[Federal Register Volume 76, Number 203 (Thursday, October 20, 2011)]
[Notices]
[Pages 65306-65307]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-27136]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-65575; File No. SR-NASDAQ-2011-141]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Modify Interpretation of Rule 4120(a)(11)
October 14, 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 October 6, 2011, the NASDAQ Stock Market, LLC (``NASDAQ'' 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 NASDAQ. 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
NASDAQ proposes to modify its interpretation of Rule 4120(a)(11)
regarding at what price level to initiate a subsequent trading halts
for any security that has been previously halted. NASDAQ will implement
the proposed change immediately upon filing. There is no new proposed
rule text, and a copy of the proposed rule change is available at
http://nasdaqomx.cchwallstreet.com, at NASDAQ'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, NASDAQ 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. NASDAQ 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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
NASDAQ is modifying its interpretation and practices related to
certain language contained in Rule 4120(a)(11) which generally allows
for the pausing of trading in individual securities should that
security experience a significant percentage price increase or decline.
Once a stock is halted pursuant to the rule, a five-minute halt period
commences, after which trading is re-commenced using prices determined
by NASDAQ's halt-cross process.
Currently, NASDAQ interprets language in Rule 4120(a) that states
``[p]rice moves under this paragraph will be calculated by changes in
each consolidated last-sale price disseminated by a network processor
over a five minute rolling period measured continuously[.]'' as
requiring a continuous look back of five minutes--even when a stock is
currently halted for a previous triggering price increase or decline.
In this situation, trade reports for transactions taking place
immediately before, or contemporaneous with, the halt can be submitted
and disseminated, and thus set a new ``within five minutes'' comparison
price level with any subsequent opening price coming out of the halt-
cross process. Should a resulting price decline differential between
the late intra-halt disseminated price and any new opening price coming
out of the cross halt be great enough, another disruptive halt can be
triggered.
In response, NASDAQ proposes to modify its interpretation of what
price its systems will for [sic] consider for evaluating the need for
any subsequent
[[Page 65307]]
halt during the initial time period when a stock is coming out of a
halt commenced pursuant to Rule 4120(a)(11). Under the proposed change,
NASDAQ systems will not look back for any prices disseminated during a
halt and instead will use the opening price determined by its halt-
cross process as the initial price level against which subsequent price
increases or declines will be measured. As before, any subsequent
triggering price increases or declines within any continuous five-
minute period, even one immediately triggering a halt in comparison to
the halt-cross process, will initiate a halt in conformity with Rule
4120(a)(11).
NASDAQ believes that the above interpretation will ensure that
prices determined and submitted at a period of time around the start of
a trading halt do not carry over and inappropriately impact attempts to
re-start trading after that halt. NASDAQ also understands that this
approach to initial pricing coming out of a halt is already in effect
at other listing markets likewise subject to uniform percentage
increase or decline stock halt rules.
2. Statutory Basis
NASDAQ believes that the proposed rule change is consistent with
the provisions of Section 6 of the Act,\3\ in general, and with Section
6(b)(5) of the Act \4\ in particular, in that the proposal 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 regulating, clearing, settling,
processing information with respect to, and facilitating transactions
in securities, to remove impediments to and perfect the mechanism of a
free and open market and a national market system, and, in general, to
protect investors and the public interest. NASDAQ believes that the
change will result in the adoption of a clear policy with respect to
the meaning, administration, and enforcement of Rule 4120(a)(11),
thereby promoting members' understanding of the parameters of the rule
and the efficiency of its administration.
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\3\ 15 U.S.C. 78f.
\4\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
As all listing markets are subject to uniform halt rules, and it is
NASDAQ's understanding that its proposed approach to evaluating prices
coming out of a halt is similar to that already being used by other
listing markets, NASDAQ 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
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act.\5\ At any time within 60 days of the filing
of the proposed rule change, the Commission summarily may temporarily
suspend such rule change if it appears to the Commission that such
action is necessary or appropriate in the public interest, for the
protection of investors, or otherwise in furtherance of the purposes of
the Act. If the Commission takes such action, the Commission shall
institute proceedings to determine whether the proposed rule should be
approved or disapproved.
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\5\ 15 U.S.C. 78s(b)(3)(A)(ii).
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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:
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 No. SR-NASDAQ-2011-141 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 No. SR-NASDAQ-2011-141. 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
available publicly. All submissions should refer to File No. SR-NASDAQ-
2011-141 and should be submitted on or before November 10, 2011.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\6\
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\6\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-27136 Filed 10-19-11; 8:45 am]
BILLING CODE 8011-01-P