9618 Federal Register / Vol. 76, No. 34 / Friday, February 18, 2011 / Notices 

9 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3The FINRA/NASDAQ TRF is a facility of FINRA 

operated by The NASDAQ OMX Group, Inc. 

4Securities Exchange Act Release No. 61595 

(February 26, 2010), 75 FR 11232 (March 10, 2010) 

(amending Rule 201 and Rule 200(g) of Regulation 

SHO). The amendments to Rules 201 and 200(g) of 

Regulation SHO have a compliance date of February 

28, 2011. See Securities Exchange Act Release No. 

63247 (November 4, 2010), 75 FR 68702 (November 

9, 2010) (extending the compliance date of the 

amendments to Rules 201 and 200(g) of Regulation 

SHO from November 10, 2010 until February 28, 

2011). 

5 17 CFR 242.201. 

6Rule 201(a)(9) defines the term ‘‘trading center’’ 

as having the same meaning as in Rule 600(b)(78) 

of Regulation NMS. Rule 600(b)(78) defines a 

‘‘trading center’’ as ‘‘a national securities exchange 

or national securities association that operates an 

SRO trading facility, an alternative trading system, 

an exchange market maker, an OTC market maker, 

or any other broker or dealer that executes orders 

internally by trading as principal or crossing orders 

as agent.’’ 17 CFR 242.600(b)(78). 

7Rule 201(a)(1) defines the term ‘‘covered 

security’’ for purposes of Rule 201. See 17 CFR 

242.201(a)(1). Rule 201(a)(1) defines ‘‘covered 

security’’ to mean any ‘‘NMS stock’’ as defined 

under Rule 600(b)(47) of Regulation NMS. Rule 

600(b)(47) of Regulation NMS defines an ‘‘NMS 

stock’’ as ‘‘any NMS security other than an option.’’ 

17 CFR 242.600(b)(47). Rule 600(b)(46) of 

Regulation NMS defines an ‘‘NMS security’’ as ‘‘any 

security or class of securities for which transaction 

reports are collected, processed, and made available 

pursuant to an effective transaction reporting plan, 

or an effective national market system plan for 

reporting transactions in listed options.’’ 17 CFR 

242.600(b)(46). 

8Rule 201(a)(4) defines the term ‘‘national best 

bid’’ for purposes of Rule 201. See 17 CFR 

242.201(a)(4). 

9Rule 201(a)(3) defines the term ‘‘listing market’’ 

for purposes of Rule 201. See 17 CFR 242.201(a)(3). 

10 17 CFR 242.201(b)(1)(i). 

11 17 CFR 242.201(b)(1)(ii). Further, if the price of 

a covered security declines intra-day by at least 

10% on a day on which the security is already 

subject to the short sale price test restriction of Rule 

201, the restriction will be re-triggered and, 

therefore, will continue in effect for the remainder 

of that day and the following day. Rule 201 does 

not place any limit on the frequency or number of 

times the circuit breaker can be re-triggered with 

respect to a particular stock. See Division of 

Trading and Markets: Responses to Frequently 

Asked Questions Concerning Rule 201 of 

Regulation SHO, Q&A No. 2.2 (http://sec.gov/ 

divisions/marketreg/rule201faq.htm). 

12Formerly, Rule 200(g) of Regulation SHO 

provided that a broker-dealer must mark all sell 

orders of any security as ‘‘long’’ or ‘‘short.’’ As 

amended, Rule 200(g) now provides a ‘‘short 

exempt’’ marking requirement. 17 CFR 242.200(g). 

Rule 200(g)(2) provides that a sale order may only 

available publicly. All submissions 

should refer to File Number SR–NYSE– 

2011–03 and should be submitted on or 

before March 11, 2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.9

Cathy H. Ahn, 

Deputy Secretary. 

[FR Doc. 2011–3646 Filed 2–17–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63905; File No. SR–Phlx– 

2011–17] 

Self-Regulatory Organizations; 

NASDAQ OMX PHLX LLC; Notice of 

Filing and Immediate Effectiveness of 

a Proposed Rule Change To Establish 

and Adopt Fees for the New Short Sale 

Monitor Service and PSX Data Add-On 

February 14, 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 February 

4, 2011, NASDAQ OMX PHLX LLC 

(‘‘Phlx’’ or ‘‘Exchange’’), filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III below, which Items have been 

substantially prepared by Phlx. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of the Substance 

of the Proposed Rule Change 

Phlx proposes to adopt a fee for the 

Short Sale Monitor and the PSX Data 

Add-On, a new service and related 

NASDAQ OMX PSX (‘‘PSX’’) add-on 

data that assist subscribers in complying 

with new requirements arising from 

recent amendments to Regulation SHO. 

The Exchange will implement the 

service as soon as practicable following 

the effective date of the filing. 

The text of the proposed rule change 

is available 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, 

Phlx 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. Phlx 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 

Phlx is proposing to amend its fee 

schedule to establish the Short Sale 

Monitor offered to subscribing member 

firms at no cost through March 31, 2011 

and for a fee of $750 per market 

participant identifier (‘‘MPID’’), per 

month thereafter. The Short Sale 

Monitor is a new service that provides 

subscribers with real-time surveillance 

of trades reported to the FINRA/Nasdaq 

Trade Reporting Facility (‘‘FINRA/ 

NASDAQ TRF’’) 3 marked as ‘‘short’’ and 

‘‘short exempt’’ to assist them in 

monitoring their compliance with 

amendments to Regulation SHO under 

the Act.4 The Commission recently 

amended Regulation SHO to adopt a 

new short sale-related circuit breaker 

combined with an alternative uptick 

rule under Rule 201.5 The new rule 

imposes a restriction on the price at 

which a security may be sold short if the 

circuit breaker is triggered. Specifically, 

the new rule requires trading centers,6

which include self-regulatory 

organizations (‘‘SROs’’), to establish, 

maintain and enforce written policies 

and procedures reasonably designed to 

prevent the execution or display of short 

sale orders in a covered security 7 at a 

price that is less than or equal to the 

current national best bid 8 if the price of 

that covered security decreases by 10% 

or more from its closing price as 

determined by the listing market 9 as of 

the end of regular trading hours on the 

prior day.10 In addition, the rule 

requires that the trading center 

establish, maintain, and enforce written 

policies and procedures reasonably 

designed to impose this short sale price 

test restriction for the remainder of the 

day and the following day when a 

national best bid for the covered 

security is calculated and disseminated 

on a current and continuing basis by a 

plan processor pursuant to an effective 

national market system plan.11 Trading 

centers are required to regularly surveil 

to ascertain the effectiveness of these 

policies and procedures. Rule 201 

generally permits short selling at a price 

above the current national best bid 

during the time a short sale price test 

restriction is in effect for a covered 

security. 

The Commission also amended 

Regulation SHO to provide that a 

broker-dealer may mark certain 

qualifying sell orders ‘‘short exempt.’’ 12

WReier-Aviles on DSKGBLS3C1PROD with NOTICES

Federal Register / Vol. 76, No. 34 / Friday, February 18, 2011 / Notices 9619 

be marked ‘‘short exempt’’ if the provisions of Rule 

201(c) or Rule 201(d) are met. 17 CFR 242.200(g)(2). 

See supra note 4. See also Division of Trading and 

Markets: Responses to Frequently Asked Questions 

Concerning Rule 201 of Regulation SHO, Q&A Nos. 

5.4 and 8.1. 

13 17 CFR 242.201(b)(1)(iii)(B). 

14 17 CFR 242.201(c); 17 CFR 242.201(d). 

15See supra note 4, 75 FR at 11275–76. 

16FINRA recently amended its rules to conform 

them to the requirements of the changes made by 

the Commission to Regulation SHO, including 

amending its trade reporting rules applicable to 

over-the-counter trades in NMS stocks to 

reintroduce the short sale exempt category. See 

Securities Exchange Act Release No. 63032 

(December 4, 2010), 75 FR 62439 (December 8, 

2010) (SR–FINRA–2010–043). 

17See also Division of Trading and Markets: 

Responses to Frequently Asked Questions 

Concerning Rule 201 of Regulation SHO, Q&A Nos. 

5.4 and 5.5. 

18The Commission notes that broker-dealers 

subscribing to the Short Sale Monitor and Data 

Add-On service remain responsible for compliance 

with Rule 201 of Regulation SHO. 

19Supra note 4. 

20See NASDAQ Rule 7049 (explaining the 

InterACT service). 

21NASDAQ and NASDAQ OMX BX have filed 

related rule changes with the Commission 

concurrent with Phlx’s filing. See SR–NASDAQ– 

2011–024 and SR–BX–2011–008. 

22Rule changes proposed by both NASDAQ and 

NASDAQ OMX BX provide an identical waiver of 

the Short Sale Monitor fee. 

23 15 U.S.C. 78f(b). 

24 15 U.S.C. 78f(b)(4). 

If a broker-dealer marks an order ‘‘short 

exempt,’’ it is not subject to the short 

sale price test restrictions of Rule 201 

and can be executed by a trading center 

without regard to its price.13 Paragraphs 

(c) and (d) of Rule 201 specify the 

circumstances under which a brokerdealer may mark certain sale orders as 

‘‘short exempt.’’ 14 If a broker-dealer 

chooses to rely on its own 

determination that it is submitting a 

short sale order to the trading center at 

a price that is above the current national 

best bid at the time of submission under 

Rule 201(c) or to rely on an exception 

specified in Rule 201(d), it may mark 

the order ‘‘short exempt.’’ The 

Commission noted in adopting the 

‘‘short exempt’’ marking requirement 

that it will both provide a record of 

broker-dealers availing themselves of 

the provisions of paragraphs (c) or (d) to 

the rule and aid surveillance by SROs 

and the Commission for compliance 

with the provisions of Rule 201.15

The Short Sale Monitor provides 

subscribing member firms with a tool to 

aid them in monitoring their trades 

reported into the FINRA/NASDAQ TRF 

for compliance with the requirements of 

the amended rules.16 Accessed through 

either a Workstation or Weblink ACT 

2.0 terminal, the Short Sale Monitor 

provides subscribers with notifications 

of their reported trades marked ‘‘short’’ 

and ‘‘short exempt’’ for covered 

securities subject to the short sale price 

test restrictions of Rule 201. 

Specifically, the Short Sale Monitor will 

provide subscribers notice of covered 

securities subject to the restrictions of 

Rule 201, and provide access to 

historical lists of such covered 

securities. In addition, the Short Sale 

Monitor will provide notice of trades in 

covered securities that are: (i) Subject to 

the short sale price test restriction, and 

marked ‘‘short,’’ (ii) subject to the short 

sale price test restriction, and marked 

‘‘short exempt,’’ (iii) subject to the short 

sale price test restriction, and sold 

above the current national best bid at 

the time of trade execution time, and 

(iv) not subject to the short sale price 

test restriction, but marked ‘‘short 

exempt.’’ 17 The Short Sale Monitor will 

provide this information to a 

subscribing firm both as real-time alerts 

and through a historical database of the 

firm’s trades that prompted the alerts, 

which will assist the firm in meeting its 

obligation to ascertain the effectiveness 

of its policies and procedures.18 As 

such, member firms will have a useful 

compliance tool with which they can 

monitor, post-trade, their compliance 

with the amendments to Regulation 

SHO under the Act.19 In this regard, the 

Short Sale Monitor is similar to 

NASDAQ’s InterACT service in that it 

provides member firms with post-trade 

analysis of their trades for compliance 

with regulatory obligations.20 Lastly, 

Phlx will supplement and enhance the 

Short Sale Monitor as needed to address 

any amendments to Regulation SHO or 

other related rules, and from time to 

time will make changes to enhance the 

service. 

Phlx is also proposing to amend its 

fee schedule to establish the PSX Data 

Add-On service as an additional service 

to an existing Short Sale Monitor 

subscription, which will provide 

subscribers with access to records of 

their trades in covered securities subject 

to the short sale price restrictions of 

Rule 201 executed on PSX and marked 

‘‘short exempt.’’ The proposed add-on 

service will be offered at no cost 

through March 31, 2011, and for an 

additional fee of $50 per MPID, per 

month thereafter. As noted above, to be 

eligible for the PSX Data Add-On 

service a member’s MPID must first be 

subscribed to the Short Sale Monitor. 

Last, Phlx is proposing waive the 

Short Sale Monitor fee for members 

seeking to subscribe to the PSX Data 

Add-on service if the MPID is currently 

subscribed to either the NASDAQ or 

NASDAQ OMX BX Short Sale Monitor. 

NASDAQ and NASDAQ OMX BX will 

offer 21 the Short Sale Monitor to their 

members for a price identical to that of 

Phlx’s at $750 per MPID, per month. 

Phlx notes that the Short Sale Monitor 

of each of the three exchanges offers the 

identical service and access to data. As 

such, Phlx does not believe that it is 

appropriate to charge members of Phlx 

an additional fee of $750 per MPID, per 

month if the member currently 

subscribes to the Short Sale Monitor 

offered by another NASDAQ OMX 

exchange.22 Accordingly, Phlx believes 

that a member should only pay for the 

market-specific data if it has a preexisting subscription to the Short Sale 

Monitor, irrespective of the NASDAQ 

OMX exchange through which it 

subscribes. 

2. Statutory Basis 

Phlx believes that the proposed rule 

change is consistent with Section 6(b) of 

the Act in general,23 and Section 6(b)(4) 

of the Act 24 specifically, in that it 

provides for the equitable allocation of 

reasonable dues, fees and other charges 

among members and issuers and other 

persons using any facility or system 

which the Phlx operates or controls, and 

it does not unfairly discriminate 

between customers, issuers, brokers or 

dealers. Phlx believes that offering the 

Short Sale Monitor at no cost on a trial 

basis, and for a fee of $750 per MPID, 

per month thereafter, and the PSX Data 

Add-On at no cost on a trial basis, and 

for a fee of $50 per MPID, per month 

thereafter is fair and provides an 

equitable allocation of fees in that 

subscription is voluntary and it will 

apply uniformly to all members that use 

the FINRA/NASDAQ TRF or execute on 

PSX, as applicable, and elect to 

subscribe to one or both of the services. 

Further, Phlx believes that, as discussed 

above, waiving the Short Sale Monitor 

fee for a member seeking a subscription 

to the PSX Data Add-On is appropriate 

in cases where the member has 

subscribed the MPID to the Short Sale 

Monitor of NASDAQ or NASDAQ OMX 

BX. As noted, the Short Sale Monitors 

of the NASDAQ OMX exchanges 

provide identical services and are 

offered at an identical fee. As such, Phlx 

does not believe requiring a firm to 

subscribe to a redundant service solely 

to access PSX-specific data is an 

equitable allocation of fees. Phlx notes 

that subscribing members may cancel 

their subscription(s) at any time prior to 

the expiration of the trial period at no 

cost. The proposed fee will apply to all 

members equally based on the number 

of MPIDs subscribed. The proposed fee 

will cover the costs associated with 

separately offering the service, 

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9620 Federal Register / Vol. 76, No. 34 / Friday, February 18, 2011 / Notices 

25 15 U.S.C. 78f(b)(5). 

26Supra note 4. 

27Supra note 20. 

28 15 U.S.C. 78s(b)(3)(a)(ii). 29 17 CFR 240.19b–4(f)(2). 

30 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

responding to customer requests, 

configuring PSX’s systems, 

programming to user specifications, and 

administering the service, among other 

things, and may provide Phlx with a 

profit to the extent costs are covered. 

Phlx also believes that the proposed 

rule change is consistent with the 

provisions of Section 6(b)(5) of the 

Act 25 because it is designed to, among 

other things, prevent fraudulent and 

manipulative acts and practices, to 

promote just and equitable principles of 

trade, and to foster cooperation and 

coordination with persons engaged in 

facilitating transactions in securities. 

The Short Sale Monitor will assist 

subscribing member firms in monitoring 

their compliance with the amendments 

to Regulation SHO under the Act 26 with 

respect to trades reported to the FINRA/ 

NASDAQ TRF. Phlx notes that the Short 

Sale Monitor is similar to NASDAQ’s 

InterACT service,27 which allows 

member firms to supervise trade activity 

required to be reported to the FINRA/ 

NASDAQ TRF, and provides member 

firms with real time totals of open trades 

awaiting review and acceptance within 

the twenty minute period required by 

FINRA Rule 7230A(b). As noted above, 

the Short Sale Monitor is similar to this 

service in that it provides member firms 

with post-trade analysis of their trades 

for compliance with regulatory 

obligations. In the case of the Short Sale 

Monitor and PSX Data Add-On, such 

analysis include trades reported to the 

FINRA/NASDAQ TRF and trades 

executed on PSX marked ‘‘short exempt’’ 

in covered securities. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

Phlx 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 foregoing rule change has become 

effective pursuant to Section 

19(b)(3)(A)(ii) of the Act 28 and 

subparagraph (f)(2) of Rule 19b–4 

thereunder.29 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, as amended, 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 rulecomments@sec.gov. Please include File 

Number SR–Phlx–2011–17 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–Phlx–2011–17. 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 offices 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–Phlx– 

2011–17, and should be submitted on or 

before March 11, 2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.30

Cathy H. Ahn, 

Deputy Secretary. 

[FR Doc. 2011–3689 Filed 2–17–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63906; File No. SR– 

NASDAQ–2011–024] 

Self-Regulatory Organizations; The 

NASDAQ Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

a Proposed Rule Change To Establish 

and Adopt Fees for the New Short Sale 

Monitor Service and Nasdaq Data AddOn 

February 14, 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 February 

4, 2011, The NASDAQ Stock Market 

LLC (‘‘NASDAQ’’), filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III below, which Items have been 

substantially prepared by NASDAQ. 

The Commission is publishing this 

notice to solicit comments on the 

proposed rule change from interested 

persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of the Substance 

of the Proposed Rule Change 

NASDAQ proposes to adopt a fee for 

the Short Sale Monitor and the Nasdaq 

Data Add-On, a new service and related 

add-on data that assist subscribers in 

complying with new requirements 

arising from recent amendments to 

Regulation SHO. NASDAQ will 

implement the service as soon as 

practicable following the effective date 

of the filing. 

WReier-Aviles on DSKGBLS3C1PROD with NOTICES