Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Extend the Pilot Period of the Trading Pause for NMS Stocks Other Than Rights and Warrants, 46546-46548 [2012-18971]
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46546
Federal Register / Vol. 77, No. 150 / Friday, August 3, 2012 / Notices
NASDAQ–2012–087 and should be
submitted by August 24, 2012.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.22
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2012–18998 Filed 8–2–12; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–67537; File No. SR–Phlx–
2012–99]
Self-Regulatory Organizations;
NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Extend the
Pilot Period of the Trading Pause for
NMS Stocks Other Than Rights and
Warrants
July 30, 2012.
TKELLEY on DSK3SPTVN1PROD with NOTICES
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on July 19,
2012, NASDAQ OMX PHLX LLC
(‘‘Exchange’’) 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 the self-regulatory 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 extend the
pilot period of the trading pause for
individual NMS stocks other than rights
and warrants, so that the pilot will now
expire on February 4, 2013.
The text of the proposed rule change
is below. Proposed new language is in
italics; proposed deletions are in
brackets.
*
*
*
*
*
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
CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
17:33 Aug 02, 2012
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of, and basis for,
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
self-regulatory organization has
prepared summaries, set forth in
Sections A, B and C below, of the most
significant aspects of such statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
On June 10, 2010, the Commission
granted accelerated approval for a pilot
period to end December 10, 2010, of
proposed rule changes submitted by the
BATS Exchange, Inc., NASDAQ OMX
BX, Inc., Chicago Board Options
Exchange, Incorporated, Chicago Stock
Exchange, Inc., EDGA Exchange, Inc.,
EDGX Exchange, Inc., International
Securities Exchange LLC, The NASDAQ
Stock Market LLC (‘‘NASDAQ’’), New
York Stock Exchange LLC (‘‘NYSE’’),
NYSE MKT LLC (‘‘NYSE MKT’’)
(formerly, NYSE Amex LLC), NYSE
Arca, Inc. (‘‘NYSE Arca’’), and National
Stock Exchange, Inc. (collectively, the
‘‘Exchanges’’), to pause trading during
periods of extraordinary market
volatility in S&P 500 stocks.3 The rules
require the Listing Markets 4 to issue
five-minute trading pauses for
individual securities for which they are
the primary Listing Market if the
3 Securities Exchange Act Release No. 62252
(June 10, 2010), 75 FR 34186 (June 16, 2010).
4 The term ‘‘Listing Markets’’ refers collectively to
NYSE, NYSE MKT, NYSE Arca, and the Exchange.
22 17
VerDate Mar<15>2010
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
February 4, 2013[July 31, 2012]. During
the pilot, the term ‘‘Circuit Breaker
Securities’’ shall mean any NMS stock
except rights and warrants.
(b)—(c) No change.
*
*
*
*
*
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transaction price of the security moves
ten percent or more from a price in the
preceding five-minute period. The
Listing Markets are required to notify
the other Exchanges and market
participants of the imposition of a
trading pause by immediately
disseminating a special indicator over
the consolidated tape. Under the rules,
once the Listing Market issues a trading
pause, the other Exchanges are required
to pause trading in the security on their
markets. On September 10, 2010, the
Commission approved the respective
rule filings of the Exchanges to expand
application of the pilot to securities
comprising the Russell 1000® Index and
specified Exchange Traded Products.5
In connection with its resumption of
trading of NMS Stocks through the
NASDAQ OMX PSX system, the
Exchange adopted Rule 3100(a)(4) so
that it could participate in the pilot
program.6 On September 29, 2010, the
Exchange amended Rule 3100(a)(4) to
include stocks comprising the Russell
1000® Index and specified Exchange
Traded Products.7 On December 7,
2010, the Exchange filed an
immediately effective filing to extend
the existing pilot program for four
months, so that the pilot would expire
on April 11, 2011.8 On March 31, 2011,
the Exchange filed an immediately
effective filing to extend the pilot period
an additional four months, so that the
pilot would expire on August 11, 2011
or the date on which a limit up/limit
down mechanism to address
extraordinary market volatility, if
adopted, applies.9 On June 23, 2011, the
Commission approved the expansion of
the pilot to all NMS stocks, but with
different pause-triggering thresholds.10
On August 8, 2011, the Exchange filed
an immediately effective filing that
removed language from the rule that
tied the expiration of the pilot to the
adoption of a limit up/limit down
mechanism to address extraordinary
market volatility, and further extended
the pilot period, so that the pilot would
5 Securities Exchange Act Release No. 62884
(September 10, 2010), 75 FR 56618 (September 16,
2010).
6 Securities Exchange Act Release No. 62877
(September 9, 2010), 75 FR 56633 (September 16,
2010) (SR–Phlx–2010–79).
7 Securities Exchange Act Release No. 63004
(September 29, 2010), 75 FR 61547 (October 5,
2010) (SR–Phlx–2010–126).
8 Securities Exchange Act Release No. 63504
(December 9, 2010), 75 FR 78304 (December 15,
2010) (SR–Phlx–2010–174).
9 Securities Exchange Act Release No. 64175
(April 4, 2011), 76 FR 19823 (April 8, 2011) (SR–
Phlx–2011–044).
10 Securities Exchange Act Release No. 64735
(June 23, 2011), 76 FR 38243 (June 29, 2011) (SR–
Phlx–2011–064, et al.).
E:\FR\FM\03AUN1.SGM
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Federal Register / Vol. 77, No. 150 / Friday, August 3, 2012 / Notices
expire on January 31, 2012.11 On
November 18, 2011, the Exchange filed
an immediately effective filing that
excluded rights and warrants from the
pilot.12 On January 23, 2012, the
Commission approved an extension of
the pilot to July 31, 2012.13
On May 31, 2012, the Commission
approved, on a pilot basis, the National
Market System Plan to Address
Extraordinary Market Volatility.14 This
plan creates a market-wide limit uplimit down mechanism that is intended
to address extraordinary market
volatility in NMS Stocks, which will be
implemented on February 4, 2013. Once
implemented, the limit up/limit down
mechanism to address extraordinary
market volatility will render the current
stock trading pause pilot duplicative
and unnecessary. Accordingly, the
Exchange is proposing to extend the
single stock trading pause pilot so that
it will now expire on February 4, 2013,
when the limit up/limit down
mechanism to address extraordinary
market volatility is to be implemented.
The Exchange believes that the pilot
program has been successful in reducing
the negative impacts of sudden,
unanticipated price movements in the
securities covered by the pilot. The
Exchange also believes that an
additional extension of the pilot is
warranted so that it may continue to
apply the circuit breaker to reduce the
negative impacts of sudden,
unanticipated price movements until it
is replaced by the limit up/limit down
mechanism.
TKELLEY on DSK3SPTVN1PROD with NOTICES
2. Statutory Basis
The statutory basis for the proposed
rule change is Section 6(b)(5) of the
Act,15 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) 16 of the
Act in that it seeks to assure fair
competition among brokers and dealers
and among exchange markets. The
11 Securities Exchange Act Release No. 65083
(August 10, 2011), 76 FR 50801 (August 16, 2011)
(SR–Phlx–2011–113).
12 Securities Exchange Act Release No. 65813
(November 23, 2011), 76 FR 74113 (November 30,
2011) (SR–Phlx–2011–158).
13 Securities Exchange Act Release No. 66216
(January 23, 2012), 77 FR 4385 (January 27, 2012)
(SR–Phlx–2012–07).
14 Securities Exchange Act Release No. 67091
(May 31, 2012), 77 FR 33498 (June 6, 2012).
15 15 U.S.C. 78f(b)(5).
16 15 U.S.C. 78k–1(a)(1).
VerDate Mar<15>2010
17:33 Aug 02, 2012
Jkt 226001
Exchange believes that the proposed
rule meets these requirements in that it
promotes transparency and uniformity
across markets concerning decisions to
pause trading in a security when there
are significant price movements. In
addition, the Exchange believes
extending the pilot to February 4, 2013
is consistent with the requirement to
protect investors because it will permit
the circuit breaker to continue to reduce
the negative impacts of sudden,
unanticipated price movements until it
is replaced by the preferred limit up/
limit down mechanism.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange 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 17 and Rule
19b–4(f)(6) thereunder.18 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 19 and Rule 19b–4(f)(6)(iii)
thereunder.20
A proposed rule change filed under
Rule 19b–4(f)(6) 21 normally does not
become operative for 30 days after the
date of filing. However, pursuant to
17 15
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6).
19 15 U.S.C. 78s(b)(3)(A).
20 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.
21 17 CFR 240.19b–4(f)(6).
18 17
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46547
Rule 19b–4(f)(6)(iii) 22 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, as it
will allow the pilot program to continue
uninterrupted, thereby avoiding the
investor confusion that could result
from a temporary interruption in the
pilot program. For this reason, the
Commission designates the proposed
rule change to be operative upon
filing.23
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:
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–2012–99 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–Phlx–2012–99. 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 Commissions
Internet Web site (https://www.sec.gov/
22 17
CFR 240.19b–4(f)(6)(iii).
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).
23 For
E:\FR\FM\03AUN1.SGM
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46548
Federal Register / Vol. 77, No. 150 / Friday, August 3, 2012 / Notices
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. 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 Number SR–Phlx–
2012–99 and should be submitted by
August 24, 2012.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to extend the
pilot period of amendments to Rule
3312, concerning clearly erroneous
transactions, so that the pilot will now
expire on February 4, 2013.
The text of the proposed rule change
is below. Proposed new language is in
italics; proposed deletions are in
brackets.
*
*
*
*
*
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.24
Kevin M. O’Neill,
Deputy Secretary.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of, and basis for,
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
self-regulatory organization has
prepared summaries, set forth in
Sections A, B and C below, of the most
significant aspects of such statements.
[FR Doc. 2012–18971 Filed 8–2–12; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–67538; File No. SR–Phlx–
2012–100]
Self-Regulatory Organizations;
NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Extend the
Pilot Period of Amendments to the
Clearly Erroneous Rule
TKELLEY on DSK3SPTVN1PROD with NOTICES
July 30, 2012.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on July 24,
2012, NASDAQ OMX PHLX LLC
(‘‘Exchange’’) 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 the self-regulatory organization. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
24 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
VerDate Mar<15>2010
17:33 Aug 02, 2012
Jkt 226001
Rule 3312. Clearly Erroneous
Transactions
The provisions of paragraphs (a)(2)(C),
(b), and (c)(1) of this Rule, as amended
by SR–Phlx–2010–125, shall be in effect
during a pilot period set to end on
February 4, 2013 [July 31, 2012]. If the
pilot is not either extended or approved
permanent by February 4, 2013 [July 31,
2012], the prior versions of paragraphs
(a)(2)(C), (b), and (c)(1) shall be in effect.
(a)–(f) No change.
*
*
*
*
*
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
On September 10, 2010, the
Commission approved, for a pilot period
to end December 10, 2010, a proposed
rule change submitted by the BATS
Exchange, Inc., NASDAQ OMX BX, Inc.,
Chicago Board Options Exchange,
Incorporated, Chicago Stock Exchange,
Inc., EDGA Exchange, Inc., EDGX
Exchange, Inc., International Securities
Exchange LLC, The NASDAQ Stock
Market LLC, New York Stock Exchange
LLC, NYSE MKT LLC (formerly, NYSE
Amex LLC), NYSE Arca, Inc., and
National Stock Exchange, Inc.
(collectively, the ‘‘Exchanges’’), to
amend certain of their respective rules
to set forth clearer standards and curtail
discretion with respect to breaking
PO 00000
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Fmt 4703
Sfmt 4703
erroneous trades.3 The changes were
adopted to address concerns that the
lack of clear guidelines for dealing with
clearly erroneous transactions may have
added to the confusion and uncertainty
faced by investors on May 6, 2010. In
connection with its resumption of
trading of NMS Stocks through PSX, the
Exchange amended Rule 3312 to
conform it to the newly-adopted
changes to the Exchanges’ clearly
erroneous rules, so that it could
participate in the pilot program.4 On
December 7, 2010, the Exchange filed an
immediately effective filing to extend
the existing pilot program for four
months, so that the pilot would expire
on April 11, 2011.5 On March 31, 2011,
the Exchange filed an immediately
effective filing to extend the existing
pilot program for four months, so that
the pilot would expire on 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.6 On August 5, 2011,
the Exchange filed an immediately
effective filing removed language from
the rule that tied the expiration of the
pilot to the adoption of a limit up/limit
down mechanism to address
extraordinary market volatility, and
further extended the pilot period, so
that the pilot would expire on January
31, 2012.7 On August 8, 2011, the
Exchange filed an immediately effective
filing to amend Rule 3312 so that it
would continue to operate in the same
manner after changes to the single stock
trading pause process became effective.8
On January 12, 2012, the Exchange filed
an immediately effective filing that
extended the pilot to July 31, 2012.9
On May 31, 2012, the Commission
approved, on a pilot basis, the National
Market System Plan to Address
Extraordinary Market Volatility.10 This
plan creates a market-wide limit up3 Securities Exchange Act Release No. 62886
(September 10, 2010), 75 FR 56613 (September 16,
2010).
4 Securities Exchange Act Release No. 63023
(September 30, 2010), 75 FR 61802 (October 6,
2010) (SR–Phlx–2010–125).
5 Securities Exchange Act Release No. 63491
(December 9, 2010), 75 FR 78297 (December 15,
2010) (SR–Phlx–2010–173).
6 Securities Exchange Act Release No. 64239
(April 7, 2011), 76 FR 20789 (April 13, 2011) (SR–
Phlx–2011–45).
7 Securities Exchange Act Release No. 65058
(August 9, 2011), 76 FR 50519 (August 15, 2011)
(SR–Phlx–2011–110).
8 Securities Exchange Act Release No. 65106
(August 11, 2011), 76 FR 51079 (August 17, 2011)
(SR–Phlx–2011–114).
9 Securities Exchange Act Release No. 66224
(January 24, 2012), 77 FR 4612 (January 30, 2012)
(SR–Phlx–2012–08).
10 Securities Exchange Act Release No. 67091
(May 31, 2012), 77 FR 33498 (June 6, 2012).
E:\FR\FM\03AUN1.SGM
03AUN1
]]>Agencies
[Federal Register Volume 77, Number 150 (Friday, August 3, 2012)]
[Notices]
[Pages 46546-46548]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-18971]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-67537; File No. SR-Phlx-2012-99]
Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Extend
the Pilot Period of the Trading Pause for NMS Stocks Other Than Rights
and Warrants
July 30, 2012.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on July 19, 2012, NASDAQ OMX PHLX LLC (``Exchange'') 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 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\ 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 extend the pilot period of the trading
pause for individual NMS stocks other than rights and warrants, so that
the pilot will now expire on February 4, 2013.
The text of the proposed rule change is below. Proposed new
language is in italics; proposed deletions are in brackets.
* * * * *
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 February 4, 2013[July 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, the Exchange included statements
concerning the purpose of, and basis for, the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The self-regulatory organization has prepared summaries,
set forth in Sections A, B and C below, of the most significant aspects
of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
On June 10, 2010, the Commission granted accelerated approval for a
pilot period to end December 10, 2010, of proposed rule changes
submitted by the BATS Exchange, Inc., NASDAQ OMX BX, Inc., Chicago
Board Options Exchange, Incorporated, Chicago Stock Exchange, Inc.,
EDGA Exchange, Inc., EDGX Exchange, Inc., International Securities
Exchange LLC, The NASDAQ Stock Market LLC (``NASDAQ''), New York Stock
Exchange LLC (``NYSE''), NYSE MKT LLC (``NYSE MKT'') (formerly, NYSE
Amex LLC), NYSE Arca, Inc. (``NYSE Arca''), and National Stock
Exchange, Inc. (collectively, the ``Exchanges''), to pause trading
during periods of extraordinary market volatility in S&P 500 stocks.\3\
The rules require the Listing Markets \4\ to issue five-minute trading
pauses for individual securities for which they are the primary Listing
Market if the transaction price of the security moves ten percent or
more from a price in the preceding five-minute period. The Listing
Markets are required to notify the other Exchanges and market
participants of the imposition of a trading pause by immediately
disseminating a special indicator over the consolidated tape. Under the
rules, once the Listing Market issues a trading pause, the other
Exchanges are required to pause trading in the security on their
markets. On September 10, 2010, the Commission approved the respective
rule filings of the Exchanges to expand application of the pilot to
securities comprising the Russell 1000[supreg] Index and specified
Exchange Traded Products.\5\
---------------------------------------------------------------------------
\3\ Securities Exchange Act Release No. 62252 (June 10, 2010),
75 FR 34186 (June 16, 2010).
\4\ The term ``Listing Markets'' refers collectively to NYSE,
NYSE MKT, NYSE Arca, and the Exchange.
\5\ Securities Exchange Act Release No. 62884 (September 10,
2010), 75 FR 56618 (September 16, 2010).
---------------------------------------------------------------------------
In connection with its resumption of trading of NMS Stocks through
the NASDAQ OMX PSX system, the Exchange adopted Rule 3100(a)(4) so that
it could participate in the pilot program.\6\ On September 29, 2010,
the Exchange amended Rule 3100(a)(4) to include stocks comprising the
Russell 1000[supreg] Index and specified Exchange Traded Products.\7\
On December 7, 2010, the Exchange filed an immediately effective filing
to extend the existing pilot program for four months, so that the pilot
would expire on April 11, 2011.\8\ On March 31, 2011, the Exchange
filed an immediately effective filing to extend the pilot period an
additional four months, so that the pilot would expire on August 11,
2011 or the date on which a limit up/limit down mechanism to address
extraordinary market volatility, if adopted, applies.\9\ On June 23,
2011, the Commission approved the expansion of the pilot to all NMS
stocks, but with different pause-triggering thresholds.\10\ On August
8, 2011, the Exchange filed an immediately effective filing that
removed language from the rule that tied the expiration of the pilot to
the adoption of a limit up/limit down mechanism to address
extraordinary market volatility, and further extended the pilot period,
so that the pilot would
[[Page 46547]]
expire on January 31, 2012.\11\ On November 18, 2011, the Exchange
filed an immediately effective filing that excluded rights and warrants
from the pilot.\12\ On January 23, 2012, the Commission approved an
extension of the pilot to July 31, 2012.\13\
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\6\ Securities Exchange Act Release No. 62877 (September 9,
2010), 75 FR 56633 (September 16, 2010) (SR-Phlx-2010-79).
\7\ Securities Exchange Act Release No. 63004 (September 29,
2010), 75 FR 61547 (October 5, 2010) (SR-Phlx-2010-126).
\8\ Securities Exchange Act Release No. 63504 (December 9,
2010), 75 FR 78304 (December 15, 2010) (SR-Phlx-2010-174).
\9\ Securities Exchange Act Release No. 64175 (April 4, 2011),
76 FR 19823 (April 8, 2011) (SR-Phlx-2011-044).
\10\ Securities Exchange Act Release No. 64735 (June 23, 2011),
76 FR 38243 (June 29, 2011) (SR-Phlx-2011-064, et al.).
\11\ Securities Exchange Act Release No. 65083 (August 10,
2011), 76 FR 50801 (August 16, 2011) (SR-Phlx-2011-113).
\12\ Securities Exchange Act Release No. 65813 (November 23,
2011), 76 FR 74113 (November 30, 2011) (SR-Phlx-2011-158).
\13\ Securities Exchange Act Release No. 66216 (January 23,
2012), 77 FR 4385 (January 27, 2012) (SR-Phlx-2012-07).
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On May 31, 2012, the Commission approved, on a pilot basis, the
National Market System Plan to Address Extraordinary Market
Volatility.\14\ This plan creates a market-wide limit up-limit down
mechanism that is intended to address extraordinary market volatility
in NMS Stocks, which will be implemented on February 4, 2013. Once
implemented, the limit up/limit down mechanism to address extraordinary
market volatility will render the current stock trading pause pilot
duplicative and unnecessary. Accordingly, the Exchange is proposing to
extend the single stock trading pause pilot so that it will now expire
on February 4, 2013, when the limit up/limit down mechanism to address
extraordinary market volatility is to be implemented.
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\14\ Securities Exchange Act Release No. 67091 (May 31, 2012),
77 FR 33498 (June 6, 2012).
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The Exchange believes that the pilot program has been successful in
reducing the negative impacts of sudden, unanticipated price movements
in the securities covered by the pilot. The Exchange also believes that
an additional extension of the pilot is warranted so that it may
continue to apply the circuit breaker to reduce the negative impacts of
sudden, unanticipated price movements until it is replaced by the limit
up/limit down mechanism.
2. Statutory Basis
The statutory basis for the proposed rule change is Section 6(b)(5)
of the Act,\15\ 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) \16\ 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 in
that it promotes transparency and uniformity across markets concerning
decisions to pause trading in a security when there are significant
price movements. In addition, the Exchange believes extending the pilot
to February 4, 2013 is consistent with the requirement to protect
investors because it will permit the circuit breaker to continue to
reduce the negative impacts of sudden, unanticipated price movements
until it is replaced by the preferred limit up/limit down mechanism.
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\15\ 15 U.S.C. 78f(b)(5).
\16\ 15 U.S.C. 78k-1(a)(1).
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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
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 \17\ and Rule 19b-4(f)(6) thereunder.\18\
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 \19\ and Rule 19b-
4(f)(6)(iii) thereunder.\20\
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\17\ 15 U.S.C. 78s(b)(3)(A)(iii).
\18\ 17 CFR 240.19b-4(f)(6).
\19\ 15 U.S.C. 78s(b)(3)(A).
\20\ 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) \21\ normally
does not become operative for 30 days after the date of filing.
However, pursuant to Rule 19b-4(f)(6)(iii) \22\ 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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\21\ 17 CFR 240.19b-4(f)(6).
\22\ 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, as
it will allow the pilot program to continue uninterrupted, thereby
avoiding the investor confusion that could result from a temporary
interruption in the pilot program. For this reason, the Commission
designates the proposed rule change to be operative upon filing.\23\
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\23\ 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:
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-2012-99 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-Phlx-2012-99. 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 Commissions Internet Web site (https://www.sec.gov/
[[Page 46548]]
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. 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 Number SR-Phlx-2012-99 and should be submitted by August 24, 2012.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\24\
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\24\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-18971 Filed 8-2-12; 8:45 am]
BILLING CODE 8011-01-P
