12198 Federal Register / Vol. 76, No. 43 / Friday, March 4, 2011 / Notices 

37For purposes only of waiving the 30-day 

operative delay, the Commission has considered the 

proposed rule change’s impact on efficiency, 

competition, and capital formation. 15 U.S.C. 78c(f). 

38 17 CFR 200.30–3(a)(12). 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4 17 CFR 242.201. 

5See notes 24–26 infra and accompanying text. 

6Supplementary Material to Rule 440B is 

proposed to be amended to (a) delete an incorrect 

reference to Rule 440B(c) (in .11) and (b) to permit 

orders to be marked ‘‘short exempt’’ in accordance 

with Rules 200(g)(2) and 201 of Regulation SHO (in 

.12). The remaining provisions in Supplementary 

Material are not proposed to be modified and will 

remain in effect. 

7See infra note 23 and accompanying text 

regarding ‘‘clearly erroneous’’ trades and proposed 

Rule 440B(d)(1). The proposed rule amendment 

would establish the duration of the Short Sale Price 

Test. See infra note 22 and accompanying text. In 

addition, the proposed rule amendment would 

provide for an Exchange determination that a Short 

Sale Price Test has been triggered for covered 

securities for which the Exchange is the listing 

market. See infra notes 21–22 and accompanying 

text. 

designates the proposal as operative 

upon filing.37

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. 

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 

Number SR–NYSE–2011–06 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–NYSE–2011–06. 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. Copies of 

the filing will also be available for 

inspection and copying at the NYSE’s 

principal office and on its Internet Web 

site at http://www.nyse.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–NYSE–2011–06 and should 

be submitted on or before March 25, 

2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.38

Cathy H. Ahn, 

Deputy Secretary. 

[FR Doc. 2011–4894 Filed 3–3–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63974; File No. SR– 

NYSEAMEX–2011–08] 

Self-Regulatory Organizations; NYSE 

Amex LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change Amending NYSE Amex 

Equities Rule 440B (Short Sales) in 

Order To Implement the Provisions of 

Rule 201 of Regulation SHO Under the 

Securities Exchange Act of 1934 

February 25, 2011. 

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 February 

24, 2011, NYSE Amex LLC (the 

‘‘Exchange’’ or ‘‘NYSE Amex’’) 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 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 

NYSE Amex Equities Rule 440B (Short 

Sales) in order to implement the 

provisions of Rule 201 of Regulation 

SHO (‘‘Rule 201’’) 4 under the Act which, 

if triggered, imposes a restriction on the 

prices at which securities may be sold 

short (‘‘Short Sale Price Test’’). Among 

other things, Rule 201 requires trading 

centers to establish, maintain, and 

enforce written policies and procedures 

reasonably designed to prevent the 

execution or display of a short sale 

order of a covered security at a price 

that is less than or equal to the current 

national best bid if the price of a 

covered security decreases by 10% or 

more from the covered security’s closing 

price as determined by the listing 

market for the covered security as of the 

end of regular trading hours on the prior 

day. The proposed rule amendment 

would establish procedures for the 

Exchange, as a listing market, to 

determine that a Short Sale Price Test 

has been triggered for a covered 

security. The proposed rule amendment 

would also establish the protocols for 

the handling of short sale orders by the 

Exchange, as a trading center, in the 

event the Short Sale Price Test is 

triggered, including establishing what 

types of short sale orders will be repriced to achieve a permitted price, in 

accordance with Rule 201, during the 

period in which a Short Sale Price Test 

is in effect (‘‘Short Sale Period’’).5

Amended NYSE Amex Equities Rule 

440B would also establish the 

Exchange’s procedures regarding the 

execution and display of permissible 

orders during the Short Sale Period, and 

the execution of orders marked ‘‘short 

exempt.’’ Further, the proposed rule 

amendment would establish the 

Exchange’s procedures regarding the 

permissible execution price of short sale 

orders in single-priced opening, reopening and closing transactions. The 

proposed rule amendment would also 

make minor technical changes to the 

Supplementary Material to Rule 440B.6

Finally, the proposed rule amendment 

would also establish Exchange 

procedures for addressing situations 

where the Exchange determines that the 

Short Sale Price Test for a covered 

security was triggered by a ‘‘clearly 

erroneous’’ execution as that term is 

defined in NYSE Amex Equities Rule 

128.7


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8Amendments to Regulation SHO, Securities 

Exchange Act Release No. 61595 (Feb. 26, 2010), 75 

FR 11232 (Mar. 10, 2010) (‘‘Rule 201 Adopting 

Release’’). In the Rule 201 Adopting Release, the 

Commission also adopted amendments to Rule 

200(g) of Regulation SHO to include a ‘‘short 

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

9The term ‘‘covered security’’ shall have the same 

meaning as in Rule 201 of Regulation SHO. Rule 

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)(47); and 17 CFR 242.600(b)(46). 

10 17 CFR 242.201(b). 

11Rule 201 Adopting Release, 75 FR 11232. The 

Rule 201 compliance date, originally set for 

November 10, 2010, was extended to February 28, 

2011 in Securities Exchange Act Release No. 63247 

(Nov. 4, 2010), 75 FR 68702 (Nov. 9, 2010). The 

May 10th effective date and February 28th 

compliance date also apply to amended Rule 200(g). 

12Rule 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). 

13The term ‘‘national best bid’’ shall have the 

same meaning as in Rule 201 of Regulation SHO. 

Rule 201(a)(4) states that such term shall have the 

same meaning as in Rule 600(b)(42) of Regulation 

NMS. 17 CFR 242.201(a)(4); 17 CFR 242.600(b)(42). 

14The term ‘‘listing market’’ shall have the same 

meaning as in Rule 201 of Regulation SHO. Rule 

201(a)(3) defines the term ‘‘listing market’’ to have 

the same meaning as the term ‘‘listing market’’ as 

defined in the effective transaction reporting plan 

for the covered security. 17 CFR 242.201(a)(3). See 

also 17 CFR 242.201(a)(2). 

15 17 CFR 242.201(b)(1)(i). 

16 17 CFR 242.201(b)(1)(ii). In addition, 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. See Rule 201 

Adopting Release, 75 FR 11232, 11253, n. 290. Rule 

201 does not place any limit on the frequency or 

number of times the circuit breaker can be retriggered with respect to a particular stock. Division 

of Trading and Markets: Responses to Frequently 

Asked Questions Concerning Rule 201 of 

Regulation SHO, at Q&A 2.2 (‘‘T&M FAQs’’). 

17Rule 201 Adopting Release, 75 FR 11232. 

18Rule 201 Adopting Release, 75 FR 11232, 

11252. 

19 Id. 

20See paragraphs (f) and (g) of proposed Rule 

440B regarding the treatment of permissible and 

short exempt orders. 

21 17 CFR 242.201(b)(3). See also Rule 201(a)(6) 

of Regulation SHO, which defines the term ‘‘plan 

processor’’ to have the same meaning as in Rule 

600(b)(55) of Regulation NMS. 17 CFR 

242.600(b)(55). The single plan processors are 

‘‘exclusive processors’’ as defined under Section 

3(a)(22) of the Act. See 15 U.S.C. 78c(a)(22). 

The Exchange also proposes to amend 

NYSE Amex Equities Rule 900 (OffHours Trading: Applicability and 

Definitions) to apply Rule 440B 

(including the short sale price test 

restrictions of Rule 201) to transactions 

in the Off-Hours Trading Facility (by 

deleting the current exclusion for Rule 

440B). The text of the proposed rule 

change is available at the Exchange, the 

Commission’s Public Reference Room, 

and http://www.nyse.com. 

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 the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

On February 26, 2010, the 

Commission adopted amendments to 

Rule 201.8 Among other things, the 

amendments establish a short salerelated circuit breaker that, if triggered 

with respect to a covered security,9

imposes a Short Sale Price Test.10

Amended Rule 201 became effective on 

May 10, 2010 and the compliance date 

for the Rule is February 28, 2011.11

Rule 201(b) requires that trading 

centers,12 including NYSE Amex, 

establish, maintain, and enforce written 

policies and procedures reasonably 

designed to prevent the execution or 

display of a short sale order of a covered 

security at a price that is less than or 

equal to the current national best bid 13

if the price of that covered security 

decreases by 10% or more from the 

covered security’s closing price as 

determined by the listing market 14 for 

the covered security as of the end of 

regular trading hours on the prior day 

(‘‘Trigger Price’’).15 In addition, Rule 

201(b) requires that trading centers 

establish, maintain, and enforce written 

policies and procedures reasonably 

designed to impose the Short Sale Price 

Test 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.16

In the Rule 201 Adopting Release, the 

Commission stated that it was 

appropriate to adopt a short sale-related 

circuit breaker because, when triggered, 

it will prevent short selling, including 

potentially manipulative or abusive 

short selling, from driving down further 

the price of a security that has already 

experienced a significant intra-day price 

decline, and will facilitate the ability of 

long sellers to sell first upon such a 

decline.17 The Commission further 

stated that this approach establishes a 

narrowly-tailored Rule that strikes an 

appropriate balance between its goal of 

preventing potential short sale abuses 

and the need to limit impediments to 

the normal operations of the market,18

and as such, the Rule will help address 

the erosion of investor confidence in 

markets generally.19 For these reasons, 

the Exchange seeks to amend its short 

sale rule to comply with the 

Commission’s amendment of Rule 201. 

Paragraph (b) of the proposed rule 

makes clear that, in compliance with 

Rule 201, in the event a covered security 

experiences a decrease in price of 10% 

or more, as determined by the listing 

market for the security, from the 

security’s closing price on the listing 

market as of the end of regular trading 

hours on the prior day, except for 

certain permissible and short exempt 

orders,20 Exchange systems will not 

execute or display a short sale order 

with respect to that security at a price 

that is less than or equal to the current 

national best bid. 

Where the Exchange is the listing 

market for a covered security, Exchange 

systems will determine whether the 

short sale price test restrictions of Rule 

201 have been triggered (i.e., whether a 

transaction in a covered security has 

occurred at a Trigger Price) and will 

notify the single plan processor 

responsible for consolidation of 

information for the covered security 

pursuant to Rule 603(b) of Regulation 

NMS.21 The Trigger Price of a covered 

security will not be calculated until the 

Exchange opens trading for that 

security. In circumstances where a 

covered security did not trade on the 

Exchange on the prior trading day (for 

example, due to a trading halt, trading 

suspension, or otherwise), the Exchange 

will base its determination of the 

Trigger Price on the last sale price on 

the Exchange for that security on the 

most recent day on which the security 

did trade. 

Once a Short Sale Price Test is 

triggered by the listing market, the Short 


jlentini on DSKJ8SOYB1PROD with NOTICES
12200 Federal Register / Vol. 76, No. 43 / Friday, March 4, 2011 / Notices 

22The Short Sale Price Test will remain in effect 

at all times when quotation information and the 

national best bid is collected, processed and 

disseminated. This may extend beyond regular 

trading hours. T&M FAQs, supra note 16, at Q&A 

2.1. 

23 Determination of a ‘‘clearly erroneous’’ 

transaction will be made in accordance with 

Exchange Rule 128. 

24Rule 201 Adopting Release, 75 FR 11232, 

11247. 

25 17 CFR 242.612. 

26The following example illustrates the operation 

of Exchange systems in this situation. Assume the 

national best bid is 10.10 and a sell short order 

priced at 10.10 arrives at the Exchange during the 

Short Sale Period. The order will be re-priced to 

10.11 and will rest on the limit order book. The 

national best bid then rises to 10.11. If that short 

sale order was displayed on the offer side, that 

order will remain priced at 10.11. See note 30 infra 

and accompanying text. If the order was not 

displayed at the customer’s instruction, then the 

order will be re-priced to 10.12 because it cannot 

be executed at the national best bid. See T&M 

FAQs, supra note 16, at Q&A 4.1. 

27See Exchange Rule 13 for the definition of 

inter-market sweep order. 28Under Rule 200(g) of Regulation SHO, brokerdealers are responsible for proper marking of 

orders. However, with respect to certain trading by 

DMM units, Exchange systems will monitor DMM 

unit positions on a real-time basis during the 

trading day and will be responsible for order 

marking on behalf of DMM units for certain trading 

entered through Exchange systems. This will be 

done by receiving a position report prior to the 

opening of trading and updating DMM unit 

positions based on position information provided 

by the DMM unit and/or Exchange trade executions 

during the day. DMM units will be responsible for 

properly marking any DMM interest entered into 

Exchange systems for which the Exchange does not 

monitor or update the DMM unit’s position. 

Exchange systems will treat such DMM interest that 

is marked ‘‘short’’ the same as how it treats other 

interest, as provided for in proposed Rule 440B(e), 

and will not cancel such DMM interest as provided 

for in proposed Rule 440B(e)(2). 

29See Exchange Rules 104(b) and 1000 regarding 

DMM trading algorithms and automatic execution. 

30See also 17 CFR 242.201(b)(1)(iii)(A). 

31See also 17 CFR 242.201(b)(1)(iii)(B). 

32Exchange systems will also follow the guidance 

in the T&M FAQs. See supra note 16. 

33See Letter from James Brigagliano, Deputy 

Director, Division of Trading & Markets, SEC, to 

Janet McGinness, Senior Vice President and 

Secretary, NYSE Euronext, February 7, 2011. 

34Short sale orders designated for execution only 

at the opening will be cancelled if not executed at 

the opening. Other short sale orders will remain on 

the Display Book for execution during the trading 

day if at a Permitted Price or higher and may be 

repriced throughout the day, consistent with 

proposed Rule 440B(e). 

Sale Price Test will remain in effect 

until the close of trading on the next 

trading day.22 If, however, the Exchange 

determines that the Short Sale Price 

Test for a covered security was triggered 

because of a clearly erroneous 

execution,23 the Exchange may lift the 

Short Sale Price Test before the Short 

Sale Period ends for securities for which 

the Exchange is the listing market or, for 

securities listed on another market, 

notify the other market of the 

Exchange’s determination that the 

triggering transaction was a clearly 

erroneous execution. Similarly, if the 

Exchange determines that the prior 

day’s closing price for a covered 

security for which the Exchange is the 

listing market is incorrect in Exchange 

systems and resulted in an incorrect 

determination that the short sale price 

test restriction had been triggered, the 

Exchange may correct the prior day’s 

closing price and lift the Short Sale 

Price Test before the Short Sale Period 

ends. 

During the Short Sale Period, short 

sale orders that are limited to the 

national best bid or lower and short sale 

market orders will be re-priced by 

Exchange systems one minimum price 

increment above the current national 

best bid (‘‘Permitted Price’’) to permit 

their execution at a price that is 

compliant with the Short Sale Price 

Test. Consistent with Rule 201,24 the 

Permitted Price for securities for which 

the national best bid is $1 or more is 

$.01 above the national best bid; the 

Permitted Price for securities for which 

the national best bid is below $1 is 

$.0001 above the national best bid.25

To reflect declines in the national best 

bid, the Exchange will continue to reprice a short sale order at the lowest 

Permitted Price down to the order’s 

original limit price, or if a market order, 

until the order is filled. Non-displayed 

orders will also be re-priced upward to 

a Permitted Price to correspond with a 

rise in the national best bid.26 Also, 

during the Short Sale Period, immediate 

or cancel (‘‘IOC’’) orders will be 

executed to the extent possible at a 

Permitted Price and higher and then 

cancelled, and will not be re-priced. 

Inter-market sweep orders not marked 

‘‘short exempt’’ will be handled in the 

same manner as IOC orders.27 In 

addition, during the Short Sale Period, 

Exchange systems will mark certain 

designated market maker (‘‘DMM’’) sale 

interest as ‘‘long’’ or ‘‘short’’ on behalf of 

the DMM unit based on position 

information provided by the DMM 

unit.28 For such DMM interest, after a 

security has opened for trading, 

Exchange systems (i) will not execute or 

display such DMM short sale interest 29

that is priced at or below the current 

national best bid and will cancel any 

such DMM interest, and (ii) will cancel 

any such DMM interest if the execution 

of the full amount of all DMM sell 

interest at a price at or below the 

national best bid would result in a 

change in the DMM position from long 

to short. 

During the Short Sale Period, 

Exchange systems will execute and 

display a short sale order without regard 

to price if, at the time of initial display 

of the short sale order, the order was at 

a price above the then current national 

best bid.30 Un-displayed short sale 

orders that are entered into the 

Exchange’s systems prior to the Short 

Sale Period will be re-priced as 

described above. 

As permitted by Rule 201, during the 

Short Sale Period, Exchange systems 

will execute and display orders marked 

‘‘short exempt’’ without regard to 

whether the order is at a Permitted 

Price.31 Exchange systems will also 

accept orders marked ‘‘short exempt’’ at 

any time when such systems are open 

for order entry, regardless of whether 

the Short Sale Price Test has been 

triggered.32

In addition, the proposed 

amendments to Rule 440B will also 

provide for calculation of the Permitted 

Price and re-pricing of short sale orders 

with respect to any single-priced 

opening, re-opening or closing 

transaction during the Short Sale 

Period. Paragraph (h) of Rule 440B, as 

proposed, would provide that, with 

respect to the execution of short sale 

orders in a covered security in any 

single-priced opening, re-opening or 

closing transaction during the Short 

Sale Period, Exchange systems will reprice short sale orders in a covered 

security as follows: (1) Opening—one 

minimum price increment above the 

national best bid at 9:30 a.m.; (2) Reopening following a halt or pause in 

trading—one minimum price increment 

above the last published Exchange bid 

prior to such halt or pause; and (3) 

Closing—one minimum price increment 

above the last published Exchange bid 

prior to the close.33 For purposes of 

paragraph (h) the term ‘‘minimum price 

increment’’ shall mean $.01 for 

securities for which the national best 

bid or the published Exchange bid, as 

the case may be, is $1 or more, and 

$.0001 for securities for which the 

national best bid or the published 

Exchange bid, as the case may be, is 

below $1. 

Paragraph (h) of Rule 440B, as 

proposed, also provides that, during a 

Short Sale Period, Exchange systems 

will not execute a short sale order for a 

covered security in a single-priced 

opening transaction at or below the 

national best bid at 9:30 a.m.,34 and will 

not execute a short sale order for a 

covered security in a single-priced reopening or closing transaction at or 

below the last published Exchange bid 

prior to a halt or pause in trading (in the 

case of a single-priced re-opening 

transaction), or at or below the last 

published Exchange bid prior to the 


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35 17 CFR 242.201(d); T&M FAQs, supra note 16, 

at Q&A 5.4. 

36 17 CFR 242.201(c); see also T&M FAQs, supra 

note 16, at Q&A 4.2 and 5.5. 

37 15 U.S.C. 78f(b). 

38 15 U.S.C. 78f(b)(5). 

39 15 U.S.C. 78s(b)(3)(A)(iii). 

40 17 CFR 240.19b–4(f)(6). 

41 15 U.S.C. 78s(b)(3)(A)(iii). 

42 17 CFR 240.19b–4(f)(6)(iii). In addition, Rule 

19b–4(f)(6) requires a self-regulatory organization to 

give the Commission written notice of its intent to 

file 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. 

43 17 CFR 240.19b–4(f)(6). 

44 17 CFR 240.19b–4(f)(6)(iii). 

45For purposes only of waiving the 30-day 

operative delay, the Commission has considered the 

proposed rule change’s impact on efficiency, 

competition, and capital formation. 15 U.S.C. 78c(f). 

close (in the case of a single-priced 

closing transaction). 

The Exchange is also proposing 

changes to the Supplementary Material 

to Rule 440B. First, in .11, the Exchange 

is proposing to delete an outdated 

reference to Rule 440B(c). Second, the 

Exchange is proposing to amend .12 to 

add language permitting orders to be 

marked ‘‘short exempt’’ in accordance 

with Rule 200(g)(2) and Rule 201 of 

Regulation SHO. Under amended .12, an 

order may be marked ‘‘short exempt’’ if 

the broker-dealer had a reasonable basis 

for believing that the order meets one of 

the exceptions specified in Rule 201(d) 

of Regulation SHO.35 An order may also 

be marked ‘‘short exempt’’ if it is entered 

during a Short Sale Period and meets 

the conditions specified in Rule 201(c) 

of Regulation SHO.36

Finally, the Exchange also proposes to 

amend NYSE Amex Equities Rule 900 

regarding its Off-Hours Trading Facility 

to apply Rule 440B (including the short 

sale price test restrictions of Rule 201) 

to transactions in the Off-Hours Trading 

Facility (by deleting the current 

exclusion for Rule 440B). An obsolete 

reference to the Intermarket Trading 

System (‘‘ITS’’) in Rule 900(b) will also 

be deleted. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act,37 in general, and furthers the 

objectives of Section 6(b)(5) of the Act,38

in particular, in that it is designed to, 

among other things, prevent fraudulent 

and manipulative acts and practices, to 

promote just and equitable principles of 

trade, and, in general, to protect 

investors and the public interest. The 

proposal is designed to implement the 

provisions of Rule 201 of Regulation 

SHO by establishing, maintaining and 

enforcing written policies and 

procedures reasonably designed to 

prevent the execution or display of a 

short sale order of a covered security in 

violation of the Short Sale Price Test 

established in that rule. To that end, the 

proposed rule change will, among other 

things, establish the Exchange’s 

procedures regarding the execution and 

display of permissible orders during the 

Short Sale Period, and the execution of 

orders marked ‘‘short exempt.’’ 

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 39 and Rule 

19b–4(f)(6) thereunder.40 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 41 and Rule 19b–4(f)(6)(iii) 

thereunder.42

A proposed rule change filed under 

Rule 19b–4(f)(6) 43 normally does not 

become operative prior to 30 days after 

the date of the filing. However, pursuant 

to Rule 19b4(f)(6)(iii),44 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 hereby grants the request.45

Waiving the 30-day operative delay will 

allow the Exchange to implement the 

proposed amendments by February 28, 

2011, which, as noted by the Exchange, 

is the compliance date for amendments 

to Regulation SHO under the Act. By 

waiving the operative delay, the 

Exchange will be able to comply with 

the amendments to Regulation SHO by 

February 28, 2011. Therefore, the 

Commission believes it is consistent 

with the protection of investors and the 

public interest to waive the 30-day 

operative delay and designates the 

proposal as operative upon filing. 

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. 

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 

Number SR–NYSEAMEX–2011–08 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–NYSEAMEX–2011–08. 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 


jlentini on DSKJ8SOYB1PROD with NOTICES
12202 Federal Register / Vol. 76, No. 43 / Friday, March 4, 2011 / Notices 

46 17 CFR 200.30–3(a)(12). 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4Orders subject to tick restrictions are sell ‘‘plus’’ 

and buy ‘‘minus’’ orders. See NYSE Amex Equities 

Rule 13. 

5Amendments to NYSE Amex Equities Rule 440B 

to implement the short sale price test restriction 

requirements of Rule 201 are the subject of a 

separate rule filing. See SR–NYSEAmex–2011–08. 

6Amendments to Regulation SHO, Securities 

Exchange Act Release No. 61595 (Feb. 26, 2010), 75 

FR 11232 (Mar. 10, 2010) (‘‘Rule 201 Adopting 

Release’’). In the Rule 201 Adopting Release, the 

Commission also adopted amendments to Rule 

200(g) of Regulation SHO to include a ‘‘short 

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

See also Division of Trading and Markets: 

Responses to Frequently Asked Questions 

Concerning Rule 201 of Regulation SHO (‘‘T&M 

FAQs’’). 

7The term ‘‘covered security’’ shall have the same 

meaning as in Rule 201 of Regulation SHO. Rule 

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)(47); and 17 CFR 242.600(b)(46). 

8 17 CFR 242.201(b). 

9Rule 201 Adopting Release, 75 FR 11232. The 

Rule 201 compliance date, originally set for 

November 10, 2010, was extended to February 28, 

2011 in Securities Exchange Act Release No. 63247 

(Nov. 4, 2010), 75 FR 68702 (Nov. 9, 2010). The 

May 10th effective date and February 28th 

compliance date also apply to amended Rule 200(g). 

10Rule 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). 

11The term ‘‘national best bid’’ shall have the 

same meaning as in Rule 201 of Regulation SHO. 

Rule 201(a)(4) states that such term shall have the 

same meaning as in Rule 600(b)(42) of Regulation 

NMS. 17 CFR 242.201(a)(4); 17 CFR 242.600(b)(42). 

12The term ‘‘listing market’’ shall have the same 

meaning as in Rule 201 of Regulation SHO. Rule 

201(a)(3) defines the term ‘‘listing market’’ to have 

the same meaning as the term ‘‘listing market’’ as 

defined in the effective transaction reporting plan 

for the covered security. 17 CFR 242.201(a)(3). See 

also 17 CFR 242.201(a)(2). 

13 17 CFR 242.201(b)(1)(i). 

14 17 CFR 242.201(b)(1)(ii). In addition, 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. See Rule 201 

Adopting Release, 75 FR 11232, 11253, n. 290. Rule 

201 does not place any limit on the frequency or 

number of times the circuit breaker can be retriggered with respect to a particular stock. See 

T&M FAQs, at Q&A 2.2. 

Reference Room, 100 F Street, NE., 

Washington, DC 20549–1090. Copies of 

the filing will also be available for 

inspection and copying at the 

Exchange’s principal office and on its 

Internet Web site at http:// 

www.nyse.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– 

NYSEAMEX–2011–08 and should be 

submitted on or before March 25, 2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.46

Cathy H. Ahn, 

Deputy Secretary. 

[FR Doc. 2011–4892 Filed 3–3–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63972; File No. SR– 

NYSEAMEX–2011–09] 

Self-Regulatory Organizations; NYSE 

Amex LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change Adopting Supplementary 

Material .20 to NYSE Amex Equities 

Rule 123C To Provide for the 

Treatment of Short Sale Orders at the 

Close 

February 25, 2011. 

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 February 

24, 2011, NYSE Amex LLC (the 

‘‘Exchange’’ or ‘‘NYSE Amex’’) 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 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 adopt 

Supplementary Material .20 to NYSE 

Amex Equities Rule 123C (The Closing 

Procedures) to provide for the treatment 

of short sale orders at the close, for 

purposes of execution priority, as orders 

subject to tick restrictions 4 during a 

period when a restriction on the prices 

at which covered securities may be sold 

short is in effect (‘‘Short Sale Price Test’’) 

under NYSE Amex Equities Rule 440B5

(which implements the provisions of 

Rule 201 of Regulation SHO (‘‘Rule 

201’’) under the Act). The text of the 

proposed rule change is available at the 

Exchange, the Commission’s Public 

Reference Room, and http:// 

www.nyse.com. 

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 the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

On February 26, 2010, the 

Commission adopted amendments to 

Rule 201.6 Among other things, the 

amendments establish a short salerelated circuit breaker that, if triggered 

with respect to a covered security,7

imposes a short sale price test.8

Amended Rule 201 became effective on 

May 10, 2010 and the compliance date 

for the Rule is February 28, 2011.9

Rule 201(b) requires that trading 

centers,10 including NYSE Amex, 

establish, maintain, and enforce written 

policies and procedures reasonably 

designed to prevent the execution or 

display of a short sale order of a covered 

security at a price that is less than or 

equal to the current national best bid 11

if the price of that covered security 

decreases by 10% or more from the 

covered security’s closing price as 

determined by the listing market 12 for 

the covered security as of the end of 

regular trading hours on the prior day.13

In addition, Rule 201(b) requires that 

trading centers establish, maintain, and 

enforce written policies and procedures 

reasonably designed to impose the Short 

Sale Price Test for the remainder of the 

day and the following day (including 

the close on both days) 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.14


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