[Federal Register Volume 78, Number 25 (Wednesday, February 6, 2013)]
[Notices]
[Pages 8615-8617]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-02629]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68787; File No. SR-NYSEMKT-2013-08]


Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change Delaying the Operative 
Date of A Rule Change to Exchange Rule 80B--Equities, Which Provides 
for Methodology for Determining When To Halt Trading in All Stocks Due 
to Extraordinary Market Volatility, From the Date of February 4, 2013, 
Until April 8, 2013

January 31, 2013.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that on January 23, 2013, NYSE MKT LLC (the ``Exchange'' or 
``NYSE MKT'') filed with the Securities and Exchange Commission (the 
``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\ 15 U.S.C. 78a.
    \3\ 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 delay the operative date of a rule change 
to Exchange Rule 80B-Equities, which provides for methodology for 
determining when to halt trading in all stocks due to extraordinary 
market volatility, from the date of February 4, 2013, until April 8, 
2013. The text of the proposed rule change [sic] 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 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 amend Rule 80B--Equities, which provides 
the methodology for determining when to halt trading in all stocks due 
to extraordinary market volatility, to delay the operative date of the 
pilot by which such Rule operates from the current scheduled date of 
February 4, 2013, until April 8, 2013, to coincide with the initial 
date of operations of the Regulation NMS Plan to Address Extraordinary 
Market Volatility (``LULD

[[Page 8616]]

Plan'').\4\ As proposed, the pilot period will begin and end at the 
same time [sic] the pilot period for the LULD Plan. The current Rule 
80B--Equities would remain in effect until April 8, 2013. If the pilot 
is not either extended or approved permanently at the end of the pilot 
period, the current version of Rule 80B--Equities would be in effect.
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    \4\ The Commission approved the proposed changes to the market-
wide circuit breakers on a pilot basis for a period scheduled to 
start on February 4, 2013 that corresponds to the pilot period for 
the LULD Plan so that the impact of the two proposals can be 
reviewed together. See Securities Exchange Act Release No. 67090 
(May 31, 2012), 77 FR 33531 (June 6, 2012) (SR-NYSEAmex-2011-73). 
The Exchange anticipates that the initial date of LULD Plan 
operations will be changed to April 8, 2013. The proposal would 
delay the operative date of the market-wide circuit breaker pilot to 
April 8, 2013 in order for the implementation date for the market-
wide circuit breaker pilot to remain the same date as for the LULD 
Plan.
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Current Rule 80B--Equities

    In its current form,\5\ the rule provides for Level 1, 2, and 3 
declines and specified trading halts following such declines. The 
values of Levels 1, 2 and 3 are calculated at the beginning of each 
calendar quarter, using 10%, 20% and 30%, respectively, of the average 
closing value of the DJIA for the month prior to the beginning of the 
quarter. Each percentage calculation is rounded to the nearest fifty 
points to create the Levels' trigger points. The Exchange disseminates 
the new trigger levels quarterly to the media and via an Information 
Memo and [sic] is available on the Exchange's Web site.\6\ The values 
then remain in effect until the next quarterly calculation, 
notwithstanding whether the DJIA has moved and a Level 1, 2, or 3 
decline is no longer equal to an actual 10%, 20%, or 30% decline in the 
most recent closing value of the DJIA.
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    \5\ The rule was last amended in 1998, when declines based on 
specified point drops in the DJIA were replaced with the current 
methodology of using a percentage decline that is recalculated 
quarterly. See Securities Exchange Act Release No. 39846 (April 9, 
1998), 63 FR 18477 (April 15, 1998) (SR-NYSE-98-06, SR-Amex-98-09, 
SR-BSE-98-06, SR-CHX-98-08, SR-NASD-98-27, and SR-Phlx-98-15).
    \6\ See e.g., NYSE Regulation Information Memos 11-19 (June 30, 
2011) and 11-10 (March 31, 2011).
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    Once a Rule 80B--Equities circuit breaker is in effect, trading in 
all stocks halt for the time periods specified below:

Level 1 Halt

    Anytime before 2:00 p.m.--one hour;
    At or after 2:00 p.m. but before 2:30 p.m.--30 minutes;
    At or after 2:30 p.m.--trading shall continue, unless there is a 
Level 2 Halt.

Level 2 Halt

Anytime before 1:00 p.m.--two hours;
At or after 1:00 p.m. but before 2:00 p.m.--one hour;
At or after 2:00 p.m.--trading shall halt and not resume for the rest 
of the day.

Level 3 Halt

At any time--trading shall halt and not resume for the rest of the day.

    Unless stocks are halted for the remainder of the trading day, 
price indications are disseminated during a Rule 80B--Equities trading 
halt for stocks that comprise the DJIA.

Amended Rule 80B--Equities

    The Exchange amended Rule 80B--Equities to revise the current 
methodology for determining when to halt trading in all stocks due to 
extraordinary market volatility (``market-wide circuit breakers'').\7\ 
The Exchange, other equities, options, and futures markets, and FINRA 
amended the market-wide circuit breakers to take into consideration the 
recommendations of the Joint CFTC-SEC Advisory Committee on Emerging 
Regulatory Issues, and to provide for more meaningful measures in 
today's markets of when to halt trading in all stocks. Accordingly, the 
Exchange amended Rule 80B--Equities as follows: (i) Replaced the DJIA 
with the S&P 500; (ii) replaced the quarterly calendar recalculation of 
Rule 80B--Equities triggers with daily recalculations; (iii) replaced 
the 10%, 20%, and 30% market decline percentages with 7%, 13%, and 20% 
market decline percentages; (iv) modified the length of the trading 
halts associated with each market decline level; and (v) modified the 
times when a trading halt may be triggered. The Exchange believes that 
these amendments update the rule to reflect today's high-speed, highly 
electronic trading market while still meeting the original purpose of 
Rule 80B--Equities: to ensure that market participants have an 
opportunity to become aware of and respond to significant price 
movements.
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    \7\ See Securities Exchange Act Release No. 67090 (May 31, 
2012), 77 FR 33531 (June 6, 2012) (SR-NYSEAmex-2011-73).
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    The Exchange adopted the proposed changes to the market-wide 
circuit breakers on a pilot basis for a period that corresponds to the 
pilot period for the LULD Plan so that the impact of the two proposals 
can be reviewed together.\8\ In addition, in order for the markets and 
the single plan processors responsible for the consolidation of 
information pursuant to Rule 603(b) of Regulation NMS under the 
Securities Exchange Act of 1934 to make the necessary technological 
changes to implement both the changes to the market-wide circuit 
breakers and the proposed LULD Plan, the Exchange established that the 
implementation date for the proposed rule changes should be the same 
date that the LULD Plan is implemented. The Exchange anticipates that 
the initial date of LULD Plan operations will be changed to April 8, 
2013. For the same reasons as stated above, the Exchange proposes to 
delay the operative date of the market-wide circuit breaker pilot to 
April 8, 2013 in order for the implementation date for the market-wide 
circuit breaker pilot to remain the same date as for the LULD Plan.
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    \8\ See id.
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Securities Exchange Act of 1934 (the ``Act''),\9\ in 
general, and furthers the objectives of Section 6(b)(5) of the Act,\10\ 
in particular, in that it is designed to prevent fraudulent and 
manipulative acts and practices, 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.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(5).
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    Specifically, this rule proposal supports the objectives of 
perfecting the mechanism of a free and open market and the national 
market system because it promotes uniformity across markets concerning 
when and how to halt trading in all stocks as a result of extraordinary 
market volatility. Additionally, delaying the operative date of the 
market-wide circuit breakers pilot until the initial date of operations 
of the LULD Plan would allow the pilot to begin and end at the same 
time of the LULD Plan so that the Exchange and the Commission could 
further assess the impact of the two pilots on the marketplace or 
whether other initiatives should be adopted in lieu of the pilots, 
which contributes to the protection of investors and the public 
interest.

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. The proposed changes are 
being made to delay the operation of the market-wide

[[Page 8617]]

circuit breakers pilot until April 8, 2013 to allow the pilot period to 
begin and end at the same time as the LULD Plan, which contributes to 
the protection of investors and the public interest. Other competing 
equity exchanges are subject to the same methodology for determining 
when to halt trading in all stocks due to extraordinary market 
volatility and the same requirements specified in the LULD Plan. Thus, 
the proposed changes will not impose any burden on competition while 
providing that the market-wide circuit breakers pilot period 
corresponds to the pilot period for the LULD Plan so that the impact of 
the two proposals can be reviewed together.

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 \11\ and Rule 19b-4(f)(6) thereunder.\12\ 
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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    \11\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \12\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6)\13\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\14\ 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. Doing so will delay 
the operative date of the market-wide circuit breakers pilot until the 
initial date of operations of the LULD Plan, thereby allowing the pilot 
to run simultaneously with the LULD Plan, providing an opportunity to 
properly assess the impact of the two pilots on the marketplace and 
evaluate the pilots' effectiveness. Therefore, the Commission hereby 
waives the 30-day operative delay and designates the proposal operative 
upon filing.\15\
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    \13\ 17 CFR 240.19b-4(f)(6).
    \14\ 17 CFR 240.19b-4(f)(6)(iii).
    \15\ 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. If the Commission 
takes such action, the Commission shall institute proceedings under 
Section 19(b)(2)(B)\16\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \16\ 15 U.S.C. 78s(b)(2)(B).
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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 email to [email protected]. Please include 
File Number SR-NYSEMKT-2013-08 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-2013-08. 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 10:00 a.m. and 
3:00 p.m. Copies of the 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-2013-08 and should 
be submitted on or before February 27, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-02629 Filed 2-5-13; 8:45 am]
BILLING CODE 8011-01-P