Amendments 
to Regulation SHO) (``Rule 201 Adopting Release''). In the Rule 201 
Adopting Release, the Commission also adopted amendments to Rule 
200(g) of Regulation SHO to include a ``short exempt'' marking 
requirement. 17 CFR 242.200(g).
    \6\ See Securities Exchange Act Release No. 63977 (February 25, 
2011), 76 FR 12165 (March 4, 2011) (SR-NYSE-2011-05).
---------------------------------------------------------------------------

    Under Rule 440B(c), when the Exchange is the listing market for a 
covered security, Exchange systems will determine whether the short 
sale price test restrictions of Rule 201 have been triggered (i.e., 
that a covered security has experienced a decrease in price of 10% or 
more from the security's closing price as of the end of regular trading 
hours on the prior day) and will notify the single plan processor 
responsible for consolidation of information for the covered security 
pursuant to Rule 603(b) of Regulation NMS.\7\ Once the short sale price 
test restrictions of Rule 201 are triggered by the listing market, 
those restrictions will remain in effect until the close of trading on 
the next trading day.\8\
---------------------------------------------------------------------------

    \7\ See 17 CFR 242.201(b)(3); 17 CFR 242.603(b). See also Rule 
201(a)(6) of Regulation SHO, which defines the term ``plan 
processor'' to have the same meaning as in Rule 600(b)(55) of 
Regulation NMS. 17 CFR 242.600(b)(55). The single plan processors 
are ``exclusive processors'' as defined under Section 3(a)(22) of 
the Act. See 15 U.S.C. 78c(a)(22).
    \8\ The short sale price test restrictions will remain in effect 
at all times when quotation information and the national best bid is 
collected, processed and disseminated pursuant to a national market 
system plan. This may extend beyond regular trading hours. Division 
of Trading & Markets: Responses to Frequently Asked Questions 
Concerning Rule 201 of Regulation SHO, at Q&A 2.1.
---------------------------------------------------------------------------

    If, however, the Exchange determines that the short sale price test 
for a covered security was triggered because of a clearly erroneous 
execution on the Exchange,\9\ pursuant to Rule 440B(d)(1), the Exchange 
may lift the short sale price test restrictions before the Short Sale 
Period ends for a security for which the Exchange is the listing market 
or, for a security listed on another market, notify the other market of 
the Exchange's determination that the triggering transaction was a 
clearly erroneous execution.
---------------------------------------------------------------------------

    \9\ Determination of a ``clearly erroneous'' execution will be 
made in accordance with Exchange Rule 128.
---------------------------------------------------------------------------

    For securities for which the Exchange is the listing market, 
Exchange Rule 440B currently addresses only clearly erroneous 
triggering transactions deemed to be clearly erroneous executions under 
the Exchange's rules, and does not address situations where another 
exchange or a SRO determines, under its respective rules, that a 
triggering transaction was a clearly erroneous execution. To address 
this scenario, the Exchange proposes to amend Rule 440B(d)(1) to 
provide that the Exchange may also lift the short sale price test 
restrictions before the Short Sale Period ends, for covered securities 
for which the Exchange is the listing market, if the Exchange has been 
informed by another exchange or a SRO that a transaction in the covered 
security that occurred at the Trigger Price \10\ was a clearly 
erroneous execution, as determined by that exchange or SRO under its 
rules.\11\
---------------------------------------------------------------------------

    \10\ The term ``Trigger Price'' is used in Rule 440B to refer to 
a decrease of 10% or more in a security's price from the security's 
closing price on the listing market as of the end of regular trading 
hours on the prior day. Under Rule 440B(c), the short sale price 
test restrictions of Rule 201 are triggered if a transaction in a 
covered security occurs at a Trigger Price.
    \11\ The Exchange will only lift the short sale price test 
restrictions before the Short Sale Period ends under these 
circumstances when informed by another exchange or a SRO that a 
triggering transaction has been determined to be a clearly erroneous 
execution under the rules of the exchange or SRO, consistent with 
the authority of that exchange or SRO for making such 
determinations.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\12\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\13\ in particular, in that it is designed to, among 
other things, prevent fraudulent and manipulative acts and practices, 
to promote just and equitable principles of trade, and, in general, to 
protect investors and the public interest. The proposal is designed to 
refine the Exchange's written policies and procedures reasonably 
designed to prevent the execution or display of a

[[Page 24945]]

short sale order of a covered security in violation of the short sale 
price test restrictions established in Rule 201. To that end, the 
proposed rule change expands the ability of the Exchange, as a listing 
market, to lift short sale price test restrictions to include 
situations where another exchange or a SRO has determined that a 
triggering transaction was a clearly erroneous execution under the 
rules of that exchange or SRO.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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 Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \14\ and Rule 19b-4(f)(6) thereunder.\15\ 
Because the 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 prior to 
30 days from the date on which it was filed, or such shorter time as 
the Commission may designate, if consistent with the protection of 
investors and the public interest, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \15\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6)\16\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b4(f)(6)(iii),\17\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay so that the proposal 
may become operative immediately upon filing.
---------------------------------------------------------------------------

    \16\ 17 CFR 240.19b-4(f)(6).
    \17\ 17 CFR 240.19b-4(f)(6)(iii).
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    The Commission has considered the Exchange's request to waive the 
30-day operative delay, and hereby grants the request. The Commission 
believes that waiving the 30-day operative delay is consistent with the 
protection of investors and the public interest, as it will permit the 
Exchange to lift Rule 201's short sale price test restrictions, in a 
covered security for which the Exchange is the listing market, when 
such restrictions were triggered by a transaction that another exchange 
or a SRO has determined to be a clearly erroneous execution, pursuant 
to the rules of that exchange or SRO.\18\ For this reason, the 
Commission designates the proposed rule change to be operative upon 
filing.
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    \18\ 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 such 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:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-NYSE-2011-19 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-NYSE-2011-19. 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 20549-1090. Copies of the filing will also 
be available for inspection and copying at the NYSE's principal office 
and on its Internet Web site at http://www.nyse.com. 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-NYSE-2011-19 and should be 
submitted on or before May 24, 2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
Cathy H. Ahn,
Deputy Secretary.
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    \19\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2011-10657 Filed 5-2-11; 8:45 am]
BILLING CODE 8011-01-P