[Federal Register Volume 78, Number 34 (Wednesday, February 20, 2013)]
[Notices]
[Pages 11930-11932]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-03816]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-68916; File No. SR-BX-2013-012]
Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Extend
the Pilot Period of the Trading Pause for Certain NMS Stocks
February 13, 2013.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on February 1, 2013, NASDAQ OMX BX, Inc. (``BX'' or ``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 extend the trading pause pilot in certain
individual NMS stocks when the price moves ten percent or more in the
preceding five minute period, so that the pilot will now expire on the
earlier of the initial date of operations of the Regulation NMS Plan to
Address Extraordinary Market Volatility or February 4, 2014.
The text of the proposed rule change is below. Proposed new
language is italicized; proposed deletions are in [brackets].
* * * * *
IM-4120-3. Circuit Breaker Securities Pilot
The provisions of paragraph (a)(11) of this Rule shall be in effect
during a pilot set to end on the earlier of the initial date of
operations of the Regulation NMS Plan to Address Extraordinary Market
Volatility or February 4, 2014[3]. During the pilot, the term ``Circuit
Breaker Securities'' shall mean all NMS stocks except rights and
warrants.
* * * * *
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
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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
On June 10, 2010, the Commission granted accelerated approval for a
pilot period to end December 10, 2010, for a proposed rule change
submitted by the Exchange, together with related rule changes of the
BATS Exchange, 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 MKT LLC
(``NYSE MKT'') (formerly, NYSE Amex LLC), 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 the Russell 1000[supreg] Index and
specified Exchange Traded Products.\5\ 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.\6\ On March 31, 2011, the Exchange filed an immediately
effective filing to extend the pilot period an additional four months,
so that the pilot would expire on August 11, 2011 or the date on which
a limit up/limit down mechanism to address extraordinary market
volatility, if adopted, applies.\7\ On June 23, 2011, the Commission
approved the expansion of the pilot to all NMS stocks, but with
different pause-triggering thresholds.\8\ On August 8, 2011, the
Exchange filed an immediately effective filing that removed language
from the rule that tied the expiration of the pilot to the adoption of
a limit up/limit down mechanism to address extraordinary market
volatility, and further extended the pilot period, so that the pilot
would expire on January 31, 2012.\9\ On November 18, 2011, the Exchange
filed an immediately effective filing that excluded rights and warrants
from the pilot.\10\ On January 23, 2012, the Commission approved an
extension of the pilot to July 31, 2012.\11\
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\3\ Securities Exchange Act Release No. 62252 (June 10, 2010),
75 FR 34186 (June 16, 2010) (SR-BX-2010-037).
\4\ The term ``Listing Markets'' refers collectively to NYSE,
NYSE MKT, NYSE Arca, and NASDAQ.
\5\ Securities Exchange Act Release No. 62884 (September 10,
2010), 75 FR 56618 (September 16, 2010) (SR-BX-2010-044).
\6\ Securities Exchange Act Release No. 63527 (December 10,
2010), 75 FR 78781 (December 16, 2010) (SR-BX-2010-088).
\7\ Securities Exchange Act Release No. 64176 (April 4, 2011),
76 FR 19821 (April 8, 2011) (SR-BX-2011-018).
\8\ Securities Exchange Act Release No. 64735 (June 23, 2011),
76 FR 38243 (June 29, 2011) (SR-BX-2011-025, et al.).
\9\ Securities Exchange Act Release No. 65093 (August 10, 2011),
76 FR 50781 (August 16, 2011) (SR-BX-2011-055).
\10\ Securities Exchange Act Release No. 65815 (November 23,
2011), 76 FR 74109 (November 30, 2011) (SR-BX-2011-079).
\11\ Securities Exchange Act Release No. 66215 (January 23,
2012), 77 FR 4387 (January 27, 2012) (SR-BX-2012-003).
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On May 31, 2012, the Commission approved, on a pilot basis, the
National Market System Plan to Address Extraordinary Market
Volatility.\12\ This plan creates a market-wide limit up-limit down
mechanism that is intended to address extraordinary market volatility
in NMS Stocks, with a planned implementation date of February 4, 2013.
Once implemented, the limit up/limit down mechanism to address
extraordinary market volatility will render the current stock trading
pause pilot duplicative and unnecessary. The Exchange filed a rule
change proposal to extend the single stock trading pause pilot so that
it will now expire on February 4, 2013, when the limit up/limit down
mechanism to address extraordinary market volatility is to be
implemented.\13\
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\12\ Securities Exchange Act Release No. 67091 (May 31, 2012),
77 FR 33498 (June 6, 2012).
\13\ Securities Exchange Act Release No. 67571 (August 2, 2012),
77 FR 47448 (August 8, 2012) (SR-BX-2012-055).
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The Exchange, in conjunction with the Exchanges and FINRA, recently
filed an amendment to the Plan to change the date of initial operations
of the Plan from February 4, 2013 to April 8, 2013. Accordingly, the
Exchange is proposing to extend the expiration of the trading pause
pilot to the earlier of the initial date of operations of the Plan or
February 4, 2014 to allow adequate time for the Plan's implementation.
The Exchange believes that the pilot program has been successful in
reducing the negative impacts of sudden, unanticipated price movements
in the securities covered by the pilot. The Exchange also believes that
an additional extension of the pilot is warranted so that it may
continue to apply the circuit breaker to reduce the negative impacts of
sudden, unanticipated price movements until it is replaced by the limit
up/limit down mechanism.
2. Statutory Basis
The statutory basis for the proposed rule change is Section 6(b)(5)
of the Act,\14\ which requires the rules of an exchange to promote just
and equitable principles of trade, to remove impediments to and perfect
the mechanism of a free and open market and a national market system
and, in general, to protect investors and the public interest. The
Exchange believes that the change proposed herein meets these
requirements in that it promotes uniformity across markets concerning
decisions to pause trading in a security when there are significant
price movements, which promotes just and equitable principles of trade
and removes impediments to, and perfects the mechanism of, a free and
open market and a national market system. Additionally, extension of
the pilot until the earlier of the initial date of operations of the
Plan or February 4, 2014 would allow the pilot to continue to operate
without interruption while the Exchange and the Commission further
assess the effect of the pilot on the marketplace or whether other
initiatives should be adopted in lieu of the current pilot, which
contributes to the protection of investors and the public interest.
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\14\ 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
result in any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act, as amended. The
proposed changes are being made to
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extend the operation of the trading pause pilot until the earlier of
the initial date of operations of the Plan or February 4, 2014 would
allow the pilot to continue to operate without interruption until
implementation of the Plan, which contributes to the protection of
investors and the public interest. Other competing equity exchanges are
subject to the same trading pause requirements specified in the Plan.
Thus, the proposed changes will not impose any burden on competition
while providing trading pause requirements specified in the Plan.
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 Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \15\ and Rule 19b-4(f)(6) thereunder.\16\
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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\15\ 15 U.S.C. 78s(b)(3)(A)(iii).
\16\ 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) \17\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\18\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has asked
the Commission to waive the 30-day operative delay so that the proposal
may become operative immediately upon filing. The Commission believes
that waiving the 30-day operative delay is consistent with the
protection of investors and the public interest because such waiver
would allow the pilot program to continue uninterrupted. Accordingly,
the Commission hereby grants the Exchange's request and designates the
proposal operative upon filing.\19\
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\17\ 17 CFR 240.19b-4(f)(6).
\18\ 17 CFR 240.19b-4(f)(6)(iii).
\19\ For purposes only of waiving the 30-day 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 (http://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-BX-2013-012 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-BX-2013-012. 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 (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-BX-2013-012 and should be
submitted on or before March 13, 2013.
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\20\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\20\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-03816 Filed 2-19-13; 8:45 am]
BILLING CODE 8011-01-P