Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Exclude All Rights and Warrants From the Pilot Rule for Trading Pauses Due to Extraordinary Market Volatility, 74113-74115 [2011-30808]
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Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / Notices
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
available publicly. All submissions
should refer to File No. SR–CBOE–
2011–111 and should be submitted on
or before December 21, 2011.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.20
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2011–30819 Filed 11–29–11; 8:45 am]
BILLING CODE 8011–01–P
[Release No. 34–65813; File No. SR–Phlx–
2011–158]
Self-Regulatory Organizations;
NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Exclude All
Rights and Warrants From the Pilot
Rule for Trading Pauses Due to
Extraordinary Market Volatility
November 23, 2011.
emcdonald on DSK5VPTVN1PROD with NOTICES
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 November
18, 2011, NASDAQ OMX PHLX LLC
(‘‘PHLX’’), filed with the Securities and
Exchange Commission (‘‘Commission’’)
the proposed rule change as described
in Items I and II below, which Items
have been prepared by PHLX. 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
20 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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17:30 Nov 29, 2011
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Rule 3100. Trading Halts on PSX
(a) Authority to Initiate Trading Halts or
Pauses
In circumstances in which the Exchange
deems it necessary to protect investors and
the public interest, and pursuant to the
procedures set forth in paragraph (c):
(1)–(3) No change.
(4) If a primary listing market issues an
individual stock trading pause in any of the
Circuit Breaker Securities, as defined herein,
the Exchange will pause trading in that
security until trading has resumed on the
primary listing market. If, however, trading
has not resumed on the primary listing
market and ten minutes have passed since
the individual stock trading pause message
has been received from the responsible single
plan processor, the Exchange may resume
trading in such stock. The provisions of this
paragraph (a)(4) shall be in effect during a
pilot set to end on January 31, 2012. During
the pilot, the term ‘‘Circuit Breaker
Securities’’ shall mean any NMS stock except
rights and warrants.
(b)–(c) No change.
*
SECURITIES AND EXCHANGE
COMMISSION
PHLX proposes to exclude all rights
and warrants from the pilot trading
pause process under Rule 3100(a)(4).
The text of the proposed rule change
is below. Proposed new language is
italicized.
*
*
*
*
*
*
*
*
*
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission,
PHLX 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. PHLX has prepared
summaries, set forth in Sections A, B,
and C below, of the most significant
aspects of such statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
PHLX proposes to exclude all rights
and warrants from the single stock
circuit breaker under Rule 3100(a)(4).
On June 10, 2010, the Commission
approved the proposed rules of the
other equity exchanges and FINRA to
provide for trading pauses in individual
securities due to extraordinary market
volatility in all securities included
within the S&P 500 Index (‘‘S&P 500’’)
(the ‘‘Pause Pilot’’).3 The other equity
3 The Commission approved the Pause Pilot for
all equities exchanges and FINRA. See Securities
Exchange Act Release No. 62252 (June 10, 2010), 75
FR 34186 (June 16, 2010) (File Nos. SR–BATS–
2010–014; SR–EDGA–2010–01; SR–EDGX–2010–01;
PO 00000
Frm 00075
Fmt 4703
Sfmt 4703
74113
exchanges and FINRA subsequently
received approval to add to the Pause
Pilot the securities included in the
Russell 1000 Index (‘‘Russell 1000’’) and
a specified list of Exchange Traded
Products (‘‘ETPs’’).4 In connection with
its resumption of trading of NMS Stocks
through the NASDAQ OMX PSX
system, PHLX adopted Rule 3100(a)(4)
so that it could participate in the pilot
program.5 On September 29, 2010,
PHLX amended Rule 3100(a)(4) to
include stocks comprising the Russell
1000 and specified ETPs.6
On June 23, 2011, the Commission
approved proposed rule changes of
PHLX and the other equity exchanges
(collectively, the ‘‘Exchanges’’), and
FINRA to amend their respective rules
to expand the Pause Pilot to include all
remaining NMS stocks (‘‘Phase III
Securities’’), which includes rights and
warrants.7 Unlike the original Pause
Pilot securities, the amended Pause
Pilot applies wider percentage price
moves to the Phase III Securities before
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 Securities Exchange Act Release No. 62251
(June 10, 2010), 75 FR 34183 (June 16, 2010) (SR–
FINRA–2010–025).
4 The Commission approved the addition to the
Pause Pilot of the securities included in the Russell
1000 and ETPs, where applicable, for all equities
exchanges and FINRA. See Securities Exchange Act
Release No. 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 Securities Exchange Act Release No. 62883
(September 10, 2010), 75 FR 56608 (September 16,
2010) (SR–FINRA–2010–033).
5 See Securities Exchange Act Release No. 62877
(September 9, 2010), 75 FR 56633 (September 16,
2010) (SR–Phlx–2010–79).
6 Securities Exchange Act Release No. 63004
(September 29, 2010), 75 FR 61547 (October 5,
2010) (SR–Phlx–2010–126). PHLX submitted a
proposed rule change shortly after the addition of
the Russell 1000 securities and ETPs to extend the
operation of the Pause Pilot, which was set to
expire on December 10, 2010, until April 11, 2011.
See Securities Exchange Act Release No. 63504
(December 9, 2010), 75 FR 78304 (December 15,
2010) (SR–Phlx–2010–174). On March 31, 2011,
PHLX submitted a proposed rule change to further
extend the Pause Pilot until 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. See Securities
Exchange Act Release No. 64175 (April 4, 2011), 76
FR 19823 (April 8, 2011) (SR–Phlx–2011–44). On
August 8, 2011, PHLX submitted a proposed rule
change to further extend the Pause Pilot until
January 31, 2012. See Securities Exchange Act
Release No. 65083 (August 10, 2011), 76 FR 50801
(August 16, 2011) (SR–Phlx–2011–113).
7 See Securities Exchange Act Release No. 64735
(June 23, 2011), 76 FR 38243 (June 29, 2011) (SR–
Phlx–2011–64, et al.).
E:\FR\FM\30NON1.SGM
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74114
Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / Notices
a trading pause is triggered.8 The
changes to the Pause Pilot became
effective on August 8, 2011.
The Exchanges and FINRA have
analyzed the nature of trading pauses
triggered since adoption of the Pause
Pilot and found that over 25% of such
pauses have occurred in rights and
warrants. Further, the Exchanges and
FINRA have experienced a significant
increase in trading pauses involving
rights and warrants since the
implementation of the Phase III
Securities, with such pauses
representing approximately 52% [sic]
all trading pauses occurring through the
end of August 2011. Rights and warrants
trade on equity exchanges, but are
closely related to call options. Rights
and warrants entitle owners to purchase
shares of stock at predetermined prices
subject to various timing and other
conditions. Like options, the price of
rights and warrants are affected by the
price of the underlying stock as well as
other factors, particularly the volatility
of the stock. As a consequence, the
prices of rights and warrants may move
more dramatically than the prices of the
underlying stocks even when the rights
and warrants (and the underlying stock)
are trading in an orderly manner. This
difference in trading behavior may
result in rights and warrants triggering
the circuit breaker under the Pause Pilot
and being subject to a trading pause,
even while the underlying stock
continues to trade. This can be
particularly true of rights and warrants
that have low prices. As such, the
Exchanges and FINRA have determined
to exclude rights and warrants from the
Pause Pilot, and accordingly, PHLX is
proposing to amend Rule 3100(a)(4) to
exclude rights and warrants from the
Pause Pilot.
2. Statutory Basis
emcdonald on DSK5VPTVN1PROD with NOTICES
The proposed rule change is
consistent with Section 6(b) of the Act,9
in general, and furthers the objectives of
Section 6(b)(5),10 in particular, in that it
is designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, to foster cooperation and
coordination with persons engaged in
facilitating transactions in securities,
and to remove impediments to and
8 Under the amended Pause Pilot, a pause is
triggered by a 30% or more price move in a Phase
III Security priced at $1 or higher, and by a 50%
or more price move to such a security priced less
than $1. The price of a security is 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.
9 15 U.S.C. 78f(b).
10 15 U.S.C. 78f(b)(5).
VerDate Mar<15>2010
17:30 Nov 29, 2011
Jkt 226001
perfect the mechanism of a free and
open market and a national market
system. The proposed rule change also
is designed to support the principles of
Section 11A(a)(1) 11 of the Act in that it
seeks to ensure fair competition among
brokers and dealers and among
exchange markets. PHLX believes that
the proposed rule meets these
requirements because it excludes certain
securities from the rule’s coverage that
are prone to triggering pauses because of
their unique characteristics. These
securities are unique in that they may
move more dramatically than the prices
of the underlying stocks to which they
are related even when both securities
are trading in an orderly manner. As
such, the securities that are subject to
this proposal may trigger a Pause Pilot
circuit breaker and be subject to a
trading pause, even while the
underlying security continues to trade.
Although there is little benefit in
pausing trading in these securities, such
pauses sequester regulatory resources
that are better applied to the review of
trading pauses in other securities that
have a greater impact on the national
market system.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
PHLX does not believe that the
proposed rule change will result in any
burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act, as amended.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
Written comments were neither
solicited nor received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed
rule change pursuant to Section
19(b)(3)(A)(iii) of the Act 12 and Rule
19b–4(f)(6) thereunder.13 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)
11 15
U.S.C. 78k–1(a)(1).
U.S.C. 78s(b)(3)(A)(iii).
13 17 CFR 240.19b–4(f)(6).
12 15
PO 00000
Frm 00076
Fmt 4703
Sfmt 4703
of the Act 14 and Rule 19b–4(f)(6)(iii)
thereunder.15
A proposed rule change filed under
Rule 19b–4(f)(6)16 normally does not
become operative for 30 days after the
date of filing. However, pursuant to
Rule 19b–4(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 believes that
waiving the 30-day operative delay is
consistent with the protection of
investors and the public interest.
Including rights and warrants in the
pilot program which may trigger a
circuit breaker and be subject to a
trading pause, even while the
underlying security continues to trade,
provides little benefit and has the
potential to create confusion among
investors. Excluding rights and warrants
from the pilot program should minimize
investor confusion that could result
from temporary trading pauses in these
securities. For this reason, the
Commission designates the proposed
rule change as operative upon the date
of this Notice.18
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
14 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6)(iii) requires the Exchange to give the
Commission written notice of the Exchange’s intent
to file the proposed rule change along with a brief
description and text of the proposed rule change,
at least five business days prior to the date of filing
of the proposed rule change, or such shorter time
as designated by the Commission. The Exchange
has satisfied this requirement.
16 17 CFR 240.19b–4(f)(6).
17 17 CFR 240.19b–4(f)(6)(iii).
18 For purposes only of waiving the 30-day
operative delay, the Commission has also
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
15 17
E:\FR\FM\30NON1.SGM
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Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / Notices
SMALL BUSINESS ADMINISTRATION
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rulecomments@sec.gov. Please include File
No. SR–Phlx–2011–158 on the subject
line.
Paper Comments
emcdonald on DSK5VPTVN1PROD with NOTICES
All submissions should refer to File No.
SR–Phlx–2011–158. This file number
should be included on the subject line
if email 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, 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
available publicly. All submissions
should refer to File No. SR–Phlx–2011–
158 and should be submitted on or
before December 21, 2011.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.19
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2011–30808 Filed 11–29–11; 8:45 am]
BILLING CODE 8011–01–P
17:30 Nov 29, 2011
[Disaster Declaration #12932 and #12933]
James E. Rivera,
Associate Administrator for Disaster
Assistance.
Connecticut Disaster # CT–00026
[FR Doc. 2011–30498 Filed 11–29–11; 8:45 am]
U.S. Small Business
Administration.
AGENCY:
ACTION:
BILLING CODE M
Notice.
This is a Notice of the
Presidential declaration of a major
disaster for Public Assistance Only for
the State of Connecticut (FEMA—
4046—DR), dated 11/17/2011.
Incident: Severe storm.
Incident Period: 10/29/2011 through
10/30/2011.
Effective Date: 11/17/2011.
Physical Loan Application Deadline
Date: 01/16/2012.
Economic Injury (EIDL) Loan
Application Deadline Date: 08/17/2012.
Submit completed loan
applications to: U.S. Small Business
Administration, Processing and
Disbursement Center, 14925 Kingsport
Road, Fort Worth, TX 76155.
ADDRESSES:
A
Escobar, Office of Disaster Assistance,
U.S. Small Business Administration,
409 3rd Street, SW., Suite 6050,
Washington, DC 20416.
FOR FURTHER INFORMATION CONTACT:
Notice is
hereby given that as a result of the
President’s major disaster declaration on
11/17/2011, Private Non-Profit
organizations that provide essential
services of governmental nature may file
disaster loan applications at the address
listed above or other locally announced
locations.
The following areas have been
determined to be adversely affected by
the disaster:
Primary Counties: Fairfield, Hartford,
Litchfield, Middlesex, New Haven,
Tolland, Windham.
SUPPLEMENTARY INFORMATION:
The Interest Rates are:
Percent
For Physical Damage:
Non-Profit Organizations With
Credit Available Elsewhere ...
Non-Profit Organizations Without Credit Available Elsewhere .....................................
For Economic Injury:
Non-Profit Organizations Without Credit Available Elsewhere .....................................
3.125.
3.000.
SMALL BUSINESS ADMINISTRATION
[License No. 09/79–0454]
Emergence Capital Partners SBIC,
L.P.; Notice Seeking Exemption Under
Section 312 of the Small Business
Investment Act, Conflicts of Interest
Notice is hereby given that Emergence
Capital Partners SBIC, L.P., 160 Bovet
Road, Suite 300, San Mateo, CA 94402
a Federal Licensee under the Small
Business Investment Act of 1958, as
amended (‘‘the Act’’), in connection
with the financing of a small concern,
has sought an exemption under Section
312 of the Act and Section 107.730,
Financings which Constitute Conflicts
of Interest of the Small Business
Administration (‘‘SBA’’) Rules and
Regulations (13 CFR 107.730).
Emergence Capital Partners SBIC, L.P.
proposes to provide equity security
financing to Bill.com, Inc., 3250 Ash
Street, Palo Alto, CA 94306.
The financing is brought within the
purview of § 107.730(a)(1) of the
Regulations because Emergence Capital
Partners, L.P. and Emergence Capital
Associates, L.P., both Associates of
Emergence Capital Partners SBIC, L.P.,
own in the aggregate more than ten
percent of Bill.com, Inc, and therefore
this transaction is considered a
financing of an Associate requiring prior
SBA approval.
Notice is hereby given that any
interested person may submit written
comments on the transaction, within
fifteen days of the date of this
publication, to the Associate
Administrator for Investment, U.S.
Small Business Administration, 409
Third Street, SW., Washington, DC
20416.
Dated: November 15, 2011.
Sean J. Greene,
Associate Administrator for Investment.
[FR Doc. 2011–30604 Filed 11–29–11; 8:45 am]
3.000.
BILLING CODE M
The number assigned to this disaster
for physical damage is 12932B and for
economic injury is 12933B.
CFR 200.30–3(a)(12).
VerDate Mar<15>2010
(Catalog of Federal Domestic Assistance
Numbers 59002 and 59008)
SUMMARY:
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
100 F Street NE., Washington, DC
20549–1090.
19 17
74115
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]]>Agencies
[Federal Register Volume 76, Number 230 (Wednesday, November 30, 2011)]
[Notices]
[Pages 74113-74115]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-30808]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-65813; File No. SR-Phlx-2011-158]
Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Exclude
All Rights and Warrants From the Pilot Rule for Trading Pauses Due to
Extraordinary Market Volatility
November 23, 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 November 18, 2011, NASDAQ OMX PHLX LLC (``PHLX''), filed with the
Securities and Exchange Commission (``Commission'') the proposed rule
change as described in Items I and II below, which Items have been
prepared by PHLX. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
PHLX proposes to exclude all rights and warrants from the pilot
trading pause process under Rule 3100(a)(4).
The text of the proposed rule change is below. Proposed new
language is italicized.
* * * * *
Rule 3100. Trading Halts on PSX
(a) Authority to Initiate Trading Halts or Pauses
In circumstances in which the Exchange deems it necessary to
protect investors and the public interest, and pursuant to the
procedures set forth in paragraph (c):
(1)-(3) No change.
(4) If a primary listing market issues an individual stock
trading pause in any of the Circuit Breaker Securities, as defined
herein, the Exchange will pause trading in that security until
trading has resumed on the primary listing market. If, however,
trading has not resumed on the primary listing market and ten
minutes have passed since the individual stock trading pause message
has been received from the responsible single plan processor, the
Exchange may resume trading in such stock. The provisions of this
paragraph (a)(4) shall be in effect during a pilot set to end on
January 31, 2012. During the pilot, the term ``Circuit Breaker
Securities'' shall mean any NMS stock except rights and warrants.
(b)-(c) No change.
* * * * *
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, PHLX 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. PHLX has prepared summaries, set forth in Sections A, B,
and C below, of the most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
PHLX proposes to exclude all rights and warrants from the single
stock circuit breaker under Rule 3100(a)(4). On June 10, 2010, the
Commission approved the proposed rules of the other equity exchanges
and FINRA to provide for trading pauses in individual securities due to
extraordinary market volatility in all securities included within the
S&P 500 Index (``S&P 500'') (the ``Pause Pilot'').\3\ The other equity
exchanges and FINRA subsequently received approval to add to the Pause
Pilot the securities included in the Russell 1000 Index (``Russell
1000'') and a specified list of Exchange Traded Products (``ETPs'').\4\
In connection with its resumption of trading of NMS Stocks through the
NASDAQ OMX PSX system, PHLX adopted Rule 3100(a)(4) so that it could
participate in the pilot program.\5\ On September 29, 2010, PHLX
amended Rule 3100(a)(4) to include stocks comprising the Russell 1000
and specified ETPs.\6\
---------------------------------------------------------------------------
\3\ The Commission approved the Pause Pilot for all equities
exchanges and FINRA. See Securities Exchange Act Release No. 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 Securities Exchange Act Release No. 62251 (June 10,
2010), 75 FR 34183 (June 16, 2010) (SR-FINRA-2010-025).
\4\ The Commission approved the addition to the Pause Pilot of
the securities included in the Russell 1000 and ETPs, where
applicable, for all equities exchanges and FINRA. See Securities
Exchange Act Release No. 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 Securities
Exchange Act Release No. 62883 (September 10, 2010), 75 FR 56608
(September 16, 2010) (SR-FINRA-2010-033).
\5\ See Securities Exchange Act Release No. 62877 (September 9,
2010), 75 FR 56633 (September 16, 2010) (SR-Phlx-2010-79).
\6\ Securities Exchange Act Release No. 63004 (September 29,
2010), 75 FR 61547 (October 5, 2010) (SR-Phlx-2010-126). PHLX
submitted a proposed rule change shortly after the addition of the
Russell 1000 securities and ETPs to extend the operation of the
Pause Pilot, which was set to expire on December 10, 2010, until
April 11, 2011. See Securities Exchange Act Release No. 63504
(December 9, 2010), 75 FR 78304 (December 15, 2010) (SR-Phlx-2010-
174). On March 31, 2011, PHLX submitted a proposed rule change to
further extend the Pause Pilot until 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. See Securities
Exchange Act Release No. 64175 (April 4, 2011), 76 FR 19823 (April
8, 2011) (SR-Phlx-2011-44). On August 8, 2011, PHLX submitted a
proposed rule change to further extend the Pause Pilot until January
31, 2012. See Securities Exchange Act Release No. 65083 (August 10,
2011), 76 FR 50801 (August 16, 2011) (SR-Phlx-2011-113).
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On June 23, 2011, the Commission approved proposed rule changes of
PHLX and the other equity exchanges (collectively, the ``Exchanges''),
and FINRA to amend their respective rules to expand the Pause Pilot to
include all remaining NMS stocks (``Phase III Securities''), which
includes rights and warrants.\7\ Unlike the original Pause Pilot
securities, the amended Pause Pilot applies wider percentage price
moves to the Phase III Securities before
[[Page 74114]]
a trading pause is triggered.\8\ The changes to the Pause Pilot became
effective on August 8, 2011.
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\7\ See Securities Exchange Act Release No. 64735 (June 23,
2011), 76 FR 38243 (June 29, 2011) (SR-Phlx-2011-64, et al.).
\8\ Under the amended Pause Pilot, a pause is triggered by a 30%
or more price move in a Phase III Security priced at $1 or higher,
and by a 50% or more price move to such a security priced less than
$1. The price of a security is 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.
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The Exchanges and FINRA have analyzed the nature of trading pauses
triggered since adoption of the Pause Pilot and found that over 25% of
such pauses have occurred in rights and warrants. Further, the
Exchanges and FINRA have experienced a significant increase in trading
pauses involving rights and warrants since the implementation of the
Phase III Securities, with such pauses representing approximately 52%
[sic] all trading pauses occurring through the end of August 2011.
Rights and warrants trade on equity exchanges, but are closely related
to call options. Rights and warrants entitle owners to purchase shares
of stock at predetermined prices subject to various timing and other
conditions. Like options, the price of rights and warrants are affected
by the price of the underlying stock as well as other factors,
particularly the volatility of the stock. As a consequence, the prices
of rights and warrants may move more dramatically than the prices of
the underlying stocks even when the rights and warrants (and the
underlying stock) are trading in an orderly manner. This difference in
trading behavior may result in rights and warrants triggering the
circuit breaker under the Pause Pilot and being subject to a trading
pause, even while the underlying stock continues to trade. This can be
particularly true of rights and warrants that have low prices. As such,
the Exchanges and FINRA have determined to exclude rights and warrants
from the Pause Pilot, and accordingly, PHLX is proposing to amend Rule
3100(a)(4) to exclude rights and warrants from the Pause Pilot.
2. Statutory Basis
The proposed rule change is consistent with Section 6(b) of the
Act,\9\ in general, and furthers the objectives of Section 6(b)(5),\10\
in particular, in that it is designed to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade, to foster cooperation and coordination with
persons engaged in facilitating transactions in securities, and to
remove impediments to and perfect the mechanism of a free and open
market and a national market system. The proposed rule change also is
designed to support the principles of Section 11A(a)(1) \11\ of the Act
in that it seeks to ensure fair competition among brokers and dealers
and among exchange markets. PHLX believes that the proposed rule meets
these requirements because it excludes certain securities from the
rule's coverage that are prone to triggering pauses because of their
unique characteristics. These securities are unique in that they may
move more dramatically than the prices of the underlying stocks to
which they are related even when both securities are trading in an
orderly manner. As such, the securities that are subject to this
proposal may trigger a Pause Pilot circuit breaker and be subject to a
trading pause, even while the underlying security continues to trade.
Although there is little benefit in pausing trading in these
securities, such pauses sequester regulatory resources that are better
applied to the review of trading pauses in other securities that have a
greater impact on the national market system.
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\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(5).
\11\ 15 U.S.C. 78k-1(a)(1).
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B. Self-Regulatory Organization's Statement on Burden on Competition
PHLX does not believe that the proposed rule change will result in
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act, as amended.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \12\ and Rule 19b-4(f)(6) thereunder.\13\
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 \14\ and Rule 19b-
4(f)(6)(iii) thereunder.\15\
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\12\ 15 U.S.C. 78s(b)(3)(A)(iii).
\13\ 17 CFR 240.19b-4(f)(6).
\14\ 15 U.S.C. 78s(b)(3)(A).
\15\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires the Exchange to give the Commission written notice of the
Exchange's intent to file the proposed rule change along with a
brief description and text of the proposed rule change, at least
five business days prior to the date of filing of the proposed rule
change, or such shorter time as designated by the Commission. The
Exchange has satisfied this requirement.
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A proposed rule change filed under Rule 19b-4(f)(6)\16\ normally
does not become operative for 30 days after the date of filing.
However, pursuant to Rule 19b-4(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 believes that waiving the 30-day operative delay is
consistent with the protection of investors and the public interest.
Including rights and warrants in the pilot program which may trigger a
circuit breaker and be subject to a trading pause, even while the
underlying security continues to trade, provides little benefit and has
the potential to create confusion among investors. Excluding rights and
warrants from the pilot program should minimize investor confusion that
could result from temporary trading pauses in these securities. For
this reason, the Commission designates the proposed rule change as
operative upon the date of this Notice.\18\
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\18\ For purposes only of waiving the 30-day operative delay,
the Commission has also 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 the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
[[Page 74115]]
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File No. SR-Phlx-2011-158 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 No. SR-Phlx-2011-158. This file
number should be included on the subject line if email 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, 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 available publicly. All
submissions should refer to File No. SR-Phlx-2011-158 and should be
submitted on or before December 21, 2011.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
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\19\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2011-30808 Filed 11-29-11; 8:45 am]
BILLING CODE 8011-01-P
