Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Proposed Rule Change Related to the Individual Trading Pause Pilot and CBSX Market-Maker Quoting Obligations, 27687-27689 [2011-11680]

Download as PDF Federal Register / Vol. 76, No. 92 / Thursday, May 12, 2011 / Notices All submissions should refer to File Number SR–BATS–2011–016. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s Internet Web site (http://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission’s Public Reference Room, 100 F Street, NE., Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. Copies of such filing also will be available for inspection and copying at the principal 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 publicly available. All submissions should refer to File Number SR–BATS– 2011–016 and should be submitted on or before June 2, 2011. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.10 Elizabeth M. Murphy, Secretary. [FR Doc. 2011–11681 Filed 5–11–11; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION wwoods2 on DSK1DXX6B1PROD with NOTICES_PART 1 [Release No. 34–64434; File No. SR–CBOE– 2011–049] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Proposed Rule Change Related to the Individual Trading Pause Pilot and CBSX MarketMaker Quoting Obligations May 6, 2011. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 notice is hereby given that on May 4, 10 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 14:49 May 11, 2011 Jkt 223001 2011, the Chicago Board Options Exchange, Incorporated (‘‘Exchange’’ or ‘‘CBOE’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘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 is proposing to amend CBOE Stock Exchange, LLC’s (‘‘CBSX’’, the CBOE’s stock trading facility) rules to include additional stocks in the individual stock trading pause pilot and to include certain conforming amendments to the CBSX Market-Maker quoting obligation provisions. The Exchange is also proposing certain other conforming and non-substantive amendments to CBSX’s individual stock trading pause provisions and CBOE’s options trading halt provisions. The text of the rule proposal is available on the Exchange’s Web site (http:// www.cboe.org/legal), at the Exchange’s Office of the Secretary and at 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 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 Statutory Basis for, the Proposed Rule Change 1. Purpose With respect to CBSX, the Exchange proposes to amend Rule 6.3C to include additional stocks in the pilot by which such rule operates and to amend Rules 53.23 and 53.56 to simplify certain aspects of the text while also conforming certain percentages thereunder to the proposed changes to Rule 6.3C. With respect to both CBSX and CBOE, the Exchange proposes to make certain other conforming and non- PO 00000 Frm 00055 Fmt 4703 Sfmt 4703 27687 substantive changes to the text of Rules 6.3C and 6.3.06. The Commission approved Rule 6.3C on a pilot basis on June 10, 2010 to provide for trading pauses in individual stocks due to extraordinary market volatility (‘‘Trading Pause’’) in all stocks included in the S&P 500 Index (‘‘S&P 500’’) (‘‘Trading Pause Pilot’’ or ‘‘Pilot’’).3 The Exchange subsequently received approval to add to the Pilot the stocks included in the Russell 1000 Index (‘‘Russell 1000’’) and a specified list of Exchange Traded Products (‘‘ETPs’’).4 In consultation with other markets and the staff of the Commission, the Exchange proposes to include all NMS stocks within the Pilot that are not already included therein, but to apply a wider Threshold Move percentage to the newly added stocks. Accordingly, the Exchange proposes to amend the text of Rule 6.3C to provide that the Threshold Move required to trigger an individual stock trading pause for the proposed new stocks, as calculated by the primary listing market, to be 30% or more for such stocks priced at $1 or higher and 50% or more for such stocks priced less than $1.5 The Exchange believes that these percentages are commensurate 3 The Commission approved the Trading Pause Pilot for all equities exchanges and FINRA. See Securities Exchange Act Release Nos. 62252 (June 10, 2010), 75 FR 34186 (June 16, 2010) (File Nos. SR–BATS–2010–014; SR–EDGA–2010–01; SR– EDGX–2010–01; SR–BX–2010–037; SR–ISE–2010– 48; SR–NYSE–2010–39; SR–NYSEAmex–2010–46; SR–NYSEArca–2010–41; SR–NASDAQ–2010–061; SR–CHX–2010–10; SR–NSX–2010–05; and SR– CBOE–2010–047) and 62251 (June 10, 2010), 75 FR 34183 (June 16, 2010) (SR–FINRA–2010–025). 4 The Commission approved the addition to the Trading Pause Pilot of the stocks included in the Russell 1000 and ETPs, where applicable, for all equities exchanges and FINRA. See Securities Exchange Act Release Nos. 62884 (September 10, 2010), 75 FR 56618 (September 16, 2010) (File Nos. SR–BATS–2010–018; SR–BX–2010–044; SR–CBOE– 2010–065; SR–CHX–2010–14; SR–EDGA–2010–05; SR–EDGX–2010–05; SR–ISE–2010–66; SR– NASDAQ–2010–079; SR–NYSE–2010–49; SR– NYSEAmex–2010–63; SR–NYSEArca–2010–61; and SR–NSX–2010–08) and 62883 (September 10, 2010), 75 FR 56608 (September 16, 2010) (SR– FINRA–2010–033). The Exchange has subsequently extended the operation of the Pilot, which was originally set to expire on December 10, 2010, through the earlier of August 11, 2011 or the date on which a limit up-limit down mechanism to address extraordinary market volatility, if adopted, applies to the Circuit Breaker Stocks. See Securities Exchange Act Release Nos. 63502 (December 9, 2010), 75 FR 78306 (December 15, 2010) (SR– CBOE–2010–112) (extension of Pilot through April 11, 2011) and 64194 (April 5, 2011), 76 FR 20389 (April 12, 2011)(SR–CBOE–2011–031)(extension of Pilot through the earlier of August 11, 2011 or the date on which a limit up-limit down mechanism to address extraordinary market volatility, if adopted, applies to the pilot stocks). 5 Under the proposed rule change, the price of a stock would be based on the closing price on the previous trading day, or, if no closing price exists, the last sale reported to the Consolidated Tape on the previous trading day. E:\FR\FM\12MYN1.SGM 12MYN1 27688 Federal Register / Vol. 76, No. 92 / Thursday, May 12, 2011 / Notices wwoods2 on DSK1DXX6B1PROD with NOTICES_PART 1 with the characteristics shared by the proposed new stocks within these price ranges and would promote the objectives of the Trading Pause Pilot to reduce the negative impacts of unanticipated price movements in a security. In particular, the proposed additional stocks are those not currently included in the S&P 500 Index, Russell 1000 Index, or specified ETPs, and therefore are more likely to be less liquid securities or securities with lower trading volumes. Accordingly, the Exchange believes that broader Threshold Move percentages would be appropriate. Similarly, because leveraged ETPs trade at a ratio against the associated index, a broader Threshold Move percentage would also be appropriate for leveraged ETPs. With respect to the 30% threshold for stocks priced at $1 or higher and the 50% threshold for stocks priced less than $1, the rationale for this differentiation is that lower-priced securities may tend to be more volatile, and price movements of lower-priced stocks equate to a higher percentage move than a similar price change for a higher-priced stock. The Exchange proposes to include new subsections 6.3C.03(a), (b) and (c) to reflect the distinction between the applicable Threshold Move percentages for current Pilot stocks and the proposed new stocks to be included within the Pilot.6 The Exchange also proposes to make certain other conforming and non-substantive changes to the text of Rules 6.3C and 6.3.06.7 The Exchange is not proposing any other substantive changes to the text of Rule 6.3C or the operation of the Pilot, and will continue in consultation with the other markets to assess whether the parameters for invoking a Trading Pause continue to be appropriate and whether the parameters should be modified. The proposed changes to the Pilot, if approved, would require that the text of 6 The Exchange is not proposing a change to the Threshold Move percentage applicable to stocks currently included within the current Pilot. However, the changes proposed herein would require that certain rule text pertaining to the Threshold Move for the existing Pilot stocks be reorganized within Rule 6.3C. 7 The Exchange is proposing certain other conforming and non-substantive amendments to Rules 6.3C (pertaining to CBSX) and 6.3.06 (pertaining to CBOE). Specifically, the Exchange is proposing to replace certain references in these rules to ‘‘Circuit Breaker Stocks’’ and ‘‘eligible underlying stock’’ with conforming references to ‘‘NMS stocks’’ and ‘‘underlying NMS stock.’’ The Exchange is also proposing to include text in these rules confirming that, following an individual stock trading pause, trading will generally resume on the primary listing market after a period of five minutes, which is consistent with the current Pilot and is simply intended to provide more detail in the text explaining the existing Pilot’s operation. VerDate Mar<15>2010 14:49 May 11, 2011 Jkt 223001 Rules 53.23.01 and 53.56.01, which pertains to the pricing obligations that CBSX Market-Makers are required to adhere to, be amended to update the cross-references therein to Rule 6.3C and the Threshold Moves thereunder. Specifically, the Exchange proposes to remove any text from the two rules addressing NMS stocks that are not subject to the Pilot because no such stocks would exist and such text would therefore be unnecessary. The Exchange also proposes to simplify the two rules by explicitly stating the percentages that are applicable thereunder and the times during the trading day when Rule 6.3C is not in effect.8 The Exchange notes that part of this proposed change would be substantive, in that the percentages under the two rules would decrease slightly for the proposed new stocks priced at $1 or greater. The Exchange believes that this proposed substantive change would not have a significant impact on CBSX Market-Maker pricing obligations and is reasonable because it would ensure that the designated quoting percentages in the rules are within a narrower range than the percentages necessary to trigger a Trading Pause. 2. Statutory Basis The statutory basis for the proposed rule change is Section 6(b)(5) of the Act,9 which requires the rules of an exchange to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system and, in general, to protect investors and the public interest. The proposed rule change also is designed to support the principles of Section 11A(a)(1) 10 of the Act in that it seeks to assure fair competition among brokers and dealers and among exchange markets. The Exchange believes that the proposed rule meets these requirements because it expands the scope of the Pilot to cover all NMS stocks while adjusting the parameters of the rule for different stocks in a manner that will promote uniformity across markets concerning decisions to pause trading in a stock when there are significant price movements. Additionally, the proposed changes would ensure that the designated quoting percentages in Rules 53.23 and 53.56 are within a narrower 8 The Exchange is also proposing a nonsubstantive amendment to Rules 53.23 and 53.56 to correct a typographical error (replacing the phrase ‘‘Market-Marker’’ with ‘‘Market-Maker’’). 9 15 U.S.C. 78f(b)(5). 10 15 U.S.C. 78k–1(a)(1). PO 00000 Frm 00056 Fmt 4703 Sfmt 4703 range than the percentages necessary to trigger a Trading Pause. B. Self-Regulatory Organization’s Statement on Burden on Competition CBOE does not believe that the proposed rule change will impose any burden on competition 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 neither solicited nor received comments on the proposal. 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–CBOE–2011–049 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–CBOE–2011–049. 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 E:\FR\FM\12MYN1.SGM 12MYN1 Federal Register / Vol. 76, No. 92 / Thursday, May 12, 2011 / Notices Internet Web site (http://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission’s Public Reference Room, 100 F Street, NE., Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. Copies of such filing also will be available for inspection and copying at the principal office of CBOE. 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 publicly available. All submissions should refer to File Number SR–CBOE–2011–049 and should be submitted on or before June 2, 2011. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.11 Elizabeth M. Murphy, Secretary. [FR Doc. 2011–11680 Filed 5–11–11; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–64425; File No. SR–NSX– 2011–06] Self-Regulatory Organizations; National Stock Exchange, Inc.; Notice of Filing of Proposed Rule Change To Amend Its Rules To Extend a Pilot Program Regarding Trading Pauses in Individual Securities Due to Extraordinary Market Volatility to All NMS Stocks and To Make Conforming Changes to Market Maker Quoting Obligations wwoods2 on DSK1DXX6B1PROD with NOTICES_PART 1 May 6, 2011. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 notice is hereby given that on May 4, 2011, the National Stock Exchange, Inc. (‘‘Exchange’’ or ‘‘NSX’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) the proposed 11 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 14:49 May 11, 2011 I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change National Stock Exchange, Inc. (‘‘NSX®’’ or ‘‘Exchange’’) is proposing to amend Rule 11.20B to include additional securities in the pilot by which such rule operates and amend Rule 11.8 to simplify certain aspects of the text while also conforming certain of the percentages thereunder to the proposed changes to Rule 11.20B. The text of the proposed rule change is available on the Exchange’s Web site at http://www.nsx.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose With this rule change, the Exchange is proposing to amend Rule 11.20B to include additional securities in the pilot by which such rule operates and amend Rule 11.8 to simplify certain aspects of the text while also conforming certain of the percentages thereunder to the proposed changes to Rule 11.20B. NSX Rule 11.20B (Trading Pauses in Individual Securities Due to Extraordinary Market Volatility) was approved by the Securities and Exchange Commission (the ‘‘Commission’’) on June 10, 2010 on a pilot basis (‘‘Pilot’’) to end on December 10, 2010.3 The Pilot end date was subsequently extended until August 11, 2011 or to coincide, if applicable, with 3 See Securities Exchange Act Release No. 62252 (June 10, 2010), 75 FR 34186 (June 16, 2010) (SR– NSX–2010–05). 1 15 VerDate Mar<15>2010 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. Jkt 223001 PO 00000 Frm 00057 Fmt 4703 Sfmt 4703 27689 the earlier implementation date of the limit up/limit down mechanism.4 Similar rule changes were adopted by other markets in the national market system in a coordinated manner. As the Exchange noted in its filing to adopt NSX Rule 11.20B, during the Pilot period, the Exchange, in conjunction with other markets in the national market system, would continue to assess whether additional securities need to be added and whether the parameters of the rule would need to be modified to accommodate trading characteristics of different securities. When initially adopted on June 10, 2010, the pilot included all securities included within the S&P 500® Index. On September 10, 2010 NSX Rule 11.20B was expanded to securities included in the Russell 1000® Index (‘‘Russell 1000’’) and specified Exchange Traded Products (‘‘ETPs’’). 5 The Exchange has continued to assess whether additional securities need to be added to the Pilot and whether the parameters of Rule 11.20B need to be modified to accommodate trading characteristics of different securities. In consultation with other markets and the staff of the Commission, the Exchange proposes to include all NMS stocks within the Pilot that are not already included therein. In addition, a wider Threshold Move percentage would apply to the newly added securities. Because the proposed additional stocks are those not currently included in the S&P 500 Index, Russell 1000 Index, or specified ETPs, and therefore are more likely to be less liquid securities or securities with lower trading volume, the Exchange believes that broader Threshold Move percentages would be appropriate. Similarly, because leveraged ETPs trade at a ratio against the associated index, a broader Threshold Move percentage would also be appropriate for leveraged ETPs. Securities priced below $1 are proposed to have a higher Threshold Move than higher priced securities because lowerpriced securities may tend to be more volatile, and price movements of lowerpriced securities equate to a higher percentage move than a similar price change for a higher-priced security. Accordingly, the Exchange proposes to expand the definition of the term ‘‘Circuit Breaker Securities’’ set forth in Commentary .05 to Rule 11.20 to include all NMS stocks. The Exchange 4 See Securities Exchange Act Release No. 63512 (December 9, 2010), 75 FR 78786 (December 16, 2010) (SR–NSX–2010–17); and Securities Exchange Act Release No. 64213 (April 6, 2011), 76 FR 20409 (April 12, 2011) (SR–NSX–2011–04). 5 See Securities Exchange Act Release No. 62884 (September 10, 2010), 75 FR 56618 (September 16, 2010) (SR–NSX–2010–08). E:\FR\FM\12MYN1.SGM 12MYN1

Agencies

[Federal Register Volume 76, Number 92 (Thursday, May 12, 2011)]
[Notices]
[Pages 27687-27689]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-11680]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-64434; File No. SR-CBOE-2011-049]


Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Proposed Rule Change Related to the Individual 
Trading Pause Pilot and CBSX Market-Maker Quoting Obligations

May 6, 2011.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on May 4, 2011, the Chicago Board Options Exchange, Incorporated 
(``Exchange'' or ``CBOE'') filed with the Securities and Exchange 
Commission (``SEC'' or ``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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is proposing to amend CBOE Stock Exchange, LLC's 
(``CBSX'', the CBOE's stock trading facility) rules to include 
additional stocks in the individual stock trading pause pilot and to 
include certain conforming amendments to the CBSX Market-Maker quoting 
obligation provisions. The Exchange is also proposing certain other 
conforming and non-substantive amendments to CBSX's individual stock 
trading pause provisions and CBOE's options trading halt provisions. 
The text of the rule proposal is available on the Exchange's Web site 
(http://www.cboe.org/legal), at the Exchange's Office of the Secretary 
and at 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 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    With respect to CBSX, the Exchange proposes to amend Rule 6.3C to 
include additional stocks in the pilot by which such rule operates and 
to amend Rules 53.23 and 53.56 to simplify certain aspects of the text 
while also conforming certain percentages thereunder to the proposed 
changes to Rule 6.3C. With respect to both CBSX and CBOE, the Exchange 
proposes to make certain other conforming and non-substantive changes 
to the text of Rules 6.3C and 6.3.06.
    The Commission approved Rule 6.3C on a pilot basis on June 10, 2010 
to provide for trading pauses in individual stocks due to extraordinary 
market volatility (``Trading Pause'') in all stocks included in the S&P 
500 Index (``S&P 500'') (``Trading Pause Pilot'' or ``Pilot'').\3\ The 
Exchange subsequently received approval to add to the Pilot the stocks 
included in the Russell 1000 Index (``Russell 1000'') and a specified 
list of Exchange Traded Products (``ETPs'').\4\
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    \3\ The Commission approved the Trading Pause Pilot for all 
equities exchanges and FINRA. See Securities Exchange Act Release 
Nos. 62252 (June 10, 2010), 75 FR 34186 (June 16, 2010) (File Nos. 
SR-BATS-2010-014; SR-EDGA-2010-01; SR-EDGX-2010-01; SR-BX-2010-037; 
SR-ISE-2010-48; SR-NYSE-2010-39; SR-NYSEAmex-2010-46; SR-NYSEArca-
2010-41; SR-NASDAQ-2010-061; SR-CHX-2010-10; SR-NSX-2010-05; and SR-
CBOE-2010-047) and 62251 (June 10, 2010), 75 FR 34183 (June 16, 
2010) (SR-FINRA-2010-025).
    \4\ The Commission approved the addition to the Trading Pause 
Pilot of the stocks included in the Russell 1000 and ETPs, where 
applicable, for all equities exchanges and FINRA. See Securities 
Exchange Act Release Nos. 62884 (September 10, 2010), 75 FR 56618 
(September 16, 2010) (File Nos. SR-BATS-2010-018; SR-BX-2010-044; 
SR-CBOE-2010-065; SR-CHX-2010-14; SR-EDGA-2010-05; SR-EDGX-2010-05; 
SR-ISE-2010-66; SR-NASDAQ-2010-079; SR-NYSE-2010-49; SR-NYSEAmex-
2010-63; SR-NYSEArca-2010-61; and SR-NSX-2010-08) and 62883 
(September 10, 2010), 75 FR 56608 (September 16, 2010) (SR-FINRA-
2010-033). The Exchange has subsequently extended the operation of 
the Pilot, which was originally set to expire on December 10, 2010, 
through the earlier of August 11, 2011 or the date on which a limit 
up-limit down mechanism to address extraordinary market volatility, 
if adopted, applies to the Circuit Breaker Stocks. See Securities 
Exchange Act Release Nos. 63502 (December 9, 2010), 75 FR 78306 
(December 15, 2010) (SR-CBOE-2010-112) (extension of Pilot through 
April 11, 2011) and 64194 (April 5, 2011), 76 FR 20389 (April 12, 
2011)(SR-CBOE-2011-031)(extension of Pilot through the earlier of 
August 11, 2011 or the date on which a limit up-limit down mechanism 
to address extraordinary market volatility, if adopted, applies to 
the pilot stocks).
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    In consultation with other markets and the staff of the Commission, 
the Exchange proposes to include all NMS stocks within the Pilot that 
are not already included therein, but to apply a wider Threshold Move 
percentage to the newly added stocks. Accordingly, the Exchange 
proposes to amend the text of Rule 6.3C to provide that the Threshold 
Move required to trigger an individual stock trading pause for the 
proposed new stocks, as calculated by the primary listing market, to be 
30% or more for such stocks priced at $1 or higher and 50% or more for 
such stocks priced less than $1.\5\ The Exchange believes that these 
percentages are commensurate

[[Page 27688]]

with the characteristics shared by the proposed new stocks within these 
price ranges and would promote the objectives of the Trading Pause 
Pilot to reduce the negative impacts of unanticipated price movements 
in a security. In particular, the proposed additional stocks are those 
not currently included in the S&P 500 Index, Russell 1000 Index, or 
specified ETPs, and therefore are more likely to be less liquid 
securities or securities with lower trading volumes. Accordingly, the 
Exchange believes that broader Threshold Move percentages would be 
appropriate. Similarly, because leveraged ETPs trade at a ratio against 
the associated index, a broader Threshold Move percentage would also be 
appropriate for leveraged ETPs. With respect to the 30% threshold for 
stocks priced at $1 or higher and the 50% threshold for stocks priced 
less than $1, the rationale for this differentiation is that lower-
priced securities may tend to be more volatile, and price movements of 
lower-priced stocks equate to a higher percentage move than a similar 
price change for a higher-priced stock.
---------------------------------------------------------------------------

    \5\ Under the proposed rule change, the price of a stock would 
be based on the closing price on the previous trading day, or, if no 
closing price exists, the last sale reported to the Consolidated 
Tape on the previous trading day.
---------------------------------------------------------------------------

    The Exchange proposes to include new subsections 6.3C.03(a), (b) 
and (c) to reflect the distinction between the applicable Threshold 
Move percentages for current Pilot stocks and the proposed new stocks 
to be included within the Pilot.\6\ The Exchange also proposes to make 
certain other conforming and non-substantive changes to the text of 
Rules 6.3C and 6.3.06.\7\ The Exchange is not proposing any other 
substantive changes to the text of Rule 6.3C or the operation of the 
Pilot, and will continue in consultation with the other markets to 
assess whether the parameters for invoking a Trading Pause continue to 
be appropriate and whether the parameters should be modified.
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    \6\ The Exchange is not proposing a change to the Threshold Move 
percentage applicable to stocks currently included within the 
current Pilot. However, the changes proposed herein would require 
that certain rule text pertaining to the Threshold Move for the 
existing Pilot stocks be reorganized within Rule 6.3C.
    \7\ The Exchange is proposing certain other conforming and non-
substantive amendments to Rules 6.3C (pertaining to CBSX) and 6.3.06 
(pertaining to CBOE). Specifically, the Exchange is proposing to 
replace certain references in these rules to ``Circuit Breaker 
Stocks'' and ``eligible underlying stock'' with conforming 
references to ``NMS stocks'' and ``underlying NMS stock.'' The 
Exchange is also proposing to include text in these rules confirming 
that, following an individual stock trading pause, trading will 
generally resume on the primary listing market after a period of 
five minutes, which is consistent with the current Pilot and is 
simply intended to provide more detail in the text explaining the 
existing Pilot's operation.
---------------------------------------------------------------------------

    The proposed changes to the Pilot, if approved, would require that 
the text of Rules 53.23.01 and 53.56.01, which pertains to the pricing 
obligations that CBSX Market-Makers are required to adhere to, be 
amended to update the cross-references therein to Rule 6.3C and the 
Threshold Moves thereunder. Specifically, the Exchange proposes to 
remove any text from the two rules addressing NMS stocks that are not 
subject to the Pilot because no such stocks would exist and such text 
would therefore be unnecessary. The Exchange also proposes to simplify 
the two rules by explicitly stating the percentages that are applicable 
thereunder and the times during the trading day when Rule 6.3C is not 
in effect.\8\ The Exchange notes that part of this proposed change 
would be substantive, in that the percentages under the two rules would 
decrease slightly for the proposed new stocks priced at $1 or greater. 
The Exchange believes that this proposed substantive change would not 
have a significant impact on CBSX Market-Maker pricing obligations and 
is reasonable because it would ensure that the designated quoting 
percentages in the rules are within a narrower range than the 
percentages necessary to trigger a Trading Pause.
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    \8\ The Exchange is also proposing a non-substantive amendment 
to Rules 53.23 and 53.56 to correct a typographical error (replacing 
the phrase ``Market-Marker'' with ``Market-Maker'').
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2. Statutory Basis
    The statutory basis for the proposed rule change is Section 6(b)(5) 
of the Act,\9\ which requires the rules of an exchange to promote just 
and equitable principles of trade, to remove impediments to and perfect 
the mechanism of a free and open market and a national market system 
and, in general, to protect investors and the public interest. The 
proposed rule change also is designed to support the principles of 
Section 11A(a)(1) \10\ of the Act in that it seeks to assure fair 
competition among brokers and dealers and among exchange markets. The 
Exchange believes that the proposed rule meets these requirements 
because it expands the scope of the Pilot to cover all NMS stocks while 
adjusting the parameters of the rule for different stocks in a manner 
that will promote uniformity across markets concerning decisions to 
pause trading in a stock when there are significant price movements. 
Additionally, the proposed changes would ensure that the designated 
quoting percentages in Rules 53.23 and 53.56 are within a narrower 
range than the percentages necessary to trigger a Trading Pause.
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    \9\ 15 U.S.C. 78f(b)(5).
    \10\ 15 U.S.C. 78k-1(a)(1).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    CBOE does not believe that the proposed rule change will impose any 
burden on competition 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 neither solicited nor received comments on the 
proposal.

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 rule-comments@sec.gov. Please include 
File Number SR-CBOE-2011-049 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-CBOE-2011-049. 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

[[Page 27689]]

Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the 
submission, all subsequent amendments, all written statements with 
respect to the proposed rule change that are filed with the Commission, 
and all written communications relating to the proposed rule change 
between the Commission and any person, other than those that may be 
withheld from the public in accordance with the provisions of 5 U.S.C. 
552, will be available for Web site viewing and printing in the 
Commission's Public Reference Room, 100 F Street, NE., Washington, DC 
20549, on official business days between the hours of 10 a.m. and 3 
p.m. Copies of such filing also will be available for inspection and 
copying at the principal office of CBOE. 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 publicly available. All submissions 
should refer to File Number SR-CBOE-2011-049 and should be submitted on 
or before June 2, 2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-11680 Filed 5-11-11; 8:45 am]
BILLING CODE 8011-01-P