[Federal Register Volume 77, Number 152 (Tuesday, August 7, 2012)]
[Notices]
[Pages 47136-47138]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-19292]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67567; File No. SR-NYSEMKT-2012-28]


 Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Amending Rule 128--
Equities, Which Governs Clearly Erroneous Executions, To Extend the 
Effective Date of the Pilot by Which Portions of Such Rule Operate 
Until February 4, 2013

August 1, 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 July 20, 2012, NYSE MKT LLC (the ``Exchange'' or ``NYSE MKT'') 
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 self-regulatory organization. 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 amend Rule 128--Equities, which governs 
clearly erroneous executions, to extend the effective date of the pilot 
by which portions of such Rule operate until February 4, 2013. The 
pilot is currently scheduled to expire on July 31, 2012. The text of 
the proposed rule change is available on the Exchange's Web site at 
www.nyse.com, at the principal office of the Exchange, 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, 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 self-regulatory organization 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
    The Exchange proposes to amend Rule 128--Equities, which governs 
clearly erroneous executions, to extend the effective date of the pilot 
by which portions of such Rule operate, until February 4, 2013. The 
pilot is currently scheduled to expire on July 31, 2012.\3\
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    \3\ See Securities Exchange Act Release No. 62886 (September 10, 
2010), 75 FR 56613 (September 16, 2010) (SR-NYSEAmex-2010-60). See 
also Securities Exchange Act Release Nos. 63480 (December 9, 2010), 
75 FR 78333 (December 15, 2010) (SR-NYSEAmex-2010-116); 64233 (April 
7, 2011), 76 FR 20736 (April 13, 2011) (SR-NYSEAmex-2011-24); 65066 
(August 9, 2011), 76 FR 50506 (August 15, 2011) (SR-NYSEAmex-2011-
58) and 66137 (January 11, 2012), 77 FR 2587 (January 18, 2012) (SR-
NYSEAmex-2011-106).
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    On September 10, 2010, the Commission approved, on a pilot basis, 
market-wide amendments to exchanges' rules for clearly erroneous 
executions to set forth clearer standards and curtail discretion with 
respect to breaking erroneous trades. In connection with this pilot 
initiative, the Exchange amended Rule 128(c), (e)(2), (f), and (g). The 
amendments provide for uniform treatment of clearly erroneous execution 
reviews (1) in Multi-Stock Events \4\ involving twenty or more 
securities, and (2) in the event transactions occur that result in the 
issuance of an individual security trading pause by the primary market 
and subsequent transactions that occur before the trading pause is in 
effect on the Exchange.\5\ The

[[Page 47137]]

amendments also eliminated appeals of certain rulings made in 
conjunction with other exchanges with respect to clearly erroneous 
transactions and limited the Exchange's discretion to deviate from 
Numerical Guidelines set forth in the Rule in the event of system 
disruptions or malfunctions.
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    \4\ Terms not defined herein are defined in Rule 128--Equities.
    \5\ Separately, the Exchange has proposed extend the effective 
date of the trading pause pilot under Rule 80C--Equities, which 
requires to the Exchange to pause trading in an individual security 
listed on the Exchange if the price moves by a specified percentage 
as compared to prices of that security in the preceding five-minute 
period during a trading day. See SR-NYSEMKT-2012-27.
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    If the pilot were not extended, the prior versions of paragraphs 
(c), (e)(2), (f), and (g) of Rule 128--Equities would be in effect, and 
the Exchange would have different rules than other exchanges and 
greater discretion in connection with breaking clearly erroneous 
transactions. The Exchange proposes to extend the pilot amendments to 
Rule 128--Equities until February 4, 2013 in order to maintain uniform 
rules across markets and allow the pilot to continue to operate without 
interruption during the same period that the Rule 80C trading pause 
rule pilot is also in effect. Extension of the pilot would permit the 
Exchange, other national securities exchanges and the Commission to 
further assess the effect of the pilot on the marketplace, including 
whether additional measures should be added, whether the parameters of 
the rule should be modified or whether other initiatives should be 
adopted in lieu of the current pilot.\6\
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    \6\ This proposed extension would also permit the pilot to 
operate until the National Market System Plan to Address 
Extraordinary Market Volatility is implemented, which will occur on 
February 4, 2013. See Securities Exchange Act Release No. 67091 (May 
31, 2012), 77 FR 33498 (June 6, 2012) (File No. 4-631) (Order 
Approving, on a Pilot Basis, the National Market System Plan To 
Address Extraordinary Market Volatility by BATS Exchange, Inc., BATS 
Y-Exchange, Inc., Chicago Board Options Exchange, Incorporated, 
Chicago Stock Exchange, Inc., EDGA Exchange, Inc., EDGX Exchange, 
Inc., Financial Industry Regulatory Authority, Inc., NASDAQ OMX BX, 
Inc., NASDAQ OMX PHLX LLC, The Nasdaq Stock Market LLC, National 
Stock Exchange, Inc., New York Stock Exchange LLC, NYSE MKT LLC, and 
NYSE Arca, Inc).
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2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) \7\ of the 
Act, in general, and furthers the objectives of Section 6(b)(5) \8\ in 
particular in that it 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 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. More specifically, the Exchange believes that the 
extension of the pilot would promote just and equitable principles of 
trade because it would help assure that the determination of whether a 
clearly erroneous trade has occurred will be based on clear and 
objective criteria. Additionally, resolution of the incident will occur 
promptly through a transparent process, which the Exchange believes 
would protect investors and the public interest. The proposed rule 
change would also foster cooperation and coordination with persons 
engaged in facilitating transactions in securities and to remove 
impediments to, and perfect the mechanism of, a free and open market 
and a national market system because it would help assure consistent 
results in handling erroneous trades across the U.S. markets, thus 
furthering fair and orderly markets, the protection of investors and 
the public interest. Finally, the proposed rule change would permit the 
pilot to operate until the National Market System Plan to Address 
Extraordinary Market Volatility is implemented, which will occur on 
February 4, 2013.\9\
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
    \9\ See supra note 7.
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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

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \10\ and Rule 19b-4(f)(6) thereunder.\11\ 
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 \12\ and Rule 19b-
4(f)(6)(iii) thereunder.\13\
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    \10\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \11\ 17 CFR 240.19b-4(f)(6).
    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 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) \14\ normally 
does not become operative for 30 days after the date of filing. 
However, pursuant to Rule 19b-4(f)(6)(iii) \15\ 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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    \14\ 17 CFR 240.19b-4(f)(6).
    \15\ 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.\16\
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    \16\ 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

[[Page 47138]]

     Send an Email to [email protected]. Please include 
File No. SR-NYSEMKT-2012-28 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-NYSEMKT-2012-28. 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. 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 Number SR-NYSEMKT-2012-28 and should be submitted by August 28, 
2012.
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    \17\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-19292 Filed 8-6-12; 8:45 am]
BILLING CODE 8011-01-P