[Federal Register Volume 76, Number 92 (Thursday, May 12, 2011)]
[Notices]
[Pages 27693-27694]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-11669]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-64419; File No. SR-Phlx-2011-64]
Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of
Filing of Proposed Rule Change To Amend Rule 3100(a)(4) To Include
Additional Securities in the Pilot by Which Such Rule Operates
May 6, 2011.
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 May 4, 2011, NASDAQ OMX PHLX LLC (``Exchange''), filed with the
Securities and Exchange Commission (``Commission'') the proposed rule
change as described in Items I and II below, which Items have been
prepared by the Exchange. The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend Rule 3100(a)(4) to include
additional securities in the pilot by which such rule operates.
The text of the proposed rule change is below. Proposed new
language is italicized; proposed deletions are in brackets.
* * * * *
Rule 3100. Trading Halts on PSX
(a) Authority To Initiate Trading Halts or Pauses
In circumstances in which the Exchange deems it necessary to
protect investors and the public interest, and pursuant to the
procedures set forth in paragraph (c):
(1)-(3) No change.
(4) If a primary listing market issues an individual stock
trading pause in any of the Circuit Breaker Securities, as defined
herein, the Exchange will pause trading in that security until
trading has resumed on the primary listing market. If, however,
trading has not resumed on the primary listing market and ten
minutes have passed since the individual stock trading pause message
has been received from the responsible single plan processor, the
Exchange may resume trading in such stock. The provisions of this
paragraph (a)(4) shall be in effect during a pilot set to end on the
earlier of August 11, 2011 or the date on which a limit up/limit
down mechanism to address extraordinary market volatility, if
adopted, applies. During the pilot, the term ``Circuit Breaker
Securities'' shall mean any NMS stock [the securities included in
the S&P 500[supreg] Index and the Russell 1000[supreg]
Index, as well as a pilot list of Exchange Traded Products].
(b)-(c) No change.
* * * * *
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
Sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend Rule 3100(a)(4) to include
additional securities in the pilot by which such rule operates.
On June 10, 2010, the Commission granted accelerated approval, for
a pilot period to end December 10, 2010, of proposed rule changes
submitted by the BATS Exchange, Inc., NASDAQ OMX BX, Inc., Chicago
Board Options Exchange, Incorporated, Chicago Stock Exchange, Inc.,
EDGA Exchange, Inc., EDGX Exchange, Inc., International Securities
Exchange LLC, The NASDAQ Stock Market LLC (``NASDAQ''), New York Stock
Exchange LLC (``NYSE''), NYSE Amex LLC (``NYSE Amex''), NYSE Arca, Inc.
(``NYSE Arca''), and National Stock Exchange, Inc. (collectively, the
``Exchanges''), to pause trading during periods of extraordinary market
volatility in S&P 500 stocks.\3\ The rules require the Listing Markets
\4\ to issue five-minute trading pauses for individual securities for
which they are the primary Listing Market if the transaction price of
the security moves ten percent or more from a price in the preceding
five-minute period. The Listing Markets are required to notify the
other Exchanges and market participants of the imposition of a trading
pause by immediately disseminating a special indicator over the
consolidated tape. Under the rules, once the Listing Market issues a
trading pause, the other Exchanges are required to pause trading in the
security on their markets. On September 10, 2010, the Commission
approved the respective rule filings of the Exchanges to expand
application of the pilot to securities comprising the Russell
1000[supreg] Index and specified Exchange Traded Products.\5\
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\3\ See Securities Exchange Act Release No. 62252 (June 10,
2010), 75 FR 34186 (June 16, 2010).
\4\ The term ``Listing Markets'' refers collectively to NYSE,
NYSE Amex, NYSE Arca, and NASDAQ.
\5\ See Securities Exchange Act Release No. 62884 (September 10,
2010), 75 FR 56618 (September 16, 2010).
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In connection with its resumption of trading of NMS Stocks through
the NASDAQ OMX PSX system, the Exchange adopted Rule 3100(a)(4) so that
it could participate in the pilot program.\6\ On September 29, 2010,
the Exchange amended Rule 3100(a)(4) to include stocks comprising the
Russell 1000[supreg] Index and specified Exchange Traded Products.\7\
On December 7, 2010, the Exchange filed an immediately effective filing
to extend the existing pilot program for four months, so that the pilot
would expire on April 11, 2011.\8\ On March 31, 2011, the Exchange
filed an immediately effective filing to extend the existing pilot
program for four months, so that the pilot would expire on the earlier
of August 11, 2011 or the date on which a limit up/limit down mechanism
to address extraordinary market volatility, if adopted, applies.\9\
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\6\ See Securities Exchange Act Release No. 62877 (September 9,
2010), 75 FR 56633 (September 16, 2010) (SR-Phlx-2010-79).
\7\ See Securities Exchange Act Release No. 63004 (September 29,
2010), 75 FR 61547 (October 5, 2010) (SR-Phlx-2010-126).
\8\ See Securities Exchange Act Release No. 63504 (December 9,
2010), 75 FR 78304 (December 15, 2010) (SR-Phlx-2010-174).
\9\ See Securities Exchange Act Release No. 64175 (April 4,
2011), 76 FR 19823 (April 8, 2011) (SR-Phlx-2011-44).
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The Exchanges have continued to assess whether additional
securities need to be added to the Pilot and whether the parameters of
the Circuit Breaker Pilot needs to be modified to accommodate trading
characteristics of different securities. In consultation with other
markets and the staff of the Commission, the Exchanges are proposing to
include all NMS stocks within the Pilot that are not already included
therein, but to apply a wider price move percentage to the newly
[[Page 27694]]
added securities.\10\ Specifically, NYSE, NYSE Amex, NYSE Arca, and
NASDAQ, as the listing markets, are proposing to set the price move
required to trigger a trading pause for the proposed new securities to
be 30% or more for such securities priced at $1 or higher and 50% or
more for such securities priced less than $1. The listing markets
believe that applying a broader percentage to securities priced less
than $1 compared to those priced above $1 is appropriate given that
lower-priced securities tend to be more volatile, and price movements
of lower-priced securities equate to a higher percentage move than a
similar price change for a higher-priced security. The listing markets
also believe that, since the newly added securities are not currently
included in the S&P 500 Index, Russell 1000 Index, or specified ETPs,
they are more likely to be less liquid securities or securities with
lower trading volumes. Accordingly, the Exchanges believe that broader
price move percentages would be appropriate. Similarly, because
leveraged ETPs trade at a ratio against the associated index, a broader
price move percentage would also be appropriate for leveraged ETPs. As
such, the Exchange proposes to delete language concerning the limited
application of pauses in Circuit Breaker Securities from the rule's
text, as the text therein would no longer be necessary, and to define
Circuit Breaker Securities as all NMS stocks.
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\10\ Certain of the Exchanges that have market maker
requirements are modifying their market maker obligations to fit
within these new Pilot price move percentages.
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2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\11\ in general, and furthers the objectives of Section
6(b)(5),\12\ in particular, in that it is designed to prevent
fraudulent and manipulative acts and practices, to promote just and
equitable principles of trade, to foster cooperation and coordination
with persons engaged in facilitating transactions in securities, and to
remove impediments to and perfect the mechanism of a free and open
market and a national market system. The proposed rule change also is
designed to support the principles of Section 11A(a)(1) \13\ of the Act
in that it seeks to ensure fair competition among brokers and dealers
and among exchange markets. The Exchange believes that the proposed
rule meets these requirements because it expands the scope of the Pilot
to cover all NMS stocks, consistent with similar proposals submitted by
the other Exchanges.
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\11\ 15 U.S.C. 78f(b).
\12\ 15 U.S.C. 78f(b)(5).
\13\ 15 U.S.C. 78k-1(a)(1).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
result in any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act, as amended.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
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 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 (http://www.sec.gov/rules/sro.shtml); or
Send an e-mail to [email protected]. Please include
File Number SR-Phlx-2011-64 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-Phlx-2011-64. This file
number should be included on the subject line if e-mail 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 (http://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
a.m. and 3 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-Phlx-2011-64 and should be
submitted on or before June 2, 2011.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-11669 Filed 5-11-11; 8:45 am]
BILLING CODE 8011-01-P