Self-Regulatory Organizations; EDGA Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend EDGA Rule 11.13 To Extend the Operation of a Pilot Pursuant to Rule 11.13 Until September 30, 2013, 9073-9076 [2013-02745]

Download as PDF Federal Register / Vol. 78, No. 26 / Thursday, February 7, 2013 / Notices special protection. The regulations establish such a permit system to designate Antarctic Specially Protected Areas. The applications received are as follows: Permit Application: 2013–028 1. Applicant: John H. Postlethwait, Institute of Neuroscience, 1254 University of Oregon, Eugene, OR 97403. Activity for Which Permit Is Requested Enter Antarctic Specially Protected Areas. The applicant intends to enter ASPA 152-Western Bransfield Strait, and ASPA 153-Eastern Dallmann Bay to capture Antarctic fish by trawling and trapping. The project will study the evolution of secondary pelagicism in Antarctic fishes by reduction of bone mineral density. Fish will be caught and taken to the Palmer Station laboratory for further study, then released live back into the Southern Ocean. Trawling and trapping are complementary fishing techniques. Trawling is time-efficient means to collect the icefish Chaenocephaus aceratus and the rockcod Notothenia coriiceps, but is limited to smooth bottoms. Trapping, on the other hand, can be performed irrespective of bottom type, which enhances the ability to capture the odorant-sensing N. coriiceps. Location Antarctic Peninsula including ASPA 152-Western Bransfield Strait, and ASPA 153-Eastern Dallmann Bay. Dates March 10, 2013 to June 27, 2013. Nadene G. Kennedy, Permit Officer, Office of Polar Programs. [FR Doc. 2013–02690 Filed 2–6–13; 8:45 am] BILLING CODE 7555–01–P NATIONAL SCIENCE FOUNDATION Business and Operations Advisory Committee; Notice of Meeting mstockstill on DSK4VPTVN1PROD with NOTICES In accordance with Federal Advisory Committee Act (Pub. L. 92–463, as amended), the National Science Foundation announces the following meeting: Name: Business and Operations Advisory Committee (9556) . Date/Time: Monday, February 25, 2013; 1:00 p.m. to 4:00 p.m. (EST). Place: National Science Foundation, 4201 Wilson Boulevard, Stafford II, Room 515. To help facilitate your entry into the building, contact the individual listed below. Your request should be received by email VerDate Mar<15>2010 17:45 Feb 06, 2013 Jkt 229001 (pbalanga@nsf.gov) on or prior to Thursday, February 21, 2012. Type of Meeting: Open. Contact Person: Patty Balanga, National Science Foundation, 4201 Wilson Boulevard, Arlington, VA 22230 (703) 292–8100, pbalanga@nsf.gov. Purpose of Meeting: To provide advice concerning issues related to the oversight, integrity, development and enhancement of NSF’s business operations. Agenda: Welcome/Introductions, BFA Strategic Priorities, Follow-Up on NSF Employee Viewpoint Survey, Discuss the Pros and Cons of the Meeting’s Virtual Aspects. Dated: February 1, 2013. Susanne Bolton, Committee Management Officer. [FR Doc. 2013–02687 Filed 2–6–13; 8:45 am] BILLING CODE 7555–01–P NATIONAL SCIENCE FOUNDATION National Science Board; Sunshine Act Meetings; Notice The National Science Board’s Committee on Education and Human Resources, pursuant to NSF regulations (45 CFR part 614), the National Science Foundation Act, as amended (42 U.S.C. 1862n-5), and the Government in the Sunshine Act (5 U.S.C. 552b), hereby gives notice in regard to the scheduling of a teleconference for the transaction of National Science Board business and other matters specified, as follows: DATE & TIME: Monday, February 11, 2013, 10:00–11:00 a.m. EST. SUBJECT MATTER: (1) Chairman’s opening remarks; and (2) Guidelines for discussion at the Board’s February 20th meeting. STATUS: Open. LOCATION: This meeting will be held by teleconference at the National Science Board Office, National Science Foundation, 4201 Wilson Blvd., Arlington, VA 22230. A public listening room will be available for this teleconference meeting. All visitors must contact the Board Office [call 703– 292–7000 or send an email message to nationalsciencebrd@nsf.gov] at least 24 hours prior to the teleconference for the public room number and to arrange for a visitor’s badge. All visitors must report to the NSF visitor desk located in the lobby at the 9th and N. Stuart Streets entrance on the day of the teleconference to receive a visitor’s badge. UPDATES & POINT OF CONTACT: Please refer to the National Science Board Web site www.nsf.gov/nsb for additional information. Meeting information and updates (time, place, subject matter or PO 00000 Frm 00047 Fmt 4703 Sfmt 4703 9073 status of meeting) may be found at https://www.nsf.gov/nsb/notices/. Point of contact for this meeting is: Jacqueline Meszaros, National Science Board Office, 4201Wilson Blvd., Arlington, VA 22230. Telephone: (703) 292–7000. Ann Bushmiller, Senior Counsel to the National Science Board. [FR Doc. 2013–02844 Filed 2–5–13; 11:15 am] BILLING CODE 7555–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–68813; File No. SR–EDGA– 2013–06] Self-Regulatory Organizations; EDGA Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend EDGA Rule 11.13 To Extend the Operation of a Pilot Pursuant to Rule 11.13 Until September 30, 2013 February 1, 2013. 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 January 31, 2013, EDGA Exchange, Inc. (the ‘‘Exchange’’ or ‘‘EDGA’’) 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 amend EDGA Rule 11.13 to extend the operation of a pilot pursuant to Rule 11.13 (the ‘‘Pilot’’) until September 30, 2013. The Exchange also proposes to adopt new paragraph (i) to Rule 11.13 in connection with the upcoming operation of the Plan to Address Extraordinary Market Volatility Pursuant to Rule 608 of Regulation NMS under the Act (the ‘‘Limit Up-Limit Down Plan’’ or the ‘‘Plan’’).3 All of the changes described herein are applicable to EDGA Members. The text of the proposed rule change is available on the Exchange’s Internet Web site at www.directedge.com, at the Exchange’s 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 See Securities Exchange Act Release No. 67091 (May 31, 2012), 77 FR 33498 (June 6, 2012). 2 17 E:\FR\FM\07FEN1.SGM 07FEN1 9074 Federal Register / Vol. 78, No. 26 / Thursday, February 7, 2013 / Notices principal office, and at the Public Reference Room of the Commission. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of 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 mstockstill on DSK4VPTVN1PROD with NOTICES 1. Purpose The purpose of this filing is to extend the effectiveness of the Exchange’s current rule applicable to Clearly Erroneous Executions and to adopt new paragraph (i) to Rule 11.13 in connection with upcoming operation of the Limit Up-Limit Down Plan. Background Portions of Rule 11.13, explained in further detail below, are currently operating as the Pilot and are set to expire on February 4, 2013.4 The Exchange proposes to extend the Pilot to September 30, 2013. On September 10, 2010, the Commission approved, on a pilot basis, changes to EDGA Rule 11.13 to provide for uniform treatment: (1) Of clearly erroneous execution reviews in multistock events involving twenty or more securities; and (2) in the event transactions occur that result in the issuance of an individual stock trading pause by the primary market and subsequent transactions that occur before the trading pause is in effect on the Exchange.5 The Exchange also adopted additional changes to Rule 11.13 that reduced the ability of the Exchange to deviate from the objective standards set forth in Rule 11.13.6 The Exchange believes the benefits to market participants from the more objective clearly erroneous executions rule should continue on a pilot basis through September 30, 2013, which is the date 4 See Securities Exchange Act Release No. 67500 (July 25, 2012), 77 FR 45398 (July 31, 2012) (SR– EDGA–2012–30). 5 See Securities Exchange Act Release No. 62886 (September 10, 2010), 75 FR 56613 (September 16, 2010) (SR–EDGA–2010–03). 6 Id. VerDate Mar<15>2010 17:45 Feb 06, 2013 Jkt 229001 that the Exchange anticipates that the phased implementation of the Limit UpLimit Down Plan will be complete. As explained in further detail below, although the Limit Up-Limit Down Plan is intended to prevent executions that would need to be nullified as clearly erroneous, the Exchange believes that certain protections should be maintained while the industry gains initial experience operating with the Limit Up-Limit Down Plan, including the provisions of Rule 11.13 that currently operate as a pilot. Proposed Limit Up-Limit Down Provision to Rule 11.13 The Exchange proposes to adopt new paragraph (i) to Rule 11.13, to provide that the existing provisions of Rule 11.13 will continue to apply to all Exchange transactions, including transactions in securities subject to the Plan, other than as set forth in proposed paragraph (i). Accordingly, other than as proposed below, the Exchange proposes to maintain and continue to apply the Clearly Erroneous Execution standards in the same way that it does today. Notably, this means that the Exchange might nullify transactions that occur within the price bands disseminated pursuant to the Limit Up-Limit Down Plan to the extent such transactions qualify as clearly erroneous under existing criteria. As an example, assume that a Tier 1 security pursuant to the Plan has a reference price pursuant to both the Plan and Rule 11.13 of $100.00. The lower pricing band under the Plan would be $95.00 and the upper pricing band under the Plan would be $105.00. An execution could occur on the Exchange in this security at $96.00, as this is within the Plan’s pricing bands. However, if subjected to review as potentially clearly erroneous, the Exchange would nullify an execution at $96.00 as clearly erroneous because it exceeds the 3% threshold that is in place pursuant to Rule 11.13(c)(1) for securities priced above $50.00 (i.e., with a reference price of $100.00, any transactions at or below $97.00 or above $103.00 could be nullified as clearly erroneous). Accordingly, this proposal maintains the status quo with respect to reviews of Clearly Erroneous Executions and the application of objective numerical guidelines by the Exchange. The proposal does not increase the discretion afforded to the Exchange in connection with reviews of Clearly Erroneous Executions. The Limit Up-Limit Down Plan is designed to prevent executions from occurring outside of dynamic price bands disseminated to the public by the single plan processor as defined in the PO 00000 Frm 00048 Fmt 4703 Sfmt 4703 Limit Up-Limit Down Plan.7 The possibility remains that the Exchange could experience a technology or systems problem with respect to the implementation of the price bands disseminated pursuant to the Plan. To address such possibilities, the Exchange proposes to adopt language to make clear that if an Exchange technology or systems issue results in any transaction occurring outside of the price bands disseminated pursuant to the Plan, an Officer of the Exchange or senior level employee designee, acting on his or her own motion or at the request of a third party, shall review and declare any such trades null and void. Absent extraordinary circumstances, any such action of the Officer of the Exchange or other senior level employee designee shall be taken in a timely fashion, generally within thirty (30) minutes of the detection of the erroneous transaction. When extraordinary circumstances exist, any such action of the Officer of the Exchange or other senior level employee designee must be taken by no later than the start of Regular Trading Hours 8 on the trading day following the date on which the execution(s) under review occurred. Although the Exchange will act as promptly as possible and the proposed objective standard (i.e., whether an execution occurred outside the band) should make it feasible to quickly make a determination, there may be circumstances in which additional time may be needed for verification of facts or coordination with outside parties, including the single plan processor responsible for disseminating the price bands and other market centers. Accordingly, the Exchange believes it necessary to maintain some flexibility to make a determination outside of the thirty (30) minute guideline. In addition, the Exchange proposes that a transaction that is nullified pursuant to new paragraph (i) would be appealable in accordance with the provisions of Rule 11.13(e)(2). In addition, the Exchange proposes to make clear that in the event that a single plan processor experiences a technology or systems problem that prevents the dissemination of price bands, the Exchange would make the determination of whether to nullify transactions based on Rule 11.13(a)–(h). The Exchange believes that cancelling trades that occur outside of the price bands disseminated pursuant to the Plan is consistent with the purpose and 7 See Securities Exchange Act Release No. 67091 (May 31, 2012), 77 FR 33498 (June 6, 2012). 8 Regular Trading Hours commence at 9:30 a.m. Eastern Time. See Exchange Rule 1.5(y). E:\FR\FM\07FEN1.SGM 07FEN1 Federal Register / Vol. 78, No. 26 / Thursday, February 7, 2013 / Notices intent of the Plan, as such transactions are not intended to occur in the first place. If transactions do occur outside of the price bands and no exception applies—which necessarily would be caused by a technology or systems issue—then the Exchange believes the appropriate result is to nullify such transactions. mstockstill on DSK4VPTVN1PROD with NOTICES 2. Statutory Basis The statutory basis for the proposed rule change is Section 6(b)(5) of the Act,9 which requires the rules of an exchange to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system and, in general, to protect investors and the public interest. The Exchange believes that the proposed rule meets these requirements in that it promotes transparency and uniformity across markets concerning review of transactions as clearly erroneous. More specifically, the Exchange believes that the extension of the Pilot would help assure that the determination of whether a clearly erroneous trade has occurred will be based on clear and objective criteria, and that the resolution of the incident will occur promptly through a transparent process. The proposed rule change would also help assure consistent results in handling erroneous trades across the U.S. markets, thus furthering fair and orderly markets, the protection of investors and the public interest. Although the Limit Up-Limit Down Plan will be operational during the same time period as the proposed extended Pilot, the Exchange believes that maintaining the Pilot for at least through the phased implementation of the Plan is operational will help to protect against unanticipated consequences. To that end, the extension will allow the Exchange to determine whether Rule 11.13 is necessary once the Plan is operational and, if so, whether improvements can be made. Further, the Exchange believes it consistent with the protection of investors and the public interest to adopt objective criteria to nullify transactions that occur outside of the Plan’s price bands when such transactions should not have been executed but were due to a systems or technology issue. 9 15 U.S.C. 78f(b)(5). VerDate Mar<15>2010 17:45 Feb 06, 2013 Jkt 229001 B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Financial Industry Regulatory Authority (‘‘FINRA’’) and other national securities exchanges are also filing similar proposals. Thus the Exchange believes that the proposal will help to ensure consistent rules across market centers. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange has neither solicited nor received written comments on the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action 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 for 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 10 and Rule 19b–4(f)(6)(iii) thereunder.11 A proposed rule change filed under Rule 19b–4(f)(6) 12 normally does not become operative for 30 days after the date of filing. However, pursuant to Rule 19b–4(f)(6)(iii) 13 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 10 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(6)(iii). As required under Rule 19b–4(f)(6)(iii), the Exchange provided the Commission with written notice of its intent to file the proposed rule change, along with a brief description and the 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. 12 17 CFR 240.19b–4(f)(6). 13 17 CFR 240.19b–4(f)(6)(iii). 11 17 PO 00000 Frm 00049 Fmt 4703 Sfmt 4703 9075 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.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. 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–EDGA–2013–06 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–EDGA–2013–06. 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., 14 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). E:\FR\FM\07FEN1.SGM 07FEN1 9076 Federal Register / Vol. 78, No. 26 / Thursday, February 7, 2013 / Notices 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–EDGA– 2013–06 and should be submitted on or before February 28, 2013. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.15 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2013–02745 Filed 2–6–13; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend CBSX Rule 52.4 Relating to the Clearly Erroneous Policy February 1, 2013. mstockstill on DSK4VPTVN1PROD 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 January 29, 2013, Chicago Board Options Exchange, Incorporated (the ‘‘Exchange’’ or ‘‘CBOE’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to extend a pilot program related to CBOE Stock Exchange (‘‘CBSX’’) Rule 52.4, entitled ‘‘Clearly Erroneous Policy.’’ The Exchange also proposes to adopt new paragraph (i) to CBSX Rule 52.4 in connection with the upcoming operation of the Plan to Address CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 17:45 Feb 06, 2013 Rules * * * * * Rule 52.4 Clearly Erroneous Policy The provisions of paragraphs (c), (e)(2), (f), and (g) of this Rule, as amended on September 10, 2010, and the provisions of paragraph (i), shall be in effect during a pilot period set to end on [February 4]September 30, 2013. If the pilot is not either extended, replaced or approved permanent by September 30, 2013, the prior versions of paragraphs (c), (e)(2), (f), and (g) shall be in effect, and the provisions of paragraph (i) shall be null and void. * * * * (i) Securities Subject to Limit Up-Limit Down Plan. For purposes of this paragraph, the phrase ‘‘Limit Up-Limit Down Plan’’ or ‘‘Plan’’ shall mean the Plan to Address Extraordinary Market Volatility Pursuant to Rule 608 of Regulation NMS under the Act. The provisions of paragraphs (a) through (h) above shall govern all CBSX transactions, including transactions in securities subject to the Plan, other than as set forth in this paragraph (i). If as a result of CBSX technology or systems issue any transaction occurs outside of the applicable price bands disseminated pursuant to the Plan, an Official or senior level employee designee, acting on his or her own motion or at the request of a third party, shall review and declare any such trades null and void. Absent extraordinary circumstances, any such action of the Official or other senior level employee designee shall be taken in a timely fashion, generally within thirty (30) minutes of the detection of the erroneous transaction. When extraordinary circumstances exist, any such action of the Official or other senior level employee designee must be taken by no later than the start of CBSX Regular Trading Hours on the trading day following the date on which the execution(s) under review occurred. Each CBSX Trader involved in the transaction shall be notified as soon as practicable by CBSX, and the party aggrieved by the action may appeal such action in accordance with the provisions of paragraph (e)(2) above. In the event that a single plan processor experiences a technology or systems issue that prevents the dissemination of price bands, CBSX will make the determination of whether to nullify transactions based on paragraphs (a) through (h) above. * * * * * The text of the proposed rule change is also available on the Exchange’s Web 3 See Securities Exchange Act Release No. 67091 (May 31, 2012), 77 FR 33498 (June 6, 2012) (the ‘‘Limit Up-Limit Down Release’’). 1 15 VerDate Mar<15>2010 Chicago Board Options Exchange, Incorporated * [Release No. 34–68800; File No. SR–CBOE– 2013–012] 15 17 Extraordinary Market Volatility Pursuant to Rule 608 of Regulation NMS under the Securities and Exchange Act of 1934 (the ‘‘Limit Up-Limit Down Plan’’ or ‘‘Plan’’).3 (additions are in italics; deletions are [bracketed]) * * * * * Jkt 229001 PO 00000 Frm 00050 Fmt 4703 Sfmt 4703 site (https://www.cboe.com/AboutCBOE/ CBOELegalRegulatoryHome.aspx), at the Exchange’s Office of the Secretary, and at the Commission. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the 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 purpose of this filing is to extend the effectiveness of CBSX’s current rule ‘‘Clearly Erroneous Policy’’ and to adopt new paragraph (i) to CBSX Rule 52.4 in connection with upcoming operation of the Limit Up-Limit Down Plan. Proposal To Extend Pilot Portions of Rule 52.4, explained in further detail below, are currently operating as a pilot program set to expire on February 4, 2013.4 The Exchange proposes to extend the pilot program to September 30, 2013. On September 10, 2010, the Commission approved, on a pilot basis, changes to CBSX Rule 52.4 to provide for uniform treatment: (1) Of clearly erroneous execution reviews in multistock events involving twenty or more securities; and (2) in the event transactions occur that result in the issuance of an individual stock trading pause by the primary market and subsequent transactions that occur before the trading pause is in effect on CBSX.5 The Exchange also adopted additional changes to CBSX Rule 52.4 that reduced the ability of CBSX to deviate from the objective standards set forth in Rule 52.4.6 The Exchange believes the benefits to market participants from the more objective clearly erroneous executions rule should continue on a pilot basis through 4 Securities Exchange Act Release No. 67575 (August 2, 2012), 77 FR 47478 (August 8, 2012) (SR–CBOE–2012–070). 5 Securities Exchange Act Release No. 62886 (September 10, 2010), 75 FR 56613 (September 16, 2010) (SR–CBOE–2010–056). 6 Id. E:\FR\FM\07FEN1.SGM 07FEN1

Agencies

[Federal Register Volume 78, Number 26 (Thursday, February 7, 2013)]
[Notices]
[Pages 9073-9076]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-02745]


=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68813; File No. SR-EDGA-2013-06]


Self-Regulatory Organizations; EDGA Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Amend 
EDGA Rule 11.13 To Extend the Operation of a Pilot Pursuant to Rule 
11.13 Until September 30, 2013

February 1, 2013.
    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 January 31, 2013, EDGA Exchange, Inc. (the ``Exchange'' or 
``EDGA'') 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 amend EDGA Rule 11.13 to extend the 
operation of a pilot pursuant to Rule 11.13 (the ``Pilot'') until 
September 30, 2013. The Exchange also proposes to adopt new paragraph 
(i) to Rule 11.13 in connection with the upcoming operation of the Plan 
to Address Extraordinary Market Volatility Pursuant to Rule 608 of 
Regulation NMS under the Act (the ``Limit Up-Limit Down Plan'' or the 
``Plan'').\3\ All of the changes described herein are applicable to 
EDGA Members. The text of the proposed rule change is available on the 
Exchange's Internet Web site at www.directedge.com, at the Exchange's

[[Page 9074]]

principal office, and at the Public Reference Room of the Commission.
---------------------------------------------------------------------------

    \3\ See Securities Exchange Act Release No. 67091 (May 31, 
2012), 77 FR 33498 (June 6, 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 self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of 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
    The purpose of this filing is to extend the effectiveness of the 
Exchange's current rule applicable to Clearly Erroneous Executions and 
to adopt new paragraph (i) to Rule 11.13 in connection with upcoming 
operation of the Limit Up-Limit Down Plan.
Background
    Portions of Rule 11.13, explained in further detail below, are 
currently operating as the Pilot and are set to expire on February 4, 
2013.\4\ The Exchange proposes to extend the Pilot to September 30, 
2013.
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 67500 (July 25, 
2012), 77 FR 45398 (July 31, 2012) (SR-EDGA-2012-30).
---------------------------------------------------------------------------

    On September 10, 2010, the Commission approved, on a pilot basis, 
changes to EDGA Rule 11.13 to provide for uniform treatment: (1) Of 
clearly erroneous execution reviews in multi-stock events involving 
twenty or more securities; and (2) in the event transactions occur that 
result in the issuance of an individual stock trading pause by the 
primary market and subsequent transactions that occur before the 
trading pause is in effect on the Exchange.\5\ The Exchange also 
adopted additional changes to Rule 11.13 that reduced the ability of 
the Exchange to deviate from the objective standards set forth in Rule 
11.13.\6\ The Exchange believes the benefits to market participants 
from the more objective clearly erroneous executions rule should 
continue on a pilot basis through September 30, 2013, which is the date 
that the Exchange anticipates that the phased implementation of the 
Limit Up-Limit Down Plan will be complete. As explained in further 
detail below, although the Limit Up-Limit Down Plan is intended to 
prevent executions that would need to be nullified as clearly 
erroneous, the Exchange believes that certain protections should be 
maintained while the industry gains initial experience operating with 
the Limit Up-Limit Down Plan, including the provisions of Rule 11.13 
that currently operate as a pilot.
---------------------------------------------------------------------------

    \5\ See Securities Exchange Act Release No. 62886 (September 10, 
2010), 75 FR 56613 (September 16, 2010) (SR-EDGA-2010-03).
    \6\ Id.
---------------------------------------------------------------------------

Proposed Limit Up-Limit Down Provision to Rule 11.13
    The Exchange proposes to adopt new paragraph (i) to Rule 11.13, to 
provide that the existing provisions of Rule 11.13 will continue to 
apply to all Exchange transactions, including transactions in 
securities subject to the Plan, other than as set forth in proposed 
paragraph (i). Accordingly, other than as proposed below, the Exchange 
proposes to maintain and continue to apply the Clearly Erroneous 
Execution standards in the same way that it does today. Notably, this 
means that the Exchange might nullify transactions that occur within 
the price bands disseminated pursuant to the Limit Up-Limit Down Plan 
to the extent such transactions qualify as clearly erroneous under 
existing criteria. As an example, assume that a Tier 1 security 
pursuant to the Plan has a reference price pursuant to both the Plan 
and Rule 11.13 of $100.00. The lower pricing band under the Plan would 
be $95.00 and the upper pricing band under the Plan would be $105.00. 
An execution could occur on the Exchange in this security at $96.00, as 
this is within the Plan's pricing bands. However, if subjected to 
review as potentially clearly erroneous, the Exchange would nullify an 
execution at $96.00 as clearly erroneous because it exceeds the 3% 
threshold that is in place pursuant to Rule 11.13(c)(1) for securities 
priced above $50.00 (i.e., with a reference price of $100.00, any 
transactions at or below $97.00 or above $103.00 could be nullified as 
clearly erroneous). Accordingly, this proposal maintains the status quo 
with respect to reviews of Clearly Erroneous Executions and the 
application of objective numerical guidelines by the Exchange. The 
proposal does not increase the discretion afforded to the Exchange in 
connection with reviews of Clearly Erroneous Executions.
    The Limit Up-Limit Down Plan is designed to prevent executions from 
occurring outside of dynamic price bands disseminated to the public by 
the single plan processor as defined in the Limit Up-Limit Down 
Plan.\7\ The possibility remains that the Exchange could experience a 
technology or systems problem with respect to the implementation of the 
price bands disseminated pursuant to the Plan. To address such 
possibilities, the Exchange proposes to adopt language to make clear 
that if an Exchange technology or systems issue results in any 
transaction occurring outside of the price bands disseminated pursuant 
to the Plan, an Officer of the Exchange or senior level employee 
designee, acting on his or her own motion or at the request of a third 
party, shall review and declare any such trades null and void. Absent 
extraordinary circumstances, any such action of the Officer of the 
Exchange or other senior level employee designee shall be taken in a 
timely fashion, generally within thirty (30) minutes of the detection 
of the erroneous transaction. When extraordinary circumstances exist, 
any such action of the Officer of the Exchange or other senior level 
employee designee must be taken by no later than the start of Regular 
Trading Hours \8\ on the trading day following the date on which the 
execution(s) under review occurred. Although the Exchange will act as 
promptly as possible and the proposed objective standard (i.e., whether 
an execution occurred outside the band) should make it feasible to 
quickly make a determination, there may be circumstances in which 
additional time may be needed for verification of facts or coordination 
with outside parties, including the single plan processor responsible 
for disseminating the price bands and other market centers. 
Accordingly, the Exchange believes it necessary to maintain some 
flexibility to make a determination outside of the thirty (30) minute 
guideline. In addition, the Exchange proposes that a transaction that 
is nullified pursuant to new paragraph (i) would be appealable in 
accordance with the provisions of Rule 11.13(e)(2). In addition, the 
Exchange proposes to make clear that in the event that a single plan 
processor experiences a technology or systems problem that prevents the 
dissemination of price bands, the Exchange would make the determination 
of whether to nullify transactions based on Rule 11.13(a)-(h).
---------------------------------------------------------------------------

    \7\ See Securities Exchange Act Release No. 67091 (May 31, 
2012), 77 FR 33498 (June 6, 2012).
    \8\ Regular Trading Hours commence at 9:30 a.m. Eastern Time. 
See Exchange Rule 1.5(y).
---------------------------------------------------------------------------

    The Exchange believes that cancelling trades that occur outside of 
the price bands disseminated pursuant to the Plan is consistent with 
the purpose and

[[Page 9075]]

intent of the Plan, as such transactions are not intended to occur in 
the first place. If transactions do occur outside of the price bands 
and no exception applies--which necessarily would be caused by a 
technology or systems issue--then the Exchange believes the appropriate 
result is to nullify such transactions.
2. Statutory Basis
    The statutory basis for the proposed rule change is Section 6(b)(5) 
of the Act,\9\ which requires the rules of an exchange to promote just 
and equitable principles of trade, to remove impediments to and perfect 
the mechanism of a free and open market and a national market system 
and, in general, to protect investors and the public interest. The 
Exchange believes that the proposed rule meets these requirements in 
that it promotes transparency and uniformity across markets concerning 
review of transactions as clearly erroneous. More specifically, the 
Exchange believes that the extension of the Pilot would help assure 
that the determination of whether a clearly erroneous trade has 
occurred will be based on clear and objective criteria, and that the 
resolution of the incident will occur promptly through a transparent 
process. The proposed rule change would also help assure consistent 
results in handling erroneous trades across the U.S. markets, thus 
furthering fair and orderly markets, the protection of investors and 
the public interest. Although the Limit Up-Limit Down Plan will be 
operational during the same time period as the proposed extended Pilot, 
the Exchange believes that maintaining the Pilot for at least through 
the phased implementation of the Plan is operational will help to 
protect against unanticipated consequences. To that end, the extension 
will allow the Exchange to determine whether Rule 11.13 is necessary 
once the Plan is operational and, if so, whether improvements can be 
made. Further, the Exchange believes it consistent with the protection 
of investors and the public interest to adopt objective criteria to 
nullify transactions that occur outside of the Plan's price bands when 
such transactions should not have been executed but were due to a 
systems or technology issue.


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

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

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

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. The Financial Industry 
Regulatory Authority (``FINRA'') and other national securities 
exchanges are also filing similar proposals. Thus the Exchange believes 
that the proposal will help to ensure consistent rules across market 
centers.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Exchange has neither solicited nor received written comments on 
the proposed rule change.

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

    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 for 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 \10\ and Rule 19b-
4(f)(6)(iii) thereunder.\11\
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6)(iii). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written 
notice of its intent to file the proposed rule change, along with a 
brief description and the 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.
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) \12\ normally 
does not become operative for 30 days after the date of filing. 
However, pursuant to Rule 19b-4(f)(6)(iii) \13\ 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.
---------------------------------------------------------------------------

    \12\ 17 CFR 240.19b-4(f)(6).
    \13\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------

    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.\14\
---------------------------------------------------------------------------

    \14\ 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).
---------------------------------------------------------------------------

    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 Number SR-EDGA-2013-06 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-EDGA-2013-06. 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.,

[[Page 9076]]

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-EDGA-2013-06 and should be 
submitted on or before February 28, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
---------------------------------------------------------------------------

    \15\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-02745 Filed 2-6-13; 8:45 am]
BILLING CODE 8011-01-P
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.