[Federal Register Volume 76, Number 158 (Tuesday, August 16, 2011)]
[Notices]
[Pages 50801-50803]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-20704]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-65083; File No. SR-Phlx-2011-113]


Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Extend 
the Pilot Period of the Trading Pause for NMS Stocks

August 10, 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 August 8, 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 extend the pilot period of the trading 
pause for individual stocks contained in the Standard & Poor's 500 
Index, Russell 1000 Index, and specified Exchange Traded Products that 
experience a price change of 10% or more during a five-minute period, 
so that the pilot will now expire on January 31, 2012.
    The text of the proposed rule change is below. Proposed new 
language is

[[Page 50802]]

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 January 31, 2012[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.
    (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 the 
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, 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[reg] 
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[reg] 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 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.\9\ On June 23, 
2011, the Commission approved the expansion of the pilot to all NMS 
stocks, but with different pause-triggering thresholds.\10\
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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-2011-044).
    \10\ See Securities Exchange Act Release No. 64735 (June 23, 
2011), 76 FR 38243 (June 29, 2011) (SR-Phlx-2011-064, et al.).
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    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 assess whether circuit breakers are the best means to 
reduce the negative impacts of sudden, unanticipated price movements or 
whether alternative mechanisms would be more effective in achieving 
this goal.
    Accordingly, the Exchange is filing to further extend the pilot 
program until January 31, 2012 and remove language from the rule 
concerning the ``limit up/limit down'' mechanism.
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''),\11\ 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) \12\ 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 across markets concerning decisions to pause trading in 
a security when there are significant price movements.
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    \11\ 15 U.S.C. 78f(b)(5).
    \12\ 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.

[[Page 50803]]

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 \13\ and Rule 19b-4(f)(6) thereunder.\14\ 
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 \15\ and Rule 19b-
4(f)(6)(iii) thereunder.\16\
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    \13\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \14\ 17 CFR 240.19b-4(f)(6).
    \15\ 15 U.S.C. 78s(b)(3)(A).
    \16\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
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 for 30 days after the date of 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.
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    \17\ 17 CFR 240.19b-4(f)(6).
    \18\ 17 CFR 240.19b-4(f)(6)(iii).
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    The Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest, as 
it will allow the pilot program to continue uninterrupted, thereby 
avoiding the investor confusion that could result from a temporary 
interruption in the pilot program. For this reason, the Commission 
designates the proposed rule change as operative upon filing.\19\
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    \19\ For purposes only of waiving the 30-day operative delay, 
the Commission has also 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 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.

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-Phlx-2011-113 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-Phlx-2011-113. 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-Phlx-2011-113 and should be 
submitted on or before September 6, 2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\20\
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    \20\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-20704 Filed 8-15-11; 8:45 am]
BILLING CODE 8011-01-P