12176 Federal Register / Vol. 76, No. 43 / Friday, March 4, 2011 / Notices 

28 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3 17 CFR 242.200(g); 17 CFR 242.201. 

4See Securities Exchange Act Release No. 61595 

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

In connection with the adoption of Rule 201, Rule 

200(g) of Regulation SHO was also amended to 

include a ‘‘short exempt’’ marking requirement. The 

amendments to Rule 201 and Rule 200(g) have a 

compliance date of February 28, 2011. See 

Securities Exchange Act Release No. 63247 

(November 4, 2010), 75 FR 68702 (November 9, 

2010). See also Division of Trading & Markets: 

Responses to Frequently Asked Questions 

Concerning Rule 201 of Regulation SHO. 

5Rule 201(a)(1) defines the term ‘‘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.’’ 

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 

242.201(a)(1); 17 CFR 242.600(b)(46); and 17 CFR 

242.600(b)(47). 

6Rule 201(a)(9) states that the term ‘‘trading 

center’’ shall have 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). 

7Rules 201(a)(4) defines the term ‘‘national best 

bid’’ to have the same meaning as in Rule 600(b)(42) 

of Regulation NMS. 17 CFR 242.600(b)(42). 

8 17 CFR 242.201(b)(1). See also Division of 

Trading & Markets: Responses to Frequently Asked 

Questions Concerning Rule 201 of Regulation SHO, 

Q&A Nos. 2.1 and 2.2 (concerning the duration of 

a short sale price test restriction). 

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 e-mail to rulecomments@sec.gov. Please include File 

No. SR–EDGX–2011–04 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–EDGX–2011–04. 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 20549–1090, 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 and on its Internet Web site at 

http://www.directedge.com. 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–EDGX–2011–04 and should 

be submitted by March 25, 2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.28

Cathy H. Ahn, 

Deputy Secretary. 

[FR Doc. 2011–4905 Filed 3–3–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63988; File No. SR–EDGA– 

2011–05] 

Self-Regulatory Organizations; EDGA 

Exchange, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend EDGA Rules 

11.5, 11.9, and 11.15 to Make Certain 

Changes Consistent With the 

Upcoming Implementation of 

Amendments to Regulation SHO 

February 28, 2011. 

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 February 

25, 2011 the EDGA Exchange, Inc. (the 

‘‘Exchange’’ or the ‘‘EDGA’’) filed with 

the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change as described in 

Items I and II below, which items have 

been substantially prepared by the selfregulatory organization. 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 Substance of 

the Proposed Rule Change 

The Exchange proposes to amend 

EDGA Rules 11.5, 11.9, and 11.15 to 

make certain changes consistent with 

the upcoming implementation of 

amendments to Regulation SHO.3 The 

text of the proposed rule change is 

attached as Exhibit 5 and is available on 

the Exchange’s Web site at http:// 

www.directedge.com, at the Exchange’s 

principal office, and at the Public 

Reference Room of the Commission. 

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 

On February 26, 2010, the 

Commission adopted amendments to 

Regulation SHO under the Act in the 

form of Rule 201,4 pursuant to which, 

among other things, short sale orders in 

covered securities 5 generally cannot be 

executed or displayed by a trading 

center 6 such as EDGA at a price that is 

at or below the current national best bid 

(‘‘NBB’’) 7 when a short sale circuit 

breaker is in effect for the covered 

security (the ‘‘short sale price test 

restriction’’).8 In anticipation of the 

upcoming February 28, 2011 

compliance date for Rule 201, the 

Exchange is proposing to amend certain 

EDGA rules to describe the manner in 


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Federal Register / Vol. 76, No. 43 / Friday, March 4, 2011 / Notices 12177 

9The ‘‘System’’ is defined in EDGA Rule 1.5(aa) 

as ‘‘the electronic communications and trading 

facility designated by the Board through which 

securities orders of Users are consolidated for 

ranking, execution and, when applicable, routing 

away.’’ 

10The Exchange currently offers a process called 

‘‘displayed price sliding process,’’ as defined in 

current EDGA Rule 11.5(c)(4), which re-prices and/ 

or displays orders at permissible prices when such 

orders would lock or cross Protected Quotations in 

a manner inconsistent with Rule 610(d) of 

Regulation NMS. 

11A ‘‘User’’ is defined in EDGA Rule 1.5(cc) as 

any member or sponsored participant of the 

Exchange who is authorized to obtain access to the 

System. 

12Any execution or display will also need to be 

in compliance with applicable rules regarding 

minimum pricing increments. 17 CFR 242.612. 

13See Division of Trading & Markets: Responses 

to Frequently Asked Questions Concerning Rule 

201 of Regulation SHO, Q&A No. 4.1 (concerning 

un-displayed orders). 

14As defined in EDGA Rule 1.5(d). 

15Like with an EDGA Only Order, a User can 

affirmatively choose to opt-out of the short sale 

price sliding process. 

16 17 CFR 242.200(g)(2). Under Rule 200(g)(2), an 

order may be marked ‘‘short exempt’’ if the brokerdealer had a reasonable basis for believing that the 

order meets one of the exceptions specified in Rule 

201(d) of Regulation SHO or if it is entered during 

a Short Sale Period and meets the conditions 

specified in Rule 201(c) of Regulation SHO. See 17 

CFR 242.201(d); 17 CFR 242.201(c); See Division of 

Trading & Markets: Responses to Frequently Asked 

Questions Nos. 4.2, 5.4 and 5.5. 

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

18A Member is defined in EDGA Rule 1.5(l) as 

any registered broker or dealer, or any person 

associated with a registered broker or dealer, that 

has been admitted to membership in the Exchange. 

19 17 CFR 242.200(g)(2). See also 17 CFR 

242.201(c); 17 CFR 242.201(d). See also Division of 

Trading and Markets: Responses to Frequently 

Asked Questions Concerning Rule 201 of 

Regulation SHO, Q&A Nos. 4.2, 5.4, and 5.5. 

20 15 U.S.C. 78f(b). 

21 15 U.S.C. 78f(b)(5). 

which the System 9 will handle short 

sell orders when a short sale price test 

restriction is triggered under Rule 201 of 

Regulation SHO. These changes include 

establishing a definition for ‘‘short sale 

price sliding,’’ which is a new form of 

price sliding 10 the Exchange proposes 

to offer when the amendments to 

Regulation SHO become operative, 

modifying certain EDGA rules regarding 

order execution and routing when a 

short sale price test restriction is in 

effect, and modifying EDGA rules 

related to order marking requirements. 

The Exchange proposes to offer a new 

form of price sliding, short sale price 

sliding, which will be defined in EDGA 

Rule 11.5(c)(4). As a default, the 

Exchange will subject a User’s 11 EDGA 

Only Orders to the short sale price 

sliding in proposed Rule 11.5(c)(4)(B) 

unless they affirmatively choose to optout of the process. As proposed, when 

a User opts out of the short sale price 

sliding process, any short sale order that 

could not be executed or displayed due 

to a short sale price test restriction 

would be rejected or cancelled by the 

Exchange upon entry or while resting on 

the order book, respectively. When a 

User’s EDGA Only Order is subject to 

the short sale price sliding process, as 

proposed in Rule 11.5(c)(4)(B), if it 

cannot be executed or displayed at the 

time of entry due to a short sale price 

test restriction, it will be re-priced by 

the System to prevent execution or 

display at or below the current NBB to 

comply with Rule 201(b)(1)(i).12 Any 

EDGA Only Order subject to such repricing by the System will be re-priced 

to display at one minimum price 

variation (‘‘MPV’’) above the current 

NBB (‘‘Permitted Price’’). The order will 

receive a new timestamp when it is repriced. Following the initial adjustment 

provided for in proposed Rule 

11.5(c)(4)(B), the EDGA Only Order will, 

to reflect declines in the NBB, continue 

to be re-priced at the lowest Permitted 

Price down to the order’s original limit 

price, or if a market order, until the 

order is filled. The order will receive a 

new timestamp each time it is re-priced. 

Alternatively, following the initial 

adjustment provided for in Rule 

11.5(c)(4)(B), the EDGA Only Order 

may, in accordance with the User’s 

instructions, provided that in all cases 

the display of such lower prices does 

not violate Rule 201 of Regulation SHO: 

(i) Be re-priced one additional time to a 

price that is above the current NBB but 

equal to the NBB at the time the EDGA 

Only Order was received and receive a 

new timestamp; or (ii) not be adjusted 

further. In the event the NBB changes 

such that the price of a Non-Displayed 

Order, as defined in EDGA Rule 

11.5(c)(8), subject to short sale price 

sliding would lock or cross the NBB, the 

Non-Displayed Order will receive a new 

timestamp, and will be re-priced by the 

System to a Permitted Price, again in 

compliance with Rule 201(b)(1)(i).13

As proposed, EDGA Only Orders 

marked ‘‘short exempt’’ will not be 

subject to short sale price sliding. 

Certain displayed short sale orders will 

not be re-priced by the System after 

entry because under Rule 

201(b)(1)(iii)(A) a trading center’s 

policies and procedures must be 

reasonably designed to permit the 

execution of short sale orders of covered 

securities that were displayed at a price 

above the current NBB at the time of 

initial display. ‘‘Short exempt’’ orders 

also will not be re-priced by the System, 

but instead, the Exchange will execute, 

display and/or route such orders 

without regard to whether the order is 

at a price less than or equal to the NBB 

or any short sale price test restriction in 

effect under Regulation SHO, as 

described below. 

The Exchange also proposes to amend 

its Rule 11.9 to make clear that it will 

execute, display and route an order 

consistent with Rule 201 of Regulation 

SHO, and that if it cannot do so, orders 

will be cancelled back to the applicable 

User. In addition, the Exchange 

proposes to make clear that it will not 

route orders away from the Exchange 

that are marked ‘‘short’’ if a short sale 

price test restriction is in effect for the 

covered security. Instead, such orders, if 

immediate-or-cancel (‘‘IOC’’) will be 

cancelled, and all other orders will be 

posted to the EDGA Book,14 treated as 

if they are EDGA Only Orders, as 

defined in Rule 11.5(c)(4), and subjected 

to the short sale price sliding process.15

Finally, current Rule 11.15 requires 

Users to identify short sale orders as 

‘‘short’’ when entered into the System. 

The Exchange proposes to add the term 

‘‘short exempt’’ to Rule 11.15 because 

pursuant to amended Rule 200(g) of 

Regulation SHO, a broker-dealer can 

mark a short sale order as either ‘‘short’’ 

or ‘‘short exempt.’’ 16 The Exchange also 

proposes to make clear in Rule 11.15 

that if an order it received is marked 

‘‘short exempt,’’ the Exchange will 

execute, display and/or route the order 

without regard to whether the order is 

at a price less than or equal to the NBB 

or any short sale price test restriction in 

effect under Regulation SHO.17 The 

Exchange also proposes to make clear, 

as it does in Rule 11.5(d)(1) with respect 

to intermarket sweep orders, that it 

relies on a Member’s 18 marking of an 

order, in this case the ‘‘short exempt’’ 

marking, when handling such order. 

Accordingly, proposed Rule 11.15 states 

that it is the entering Member’s 

responsibility, not the Exchange’s 

responsibility, to comply with the 

requirements of Regulation SHO relating 

to marking of orders as ‘‘short 

exempt.’’ 19

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with the 

requirements of the Act and the rules 

and regulations thereunder that are 

applicable to a national securities 

exchange, and, in particular, with the 

requirements of Section 6(b) of the 

Act.20 In particular, the proposed 

change is consistent with Section 6(b)(5) 

of the Act,21 because it would promote 

just and equitable principles of trade, 

and, in general, protect investors and 

the public interest. The Exchange 


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12178 Federal Register / Vol. 76, No. 43 / Friday, March 4, 2011 / Notices 

22 15 U.S.C. 78s(b)(3)(A). 

23 17 CFR 240.19b–4(f)(6)(iii). 

24 17 CFR 240.19b–4(f)(6). 

25 17 CFR 240.19b–4(f)(6)(iii). In addition, Rule 

19b–4(f)(6)(iii) requires that a self-regulatory 

organization submit to the Commission written 

notice of its 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. 

26 17 CFR 240.19b–4(f)(6)(iii). 

27For the 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). 

28 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

believes that the proposed changes will 

provide clarity on the short sale order 

handling procedures employed by the 

Exchange and certain obligations of 

Members when sending short sale 

orders to the Exchange consistent with 

Regulation SHO, as amended. The 

Exchange also believes that the 

proposed short sale price sliding 

functionality will assist Users in 

executing or displaying their orders 

consistent with Regulation SHO, 

especially under fast moving conditions 

where the national best bid/offer is 

quickly updating. In addition, as is 

currently the case, the short sale price 

sliding process is optional to Users. 

Specifically, Users can choose to opt-out 

of the short sale price sliding process, 

and if they choose to do so, the 

Exchange will cancel back their orders 

when such orders contradict the 

provisions of Regulation SHO. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The proposed rule change does not 

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 

The Exchange has not solicited, and 

does not intend to solicit, comments on 

this proposed rule change. The 

Exchange has not received any 

unsolicited written comments from 

members or other interested parties. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the foregoing 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, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 22 and Rule 19b– 

4(f)(6)(iii) thereunder.23

A proposed rule change filed under 

Rule 19b–4(f)(6) 24 normally does not 

become operative prior to 30 days after 

the date of the filing.25 However, 

pursuant to Rule 19–b4(f)(6)(iii),26 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 it may 

implement the change no later than 

February 28, 2011 to coincide with the 

compliance date for the amendments to 

Rules 200(g) and 201 of Regulation 

SHO. The Commission believes that 

waiving the 30-day operative delay is 

consistent with the protection of the 

investors and the public interest 

because such waiver would ensure 

compliance with the Commission’s 

amendments to Rules 200(g) and 201 of 

Regulation SHO. For this reason, the 

Commission designates the proposed 

rule change to be operative upon filing 

with the Commission.27

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 e-mail to rulecomments@sec.gov. Please include File 

No. SR–EDGA–2011–05 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–EDGA–2011–05. 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 20549–1090, 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 and on its Internet Web site at 

http://www.directedge.com. 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–EDGA–2011–05 and should 

be submitted by March 25, 2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.28

Cathy H. Ahn, 

Deputy Secretary. 

[FR Doc. 2011–4904 Filed 3–3–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63983; File No. SR– 

NASDAQ–2011–032] 

Self-Regulatory Organizations; The 

NASDAQ Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Offer Market 

Data to the Public at No Charge 

February 25, 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 

24, 2011, The NASDAQ Stock Market 

LLC (the ‘‘Exchange’’ or ‘‘NASDAQ’’) 

filed with the Securities and Exchange 


jlentini on DSKJ8SOYB1PROD with NOTICES