[Federal Register Volume 75, Number 99 (Monday, May 24, 2010)]
[Notices]
[Pages 28831-28833]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-12418]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62126; File No. SR-NYSE-2010-39]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing of a Proposed Rule Change Adding Rule 80C To Provide 
for a Trading Pause for Individual Securities When the Price Moves 10 
Percent or More

May 19, 2010.
    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 18, 2010, New York Stock Exchange LLC (``NYSE'' or the 
``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 NYSE. 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 add Rule 80C to provide for a trading 
pause for individual securities when the price moves 10 percent or 
more. A copy of this filing is available on the Exchange's Web site at 
http://www.nyse.com, at the Exchange's principal office, and at the 
Commission's Public Reference Room.

[[Page 28832]]

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 self-regulatory organization 
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 those 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 parts 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 add Rule 80C to provide for a trading 
pause for individual securities for which the Exchange is the primary 
listing market if the price of such security moves 10% or more from a 
sale in a preceding five-minute period. The Exchange is proposing this 
rule addition in consultation with other markets and staff of the 
Securities and Exchange Commission to provide for uniform market-wide 
trading pause standards for individual securities in the S&P 
500[supreg] Index that experience rapid price movement, as set forth 
below.
    The Exchange is proposing that this rule be implemented on a pilot 
basis, set to end on December 10, 2010. During this pilot period, the 
rule would be in effect only with respect to securities included in the 
S&P 500[supreg] Index. During that pilot period, the Exchange will 
continue to assess whether additional securities need to be added and 
whether the parameters of the rule would need to be modified to 
accommodate trading characteristics of different securities.
    As proposed, Rule 80C would enable the Exchange to pause trading in 
an individual security listed on the Exchange if the price moves by 10% 
as compared to prices of that security in the preceding five-minute 
period during a trading day, which period is defined as a ``Trading 
Pause.'' To enable the market to absorb the opening price of a security 
and to participate in the close, as proposed, the proposed rule would 
be in effect from 9:45 a.m. to 3:35 p.m., Eastern Time.
    Proposed Rule 80C(b) sets forth the re-opening procedures following 
a Trading Pause. As proposed, Designated Market Makers (``DMM'') at the 
Exchange would be responsible for re-opening trading at the end of the 
Trading Pause in a manner similar to existing procedures set forth in 
Rule 123D, subject to specified revisions. First, unlike the regular 
procedures for publishing indications after a halt, an indication shall 
be published as close to the beginning of the Trading Pause as possible 
and such indications shall be updated until the security has re-opened. 
Note, however, that the security may re-open even if the DMM does not 
have an opportunity to update an indication to reflect changes to order 
flow before the re-opening time. Second, any re-openings following a 
Trading Pause are not subject to the requirements that (i) a minimum of 
three minutes must elapse between the first indication and a security's 
re-opening, or (ii) if more than one indication is published, a minimum 
of one minute must elapse before a security's re-opening. Third, the 
Exchange shall publish Order Imbalance Information, as defined in Rule 
15(c), approximately every 15 seconds following the imposition of the 
Trading Pause until the security re-opens.
    Unlike a re-opening following a regulatory halt, the re-opening of 
a security following a Trading Pause shall be at the end of the Trading 
Pause. Such re-opening may be either on a trade or a quote. However, in 
the event of a significant imbalance, the Exchange may delay the re-
opening of the security past the five-minute Trading Pause period. The 
Exchange will notify other markets if it cannot reopen because of 
issues unrelated to an order imbalance, thereby enabling other markets 
to resume trading even if the primary market has not re-opened. The 
Exchange notes that if it re-opens the security after other markets 
have resumed trading, such reopening is subject to Rule 611(b)(3) of 
Regulation NMS as an exception to the Order Protection Rule.
    The 10% or more move in price will be calculated every second by 
comparing each last consolidated sale price of a security (``Trigger 
Trade'') during the preceding second to a reference price (the 
``Calculation Time''). For purposes of this calculation, the reference 
price shall be any transaction in that security printed to the 
Consolidated Tape during the five-minute period before the Calculation 
Time. Because the calculation period begins at 9:45 a.m., trades 
occurring after 9:45 a.m. may be a Trigger Trade, however, the 
reference price(s) for such Trigger Trades will begin at 9:45 a.m. In 
such case, in the first five minutes of the calculation period, the 
reference prices for a Trigger Trade will not be based on five minutes 
of trading in that security. For example, a trade at 9:45:05 will be 
compared only to trades between 9:45:00 and 9:45:05. The last potential 
Trigger Trade will be at 3:35 p.m., so that such Trading Pause will end 
at 3:40 p.m.
    As proposed, only regular way, in-sequence transactions qualify as 
either a Trigger Trade or a reference price. To ensure that erroneous 
executions do not trigger a Trading Pause, the Exchange also proposes 
that it can exclude a transaction price from use as a reference price 
or Trigger Trade if it concludes that the transaction price resulted 
from an erroneous execution.
    The proposed rule further provides that if a Trading Pause is 
triggered, the Exchange will immediately notify the single plan 
processor responsible for consolidation of information for the 
security.
    The Exchange further proposes to include in the rule that if the 
listing market for a security that trades on the Exchange on an 
unlisted trading privilege (``UTP'') basis pauses under its respective 
rules, the Exchange will also pause trading in that security until the 
listing market has either resumed trading or the Exchange has received 
notice from the primary listing market that trading may resume. If the 
primary listing market does not reopen trading in the security within 
10 minutes of notification of a trading pause, the Exchange may resume 
trading of the security. While the Exchange does not currently trade 
any securities on a UTP basis, the Exchange is including this provision 
both to maintain uniformity across the ``trading pause'' rules adopted 
by multiple markets and to ensure that if the Exchange does implement a 
UTP program, this rule will already be in place.
2. Statutory Basis
    The statutory basis for the proposed rule change is Section 6(b)(5) 
of the Securities Exchange Act of 1934 (the ``Act''),\3\ 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 proposed rule change also is 
designed to support the principles of Section 11A(a)(1) \4\ of the Act 
in that it seeks to assure fair competition among brokers and dealers 
and among exchange markets. The Exchange believes that the proposed 
rule meets these requirements in that it promotes transparency and 
uniformity

[[Page 28833]]

across markets concerning decisions to pause trading in a security when 
there are significant price movements.
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    \3\ 15 U.S.C. 78f(b)(5).
    \4\ 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 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    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 35 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 the proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule 
change should be disapproved.\5\
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    \5\ The Commission notes that the Exchange has requested 
accelerated approval of the filing.
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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 Number SR-NYSE-2010-39 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, Station Place, 100 F 
Street, NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSE-2010-39. 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 NYSE. 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-NYSE-2010-39 and should be 
submitted on or before June 3, 2010.\6\
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    \6\ The Commission believes that a 10-day comment period is 
reasonable, given the urgency of the matter. It will provide 
adequate time for comment.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-12418 Filed 5-21-10; 8:45 am]
BILLING CODE 8010-01-P