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]
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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 (https://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 (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
PO 00000
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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
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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 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.
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
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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
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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 (https://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 (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
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
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Fmt 4703
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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 https://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
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]]>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]
-----------------------------------------------------------------------
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 https://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.
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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.
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\9\ Determination of a ``clearly erroneous'' execution will be
made in accordance with Exchange Rule 128.
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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\
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\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.
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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.
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\12\ 15 U.S.C. 78f(b).
\13\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The 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.
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\14\ 15 U.S.C. 78s(b)(3)(A)(iii).
\15\ 17 CFR 240.19b-4(f)(6).
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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.
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\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 (https://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 (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, 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 https://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
