[Federal Register Volume 77, Number 18 (Friday, January 27, 2012)]
[Notices]
[Pages 4387-4389]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-1739]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66215; File No. SR-BX-2012-003]


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 NMS Stocks Other Than Rights 
and Warrants

January 23, 2012.
    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 January 11, 2012, NASDAQ OMX BX, Inc. (``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 NMS stocks other than rights and warrants, so that 
the pilot will now expire on July 31, 2012.
    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 July 31, 2012[January 31, 2012]. 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 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 parts 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, 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 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 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

[[Page 4388]]

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\
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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 Amex, 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).
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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.
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.

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 to be 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 email to [email protected]. Please include 
File No. SR-BX-2012-003 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-BX-2012-003. 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

[[Page 4389]]

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-BX-2012-003 and should be submitted on or before February 
17, 2012.

    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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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-1739 Filed 1-26-12; 8:45 am]
BILLING CODE 8011-01-P