Self-Regulatory Organizations; C2 Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Delay the Operative Date of a Rule Change to Exchange Rule 6.32.03, 8213-8216 [2013-02484]

Download as PDF Federal Register / Vol. 78, No. 24 / Tuesday, February 5, 2013 / Notices 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 that is not necessary or appropriate in furtherance of the purposes of the Act. The proposed changes are being made to delay the operation of the market-wide circuit breakers pilot until April 8, 2013 to allow the pilot period to begin and end at the same time as the LULD Plan, which contributes to the protection of investors and the public interest. Other competing equity exchanges are subject to the same methodology for determining when to halt trading in all stocks due to extraordinary market volatility and the same requirements specified in the LULD Plan. Thus, the proposed changes will not impose any burden on competition while providing that the market-wide circuit breakers pilot period corresponds to the pilot period for the LULD Plan so that the impact of the two proposals can be reviewed together. 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 proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change does not significantly affect the protection of investors or the public interest, does not impose any significant burden on competition, and, by its terms, does not become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) of the Act 12 and Rule 19b– 4(f)(6) thereunder.13 The Exchange has requested that the Commission waive the 30-day operative delay. The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest. Doing so will delay the operative date of the market-wide circuit breakers pilot until tkelley on DSK3SPTVN1PROD with NOTICES 12 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 Commission has waived this requirement. 13 17 VerDate Mar<15>2010 17:18 Feb 04, 2013 Jkt 229001 the initial date of operations of the LULD Plan, thereby allowing the pilot to run simultaneously with the LULD Plan, providing an opportunity to properly assess the impact of the two pilots on the marketplace and evaluate the pilots’ effectiveness. Therefore, the Commission designates the proposal operative upon filing.14 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. If the Commission takes such action, the Commission shall institute proceedings under Section 19(b)(2)(B) 15 of the Act to determine whether the proposed rule change should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rulecomments@sec.gov. Please include File Number SR–CBOE–2013–011 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–2013–011. 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 14 For purposes only of waiving the 30-day operative delay, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 15 15 U.S.C. 78s(b)(2)(B). PO 00000 Frm 00113 Fmt 4703 Sfmt 4703 8213 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 10:00 a.m. and 3:00 p.m. Copies of the 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–CBOE– 2013–011 and should be submitted on or before February 26, 2013. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.16 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2013–02485 Filed 2–4–13; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–68769; File No. SR–C2– 2013–006] Self-Regulatory Organizations; C2 Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Delay the Operative Date of a Rule Change to Exchange Rule 6.32.03 January 30, 2013. 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 January 28, 2013, C2 Options Exchange, Incorporated (the ‘‘Exchange’’ or ‘‘C2’’) 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 Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 16 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 1 15 E:\FR\FM\05FEN1.SGM 05FEN1 8214 Federal Register / Vol. 78, No. 24 / Tuesday, February 5, 2013 / Notices I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to delay the operative date of a rule change to Exchange Rule 6.32.03, which provides for methodology for determining when to halt trading in all stocks due to extraordinary market volatility, from the date of February 4, 2013, until April 8, 2013. The text of the proposed rule change is available on the Exchange’s Web site (https://www.c2exchange.com/Legal/), at the Exchange’s Office of the Secretary, and at the Commission [sic]. 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 aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change tkelley on DSK3SPTVN1PROD with NOTICES The Exchange proposes to amend Rule 6.32.03, which provides the methodology for determining when to halt trading in all stocks due to extraordinary market volatility,3 to delay the operative date of the pilot by which such Rule operates from the current scheduled date of February 4, 2013, until April 8, 2013, to coincide with the initial date of operations of the Regulation NMS Plan to Address Extraordinary Market Volatility (‘‘LULD Plan’’).4 As proposed, the pilot period 3 Exchange Rule 6.32.03 does not currently contain any reference to the specific levels of decline in the DJIA that would trigger a marketwide trading halt. Instead, the rule provides that a market-wide halt will be triggered on the Exchange whenever a market-wide halt is in effect on the New York Stock Exchange (‘‘NYSE’’). 4 The Exchange adopted the proposed changes to the market-wide circuit breakers on a pilot basis for a period that corresponds to the pilot period for the LULD Plan so that the impact of the two proposals can be reviewed together. See Securities Exchange Act Release No. 67090 (May 31, 2012), 77 FR 33531 (June 6, 2012) (SR–C2–2011–024). The Exchange anticipates that the initial date of LULD Plan operations will be changed to April 8, 2013. The proposal would delay the operative date of the market-wide circuit breakers pilot to April 8, 2013 17:18 Feb 04, 2013 Jkt 229001 Current Rule 6.32.03 In its current form,5 the rule provides for Level 1, 2, and 3 declines and specified trading halts following such declines. The values of Levels 1, 2 and 3 [sic] are calculated at the beginning of each calendar quarter, using 10%, 20% and 30%, respectively, of the average closing value of the DJIA for the month prior to the beginning of the quarter. Each percentage calculation is rounded to the nearest fifty points to create the Levels’ trigger points. The NYSE disseminates the new trigger levels quarterly to the media and via an Information Memo and is available on NYSE’s Web site.6 The values then remain in effect until the next quarterly calculation, notwithstanding whether the DJIA has moved and a Level 1, 2, or 3 decline is no longer equal to an actual 10%, 20%, or 30% decline in the most recent closing value of the DJIA. Once a circuit breaker is in effect, trading in all stocks halt for the time periods specified below: Level 1 Halt 1. Purpose VerDate Mar<15>2010 will begin and end at the same time [sic] the pilot period for the LULD Plan. The current Rule 6.32.03 would remain in effect until April 8, 2013. If the pilot is not either extended or approved permanently at the end of the pilot period, the current version of Rule 6.32.03 would be in effect. anytime before 2:00 p.m.—one hour; at or after 2:00 p.m. but before 2:30 p.m.—30 minutes; at or after 2:30 p.m.—trading shall continue, unless there is a Level 2 Halt. Level 2 Halt anytime before 1:00 p.m.—two hours; at or after 1:00 p.m. but before 2:00 p.m.—one hour; at or after 2:00 p.m.—trading shall halt and not resume for the rest of the day. Level 3 Halt at any time—trading shall halt and not resume for the rest of the day. Unless stocks are halted for the remainder of the trading day, price in order for the implementation date for the marketwide circuit breakers pilot would [sic] remain the same date as for the LULD Plan. 5 The rule was last amended in 1998, when declines based on specified point drops in the DJIA were replaced with the current methodology of using a percentage decline that is recalculated quarterly. See Securities Exchange Act Release No. 39846 (April 9, 1998), 63 FR 18477 (April 15, 1998) (SR–NYSE–98–06, SR-Amex-98–09, SR–BSE–98– 06, SR–CHX–98–08, SR–NASD–98–27, and SRPhlx–98–15). 6 See e.g., NYSE Regulation Information Memos 11–19 (June 30, 2011) and 11–10 (March 31, 2011). PO 00000 Frm 00114 Fmt 4703 Sfmt 4703 indications are disseminated during a trading halt for stocks that comprise the DJIA. Amended Rule 6.32.03 The Exchange amended Rule 6.32.03 to revise the current methodology for determining when to halt trading in all stocks due to extraordinary market volatility (‘‘market-wide circuit breakers’’).7 The Exchange, other equities, options, and futures markets, and FINRA amended the market-wide circuit breakers to take into consideration the recommendations of the Joint CFTC–SEC Advisory Committee on Emerging Regulatory Issues, and to provide for more meaningful measures in today’s markets of when to halt trading in all stocks. Accordingly, the Exchange amended Rule 6.32.03 as follows: (i) Replaced the DJIA with the S&P 500; (ii) replaced the quarterly calendar recalculation of Rule 6.32.03 triggers with daily recalculations; (iii) replaced the 10%, 20%, and 30% market decline percentages with 7%, 13%, and 20% market decline percentages; (iv) modified the length of the trading halts associated with each market decline level; and (v) modified the times when a trading halt may be triggered. The Exchange believes that these amendments update the rule to reflect today’s high-speed, highly electronic trading market while still meeting the original purpose of Rule 6.32.03: to ensure that market participants have an opportunity to become aware of and respond to significant price movements. The Exchange adopted the proposed changes to the market-wide circuit breakers on a pilot basis for a period that corresponds to the pilot period for the LULD Plan so that the impact of the two proposals can be reviewed together.8 In addition, in order for the markets and the single plan processors responsible for the consolidation of information pursuant to Rule 603(b) of Regulation NMS under the Securities Exchange Act of 1934 to make the necessary technological changes to implement both the changes to the market-wide circuit breakers and the proposed LULD Plan, the Exchange established that the implementation date for the proposed rule changes should be the same date that the LULD Plan is implemented. The Exchange anticipates that the initial date of LULD Plan operations will be changed to April 8, 2013. For the same reasons as stated 7 See Securities Exchange Act Release No. 67090 (May 31, 2012), 77 FR 33531 (June 6, 2012) (SR– C2–2011–024). 8 See id. E:\FR\FM\05FEN1.SGM 05FEN1 Federal Register / Vol. 78, No. 24 / Tuesday, February 5, 2013 / Notices above, the Exchange proposes to delay the operative date of the market-wide circuit breakers pilot to April 8, 2013 in order for the implementation date for the market-wide circuit breakers pilot would remain the same date as for the LULD Plan. tkelley on DSK3SPTVN1PROD with NOTICES 2. Statutory Basis The Exchange believes the proposed rule change is consistent with the Securities Exchange Act of 1934 (the ‘‘Act’’) and the rules and regulations thereunder applicable to the Exchange and, in particular, the requirements of Section 6(b) of the Act.9 Specifically, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) 10 requirements that the rules of an exchange be 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 regulating, clearing, settling, processing information with respect to, and facilitation transactions in securities, 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. Additionally, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) 11 requirement that the rules of an exchange not be designed to permit unfair discrimination between customers, issuers, brokers, or dealers. In particular, this rule proposal supports the objectives of perfecting the mechanism of a free and open market and the national market system because it promotes uniformity across markets concerning when and how to halt trading in all stocks as a result of extraordinary market volatility. Additionally, delaying the operative date of the market-wide circuit breakers pilot until the initial date of operations of the LULD Plan would allow the pilot to begin and end at the same time of the LULD Plan so that the Exchange and the Commission could further assess the impact of the two pilots on the marketplace or whether other initiatives should be adopted in lieu of the pilots, which contributes to the protection of investors and the public interest. B. Self-Regulatory Organization’s Statement on Burden on Competition The proposed changes are being made to delay the operation of the marketwide circuit breakers pilot until April 8, 2013 to allow the pilot period to begin 9 15 U.S.C. 78f(b). U.S.C. 78f(b)(5). 11 Id. 10 15 VerDate Mar<15>2010 17:18 Feb 04, 2013 Jkt 229001 and end at the same time as the LULD Plan, which contributes to the protection of investors and the public interest. Other competing equity exchanges are subject to the same methodology for determining when to halt trading in all stocks due to extraordinary market volatility and the same requirements specified in the LULD Plan. Thus, the proposed changes will not impose any burden on competition while providing that the market-wide circuit breakers pilot period corresponds to the pilot period for the LULD Plan so that the impact of the two proposals can be reviewed together. 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 proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change does not significantly affect the protection of investors or the public interest, does not impose any significant burden on competition, and, by its terms, does not become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) of the Act 12 and Rule 19b– 4(f)(6) thereunder.13 The Exchange has requested that the Commission waive the 30-day operative delay. The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest. Doing so will delay the operative date of the market-wide circuit breakers pilot until the initial date of operations of the LULD Plan, thereby allowing the pilot to run simultaneously with the LULD Plan, providing an opportunity to properly assess the impact of the two pilots on the marketplace and evaluate the pilots’ effectiveness. Therefore, the Commission designates the proposal operative upon filing.14 12 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 Commission has waived this requirement. 14 For purposes only of waiving the 30-day operative delay, the Commission has considered the 13 17 PO 00000 Frm 00115 Fmt 4703 Sfmt 4703 8215 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. If the Commission takes such action, the Commission shall institute proceedings under Section 19(b)(2)(B) 15 of the Act to determine whether the proposed rule change should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rulecomments@sec.gov. Please include File Number SR–C2–2013–006 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–C2–2013–006. 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 proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 15 15 U.S.C. 78s(b)(2)(B). E:\FR\FM\05FEN1.SGM 05FEN1 8216 Federal Register / Vol. 78, No. 24 / Tuesday, February 5, 2013 / Notices business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the 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–C2– 2013–006 and should be submitted on or before February 26, 2013. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.16 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2013–02484 Filed 2–4–13; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–68768; File No. SR–FINRA– 2012–052] Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Designation of a Longer Period for Commission Action on Proposed Rule Change To Require Members To Report to TRACE the ‘‘Factor’’ in Limited Instances Involving Asset-Backed Security Transactions January 30, 2013. tkelley on DSK3SPTVN1PROD with NOTICES On November 29, 2012, the Financial Industry Regulatory Authority, Inc. (‘‘FINRA’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change to require FINRA members to report to the Trade Reporting and Compliance Engine (‘‘TRACE’’) the Factor used to determine the size (volume) of each transaction in an Asset-Backed Security ‘‘(ABS’’) (except ABS traded To Be Announced (‘‘TBA’’)), in the limited instances when members effect such transactions as agent and charge a commission.3 The proposed rule change was published for comment in the Federal Register on December 18, 2012.4 The Commission received one comment on the proposal 16 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 The terms ‘‘Asset-Backed Security,’’ ‘‘To Be Announced,’’ and ‘‘Factor’’ are defined in FINRA Rules 6710(m), (u), and (w), respectively. 4 See Securities Exchange Act Release No. 68414 (December 12, 2012), 77 FR 74896 (‘‘Notice’’). VerDate Mar<15>2010 17:18 Feb 04, 2013 Jkt 229001 and a response to the comment from FINRA.5 Section 19(b)(2) of the Act 6 provides that, within 45 days of the publication of notice of the filing of a proposed rule change, or within such longer period up to 90 days as the Commission may designate if it finds such longer period to be appropriate and publishes its reasons for so finding or as to which the self-regulatory organization consents, the Commission shall either approve the proposed rule change, disapprove the proposed rule change, or institute proceedings to determine whether the proposed rule change should be disapproved. The 45th day for this filing is February 1, 2013. The Commission finds that it is appropriate to designate a longer period within which to take action on the proposed rule change so that it has sufficient time to consider the proposed rule change, the comment received, and the response to the comment submitted by FINRA. Therefore, the Commission is extending this 45-day time period. Accordingly, the Commission, pursuant to Section 19(b)(2) of the Act,7 designates March 18, 2013, as the date by which the Commission should either approve or disapprove or institute proceedings to determine whether to disapprove the proposed rule change. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.8 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2013–02425 Filed 2–4–13; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–68767; File No. SR–C2– 2012–039] Self-Regulatory Organizations; C2 Options Exchange, Incorporated; Order Granting Approval to a Proposed Rule Change Relating to Bylaw and Other Changes Concerning the Board of Directors of the Exchange January 30, 2013. I. Introduction On November 30, 2012, the C2 Options Exchange, Incorporated 5 See comment from Mark Sokolow, Attorney at Law, dated December 18, 2012 (‘‘Sokolow Comment’’); see also response letter from Kathryn Moore, Assistant General Counsel, FINRA, to Elizabeth M. Murphy, Secretary, Commission, dated January 11, 2013 (‘‘FINRA Letter’’). 6 15 U.S.C. 78s(b)(2). 7 15 U.S.C. 78s(b)(2). 8 17 CFR 200.30–3(a)(31). PO 00000 Frm 00116 Fmt 4703 Sfmt 4703 (‘‘Exchange’’ or ‘‘C2’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change to amend its Bylaws concerning the nomination of Representative Directors, petition candidates, and the size of the Exchange’s Board of Directors (‘‘Board’’), and to make conforming changes to the C2 Certificate of Incorporation. On December 19, 2012, the proposed rule change was published for comment in the Federal Register.3 The Commission received no comments on the proposed rule change. This order grants approval to the proposed rule change. II. Description of the Proposed Rule Change Compositional Requirements Determined by the Board In December of 2011, C2 amended its Bylaws and Certificate of Incorporation to, among other things: (i) Eliminate the requirement that its Board of Directors be composed of at least 30% Industry Directors, and (ii) eliminate the requirement in Section 3.2 of the Bylaws that the Representative Directors must be Industry Directors.4 In connection with these changes, C2 also amended Section 3.1 of the Bylaws to provide that: ‘‘[T]he Board shall determine from time to time pursuant to resolution adopted by the Board the total number of directors, the number of Non-Industry Directors and Industry Directors (if any), and the number of Representative Directors that are NonIndustry Directors and Industry Directors (if any).’’ 5 C2 proposed to amend the Bylaws to expressly provide that any person nominated by the Representative Director Nominating Body 6 and any petition candidate nominated pursuant to the Section 3.2 of the Bylaws must satisfy the compositional requirements 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 See Securities Exchange Act Release No. 68429 (December 13, 2012), 77 FR 75237 (‘‘Notice’’). 4 See Securities Exchange Act Release Nos. 65681 (November 3, 2011), 76 FR 69783 (November 9, 2011) (SR–C2–2011–031) (noticing for comment); and 65979 (December 15, 2011), 76 FR 79239 (December 21, 2011) (approving SR–C2–2011–031). 5 See C2 Bylaw 3.1. See also Securities Exchange Act Release Nos. 65681 (November 3, 2011), 76 FR 69783 (November 9, 2011) (SR–C2–2011–031) (noticing for comment). 6 The Exchange noted that at all times at least 20% of the directors serving on the Board would be Representative Directors nominated by the Representative Director Nominating Body as provided in Section 3.2 of the Bylaws (or otherwise selected through the petition process). See Notice, supra note 3, at 75237. 2 17 E:\FR\FM\05FEN1.SGM 05FEN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 78, Number 24 (Tuesday, February 5, 2013)]
[Notices]
[Pages 8213-8216]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-02484]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68769; File No. SR-C2-2013-006]

Self-Regulatory Organizations; C2 Options Exchange, Incorporated;
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change
To Delay the Operative Date of a Rule Change to Exchange Rule 6.32.03

January 30, 2013.
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 January 28, 2013, C2 Options Exchange, Incorporated (the
``Exchange'' or ``C2'') 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 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.

---------------------------------------------------------------------------

[[Page 8214]]

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

The Exchange proposes to delay the operative date of a rule change
to Exchange Rule 6.32.03, which provides for methodology for
determining when to halt trading in all stocks due to extraordinary
market volatility, from the date of February 4, 2013, until April 8,
2013.
The text of the proposed rule change is available on the Exchange's
Web site (https://www.c2exchange.com/Legal/), at the Exchange's Office
of the Secretary, and at the Commission [sic].

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 aspects of such
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

1. Purpose
The Exchange proposes to amend Rule 6.32.03, which provides the
methodology for determining when to halt trading in all stocks due to
extraordinary market volatility,\3\ to delay the operative date of the
pilot by which such Rule operates from the current scheduled date of
February 4, 2013, until April 8, 2013, to coincide with the initial
date of operations of the Regulation NMS Plan to Address Extraordinary
Market Volatility (``LULD Plan'').\4\ As proposed, the pilot period
will begin and end at the same time [sic] the pilot period for the LULD
Plan. The current Rule 6.32.03 would remain in effect until April 8,
2013. If the pilot is not either extended or approved permanently at
the end of the pilot period, the current version of Rule 6.32.03 would
be in effect.
---------------------------------------------------------------------------

\3\ Exchange Rule 6.32.03 does not currently contain any
reference to the specific levels of decline in the DJIA that would
trigger a market-wide trading halt. Instead, the rule provides that
a market-wide halt will be triggered on the Exchange whenever a
market-wide halt is in effect on the New York Stock Exchange
(``NYSE'').
\4\ The Exchange adopted the proposed changes to the market-wide
circuit breakers on a pilot basis for a period that corresponds to
the pilot period for the LULD Plan so that the impact of the two
proposals can be reviewed together. See Securities Exchange Act
Release No. 67090 (May 31, 2012), 77 FR 33531 (June 6, 2012) (SR-C2-
2011-024). The Exchange anticipates that the initial date of LULD
Plan operations will be changed to April 8, 2013. The proposal would
delay the operative date of the market-wide circuit breakers pilot
to April 8, 2013 in order for the implementation date for the
market-wide circuit breakers pilot would [sic] remain the same date
as for the LULD Plan.
---------------------------------------------------------------------------

Current Rule 6.32.03
In its current form,\5\ the rule provides for Level 1, 2, and 3
declines and specified trading halts following such declines. The
values of Levels 1, 2 and 3 [sic] are calculated at the beginning of
each calendar quarter, using 10%, 20% and 30%, respectively, of the
average closing value of the DJIA for the month prior to the beginning
of the quarter. Each percentage calculation is rounded to the nearest
fifty points to create the Levels' trigger points. The NYSE
disseminates the new trigger levels quarterly to the media and via an
Information Memo and is available on NYSE's Web site.\6\ The values
then remain in effect until the next quarterly calculation,
notwithstanding whether the DJIA has moved and a Level 1, 2, or 3
decline is no longer equal to an actual 10%, 20%, or 30% decline in the
most recent closing value of the DJIA.
---------------------------------------------------------------------------

\5\ The rule was last amended in 1998, when declines based on
specified point drops in the
DJIA were replaced with the current methodology of using a
percentage decline that is recalculated quarterly. See Securities
Exchange Act Release No. 39846 (April 9, 1998), 63 FR 18477 (April
15, 1998) (SR-NYSE-98-06, SR-Amex-98-09, SR-BSE-98-06, SR-CHX-98-08,
SR-NASD-98-27, and SR-Phlx-98-15).
\6\ See e.g., NYSE Regulation Information Memos 11-19 (June 30,
2011) and 11-10 (March 31, 2011).
---------------------------------------------------------------------------

Once a circuit breaker is in effect, trading in all stocks halt for
the time periods specified below:
Level 1 Halt
anytime before 2:00 p.m.--one hour;
at or after 2:00 p.m. but before 2:30 p.m.--30 minutes;
at or after 2:30 p.m.--trading shall continue, unless there is a
Level 2 Halt.
Level 2 Halt
anytime before 1:00 p.m.--two hours;
at or after 1:00 p.m. but before 2:00 p.m.--one hour;
at or after 2:00 p.m.--trading shall halt and not resume for the
rest of the day.
Level 3 Halt
at any time--trading shall halt and not resume for the rest of the
day.
Unless stocks are halted for the remainder of the trading day,
price indications are disseminated during a trading halt for stocks
that comprise the DJIA.
Amended Rule 6.32.03
The Exchange amended Rule 6.32.03 to revise the current methodology
for determining when to halt trading in all stocks due to extraordinary
market volatility (``market-wide circuit breakers'').\7\ The Exchange,
other equities, options, and futures markets, and FINRA amended the
market-wide circuit breakers to take into consideration the
recommendations of the Joint CFTC-SEC Advisory Committee on Emerging
Regulatory Issues, and to provide for more meaningful measures in
today's markets of when to halt trading in all stocks. Accordingly, the
Exchange amended Rule 6.32.03 as follows: (i) Replaced the DJIA with
the S&P 500; (ii) replaced the quarterly calendar recalculation of Rule
6.32.03 triggers with daily recalculations; (iii) replaced the 10%,
20%, and 30% market decline percentages with 7%, 13%, and 20% market
decline percentages; (iv) modified the length of the trading halts
associated with each market decline level; and (v) modified the times
when a trading halt may be triggered. The Exchange believes that these
amendments update the rule to reflect today's high-speed, highly
electronic trading market while still meeting the original purpose of
Rule 6.32.03: to ensure that market participants have an opportunity to
become aware of and respond to significant price movements.
---------------------------------------------------------------------------

\7\ See Securities Exchange Act Release No. 67090 (May 31,
2012), 77 FR 33531 (June 6, 2012) (SR-C2-2011-024).
---------------------------------------------------------------------------

The Exchange adopted the proposed changes to the market-wide
circuit breakers on a pilot basis for a period that corresponds to the
pilot period for the LULD Plan so that the impact of the two proposals
can be reviewed together.\8\ In addition, in order for the markets and
the single plan processors responsible for the consolidation of
information pursuant to Rule 603(b) of Regulation NMS under the
Securities Exchange Act of 1934 to make the necessary technological
changes to implement both the changes to the market-wide circuit
breakers and the proposed LULD Plan, the Exchange established that the
implementation date for the proposed rule changes should be the same
date that the LULD Plan is implemented. The Exchange anticipates that
the initial date of LULD Plan operations will be changed to April 8,
2013. For the same reasons as stated

[[Page 8215]]

above, the Exchange proposes to delay the operative date of the market-
wide circuit breakers pilot to April 8, 2013 in order for the
implementation date for the market-wide circuit breakers pilot would
remain the same date as for the LULD Plan.
---------------------------------------------------------------------------

\8\ See id.
---------------------------------------------------------------------------

2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Securities Exchange Act of 1934 (the ``Act'') and the rules and
regulations thereunder applicable to the Exchange and, in particular,
the requirements of Section 6(b) of the Act.\9\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \10\ requirements that the rules of an exchange be
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 regulating, clearing,
settling, processing information with respect to, and facilitation
transactions in securities, 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. Additionally,
the Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \11\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
---------------------------------------------------------------------------

\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(5).
\11\ Id.
---------------------------------------------------------------------------

In particular, this rule proposal supports the objectives of
perfecting the mechanism of a free and open market and the national
market system because it promotes uniformity across markets concerning
when and how to halt trading in all stocks as a result of extraordinary
market volatility. Additionally, delaying the operative date of the
market-wide circuit breakers pilot until the initial date of operations
of the LULD Plan would allow the pilot to begin and end at the same
time of the LULD Plan so that the Exchange and the Commission could
further assess the impact of the two pilots on the marketplace or
whether other initiatives should be adopted in lieu of the pilots,
which contributes to the protection of investors and the public
interest.

B. Self-Regulatory Organization's Statement on Burden on Competition

The proposed changes are being made to delay the operation of the
market-wide circuit breakers pilot until April 8, 2013 to allow the
pilot period to begin and end at the same time as the LULD Plan, which
contributes to the protection of investors and the public interest.
Other competing equity exchanges are subject to the same methodology
for determining when to halt trading in all stocks due to extraordinary
market volatility and the same requirements specified in the LULD Plan.
Thus, the proposed changes will not impose any burden on competition
while providing that the market-wide circuit breakers pilot period
corresponds to the pilot period for the LULD Plan so that the impact of
the two proposals can be reviewed together.

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
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action

Because the foregoing proposed rule change does not significantly
affect the protection of investors or the public interest, does not
impose any significant burden on competition, and, by its terms, does
not become operative for 30 days from the date on which it was filed,
or such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \12\ and Rule 19b-
4(f)(6) thereunder.\13\
---------------------------------------------------------------------------

\12\ 15 U.S.C. 78s(b)(3)(A).
\13\ 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
Commission has waived this requirement.
---------------------------------------------------------------------------

The Exchange has requested that the Commission waive the 30-day
operative delay. The Commission believes that waiving the 30-day
operative delay is consistent with the protection of investors and the
public interest. Doing so will delay the operative date of the market-
wide circuit breakers pilot until the initial date of operations of the
LULD Plan, thereby allowing the pilot to run simultaneously with the
LULD Plan, providing an opportunity to properly assess the impact of
the two pilots on the marketplace and evaluate the pilots'
effectiveness. Therefore, the Commission designates the proposal
operative upon filing.\14\
---------------------------------------------------------------------------

\14\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
---------------------------------------------------------------------------

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. If the Commission
takes such action, the Commission shall institute proceedings under
Section 19(b)(2)(B) \15\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
---------------------------------------------------------------------------

\15\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

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 Number SR-C2-2013-006 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-C2-2013-006. 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

[[Page 8216]]

business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of
the 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-C2-2013-006 and should be submitted on or before
February 26, 2013.

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
---------------------------------------------------------------------------

\16\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-02484 Filed 2-4-13; 8:45 am]
BILLING CODE 8011-01-P

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.