Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of Filing of Proposed Rule Change To Add New Paragraphs (h) and (i) to Rule 3312, entitled “Clearly Erroneous Transactions”, 25961-25965 [2014-10291]
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Federal Register / Vol. 79, No. 87 / Tuesday, May 6, 2014 / Notices
the provisions proposed by the
Exchange above. Therefore, the proposal
promotes just and equitable principles
of trade in that it promotes transparency
and uniformity across markets
concerning treatment of transactions as
clearly erroneous. The proposed rule
change would also help to 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.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change implicates any
competitive issues. To the contrary, as
noted above, the Exchange believes
FINRA and other national securities
exchanges are also filing similar
proposals, and thus, that the proposal
will help to ensure consistency across
market centers.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of
publication of this notice in the Federal
Register or within such longer period (i)
as the Commission may designate up to
90 days of such date if it finds such
longer period to be appropriate and
publishes its reasons for so finding or
(ii) as to which the self-regulatory
organization consents, the Commission
will:
(A) by order approve or disapprove
the proposed rule change, or
(B) institute proceedings to determine
whether the proposed rule change
should be disapproved.
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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:
Number SR–NYSE–2014–22 on the
subject line.
SECURITIES AND EXCHANGE
COMMISSION
Paper Comments
[Release No. 34–72055; File No. SR-Phlx2014–27]
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE.,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–NYSE–2014–22. 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 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–NYSE–
2014–22 and should be submitted on or
before May 27, 2014.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.14
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2014–10288 Filed 5–5–14; 8:45 am]
BILLING CODE 8011–01–P
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Self-Regulatory Organizations;
NASDAQ OMX PHLX LLC; Notice of
Filing of Proposed Rule Change To
Add New Paragraphs (h) and (i) to Rule
3312, entitled ‘‘Clearly Erroneous
Transactions’’
April 30, 2014.
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 April 17,
2014, NASDAQ OMX PHLX LLC
(‘‘Phlx’’ or ‘‘Exchange’’), filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III 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 add new
paragraphs (h) and (i) to Rule 3312,
entitled ‘‘Clearly Erroneous
Transactions.’’
The text of the proposed rule change
is available from Phlx’s Web site at
https://
nasdaqomxphlx.cchwallstreet.com, at
Phlx’s principal office, 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
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
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
25961
1. Purpose
The purpose of this filing is to add
new paragraph (h) to Rule 3312 to
1 15
14 17
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CFR 200.30–3(a)(12).
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2 17
U.S.C. 78s(b)(1).
CFR 240.19b–4.
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provide the Exchange with authority to
nullify transactions that were effected
based on the same fundamentally
incorrect or grossly misinterpreted
issuance information even if such
transactions occur over a period of
several days, as further described below.
An example of fundamentally incorrect
and grossly misinterpreted issuance
information that led to a severe
valuation error is included below for
illustrative purposes.
The Exchange also proposes to add
new paragraph (i) to Rule 3312 to make
clear that in the event of any disruption
or malfunction in the operation of the
electronic communications and trading
facilities of the Exchange, another
market center or responsible single plan
processor in connection with the
transmittal or receipt of a regulatory
trading halt, suspension or pause
(hereafter generally referred to as a
‘‘trading halt’’ for ease of reference), the
Exchange will nullify any transaction
that occurs after the primary listing
market for a security declares a trading
halt with respect to such security. In the
event a trading halt is declared, then
prematurely lifted in error, and then reinstituted, proposed paragraph (i) would
also result in nullification of any
transactions that occur before the
official, final end of the trading halt
according to the primary listing market.
The Exchange also proposes a change
to certain cross-references in Rule 3312,
due to the addition of paragraphs (h)
and (i). Specifically, the Exchange
proposes to update cross-references in
existing paragraph (g) of Rule 3312 in
order to make clear that the provisions
of paragraph (g) do not alter the
application of other provisions of Rule
3312, including new paragraphs (h) and
(i).
Background
On September 10, 2010, the
Commission approved, on a pilot basis,
changes to the clearly erroneous rules of
the national securities exchanges 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 listing market and
subsequent transactions that occur
before the trading pause is in effect on
the Exchange.3 The national securities
exchanges adopted additional changes
to their clearly erroneous rules that
reduced the ability of the national
securities exchanges to deviate from the
3 Securities Exchange Act Release No. 62886
(Sept. 10, 2010), 75 FR 56613 (Sept. 16, 2010).
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objective standards set forth in their
respective clearly erroneous rules.4 In
connection with its resumption of
trading of NMS Stocks through the
NASDAQ OMX PSX system, the
Exchange amended Rule 3312 to
conform it to the newly-adopted
changes to the national securities
exchanges’ clearly erroneous rules, so
that it could participate in the pilot
program.5 In 2013, the Exchange
adopted a provision designed to address
the 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’’).6 The
Exchange removed the specific
provisions related to individual stock
trading pauses and extended to April 8,
2014 the pilot program applicable to
certain provisions of Rule 3312.7 Most
recently, the Exchange extended the
effectiveness of the pilot program under
Rule 3312 to coincide with the pilot
period for the Plan, including any
extensions to the pilot period for the
Plan.8
As proposed, similar to other
provisions added in recent years, as
described above, both paragraph (h) and
paragraph (i) would be subject to the
pilot period, and thus, will coincide
with the pilot period for the Plan,
including any extensions to the pilot
period for the Plan.
Executions Based on Incorrect or
Grossly Misinterpreted Issuance
Information
The Exchange proposes to adopt a
new provision, paragraph (h), to Rule
3312, which would provide that a series
of transactions in a particular security
on one or more trading days may be
viewed as one event if all such
transactions were effected based on the
same fundamentally incorrect or grossly
misinterpreted issuance information
(e.g., with respect to a stock split or
corporate dividend) resulting in a severe
valuation error for all such transactions
(the ‘‘Event’’).
4 Id.
5 Securities Exchange Act Release No. 63023
(Sept. 30, 2010), 75 FR 61802 (Oct. 6, 2010) (SR–
Phlx–2010–125).
6 See Securities Exchange Act Release No. 68820
(Feb. 1, 2013), 78 FR 9436 (Feb. 8, 2013) (SR–Phlx–
2013–12); Securities Exchange Act Release No.
67091 (May 31, 2012), 77 FR 33498 (June 6, 2012)
(the ‘‘Limit Up-Limit Down Release’’); see also
Exchange Rule 3312(g).
7 Paragraphs (a)(2)(C), (b), (c)(1) and (g) of Rule
3312 are currently subject to a pilot program. See
Securities Exchange Act Release No. 70541 (Sept.
27, 2013), 78 FR 61431 (Oct. 3, 2013) (SR–Phlx–
2013–97).
8 Securities Exchange Act Release No. 71783
(Mar. 24, 2014), 79 FR 17617 (Mar. 28, 2014) (SR–
Phlx–2014–18).
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As proposed, an Officer of the
Exchange or senior level employee
designee, acting on his or her own
motion, would be required to take
action to declare all transactions that
occurred during the Event null and void
not later than the start of trading on the
day following the last transaction in the
Event. If trading in the security is halted
before the valuation error is corrected,
the Officer of the Exchange or senior
level employee designee would be
required to take action to declare all
transactions that occurred during the
Event null and void prior to the
resumption of trading. The Exchange
proposes to make clear that no action
can be taken pursuant to proposed
paragraph (h) with respect to any
transactions that have reached
settlement date for the security or that
result from an initial public offering of
a security. The Exchange believes that
declaring a trade null and void after
settlement date would be complex to
administer and unfair to the affected
parties. The Exchange also believes that
excluding IPOs from the proposed rule
will ensure that transactions in a new
security for which there is no
benchmark information are not called
into question, as it is the IPO process
itself, including the extensive public
disclosure associated with IPOs, that is
intended to drive price formation.
Further, the Exchange proposes that
to the extent transactions related to an
Event occur on one or more other
market centers, the Exchange will
promptly coordinate with such other
market center(s) to ensure consistent
treatment of the transactions related to
the Event, if practicable. The Exchange
also proposes to state in the Rule that
any action taken in connection with
paragraph (h) will be taken without
regard to the Numerical Guidelines set
forth in paragraph (a)(2)(C)(i) of Rule
3312. In particular, the Exchange
believes that there could be scenarios
where there are erroneous transactions
related to an Event that do not meet
applicable Numerical Guidelines but
that are, upon review, clearly erroneous.
One example of a situation that could
occur is a corporate action, such as a
stock split, that results in the
dissemination of fundamentally
incorrect or grossly misinterpreted
issuance information and leads to
erroneous transactions at a price that is
close to the price at which the security
was previously trading. Even if such
trading is consistent with prior trading
activity for the security, and thus would
not meet applicable Numerical
Guidelines, the Exchange would have
the authority to nullify such
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transactions if they were affected based
on the same fundamentally incorrect or
grossly misinterpreted issuance
information and there was a severe
valuation error as a result (i.e., although
the security should be trading at a price
further away from its previous range,
due to fundamentally incorrect or
grossly misinterpreted issuance
information with respect to the
corporate action the security continues
to trade at a price that does not meet
applicable Numerical Guidelines).
The Exchange also proposes to
include a provision, as it does in many
other sub-paragraphs of Rule 3312,
stating that each Member involved in a
transaction subject to proposed
paragraph (h) shall be notified as soon
as practicable by the Exchange, and that
the party aggrieved by the action may
appeal such action in accordance with
Exchange Rule 3312(c).
In particular, the Exchange believes it
is necessary to have authority to nullify
trades that occur in an event similar to
an event involving an exchange offer
(‘‘Exchange Offer’’) made by U.S.
Bancorp on the New York Stock
Exchange (‘‘NYSE’’) in 2010 in which
there were a series of executions based
on incorrect or grossly misinterpreted
issuance information. As a result of
such information, the securities traded
at severely dislocated prices. At the
time, the NYSE filed an emergency rule
filing in order to respond to that event.9
With the filing the NYSE interpreted the
rule applicable to clearly erroneous
executions as permitting the NYSE to
nullify all trades resulting after the
Exchange Offer at severely dislocated
prices.10 The Exchange believes it is
important to have in place a rule to
break such trades if an event like the
U.S. Bancorp event occurs again in the
future. The U.S. Bancorp event is
described in further detail below and is
intended to be illustrative of the manner
in which the Exchange proposes to
utilize proposed paragraph (h), if
necessary.
In May 2010, U.S. Bancorp
commenced an offer to exchange up to
1,250,000 Depositary Shares, each
representing a 1/100 interest in a share
of Series A Non-Cumulative Perpetual
Preferred Stock, $100,000 liquidation
preference per share (the ‘‘Depositary
Shares’’) for any and all of the 1,250,000
outstanding 6.189% Fixed-to-Floating
Rate Normal ITS issued by U.S. Bancorp
Capital IX, each with a liquidation
amount of $1,000 (the ‘‘Normal ITS’’).
9 Securities Exchange Act Release No. 62609 (July
30, 2010), 75 FR 47327 (Aug. 5, 2010) (SR–NYSE–
2010–55).
10 Id.
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The Depositary Shares were approved
for listing on the NYSE under the
symbol USB PRA. On June 11, 2010, the
NYSE opened the shares on a quote, but
trading did not commence until June 16,
2010 at prices in the range of $79.00 per
share. There were additional executions
on the NYSE in that price range on June
17 and 18, 2010. On June 18, 2010,
NYSE staff learned that the prices at
which trades had executed were not
consistent with the value of the security,
which was closer to an $800 price.
Upon learning of the pricing disparity,
NYSE immediately halted trading in the
Depositary Shares on all markets and
alerted U.S. Bancorp and other
exchanges that traded the Depositary
Shares of the pricing discrepancy.
In order to address the situation, the
NYSE filed a proposal to interpret its
existing clearly erroneous execution
rule such that the trading in Depositary
Shares from June 16 to June 18
constituted a single event because that
trading was based on incorrect or
grossly misinterpreted issuance
information that resulted in severe price
dislocation (the ‘‘U.S. Bancorp
Event’’).11 Because the Depositary
Shares were halted before the price of
the Depositary Shares ceased to be
dislocated, and remained halted, the
NYSE was able to review trading in
Depositary Shares and declare null and
void all trading in the U.S. Bancorp
Event before the security resumed
trading.
Rather than filing a proposal in
response to a similar event happening
again, the Exchange proposes to add
paragraph (h) in order to nullify
transactions consistent with the
description of the proposed Rule above.
Executions After a Trading Halt Has
Been Declared
The Exchange proposes to add new
paragraph (i) to Rule 3312 to make clear
that in the event of any disruption or
malfunction in the operation of the
electronic communications and trading
facilities of the Exchange, another
market center or responsible single plan
processor in connection with the
transmittal or receipt of a trading halt,
the Exchange will nullify any
transaction that occurs after the primary
listing market for a security declares a
trading halt and before such trading halt
with respect to such security has
officially ended according to the
primary listing market. In addition,
proposed paragraph (i) will make clear
that in the event a trading halt is
declared, then prematurely lifted in
error and then re-instituted, the
11 Id.
PO 00000
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25963
Exchange will nullify transactions that
occur before the official, final end of the
trading halt according to the primary
listing market.
As with other provisions in Rule
3312, including proposed paragraph (h)
as discussed above, the authority to
nullify transactions pursuant to
paragraph (i) would be vested in an
officer of the Exchange or other senior
level employee designee, acting on his
or her own motion. Any action taken in
connection with paragraph (i) would be
taken in a timely fashion, generally
within thirty (30) minutes of the
detection of the erroneous transaction
and in no circumstances later than the
start of Regular Market Session 12 on the
trading day following the date of
execution(s) under review. The
Exchange also proposes to specify that
any action taken in connection with
proposed paragraph (i) will be taken
without regard to the Numerical
Guidelines set forth in paragraph
(a)(2)(C)(i) of Rule 3312. The Exchange
believes it is appropriate to act to nullify
transactions pursuant to proposed
paragraph (i) without regard to
applicable Numerical Guidelines
because in the situations covered by
paragraph (i), such transactions should
not have occurred in the first instance,
and thus, their nullification does not
put parties in any different position
than they should have been. The
Exchange also believes that the certainty
that the proposed rule provides is
critical in situations involving trading
halts.
As it has proposed for paragraph (h),
as described above, the Exchange also
proposes to include a provision stating
that each Member involved in a
transaction subject to proposed
paragraph (i) shall be notified as soon as
practicable by the Exchange, and that
the party aggrieved by the action may
appeal such action in accordance with
Exchange Rule 3312(c).
The Exchange notes that trading in a
security is typically halted immediately
on the Exchange when the primary
listing market issues a trading halt in
such security. However, in certain
circumstances, due to a technical issue
related to the transmission or receipt of
the electronic message instituting such
trading halt or due to other
extraordinary circumstances, executions
can occur on the Exchange following the
declaration of such a trading halt.
Similarly, although rare, the Exchange
has witnessed scenarios where due to
extraordinary circumstances a trading
12 Regular Market Session is defined in Exchange
Rule 3100(b)(4)(D) as the trading session from 9:30
a.m. until 4:00 p.m. or 4:15 p.m.
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halt is declared, then prematurely lifted
in error and then re-instituted. It is these
types of extraordinary circumstances
that the Exchange believes require
certainty, and thus, the Exchange
believes it necessary to make clear that
in such a circumstance any transactions
after a trading halt has been declared
will be nullified. In the event that a
trading halt is declared as of a future
time (i.e., if the primary listing exchange
declares a trading halt as of a specific,
future time in order to ensure
coordination amongst market
participants), the Exchange would only
nullify transactions occurring after the
time the trading halt was supposed to be
in place until the official end of the
trading halt according to the primary
listing market.
The Exchange also notes that it
currently has authority pursuant to
paragraph (b)(1) of Rule 3312 to review
and nullify transactions that arise
during a disruption or malfunction in
the operation of any electronic
communications and trading facilities of
the Exchange. Further, paragraph (b)(1)
of Rule 3312 gives the Exchange
authority to use a lower numerical
guideline than is set forth in paragraph
(a)(2)(C)(i) of Rule 3312 when necessary
to maintain a fair and orderly market
and to protect investors and the public
interest. Thus, while the Exchange
believes that paragraph (b)(1) does give
the Exchange the authority to nullify
transactions occurring when there is an
Exchange technical issue related to the
transmission or receipt of the electronic
message instituting a trading halt or
with respect to a technical issue related
to a prematurely lifted trading halt, the
Exchange believes that proposed
paragraph (i) will provide appropriate
authority for the Exchange to nullify all
such transactions whether or not the
systems problem occurs on the
Exchange with respect to trading halts
and explicit clarity for market
participants that such transactions will
be nullified. The Exchange believes that
such authority is appropriate because
when relied upon the Exchange will be
cancelling trades that should not have
occurred in the first instance. Finally,
the Exchange believes that such
authority is appropriate because a
trading halt declared by the primary
listing market is indicative of an issue
with respect to the applicable security
or a larger set of securities.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with the
requirements of the Act and the rules
and regulations thereunder that are
applicable to a national securities
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exchange, and, in particular, with the
requirements of Section 6(b) of the
Act.13 In particular, the proposal is
consistent with Section 6(b)(5) of the
Act,14 because it would promote just
and equitable principles of trade,
remove impediments to, and perfect the
mechanism of, a free and open market
and a national market system.
The Exchange believes that it is
appropriate to adopt a provision
granting the Exchange authority to
nullify trades that occur if an Event
similar to the U.S. Bancorp Event occurs
again. The Exchange believes that this
provision will allow the Exchange to act
in the event of such a severe valuation
error, that such action would promote
just and equitable principles of trade
and that the proposal is therefore
consistent with the Act. Similarly, the
Exchange believes that adding a
provision allowing the Exchange to
nullify transactions that occur when a
trading halt is declared, then
prematurely lifted in error and then
reinstituted, and providing that in the
event of any disruption or malfunction
in the operation of the electronic
communications and trading facilities of
the Exchange, another market center or
responsible single plan processor in
connection with the transmittal or
receipt of a trading halt the Exchange
will nullify trades occurring after a
trading halt has been declared by the
primary listing market for the security
will help to avoid confusion amongst
market participants, which is consistent
with the protection of investors and the
public interest and therefore consistent
with the Act. The Exchange further
believes that the proposal is appropriate
and consistent with the Act because
when relied upon the Exchange will be
cancelling trades that should not have
occurred in the first instance. The
Exchange also believes that the proposal
is appropriate because a trading halt
declared by the primary listing market
is indicative of an issue with respect to
the applicable security or a larger set of
securities.
The Exchange believes that the
proposal to update cross-references in
existing paragraph (g) of Rule 3312 to
include new paragraphs (h) and (i) is
consistent with the Act because, as is
the case with respect to the current rule,
this change makes clear that the
provisions of paragraph (g) do not alter
the application of other provisions of
Rule 3312.
The Exchange believes that the
Financial Industry Regulatory Authority
(‘‘FINRA’’) and other national securities
13 15
14 15
PO 00000
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
Frm 00151
Fmt 4703
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exchanges are also filing similar
proposals to add provisions similar to
the provisions proposed by the
Exchange above. Therefore, the proposal
promotes just and equitable principles
of trade in that it promotes transparency
and uniformity across markets
concerning treatment of transactions as
clearly erroneous. The proposed rule
change would also help to 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.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change implicates any
competitive issues. To the contrary, as
noted above, the Exchange believes
FINRA and other national securities
exchanges are also filing similar
proposals, and thus, that the proposal
will help to ensure consistency 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 not solicited, and
does not intend to solicit, comments on
this proposed rule change. The
Exchange has not received any written
comments from members or other
interested parties.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of
publication of this notice in the Federal
Register or within such longer period (i)
as the Commission may designate up to
90 days of such date if it finds such
longer period to be appropriate and
publishes its reasons for so finding or
(ii) as to which the Exchange consents,
the Commission shall: (a) By order
approve or disapprove such proposed
rule change, or (b) institute proceedings
to determine whether the proposed rule
change should be 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
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• Send an email to rule-comments@
sec.gov. Please include File Number SR–
Phlx–2014–27 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE.,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–Phlx–2014–27. 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 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–Phlx–
2014–27 and should be submitted on or
before May 27, 2014.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.15
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2014–10291 Filed 5–5–14; 8:45 am]
sroberts on DSK5SPTVN1PROD with NOTICES
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–72053; File No. SR–BX–
2014–021]
Self-Regulatory Organizations;
NASDAQ OMX BX, Inc.; Notice of Filing
of Proposed Rule Change To Add New
Paragraphs (h) and (i) to Rule 11890,
entitled ‘‘Clearly Erroneous
Transactions’’
April 30, 2014.
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 April 17,
2014, NASDAQ OMX BX, Inc. (‘‘BX’’ or
‘‘Exchange’’), filed with the Securities
and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III 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 add new
paragraphs (h) and (i) to Rule 11890,
entitled ‘‘Clearly Erroneous
Transactions.’’
The text of the proposed rule change
is available from BX’s Web site at
https://nasdaqomxbx.cchwallstreet.com,
at BX’s principal office, 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
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 add
new paragraph (h) to Rule 11890 to
provide the Exchange with authority to
1 15
15 17
CFR 200.30–3(a)(12).
VerDate Mar<15>2010
17:34 May 05, 2014
2 17
Jkt 232001
PO 00000
U.S.C. 78s(b)(1).
CFR 240.19b–4.
Frm 00152
Fmt 4703
Sfmt 4703
25965
nullify transactions that were effected
based on the same fundamentally
incorrect or grossly misinterpreted
issuance information even if such
transactions occur over a period of
several days, as further described below.
An example of fundamentally incorrect
and grossly misinterpreted issuance
information that led to a severe
valuation error is included below for
illustrative purposes.
The Exchange also proposes to add
new paragraph (i) to Rule 11890 to make
clear that in the event of any disruption
or malfunction in the operation of the
electronic communications and trading
facilities of the Exchange, another
market center or responsible single plan
processor in connection with the
transmittal or receipt of a regulatory
trading halt, suspension or pause
(hereafter generally referred to as a
‘‘trading halt’’ for ease of reference), the
Exchange will nullify any transaction
that occurs after the primary listing
market for a security declares a trading
halt with respect to such security. In the
event a trading halt is declared, then
prematurely lifted in error, and then reinstituted, proposed paragraph (i) would
also result in nullification of any
transactions that occur before the
official, final end of the trading halt
according to the primary listing market.
The Exchange also proposes a change
to certain cross-references in Rule
11890, due to the addition of paragraphs
(h) and (i). Specifically, the Exchange
proposes to update cross-references in
existing paragraph (g) of Rule 11890 in
order to make clear that the provisions
of paragraph (g) do not alter the
application of other provisions of Rule
11890, including new paragraphs (h)
and (i).
Background
On September 10, 2010, the
Commission approved, on a pilot basis,
changes to Rule 11890 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 listing market and
subsequent transactions that occur
before the trading pause is in effect on
the Exchange.3 The Exchange also
adopted additional changes to Rule
11890 that reduced the ability of the
Exchange to deviate from the objective
standards set forth in Rule 11890,4 and
3 Securities Exchange Act Release No. 62886
(Sept. 10, 2010), 75 FR 56613 (Sept. 16, 2010) (SR–
BX–2010–040).
4 Id.
E:\FR\FM\06MYN1.SGM
06MYN1
]]>Agencies
[Federal Register Volume 79, Number 87 (Tuesday, May 6, 2014)]
[Notices]
[Pages 25961-25965]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-10291]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-72055; File No. SR-Phlx-2014-27]
Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of
Filing of Proposed Rule Change To Add New Paragraphs (h) and (i) to
Rule 3312, entitled ``Clearly Erroneous Transactions''
April 30, 2014.
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 April 17, 2014, NASDAQ OMX PHLX LLC (``Phlx'' or
``Exchange''), filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II,
and III 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.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to add new paragraphs (h) and (i) to Rule
3312, entitled ``Clearly Erroneous Transactions.''
The text of the proposed rule change is available from Phlx's Web
site at https://nasdaqomxphlx.cchwallstreet.com, at Phlx's principal
office, 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 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 add new paragraph (h) to Rule 3312
to
[[Page 25962]]
provide the Exchange with authority to nullify transactions that were
effected based on the same fundamentally incorrect or grossly
misinterpreted issuance information even if such transactions occur
over a period of several days, as further described below. An example
of fundamentally incorrect and grossly misinterpreted issuance
information that led to a severe valuation error is included below for
illustrative purposes.
The Exchange also proposes to add new paragraph (i) to Rule 3312 to
make clear that in the event of any disruption or malfunction in the
operation of the electronic communications and trading facilities of
the Exchange, another market center or responsible single plan
processor in connection with the transmittal or receipt of a regulatory
trading halt, suspension or pause (hereafter generally referred to as a
``trading halt'' for ease of reference), the Exchange will nullify any
transaction that occurs after the primary listing market for a security
declares a trading halt with respect to such security. In the event a
trading halt is declared, then prematurely lifted in error, and then
re-instituted, proposed paragraph (i) would also result in
nullification of any transactions that occur before the official, final
end of the trading halt according to the primary listing market.
The Exchange also proposes a change to certain cross-references in
Rule 3312, due to the addition of paragraphs (h) and (i). Specifically,
the Exchange proposes to update cross-references in existing paragraph
(g) of Rule 3312 in order to make clear that the provisions of
paragraph (g) do not alter the application of other provisions of Rule
3312, including new paragraphs (h) and (i).
Background
On September 10, 2010, the Commission approved, on a pilot basis,
changes to the clearly erroneous rules of the national securities
exchanges 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 listing
market and subsequent transactions that occur before the trading pause
is in effect on the Exchange.\3\ The national securities exchanges
adopted additional changes to their clearly erroneous rules that
reduced the ability of the national securities exchanges to deviate
from the objective standards set forth in their respective clearly
erroneous rules.\4\ In connection with its resumption of trading of NMS
Stocks through the NASDAQ OMX PSX system, the Exchange amended Rule
3312 to conform it to the newly-adopted changes to the national
securities exchanges' clearly erroneous rules, so that it could
participate in the pilot program.\5\ In 2013, the Exchange adopted a
provision designed to address the 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'').\6\
The Exchange removed the specific provisions related to individual
stock trading pauses and extended to April 8, 2014 the pilot program
applicable to certain provisions of Rule 3312.\7\ Most recently, the
Exchange extended the effectiveness of the pilot program under Rule
3312 to coincide with the pilot period for the Plan, including any
extensions to the pilot period for the Plan.\8\
---------------------------------------------------------------------------
\3\ Securities Exchange Act Release No. 62886 (Sept. 10, 2010),
75 FR 56613 (Sept. 16, 2010).
\4\ Id.
\5\ Securities Exchange Act Release No. 63023 (Sept. 30, 2010),
75 FR 61802 (Oct. 6, 2010) (SR-Phlx-2010-125).
\6\ See Securities Exchange Act Release No. 68820 (Feb. 1,
2013), 78 FR 9436 (Feb. 8, 2013) (SR-Phlx-2013-12); Securities
Exchange Act Release No. 67091 (May 31, 2012), 77 FR 33498 (June 6,
2012) (the ``Limit Up-Limit Down Release''); see also Exchange Rule
3312(g).
\7\ Paragraphs (a)(2)(C), (b), (c)(1) and (g) of Rule 3312 are
currently subject to a pilot program. See Securities Exchange Act
Release No. 70541 (Sept. 27, 2013), 78 FR 61431 (Oct. 3, 2013) (SR-
Phlx-2013-97).
\8\ Securities Exchange Act Release No. 71783 (Mar. 24, 2014),
79 FR 17617 (Mar. 28, 2014) (SR-Phlx-2014-18).
---------------------------------------------------------------------------
As proposed, similar to other provisions added in recent years, as
described above, both paragraph (h) and paragraph (i) would be subject
to the pilot period, and thus, will coincide with the pilot period for
the Plan, including any extensions to the pilot period for the Plan.
Executions Based on Incorrect or Grossly Misinterpreted Issuance
Information
The Exchange proposes to adopt a new provision, paragraph (h), to
Rule 3312, which would provide that a series of transactions in a
particular security on one or more trading days may be viewed as one
event if all such transactions were effected based on the same
fundamentally incorrect or grossly misinterpreted issuance information
(e.g., with respect to a stock split or corporate dividend) resulting
in a severe valuation error for all such transactions (the ``Event'').
As proposed, an Officer of the Exchange or senior level employee
designee, acting on his or her own motion, would be required to take
action to declare all transactions that occurred during the Event null
and void not later than the start of trading on the day following the
last transaction in the Event. If trading in the security is halted
before the valuation error is corrected, the Officer of the Exchange or
senior level employee designee would be required to take action to
declare all transactions that occurred during the Event null and void
prior to the resumption of trading. The Exchange proposes to make clear
that no action can be taken pursuant to proposed paragraph (h) with
respect to any transactions that have reached settlement date for the
security or that result from an initial public offering of a security.
The Exchange believes that declaring a trade null and void after
settlement date would be complex to administer and unfair to the
affected parties. The Exchange also believes that excluding IPOs from
the proposed rule will ensure that transactions in a new security for
which there is no benchmark information are not called into question,
as it is the IPO process itself, including the extensive public
disclosure associated with IPOs, that is intended to drive price
formation.
Further, the Exchange proposes that to the extent transactions
related to an Event occur on one or more other market centers, the
Exchange will promptly coordinate with such other market center(s) to
ensure consistent treatment of the transactions related to the Event,
if practicable. The Exchange also proposes to state in the Rule that
any action taken in connection with paragraph (h) will be taken without
regard to the Numerical Guidelines set forth in paragraph (a)(2)(C)(i)
of Rule 3312. In particular, the Exchange believes that there could be
scenarios where there are erroneous transactions related to an Event
that do not meet applicable Numerical Guidelines but that are, upon
review, clearly erroneous. One example of a situation that could occur
is a corporate action, such as a stock split, that results in the
dissemination of fundamentally incorrect or grossly misinterpreted
issuance information and leads to erroneous transactions at a price
that is close to the price at which the security was previously
trading. Even if such trading is consistent with prior trading activity
for the security, and thus would not meet applicable Numerical
Guidelines, the Exchange would have the authority to nullify such
[[Page 25963]]
transactions if they were affected based on the same fundamentally
incorrect or grossly misinterpreted issuance information and there was
a severe valuation error as a result (i.e., although the security
should be trading at a price further away from its previous range, due
to fundamentally incorrect or grossly misinterpreted issuance
information with respect to the corporate action the security continues
to trade at a price that does not meet applicable Numerical
Guidelines).
The Exchange also proposes to include a provision, as it does in
many other sub-paragraphs of Rule 3312, stating that each Member
involved in a transaction subject to proposed paragraph (h) shall be
notified as soon as practicable by the Exchange, and that the party
aggrieved by the action may appeal such action in accordance with
Exchange Rule 3312(c).
In particular, the Exchange believes it is necessary to have
authority to nullify trades that occur in an event similar to an event
involving an exchange offer (``Exchange Offer'') made by U.S. Bancorp
on the New York Stock Exchange (``NYSE'') in 2010 in which there were a
series of executions based on incorrect or grossly misinterpreted
issuance information. As a result of such information, the securities
traded at severely dislocated prices. At the time, the NYSE filed an
emergency rule filing in order to respond to that event.\9\ With the
filing the NYSE interpreted the rule applicable to clearly erroneous
executions as permitting the NYSE to nullify all trades resulting after
the Exchange Offer at severely dislocated prices.\10\ The Exchange
believes it is important to have in place a rule to break such trades
if an event like the U.S. Bancorp event occurs again in the future. The
U.S. Bancorp event is described in further detail below and is intended
to be illustrative of the manner in which the Exchange proposes to
utilize proposed paragraph (h), if necessary.
---------------------------------------------------------------------------
\9\ Securities Exchange Act Release No. 62609 (July 30, 2010),
75 FR 47327 (Aug. 5, 2010) (SR-NYSE-2010-55).
\10\ Id.
---------------------------------------------------------------------------
In May 2010, U.S. Bancorp commenced an offer to exchange up to
1,250,000 Depositary Shares, each representing a 1/100 interest in a
share of Series A Non-Cumulative Perpetual Preferred Stock, $100,000
liquidation preference per share (the ``Depositary Shares'') for any
and all of the 1,250,000 outstanding 6.189% Fixed-to-Floating Rate
Normal ITS issued by U.S. Bancorp Capital IX, each with a liquidation
amount of $1,000 (the ``Normal ITS''). The Depositary Shares were
approved for listing on the NYSE under the symbol USB PRA. On June 11,
2010, the NYSE opened the shares on a quote, but trading did not
commence until June 16, 2010 at prices in the range of $79.00 per
share. There were additional executions on the NYSE in that price range
on June 17 and 18, 2010. On June 18, 2010, NYSE staff learned that the
prices at which trades had executed were not consistent with the value
of the security, which was closer to an $800 price. Upon learning of
the pricing disparity, NYSE immediately halted trading in the
Depositary Shares on all markets and alerted U.S. Bancorp and other
exchanges that traded the Depositary Shares of the pricing discrepancy.
In order to address the situation, the NYSE filed a proposal to
interpret its existing clearly erroneous execution rule such that the
trading in Depositary Shares from June 16 to June 18 constituted a
single event because that trading was based on incorrect or grossly
misinterpreted issuance information that resulted in severe price
dislocation (the ``U.S. Bancorp Event'').\11\ Because the Depositary
Shares were halted before the price of the Depositary Shares ceased to
be dislocated, and remained halted, the NYSE was able to review trading
in Depositary Shares and declare null and void all trading in the U.S.
Bancorp Event before the security resumed trading.
---------------------------------------------------------------------------
\11\ Id.
---------------------------------------------------------------------------
Rather than filing a proposal in response to a similar event
happening again, the Exchange proposes to add paragraph (h) in order to
nullify transactions consistent with the description of the proposed
Rule above.
Executions After a Trading Halt Has Been Declared
The Exchange proposes to add new paragraph (i) to Rule 3312 to make
clear that in the event of any disruption or malfunction in the
operation of the electronic communications and trading facilities of
the Exchange, another market center or responsible single plan
processor in connection with the transmittal or receipt of a trading
halt, the Exchange will nullify any transaction that occurs after the
primary listing market for a security declares a trading halt and
before such trading halt with respect to such security has officially
ended according to the primary listing market. In addition, proposed
paragraph (i) will make clear that in the event a trading halt is
declared, then prematurely lifted in error and then re-instituted, the
Exchange will nullify transactions that occur before the official,
final end of the trading halt according to the primary listing market.
As with other provisions in Rule 3312, including proposed paragraph
(h) as discussed above, the authority to nullify transactions pursuant
to paragraph (i) would be vested in an officer of the Exchange or other
senior level employee designee, acting on his or her own motion. Any
action taken in connection with paragraph (i) would be taken in a
timely fashion, generally within thirty (30) minutes of the detection
of the erroneous transaction and in no circumstances later than the
start of Regular Market Session \12\ on the trading day following the
date of execution(s) under review. The Exchange also proposes to
specify that any action taken in connection with proposed paragraph (i)
will be taken without regard to the Numerical Guidelines set forth in
paragraph (a)(2)(C)(i) of Rule 3312. The Exchange believes it is
appropriate to act to nullify transactions pursuant to proposed
paragraph (i) without regard to applicable Numerical Guidelines because
in the situations covered by paragraph (i), such transactions should
not have occurred in the first instance, and thus, their nullification
does not put parties in any different position than they should have
been. The Exchange also believes that the certainty that the proposed
rule provides is critical in situations involving trading halts.
---------------------------------------------------------------------------
\12\ Regular Market Session is defined in Exchange Rule
3100(b)(4)(D) as the trading session from 9:30 a.m. until 4:00 p.m.
or 4:15 p.m.
---------------------------------------------------------------------------
As it has proposed for paragraph (h), as described above, the
Exchange also proposes to include a provision stating that each Member
involved in a transaction subject to proposed paragraph (i) shall be
notified as soon as practicable by the Exchange, and that the party
aggrieved by the action may appeal such action in accordance with
Exchange Rule 3312(c).
The Exchange notes that trading in a security is typically halted
immediately on the Exchange when the primary listing market issues a
trading halt in such security. However, in certain circumstances, due
to a technical issue related to the transmission or receipt of the
electronic message instituting such trading halt or due to other
extraordinary circumstances, executions can occur on the Exchange
following the declaration of such a trading halt. Similarly, although
rare, the Exchange has witnessed scenarios where due to extraordinary
circumstances a trading
[[Page 25964]]
halt is declared, then prematurely lifted in error and then re-
instituted. It is these types of extraordinary circumstances that the
Exchange believes require certainty, and thus, the Exchange believes it
necessary to make clear that in such a circumstance any transactions
after a trading halt has been declared will be nullified. In the event
that a trading halt is declared as of a future time (i.e., if the
primary listing exchange declares a trading halt as of a specific,
future time in order to ensure coordination amongst market
participants), the Exchange would only nullify transactions occurring
after the time the trading halt was supposed to be in place until the
official end of the trading halt according to the primary listing
market.
The Exchange also notes that it currently has authority pursuant to
paragraph (b)(1) of Rule 3312 to review and nullify transactions that
arise during a disruption or malfunction in the operation of any
electronic communications and trading facilities of the Exchange.
Further, paragraph (b)(1) of Rule 3312 gives the Exchange authority to
use a lower numerical guideline than is set forth in paragraph
(a)(2)(C)(i) of Rule 3312 when necessary to maintain a fair and orderly
market and to protect investors and the public interest. Thus, while
the Exchange believes that paragraph (b)(1) does give the Exchange the
authority to nullify transactions occurring when there is an Exchange
technical issue related to the transmission or receipt of the
electronic message instituting a trading halt or with respect to a
technical issue related to a prematurely lifted trading halt, the
Exchange believes that proposed paragraph (i) will provide appropriate
authority for the Exchange to nullify all such transactions whether or
not the systems problem occurs on the Exchange with respect to trading
halts and explicit clarity for market participants that such
transactions will be nullified. The Exchange believes that such
authority is appropriate because when relied upon the Exchange will be
cancelling trades that should not have occurred in the first instance.
Finally, the Exchange believes that such authority is appropriate
because a trading halt declared by the primary listing market is
indicative of an issue with respect to the applicable security or a
larger set of securities.
2. Statutory Basis
The Exchange believes that its proposal is consistent with the
requirements of the Act and the rules and regulations thereunder that
are applicable to a national securities exchange, and, in particular,
with the requirements of Section 6(b) of the Act.\13\ In particular,
the proposal is consistent with Section 6(b)(5) of the Act,\14\ because
it would promote just and equitable principles of trade, remove
impediments to, and perfect the mechanism of, a free and open market
and a national market system.
---------------------------------------------------------------------------
\13\ 15 U.S.C. 78f(b).
\14\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The Exchange believes that it is appropriate to adopt a provision
granting the Exchange authority to nullify trades that occur if an
Event similar to the U.S. Bancorp Event occurs again. The Exchange
believes that this provision will allow the Exchange to act in the
event of such a severe valuation error, that such action would promote
just and equitable principles of trade and that the proposal is
therefore consistent with the Act. Similarly, the Exchange believes
that adding a provision allowing the Exchange to nullify transactions
that occur when a trading halt is declared, then prematurely lifted in
error and then reinstituted, and providing that in the event of any
disruption or malfunction in the operation of the electronic
communications and trading facilities of the Exchange, another market
center or responsible single plan processor in connection with the
transmittal or receipt of a trading halt the Exchange will nullify
trades occurring after a trading halt has been declared by the primary
listing market for the security will help to avoid confusion amongst
market participants, which is consistent with the protection of
investors and the public interest and therefore consistent with the
Act. The Exchange further believes that the proposal is appropriate and
consistent with the Act because when relied upon the Exchange will be
cancelling trades that should not have occurred in the first instance.
The Exchange also believes that the proposal is appropriate because a
trading halt declared by the primary listing market is indicative of an
issue with respect to the applicable security or a larger set of
securities.
The Exchange believes that the proposal to update cross-references
in existing paragraph (g) of Rule 3312 to include new paragraphs (h)
and (i) is consistent with the Act because, as is the case with respect
to the current rule, this change makes clear that the provisions of
paragraph (g) do not alter the application of other provisions of Rule
3312.
The Exchange believes that the Financial Industry Regulatory
Authority (``FINRA'') and other national securities exchanges are also
filing similar proposals to add provisions similar to the provisions
proposed by the Exchange above. Therefore, the proposal promotes just
and equitable principles of trade in that it promotes transparency and
uniformity across markets concerning treatment of transactions as
clearly erroneous. The proposed rule change would also help to 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.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change
implicates any competitive issues. To the contrary, as noted above, the
Exchange believes FINRA and other national securities exchanges are
also filing similar proposals, and thus, that the proposal will help to
ensure consistency 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 not solicited, and does not intend to solicit,
comments on this proposed rule change. The Exchange has not received
any written comments from members or other interested parties.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the Exchange consents, the Commission shall: (a) By order approve
or disapprove such proposed rule change, or (b) institute proceedings
to determine whether the proposed rule change should be 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
[[Page 25965]]
Send an email to rule-comments@sec.gov. Please include
File Number SR-Phlx-2014-27 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-Phlx-2014-27. 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 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-Phlx-2014-27 and should be
submitted on or before May 27, 2014.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-10291 Filed 5-5-14; 8:45 am]
BILLING CODE 8011-01-P
