[Federal Register Volume 79, Number 60 (Friday, March 28, 2014)]
[Notices]
[Pages 17621-17622]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-06894]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71785; File No. SR-NASDAQ-2014-028]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change to 
the Clearly Erroneous Rule

March 24, 2014.
    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 March 18, 2014, The NASDAQ Stock Market LLC (``NASDAQ'' or 
``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 recent 
amendments to Rule 11890, concerning clearly erroneous transactions.
    The text of the proposed rule change is available from NASDAQ's Web 
site at http://nasdaq.cchwallstreet.com/Filings/, at NASDAQ's principal 
office, 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 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of this filing is to extend the effectiveness of the 
Exchange's current rule applicable to Clearly Erroneous Executions. 
Portions of Rule 11890, explained in further detail below, are 
currently operating as a pilot program set to expire on April 8, 
2014.\3\ The Exchange proposes to extend the pilot program to coincide 
with the pilot period for the Plan to Address Extraordinary Market 
Volatility Pursuant to Rule 608 of Regulation NMS under the Act (the 
``Limit Up-Limit Down Plan'' or the ``Plan''), including any extensions 
to the pilot period for the Plan.\4\
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    \3\ Securities Exchange Act Release No. 70529 (Sept. 26, 2013), 
78 FR 60977 (Oct. 2, 2013) (SR-NASDAQ-2013-127).
    \4\ Securities Exchange Act Release No. 67091 (May 31, 2012), 77 
FR 33498 (June 6, 2012).
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    On September 10, 2010, the Commission approved, for a pilot period, 
a proposed rule change to Rule 11890 to provide for uniform treatment: 
(1) Of clearly erroneous execution reviews in multi-stock events 
involving twenty or more securities; and (2) in the event transactions 
occur that result in the issuance of an individual stock trading pause 
by the primary listing market and subsequent transactions that occur 
before the trading pause is in effect on the Exchange.\5\ The Exchange 
also adopted additional changes to Rule 11890 that reduced the ability 
of the Exchange to deviate from the objective standards set forth in 
Rule 11890,\6\ and in 2013, adopted a provision designed to address the 
operation of the Plan.\7\
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    \5\ Securities Exchange Act Release No. 62886 (Sept. 10, 2010), 
75 FR 56613 (Sept. 16, 2010).
    \6\ Id.
    \7\ Securities Exchange Act Release No. 68819 (Feb. 1, 2013), 78 
FR 9438 (Feb. 8, 2013) (SR-NASDAQ-2013-022); see also Rule 11890(g).
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    The Exchange believes the benefits to market participants from the 
more objective clearly erroneous executions rule should continue on a 
pilot basis to coincide with the operation of the Limit Up-Limit Down 
Plan. The Exchange believes that continuing the pilot will protect 
against any unanticipated consequences. Thus, the Exchange believes 
that the protections of the Clearly Erroneous Rule should continue 
while the industry gains further experience operating the Plan.
 2. Statutory Basis
    The statutory basis for the proposed rule change is Section 6(b)(5) 
of the Securities Exchange Act of 1934 (the

[[Page 17622]]

``Act''),\8\ 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. Although 
the Limit Up-Limit Down Plan is operational, the Exchange believes that 
maintaining the pilot will help to protect against unanticipated 
consequences. Thus, the Exchange believes that the protections of the 
Rule 11890 should continue while the industry gains further experience 
operating the Plan. The Exchange also believes that the pilot program 
promotes just and equitable principles of trade in that it promotes 
transparency and uniformity across markets concerning review of 
transactions as clearly erroneous. Thus, the Exchange believes that the 
extension of the pilot would help assure that the determination of 
whether a clearly erroneous trade has occurred will be based on clear 
and objective criteria, and that the resolution of the incident will 
occur promptly through a transparent process. The proposed rule change 
would also 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. Based on the 
foregoing, the Exchange believes the benefits to market participants 
from the more objective clearly erroneous executions rule should 
continue on a pilot basis to coincide with the operation of the Limit 
Up-Limit Down Plan.
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    \8\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change 
implicates any competitive issues. To the contrary, the Exchange 
believes that the Financial Industry Regulatory Authority and other 
national securities exchanges are also filing similar proposals, and 
thus, that the proposal will help to ensure consistency across market 
centers.

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

    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 for 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 \9\ and Rule 19b-
4(f)(6)(iii) thereunder.\10\
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6)(iii). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written 
notice of its intent to file the proposed rule change, along with a 
brief description and the 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.
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    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, 
as it will allow the clearly erroneous pilot program to continue 
uninterrupted while the industry gains further experience operating 
under the Limit Up-Limit Down Plan, and avoid any 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.\11\
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    \11\ 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. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule should be approved or disapproved.

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-NASDAQ-2014-028 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NASDAQ-2014-028. 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-NASDAQ-2014-028 and should 
be submitted on or before April 18, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-06894 Filed 3-27-14; 8:45 am]
BILLING CODE 8011-01-P