Self-Regulatory Organizations; National Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend its Rule 11.24, Limit Up/Limit Down, 21485-21487 [2013-08322]
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Federal Register / Vol. 78, No. 69 / Wednesday, April 10, 2013 / Notices
minutes before the end of Regular
Trading Hours. The Participants stated
that the proposed change is designed to
reduce confusion by correcting language
in the Plan.
III. Comment Letter
The Commission received one
comment letter in favor of the Third
Amendment to the Plan.23 The
commenter stated that the proposed
changes were raised since September
2012 in discussions that the commenter
had with the Participants and that it had
the understanding that amendments
would be filed with the Commission to
address these concerns. As such, market
participants have programed their
systems accordingly well in advance of
the April 8, 2013 implantation date of
the Plan.
The commenter further stated that one
of the key drivers of the Plan is the
protection of retail investors.24 Thus,
having odd-lots incorporated at the
commencement of the rule is critical.
Moreover, the commenter stated that the
implementation of the Plan has evolved
into a very complex process and it
would prefer that odd-lots not be
implemented on a different schedule
possibly causing investor confusion.
TKELLEY on DSK3SPTVN1PROD with NOTICES
IV. Discussion and Commission
Findings
After careful review, the Commission
finds that Third Amendment is
consistent with the requirements of the
Act and the rules and regulations
thereunder.25 Specifically, the
Commission finds that the Third
Amendment is consistent with Section
11A of the Act 26 and Rule 608
thereunder 27 in that it is appropriate in
the public interest, for the protection of
investors and the maintenance of fair
and orderly markets, and to remove
impediments to, and perfect the
mechanism of, a national market
system.
The Third Amendment would make
two changes to the Plan. The first
change amends the Plan to specify that
odd-lot transactions will be subject to
the limitation on trades provision of
Section VI.A.1. As such, the
requirement that trading centers in NMS
stocks establish, maintain, and enforce
written policies and procedures that are
reasonably designed to prevent trades at
prices that are below the Lower Price
23 See
25 In approving the Third Amendment, the
Commission has considered its impact on
efficiency, competition, and capital formation. 15
U.S.C. 78c(f).
26 15 U.S.C. 78k–1.
27 17 CFR 242.608.
17:59 Apr 09, 2013
V. Conclusion
It is therefore ordered, pursuant to
Section 11A of the Act 31 and Rule 608
thereunder,32 that the Third
Amendment to the Plan (File No. 4–631)
be, and it hereby is, approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.33
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2013–08249 Filed 4–9–13; 8:45 am]
BILLING CODE 8011–01–P
FIF Letter, supra note 5.
24 Id.
VerDate Mar<15>2010
Band or above the Upper Price Band for
an NMS stock will apply to odd-lot
transactions. The Commission notes that
this change could reduce the ability of
market participants to engage in odd-lot
transactions to circumvent the
requirements of the Plan, thereby
further protecting investors. The
Commission also notes that the change
is widely anticipated and supported in
the industry, as it would reduce
compliance burdens because firms
would not need to code specially for
odd lots.28
The second change would reconcile
an inconsistency in the current rule text
of the Plan. The current language states
that the price bands shall not be
calculated and disseminated less than
30 minutes before the end of the trading
day, and that trading shall not enter a
Limit State less than 25 minutes before
the end of the trading day. Under this
formulation, there would be no price
bands after 3:30 p.m. ET, although a
stock could still enter a Limit State until
3:35 p.m. ET. This is internally
inconsistent, since the price bands must
be calculated and disseminated in order
for the Limit State to be triggered. The
Participants proposed to amend the Plan
to state that no price bands shall be
calculated and disseminated and,
therefore, trading shall not enter a Limit
State, less than 30 minutes before the
end of the trading day. The Commission
believes that this change provides
further clarity on the operation of the
limit up-limit down mechanism during
Phase I of the Plan.
Therefore, the Commission believes
that the Third Amendment to the Plan
is consistent with Section 11A of the
Act 29 and Rule 608 thereunder.30
Jkt 229001
28 See
FIF Letter.
U.S.C. 78k–1.
30 17 CFR 242.608.
31 15 U.S.C. 78k–1.
32 17 CFR 242.608.
33 17 CFR 200.30–3(a)(29).
29 15
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21485
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–69296; File No. SR–NSX–
2013–12]
Self-Regulatory Organizations;
National Stock Exchange, Inc.; Notice
of Filing and Immediate Effectiveness
of Proposed Rule Change To Amend
its Rule 11.24, Limit Up/Limit Down
April 4, 2013.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’ or ‘‘Exchange Act’’) 1 and Rule
19b–4 thereunder,2 notice is hereby
given that on April 3, 2013, National
Stock Exchange, Inc. (‘‘NSX®’’ or the
‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’) the proposed rule
change, as described in Items I and II
below, which Items have been prepared
by the Exchange. The Commission is
publishing this notice to solicit
comment 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
Rule 11.24(k) regarding routing of orders
under the National Market System Plan
established pursuant to Rule 608 of the
Exchange Act, to address extraordinary
market volatility (the ‘‘Regulation NMS
Plan to Address Extraordinary Market
Volatility’’ or ‘‘Plan’’),3 also known as
Limit Up/Limit Down. The Exchange
has designated this proposal as noncontroversial and provided the
Commission with the notice required by
Rule 19b–4(f)(6)(iii) under the Act.4
The text of the proposed rule change
is available on the Exchange’s Web site
at https://www.nsx.com, at the principal
office of the Exchange, on the
Commission’s Web site at https://
www.sec.gov, and at the Commission’s
Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Appendix A to Securities Exchange Act
Release No. 67091 (May 31, 2012) 77 FR 33498
(June 6, 2012).
4 17 CFR 240.19b–4(f)(6)(iii).
2 17
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21486
Federal Register / Vol. 78, No. 69 / Wednesday, April 10, 2013 / Notices
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
Since May 6, 2010, when the markets
experienced excessive volatility in an
abbreviated time period, i.e., the ‘‘flash
crash,’’ the national securities
exchanges that list and trade equity
securities and the Financial Industry
Regulatory Authority (‘‘FINRA’’) have
implemented market-wide measures
that are designed to restore investor
confidence in the markets by reducing
the potential for excessive volatility.
The measures adopted include pilot
plans for stock-by-stock trading pauses 5
and related changes to the equities
market clearly erroneous execution
rules,6 and more stringent equity market
maker quoting requirements.7 On May
31, 2012, the Commission approved the
Plan, on a pilot basis.8 On March 8,
2013, the Commission published the
Exchange’s proposed rule change to
comply with the Plan, which is to
become operative on April 8, 2013.9
The Plan is designed to prevent trades
in NMS Stocks from occurring outside
of specified Price Bands.10 Price Bands
consisting of a Lower Price Band and an
Upper Price Band for each NMS Stock
are calculated by the Processors.11 The
Price Bands are coupled with Trading
Pauses to accommodate more
fundamental price moves. All trading
centers in NMS Stocks, including both
those operated by Participants and those
operated by members of Participants,
are required to establish, maintain, and
enforce written policies and procedures
that are reasonably designed to comply
with the requirements specified in the
Plan.12
In sum, Exchange Rule 11.24, Limit
Up-Limit Down, addresses the treatment
of certain orders to prevent executions
5 See
e.g., NSX Rule 11.20B.
e.g., NSX Rule 11.19.
7 See e.g., NSX Rule 11.8(a)(1)(B)(iv) and (v).
8 See Securities Exchange Act Release No. 67091
(May 31, 2012) 77 FR 33498 (June 6, 2012) (Order
approving, on a Pilot Basis, the National Market
System Plan to Address Extraordinary Market
Activity).
9 See Securities Exchange Act Release No. 69087
(March 8, 2013), 78 FR 16325 (March 14, 2012) (SR–
NSX–2013–09)
10 Unless otherwise specified, capitalized terms
used in this rule filing are based on defined terms
in the Plan.
11 See Section V(A) of the Plan.
12 The Exchange is a Participant in the Plan.
TKELLEY on DSK3SPTVN1PROD with NOTICES
6 See
VerDate Mar<15>2010
17:59 Apr 09, 2013
Jkt 229001
outside the Price Bands.13 The Exchange
proposes to amend Rule 11.24(k) in
order to explain how the Exchange will
route orders under the Plan. Rule
11.24(k) currently states that the
Exchange will route orders to an away
market in accordance with Rule
11.15(a)(ii) regardless of whether the
away market is displaying a sell (buy)
quote that is above (below) the Upper
(Lower) Price Band. The Exchange now
proposes to not route an order unless an
away market is displaying trading
interest at or within the Price Bands. As
amended, Rule 11.24(k) will state that
the Exchange will not route an order
unless an away market is displaying a
sell (buy) quote that is at or below
(above) the Upper (Lower) Price Band.14
The Exchange believes that this
provision is reasonably designed to
prevent an execution from occurring
outside the Price Bands in a manner that
promotes compliance with the Limit
Up-Limit Down and Trading Pause
requirements specified in the Plan. This
approach is also consistent with that of
other exchanges, including the New
York Stock Exchange, Inc. (‘‘NYSE’’) 15
and EDGA Exchange, Inc. (‘‘EDGA’’).16
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with the
requirements of Section 6(b) of the
Exchange Act.17 In addition, the rule
furthers the objective of Section 6(b)(5)
of the Exchange Act 18 by promoting just
and equitable principles of trade,
removing impediments to, and
perfecting the mechanisms of, a free and
open national market system while
protecting investors and the public
interest. The proposal furthers these
causes by ensuring that orders in NMS
Stocks are not routed to other away
markets where an execution may occur
outside the Price Bands, and thereby is
reasonably designed to prevent an
execution outside the Price Bands in a
manner that promotes compliance with
13 See
supra note 9.
NSX Rule 11.15(a)(iii), unless the terms
of the order direct otherwise, any order not
executed in full on the Exchange which is not
eligible for routing away (e.g,, no away market is
displaying a sell (buy) quote that is at or below
(above) the Upper (Lower) Price Band), or which is
not executed in full when routed away, will be
ranked in the NSX Book in accordance with the
order priority rules under NSX Rule 11.14 and
eligible for execution in accordance with NSX Rule
11.15.
15 See Securities Exchange Act Release No. 68876
(February 8, 2013), 78 FR 10643 (February 14, 2013)
(SR–NYSE–2013–09).
16 See Securities Exchange Act Release No. 69002
(February 27, 2013), 78 FR 14394 (March 5, 2013)
(SR–EDGA–2013–08).
17 15 U.S.C. 78f(b).
18 15 U.S.C 78f(b)(5).
14 Under
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the Limit Up-Limit Down and Trading
Pause requirements specified in the
Plan.
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. All national
securities exchanges are required to
establish, maintain, and enforce policies
and procedures reasonably designed to
comply with the requirements of the
Plan. Every member of those exchanges,
including ETP Holders of the Exchange,
are subject to those procedures and
prevented from executing an order in an
NMS Stock outside of the Price Bands
prescribed by the Plan. Therefore, the
Exchange believes the proposed rule
change does not impose any burden on
competition that is not necessary or
appropriate in furtherance of the
purposes of the Act.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
Written comments on the proposed
rule change were neither solicited nor
received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed
rule change pursuant to Section
19(b)(3)(A)(iii) of the Act 19 and Rule
19b–4(f)(6) thereunder.20 Because the
proposed rule change does not: (i)
Significantly affect the protection of
investors or the public interest; (ii)
impose any significant burden on
competition; and (iii) become operative
prior to 30 days from the date on which
it was filed, or such shorter time as the
Commission may designate, if
consistent with the protection of
investors and the public interest, the
proposed rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act and Rule 19b–4(f)(6)(iii)
thereunder.
A proposed rule change filed under
Rule 19b–4(f)(6) 21 normally does not
become operative prior to 30 days after
19 15
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6) requires the Exchange to give the
Commission written notice of the Exchange’s intent
to file the proposed rule change, along with a brief
description and text of the proposed rule change,
at least five business days prior to the date of filing
of the proposed rule change, or such shorter time
as designated by the Commission. The Exchange
has satisfied this requirement.
21 17 CFR 240.19b–4(f)(6).
20 17
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Federal Register / Vol. 78, No. 69 / Wednesday, April 10, 2013 / Notices
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE.,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
publicly available. All submissions
should refer to File Number SR–NSX–
2013–12 and should be submitted on or
before May 1, 2013.
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:
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.24
Kevin M. O’Neill,
Deputy Secretary.
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–NSX–2013–12 on the
subject line.
TKELLEY on DSK3SPTVN1PROD with NOTICES
the date of the filing. However, pursuant
to Rule 19b–4(f)(6)(iii),22 the
Commission may designate a shorter
time if such action is consistent with the
protection of investors and the public
interest. The Exchange has asked the
Commission to waive the 30-day
operative delay. The Commission
believes that waiving the operative
delay and designating April 8, 2013 as
the operative date of the proposed rule
change is consistent with the protection
of investors and the public interest
because such waiver would allow the
proposed rule change to be operative on
the initial date of Plan operations.
Accordingly, the Commission hereby
grants the Exchange’s request and
designates an operative date of April 8,
2013.23
At any time within 60 days of the
filing of such 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.
SECURITIES AND EXCHANGE
COMMISSION
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–NSX–2013–12. 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
[FR Doc. 2013–08322 Filed 4–9–13; 8:45 am]
BILLING CODE 8011–01–P
[Release No. 34–69313; File No. SR–NSCC–
2013–02]
Self-Regulatory Organizations;
National Securities Clearing
Corporation; Notice of Filing of
Proposed Rule Change To Institute
Supplemental Liquidity Deposits to Its
Clearing Fund Designed To Increase
Liquidity Resources To Meet Its
Liquidity Needs
April 4, 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 March 21,
2013, National Securities Clearing
Corporation (‘‘NSCC’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
24 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1). Defined terms that are not
defined in this notice are defined in Exhibit 5 of
the proposed rule change filing, available at
https://www.sec.gov/rules/sro/nscc.shtml under File
No. SR–NSCC–2013–02, Additional Materials.
2 17 CFR 240.19b–4.
1 15
22 17
CFR 240.19b–4(f)(6)(iii).
purposes only of waiving the operative
delay, the Commission has considered the proposed
rule’s impact on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f).
23 For
VerDate Mar<15>2010
17:59 Apr 09, 2013
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21487
change as described in Items I, II and III
below, which Items have been prepared
primarily by NSCC. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Clearing Agency’s Statement of the
Terms of Substance of the Proposed
Rule Change
To enhance its ability to meet its
liquidity requirements, NSCC is
proposing to amend its Rules &
Procedures (‘‘Rules’’) to provide for a
supplemental liquidity funding
obligation, as described below.
II. Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change
In its filing with the Commission,
NSCC 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. NSCC has prepared
summaries, set forth in sections (A), (B),
and (C) below, of the most significant
aspects of these statements.3
(A) Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
Proposal Overview
As a central counterparty (‘‘CCP’’),
NSCC occupies an important role in the
securities settlement system by
interposing itself between
counterparties to financial transactions,
thereby reducing the risk faced by its
Members and contributing to global
financial stability. Further, pursuant to
the Payment, Clearing, and Settlement
Supervision Act of 2010 (‘‘Clearing
Supervision Act’’),4 NSCC has been
designated a systemically important
financial market utility (‘‘SFMU’’) by
the Financial Stability Oversight
Council, obliging NSCC to meet certain
risk management regulatory standards
related to, among other things,
maintaining adequate financial
resources to meet its obligations to its
Members in the event of the default of
the Member or family of affiliated
Members (‘‘Affiliated Family’’) that
would generate the largest aggregate
payment obligation to NSCC in stressed
conditions. In this regard and to
enhance its ability to meet its liquidity
requirements, NSCC is proposing to
amend its Rules to provide for a
3 The Commission has modified the text of the
summaries prepared by NSCC.
4 12 U.S.C. 5465(e)(1).
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]]>Agencies
[Federal Register Volume 78, Number 69 (Wednesday, April 10, 2013)]
[Notices]
[Pages 21485-21487]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-08322]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-69296; File No. SR-NSX-2013-12]
Self-Regulatory Organizations; National Stock Exchange, Inc.;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend its Rule 11.24, Limit Up/Limit Down
April 4, 2013.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act'' or ``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\
notice is hereby given that on April 3, 2013, National Stock Exchange,
Inc. (``NSX[supreg]'' or the ``Exchange'') filed with the Securities
and Exchange Commission (``Commission'') the proposed rule change, as
described in Items I and II below, which Items have been prepared by
the Exchange. The Commission is publishing this notice to solicit
comment 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 Rule 11.24(k) regarding routing of
orders under the National Market System Plan established pursuant to
Rule 608 of the Exchange Act, to address extraordinary market
volatility (the ``Regulation NMS Plan to Address Extraordinary Market
Volatility'' or ``Plan''),\3\ also known as Limit Up/Limit Down. The
Exchange has designated this proposal as non-controversial and provided
the Commission with the notice required by Rule 19b-4(f)(6)(iii) under
the Act.\4\
---------------------------------------------------------------------------
\3\ See Appendix A to Securities Exchange Act Release No. 67091
(May 31, 2012) 77 FR 33498 (June 6, 2012).
\4\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------
The text of the proposed rule change is available on the Exchange's
Web site at https://www.nsx.com, at the principal office of the
Exchange, on the Commission's Web site at https://www.sec.gov, and at
the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the
[[Page 21486]]
places specified in Item IV below. The Exchange has prepared summaries,
set forth in sections A, B, and C below, of the most significant parts
of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
Since May 6, 2010, when the markets experienced excessive
volatility in an abbreviated time period, i.e., the ``flash crash,''
the national securities exchanges that list and trade equity securities
and the Financial Industry Regulatory Authority (``FINRA'') have
implemented market-wide measures that are designed to restore investor
confidence in the markets by reducing the potential for excessive
volatility. The measures adopted include pilot plans for stock-by-stock
trading pauses \5\ and related changes to the equities market clearly
erroneous execution rules,\6\ and more stringent equity market maker
quoting requirements.\7\ On May 31, 2012, the Commission approved the
Plan, on a pilot basis.\8\ On March 8, 2013, the Commission published
the Exchange's proposed rule change to comply with the Plan, which is
to become operative on April 8, 2013.\9\
---------------------------------------------------------------------------
\5\ See e.g., NSX Rule 11.20B.
\6\ See e.g., NSX Rule 11.19.
\7\ See e.g., NSX Rule 11.8(a)(1)(B)(iv) and (v).
\8\ See Securities Exchange Act Release No. 67091 (May 31, 2012)
77 FR 33498 (June 6, 2012) (Order approving, on a Pilot Basis, the
National Market System Plan to Address Extraordinary Market
Activity).
\9\ See Securities Exchange Act Release No. 69087 (March 8,
2013), 78 FR 16325 (March 14, 2012) (SR-NSX-2013-09)
---------------------------------------------------------------------------
The Plan is designed to prevent trades in NMS Stocks from occurring
outside of specified Price Bands.\10\ Price Bands consisting of a Lower
Price Band and an Upper Price Band for each NMS Stock are calculated by
the Processors.\11\ The Price Bands are coupled with Trading Pauses to
accommodate more fundamental price moves. All trading centers in NMS
Stocks, including both those operated by Participants and those
operated by members of Participants, are required to establish,
maintain, and enforce written policies and procedures that are
reasonably designed to comply with the requirements specified in the
Plan.\12\
---------------------------------------------------------------------------
\10\ Unless otherwise specified, capitalized terms used in this
rule filing are based on defined terms in the Plan.
\11\ See Section V(A) of the Plan.
\12\ The Exchange is a Participant in the Plan.
---------------------------------------------------------------------------
In sum, Exchange Rule 11.24, Limit Up-Limit Down, addresses the
treatment of certain orders to prevent executions outside the Price
Bands.\13\ The Exchange proposes to amend Rule 11.24(k) in order to
explain how the Exchange will route orders under the Plan. Rule
11.24(k) currently states that the Exchange will route orders to an
away market in accordance with Rule 11.15(a)(ii) regardless of whether
the away market is displaying a sell (buy) quote that is above (below)
the Upper (Lower) Price Band. The Exchange now proposes to not route an
order unless an away market is displaying trading interest at or within
the Price Bands. As amended, Rule 11.24(k) will state that the Exchange
will not route an order unless an away market is displaying a sell
(buy) quote that is at or below (above) the Upper (Lower) Price
Band.\14\ The Exchange believes that this provision is reasonably
designed to prevent an execution from occurring outside the Price Bands
in a manner that promotes compliance with the Limit Up-Limit Down and
Trading Pause requirements specified in the Plan. This approach is also
consistent with that of other exchanges, including the New York Stock
Exchange, Inc. (``NYSE'') \15\ and EDGA Exchange, Inc. (``EDGA'').\16\
---------------------------------------------------------------------------
\13\ See supra note 9.
\14\ Under NSX Rule 11.15(a)(iii), unless the terms of the order
direct otherwise, any order not executed in full on the Exchange
which is not eligible for routing away (e.g,, no away market is
displaying a sell (buy) quote that is at or below (above) the Upper
(Lower) Price Band), or which is not executed in full when routed
away, will be ranked in the NSX Book in accordance with the order
priority rules under NSX Rule 11.14 and eligible for execution in
accordance with NSX Rule 11.15.
\15\ See Securities Exchange Act Release No. 68876 (February 8,
2013), 78 FR 10643 (February 14, 2013) (SR-NYSE-2013-09).
\16\ See Securities Exchange Act Release No. 69002 (February 27,
2013), 78 FR 14394 (March 5, 2013) (SR-EDGA-2013-08).
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2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the requirements of Section 6(b) of the Exchange Act.\17\ In addition,
the rule furthers the objective of Section 6(b)(5) of the Exchange Act
\18\ by promoting just and equitable principles of trade, removing
impediments to, and perfecting the mechanisms of, a free and open
national market system while protecting investors and the public
interest. The proposal furthers these causes by ensuring that orders in
NMS Stocks are not routed to other away markets where an execution may
occur outside the Price Bands, and thereby is reasonably designed to
prevent an execution outside the Price Bands in a manner that promotes
compliance with the Limit Up-Limit Down and Trading Pause requirements
specified in the Plan.
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\17\ 15 U.S.C. 78f(b).
\18\ 15 U.S.C 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. All national securities
exchanges are required to establish, maintain, and enforce policies and
procedures reasonably designed to comply with the requirements of the
Plan. Every member of those exchanges, including ETP Holders of the
Exchange, are subject to those procedures and prevented from executing
an order in an NMS Stock outside of the Price Bands prescribed by the
Plan. Therefore, the Exchange believes the proposed rule change does
not impose any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Written comments on the proposed rule change were neither solicited
nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \19\ and Rule 19b-4(f)(6) thereunder.\20\
Because the proposed rule change does not: (i) Significantly affect the
protection of investors or the public interest; (ii) impose any
significant burden on competition; and (iii) become operative prior to
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, if consistent with the protection of
investors and the public interest, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.
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\19\ 15 U.S.C. 78s(b)(3)(A)(iii).
\20\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires the Exchange to give the Commission written notice of the
Exchange's intent to file the proposed rule change, along with a
brief description and text of the proposed rule change, at least
five business days prior to the date of filing of the proposed rule
change, or such shorter time as designated by the Commission. The
Exchange has satisfied this requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) \21\ normally
does not become operative prior to 30 days after
[[Page 21487]]
the date of the filing. However, pursuant to Rule 19b-4(f)(6)(iii),\22\
the Commission may designate a shorter time if such action is
consistent with the protection of investors and the public interest.
The Exchange has asked the Commission to waive the 30-day operative
delay. The Commission believes that waiving the operative delay and
designating April 8, 2013 as the operative date of the proposed rule
change is consistent with the protection of investors and the public
interest because such waiver would allow the proposed rule change to be
operative on the initial date of Plan operations. Accordingly, the
Commission hereby grants the Exchange's request and designates an
operative date of April 8, 2013.\23\
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\21\ 17 CFR 240.19b-4(f)(6).
\22\ 17 CFR 240.19b-4(f)(6)(iii).
\23\ For purposes only of waiving the operative delay, the
Commission has considered the proposed rule's impact on efficiency,
competition, and capital formation. See 15 U.S.C. 78c(f).
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At any time within 60 days of the filing of such 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-NSX-2013-12 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-NSX-2013-12. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549, on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make publicly available. All
submissions should refer to File Number SR-NSX-2013-12 and should be
submitted on or before May 1, 2013.
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\24\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\24\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-08322 Filed 4-9-13; 8:45 am]
BILLING CODE 8011-01-P
