18278 Federal Register / Vol. 76, No. 63 / Friday, April 1, 2011 / Notices 

17 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 Securities Exchange Act Release No. 61595 

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

(File No. S7–08–09; Amendments to Regulation 

SHO) (‘‘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). 

6See Securities Exchange Act Release No. 63977 

(February 25, 2010), 76 FR 12165 (March 4, 2011) 

(SR–NYSE–2011–05). 

7See Rule 201 Adopting Release at 11247. 

8 17 CFR 242.612. 

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–NYSEAmex–2011–19 and 

should be submitted on or before April 

22, 2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.17

Cathy H. Ahn, 

Deputy Secretary. 

[FR Doc. 2011–7656 Filed 3–31–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–64136; File No. SR–NYSE– 

2011–11] 

Self-Regulatory Organizations; New 

York Stock Exchange LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change Amending 

NYSE Rule 440B to Modify the 

Exchange’s Procedures for Handling 

Short Sale Orders During a Period 

When the Short Sale Price Test 

Restrictions of Rule 201 of Regulation 

SHO are In Effect 

March 28, 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 March 25, 

2011, New York Stock Exchange LLC 

(‘‘NYSE’’ or the ‘‘Exchange’’) 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 Rule 440B (Short Sales) to modify 

the Exchange’s procedures for handling 

short sale orders during a period when 

the short sale price test restrictions of 

Rule 201 of Regulation SHO (‘‘Rule 

201’’) 4 are in effect (‘‘Short Sale 

Period’’). 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 of Regulation SHO under the 

Act.5 In order to implement the 

provisions of revised Rule 201, the 

Exchange amended NYSE Rule 440B 

(Short Sales) to (1) Establish procedures 

for the Exchange, as a listing market, to 

determine that the short sale price test 

restrictions of Rule 201 have been 

triggered for a covered security, (2) 

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 restrictions of Rule 201 

are triggered, including establishing 

what types of short sale orders will be 

re-priced to achieve a ‘‘Permitted Price’’ 

(as defined and calculated in Rule 

440B(e)), in accordance with Rule 201, 

during a Short Sale Period, (3) establish 

the Exchange’s procedures regarding the 

execution and display of permissible 

orders during a Short Sale Period, and 

the execution and display of orders 

marked ‘‘short exempt’’ during such a 

period, (4) establish the Exchange’s 

procedures regarding the permissible 

execution price of short sale orders in 

single-priced opening, re-opening and 

closing transactions during a Short Sale 

Period, and (5) provide that, during a 

Short Sale Period, 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 (except as 

otherwise provided by Rule 440B and 

consistent with Rule 201).6

Under Rule 440B(e), during a Short 

Sale Period, short sale orders that are 

limited to the national best bid or lower 

and short sale market orders will be repriced by Exchange systems one 

minimum price increment above the 

current national best bid to permit their 

execution at a price that is compliant 

with the short sale price test restrictions 

of Rule 201. Consistent with Rule 201,7

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.8

Among other things, Rule 440B(f) 

implements Rule 201(b)(1)(iii)(A), 

which provides that a trading center 

must have policies and procedures 

reasonably designed to permit the 

execution of a displayed short sale order 

of a covered security if, at the time of 

the initial display of the short sale 

order, the order was at a price above the 

current national best bid. Rule 440B(f) 

specifically provides that the Exchange 

will execute and display a short sale 

order without regard to price if, at the 

time of the initial display of the short 

sale order, the order was at a price 

above the then current national best bid. 

The Exchange proposes to amend 

Rule 440B(e) to provide for how 

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Federal Register / Vol. 76, No. 63 / Friday, April 1, 2011 / Notices 18279 

9The Exchange enters a ‘‘slow’’ trading state, or 

‘‘Non-Firm Mode’’ when, pursuant to Rule 

602(a)(3)(i) of Regulation NMS and Exchange Rule 

60(c)(ii)(A) and (B), the Exchange quotation is not 

available for automatic execution. The Exchange 

resumes a ‘‘fast’’ trading state, or ‘‘Normal Mode’’ 

when the Exchange is open for trading and collects, 

processes, and makes available to quotation vendors 

the highest bid and the lowest offer, and the 

quotation size, in compliance with Rule 602(a) of 

Regulation NMS and Exchange Rule 60(c)(i). 

10 15 U.S.C. 78f(b). 

11 15 U.S.C. 78f(b)(5). 

12 15 U.S.C. 78s(b)(3)(A)(iii). 

13 17 CFR 240.19b–4(f)(6). 

14 17 CFR 240.19b–4(f)(6). 

15 17 CFR 240.19b–4(f)(6)(iii). 

16For 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). 

Exchange systems will treat short sale 

orders that are not marked ‘‘short 

exempt’’ during a Short Sale Period, i.e., 

displayed short sale orders pursuant to 

Rule 440B(f) or non-marketable 

displayable or non-displayed short sale 

orders that Exchange systems have not 

yet re-priced pursuant to Rule 440B(e), 

and that would be required to be routed 

to a protected bid pursuant to 

Regulation NMS, which, by definition, 

would be the national best bid or lower. 

An example of a situation where 

Exchange systems would otherwise be 

required to route to the national best bid 

includes the following: (1) A short sale 

order is displayed pursuant to Rule 

440B(f), (2) the Exchange enters a ‘‘slow’’ 

state, for example, if the Exchange 

reaches a liquidity replenishment point 

pursuant to Exchange Rule 1000, and (3) 

when the Exchange resumes ‘‘fast’’ 

trading, the previously displayed short 

sale order crosses the national best bid.9

In such scenario, pursuant to Regulation 

NMS, the Exchange would be required 

to route such previously displayed short 

sale order to be executed against the 

national best bid. 

The Exchange proposes to address 

how Exchange systems will treat short 

sale orders that have been displayed 

pursuant to Rule 440B(f) or that are not 

yet marketable and therefore have not 

yet been re-priced, and that would 

otherwise be required to be routed to an 

away market. For such scenarios, the 

Exchange proposes that rather than 

route such short sale orders to the 

national best bid, the Exchange will 

instead re-price such short sale orders to 

a Permitted Price, as provided for in 

Rule 440B(e). In particular, the 

proposed amendment to Rule 440B 

would add new subparagraph (e)(2), 

which would provide that, during a 

Short Sale Period, Exchange systems 

will not route to an away market short 

sale orders that have been displayed 

pursuant to Rule 440B(f) or that have 

not yet been re-priced consistent with 

Rule 440B(e) and instead will re-price 

such orders to a Permitted Price. In 

addition, the proposed amendment 

would renumber existing subparagraph 

(e)(2) as (e)(3). The Exchange further 

proposes to amend Rule 440B(e)(3) to 

provide that Exchange systems will not 

route the DMM interest identified in 

that subparagraph and will instead 

cancel such interest. Accordingly, if 

Exchange systems would otherwise 

route such DMM interest to an away 

market in compliance with Regulation 

NMS, during a Short Sale Period, 

Exchange systems will instead cancel 

such DMM short sale interest rather 

than route it. 

The Exchange also proposes a 

clarifying amendment to Rule 440B(g) to 

specify that if a short sale order has 

been marked ‘‘short exempt,’’ Exchange 

systems will display, execute, and route 

such order without regard to whether 

the order is at a Permitted Price. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act,10 in general, and furthers the 

objectives of Section 6(b)(5) of the Act,11

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 refining the Exchange’s 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 restrictions established in that 

rule. To that end, the proposed rule 

change will establish the Exchange’s 

procedures regarding handling of short 

sale orders during a Short Sale Period 

that might otherwise be routed to away 

markets. 

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 12 and Rule 

19b–4(f)(6) thereunder.13 Because the 

proposed rule change does not: (i) 

Significantly affect the protection of 

investors or the public interest; (ii) 

impose any significant burden on 

competition; and (iii) become operative 

prior to 30 days from the date on which 

it was filed, or such shorter time as the 

Commission may designate, if 

consistent with the protection of 

investors and the public interest, the 

proposed rule change has become 

effective pursuant to Section 19(b)(3)(A) 

of the Act and Rule 19b–4(f)(6)(iii) 

thereunder. 

A proposed rule change filed under 

Rule 19b–4(f)(6)14 normally does not 

become operative prior to 30 days after 

the date of the filing. However, pursuant 

to Rule 19b–4(f)(6)(iii),15 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.16 Waiving the 30-day 

operative delay will allow the Exchange 

to handle short sale orders during a 

Short Sale Period that might otherwise 

be routed to an away market in a 

manner that is consistent with Rule 201. 

Therefore, the Commission believes that 

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: 

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18280 Federal Register / Vol. 76, No. 63 / Friday, April 1, 2011 / Notices 

17 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3 In Amendment No. 1, the Exchange listed 

additional data that the Exchange will include in 

monthly reports to be provided to the Commission 

during the pilot program. 

4The Exchange previously filed a proposal to 

establish a directed order program for BATS 

Options. See Securities Exchange Act Release No. 

63403 (December 1, 2010), 75 FR 76059 (December 

7, 2010) (SR–BATS–2010–034) (notice of filing of 

directed order program proposal). The Exchange 

withdrew its original filing in its entirety and has 

re-filed this proposal to address comments received 

on the proposal by eliminating the originally 

proposed midpoint order functionality, to provide 

additional clarity in a few areas, and to propose 

operation of the directed order program on a pilot 

basis. In a manner consistent with this filing, the 

Exchange also responded to comments received on 

the original proposal. See Letter from Eric J. 

Swanson, Secretary, BATS Exchange, Inc. to 

Elizabeth M. Murphy, Secretary, U.S. Securities and 

Exchange Commission dated February 24, 2011. 

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–2011–11 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–2011–11. 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–2011–11 and should 

be submitted on or before April 22, 

2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.17

Cathy H. Ahn, 

Deputy Secretary. 

[FR Doc. 2011–7654 Filed 3–31–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–64132; File No. SR–BATS– 

2011–009] 

Self-Regulatory Organizations; BATS 

Exchange, Inc.; Notice of Proposed 

Rule Change, as Modified by 

Amendment No. 1, To Create a 

Directed Order Program on a 6-Month 

Pilot Basis 

March 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 March 16, 

2011, BATS Exchange, Inc. (‘‘Exchange’’ 

or ‘‘BATS’’) 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. 

On March 24, 2011, the Exchange filed 

Amendment No. 1 to the proposed rule 

filing.3 The Commission is publishing 

this notice to solicit comments on the 

proposed rule change, as modified by 

Amendment No. 1, from interested 

persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange is filing with the 

Commission a proposal for the BATS 

Exchange Options Market (‘‘BATS 

Options’’) to create, on a pilot basis, new 

BATS Rule 21.1(d)(13), entitled ‘‘Market 

Maker Price Improving Orders’’ and new 

BATS Rule 21.1(d)(14), entitled 

‘‘Directed Orders.’’ The Exchange also 

proposes to amend existing BATS Rule 

21.1(d)(2), entitled ‘‘Price Improving 

Orders.’’ 

The text of the proposed rule change 

is available at the Exchange’s Web site 

at http://www.batstrading.com, at the 

principal office of the Exchange, and at 

the Commission’s Public Reference 

Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

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 parts of such 

statements. 

(A) Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange is proposing certain 

modifications and additions to its rules 

related to the trading of options. First, 

the Exchange is proposing the 

establishment of new Rule 21.1(d)(13), 

entitled Market Maker Price Improving 

Orders. Second the Exchange is 

proposing the establishment of new 

Rule 21.1(d)(14), entitled Directed 

Orders. Third, the Exchange is 

proposing to modify the text of Rule 

21.1(d)(6), entitled Price Improving 

Orders, to make a clarifying change.4

The Exchange is proposing the rule 

changes described below to establish a 

directed order program through which 

members of BATS Options (‘‘Options 

Members’’) can direct an order to a 

particular BATS Options Market Maker 

for potential execution at a price 

improved over the existing National 

Best Bid (‘‘NBB’’) or National Best Offer 

(‘‘NBO’’). As part of this program, BATS 

is proposing to define two new order 

types. The first would be new Rule 

21.1(d)(13), entitled Market Maker Price 

Improving Orders, which are orders 

from a BATS Options Market Maker to 

buy or sell an option that has a 

displayed price and size and a nondisplayed price at which the BATS 

Options Market Maker is willing to 

trade with a Directed Order. As 

proposed, a Market Maker Price 

Improving Order would be ranked on 

the BATS Options Book at its displayed 

price. The non-displayed price of the 

Market Maker Price Improving Order 

would not be entered into the BATS 

Options Book, but would be, along with 

its displayed size, converted to a buy or 

sell order at its non-displayed price in 

mstockstill on DSKH9S0YB1PROD with NOTICES