Federal Register / Vol. 76, No. 71 / Wednesday, April 13, 2011 / Notices 20739 

7 15 U.S.C. 78s(b)(3)(A). 

8 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 filing of the proposed rule change, or 

such shorter time as designated by the Commission. 

The Commission notes that the Exchange has 

satisfied this requirement. 

9For 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). 

10 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

markets concerning review of 

transactions as clearly erroneous. 

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, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 7 and Rule 19b–4 

(f)(6)(iii) thereunder.8 The Exchange has 

asked the Commission to waive the 30- 

day operative delay so that the proposal 

may become operative immediately 

upon filing. The Commission believes 

that waiving the 30-day operative delay 

is consistent with the protection of 

investors and the public interest 

because such waiver will allow the pilot 

program to continue uninterrupted and 

help ensure uniformity among the 

national securities exchanges and 

FINRA with respect to the treatment of 

clearly erroneous transactions.9

Accordingly, the Commission waives 

the 30-day operative delay requirement 

and designates the proposed rule change 

as operative upon filing with the 

Commission. 

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 

Number SR–EDGX–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–EDGX–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, 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. 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 

publicly available. All submissions 

should refer to File Number SR–EDGX– 

2011–11 and should be submitted on or 

before May 4, 2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.10

Cathy H. Ahn, 

Deputy Secretary. 

[FR Doc. 2011–8806 Filed 4–12–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–64236; File No. SR–BYX– 

2011–006] 

Self-Regulatory Organizations; BATS 

Y–Exchange, Inc.; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Extend Pilot Program 

Related to Clearly Erroneous 

Execution Reviews 

April 7, 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 April 1, 

2011, BATS Y–Exchange, Inc. (the 

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

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been prepared 

by the Exchange. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

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 to extend a pilot 

program related to Rule 11.17, entitled 

‘‘Clearly Erroneous Executions.’’ 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 

mstockstill on DSKH9S0YB1PROD with NOTICES

20740 Federal Register / Vol. 76, No. 71 / Wednesday, April 13, 2011 / Notices 

3Securities Exchange Act Release No. 63097 

(October 13, 2010), 75 FR 64767 (October 20, 2010) 

(SR–BYX–2010–002). 

4 Id. 

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

6 15 U.S.C. 78f(b)(5). 

7 15 U.S.C. 78s(b)(3)(A). 

8 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 filing of the proposed rule change, or 

such shorter time as designated by the Commission. 

The Commission notes that the Exchange has 

satisfied this requirement. 

9For 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). 

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 purpose of this filing is to extend 

the effectiveness of the Exchange’s 

current rule applicable to Clearly 

Erroneous Executions, Rule 11.17. The 

rule, explained in further detail below, 

was approved to operate under a pilot 

program set to expire on April 11, 2011. 

The Exchange proposes to extend the 

pilot program to the earlier of August 

11, 2011 or the date on which a limit 

up/limit down mechanism to address 

extraordinary market volatility, if 

adopted, applies. 

On October 4, 2010, the Exchange 

filed an immediately effective filing to 

adopt various rule changes to bring BYX 

Rules up to date with the changes that 

had been made to the rules of BATS 

Exchange, Inc., the Exchange’s affiliate, 

while BYX’s Form 1 Application to 

register as a national security exchange 

was pending approval. Such changes 

included changes to the Exchange’s 

Rule 11.17, on a pilot basis, to provide 

for uniform treatment: (1) Of clearly 

erroneous execution reviews in multistock events involving twenty or more 

securities; and (2) in the event 

transactions occur that result in the 

issuance of an individual stock trading 

pause by the primary market and 

subsequent transactions that occur 

before the trading pause is in effect on 

the Exchange.3 The Exchange also 

adopted additional changes to Rule 

11.17 that reduced the ability of the 

Exchange to deviate from the objective 

standards set forth in Rule 11.17.4 The 

Exchange believes the benefits to market 

participants from the more objective 

clearly erroneous executions rule 

should be approved to continue on a 

pilot basis. 

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.5

In particular, the proposal is consistent 

with Section 6(b)(5) of the Act,6 because 

it would promote just and equitable 

principles of trade, remove 

impediments to, and perfect the 

mechanism of, a free and open market 

and a national market system. The 

Exchange believes that the pilot 

program promotes just and equitable 

principles of trade in that it promotes 

transparency and uniformity across 

markets concerning review of 

transactions as clearly erroneous. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change imposes any 

burden on competition. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

The Exchange has neither solicited 

nor received written comments on the 

proposed rule change. 

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, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 7 and Rule 19b– 

4(f)(6)(iii) thereunder.8 The Exchange 

has asked the Commission to waive the 

30-day operative delay so that the 

proposal may become operative 

immediately upon filing. The 

Commission believes that waiving the 

30-day operative delay is consistent 

with the protection of investors and the 

public interest because such waiver will 

allow the pilot program to continue 

uninterrupted and help ensure 

uniformity among the national 

securities exchanges and FINRA with 

respect to the treatment of clearly 

erroneous transactions.9 Accordingly, 

the Commission waives the 30-day 

operative delay requirement and 

designates the proposed rule change as 

operative upon filing with the 

Commission. 

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 

Number SR–BYX–2011–006 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–BYX–2011–006. 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 office of the 

Exchange. All comments received will 

mstockstill on DSKH9S0YB1PROD with NOTICES

Federal Register / Vol. 76, No. 71 / Wednesday, April 13, 2011 / Notices 20741 

10 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Securities and Exchange Act Release No. 

63909 (February 15, 2011), 76 FR 9838 (February 

22, 2011) (‘‘Notice’’). 

4See Securities Exchange Act Rel. No. 60132 

(June 17, 2009), 74 FR 30191 (June 24, 2009) (File 

No. SR–FINRA–2009–015). FINRA announced 

implementation of New Rule 13806 (Promissory 

Note Proceedings) in Regulatory Notice 09–48 

(August 2009). The effective date was September 

14, 2009. 5See Rule 13802(c)(3). 6Under Rule 13806, if an associated person does 

not file an answer, or files an answer but does not 

assert any counterclaims or third party claims, 

regardless of the amount in dispute, a single 

statutory discrimination qualified arbitrator decides 

the case. If an associated person files a counterclaim 

or third party claim, FINRA bases panel 

composition on the amount of the counterclaim or 

third party claim. For counterclaims and third party 

claims that are not more than $100,000, FINRA 

appoints a single statutory discrimination qualified 

arbitrator. For counterclaims and third party claims 

of more than $100,000, FINRA appoints a threearbitrator panel comprised of a statutory 

discrimination qualified arbitrator, a public 

arbitrator, and a non-public arbitrator. 

7Of the first 175 promissory note cases 

completed, arbitrators decided the case on the 

pleadings 76 percent of the time (unless the case 

concluded by settlement or some other means). 

8See Rule 12400(c). 

9 15 U.S.C. 78o–3(b)(6). 

10 In approving this proposed rule change, the 

Commission has considered the proposed rule’s 

impact on efficiency, competition, and capital 

formation. See 15 U.S.C. 78c(f). 

11 15 U.S.C. 78o–3(b)(6). 

be posted without change; the 

Commission does not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

publicly available. All submissions 

should refer to File Number SR–BYX– 

2011–006 and should be submitted on 

or before May 4, 2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.10

Cathy H. Ahn, 

Deputy Secretary. 

[FR Doc. 2011–8848 Filed 4–12–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–64226; File No. SR–FINRA– 

2011–005] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Order Granting 

Approval of a Proposed Rule Change 

Relating to Promissory Note 

Proceedings 

April 7, 2011. 

I. Introduction 

On February 4, 2011, the Financial 

Industry Regulatory Authority, Inc. 

(‘‘FINRA’’) filed with the Securities and 

Exchange Commission (‘‘Commission’’), 

pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 19b–4 thereunder,2 a 

proposed rule change to amend Rule 

13806 of the Code of Arbitration 

Procedure for Industry Disputes 

(‘‘Industry Code’’) to provide that FINRA 

will appoint a chair-qualified public 

arbitrator also qualified to resolve 

statutory discrimination cases. The 

proposed rule change was published for 

comment in the Federal Register on 

February 22, 2011.3 The Commission 

did not receive any comments on the 

proposal. This order approves the 

proposed change. 

II. Description of the Proposal 

In 2009, FINRA implemented new 

procedures to expedite the 

administration of cases that solely 

involve a broker-dealer’s claim that an 

associated person failed to pay money 

owed on a promissory note.4 Under 

these procedures, FINRA appoints a 

single chair-qualified public arbitrator 

from the roster of arbitrators approved 

to hear statutory discrimination claims 

(a statutory discrimination qualified 

arbitrator) 5 to resolve the dispute.6

These specially qualified arbitrators are 

public chair-qualified arbitrators who 

also are attorneys familiar with 

employment law and have at least ten 

years of legal experience. In addition, 

they may not have represented 

primarily the views of employers or of 

employees within the last five years. 

FINRA proposed using statutory 

discrimination qualified arbitrators 

because of the depth of their experience 

and their familiarity with employment 

law. At the time that FINRA filed the 

proposed rule change, these arbitrators 

were underutilized at the forum. 

Since implementing the new 

procedures, FINRA has found that 

promissory note cases do not require 

extensive experience or depth of 

knowledge (or the limitation on 

representation of employers or of 

employees within the last five years). In 

a majority of completed cases, 

arbitrators decided the case on the 

pleadings and the respondent broker did 

not appear.7 Experience with the new 

procedures led FINRA to propose 

amending the Industry Code to provide 

that FINRA will appoint a chairqualified public arbitrator to a panel 

resolving a promissory note dispute 

instead of appointing a statutory 

discrimination qualified arbitrator. 

Chair-qualified arbitrators have 

completed chair training and are 

attorneys who have served through 

award on at least two cases, or, if not 

attorneys, are arbitrators who have 

served through award on at least three 

cases.8

In addition, the number of promissory 

note cases has more than doubled in the 

past two years. As a result of this 

substantial increase, it is becoming more 

difficult to appoint panels solely with 

statutory discrimination qualified 

arbitrators to these cases. Under the 

proposed rule change, the number of 

arbitrators available for appointment in 

promissory note cases would increase 

significantly. The proposed rule change 

would ensure that FINRA has a 

sufficient number of qualified 

arbitrators readily available to resolve 

these matters. 

As explained in the Notice, FINRA 

believes that the proposed rule change 

is consistent with the provisions of 

Section 15A(b)(6) of the Act,9 which 

requires, among other things, that 

FINRA rules must be designed to 

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. FINRA believes that the 

proposed rule change is consistent with 

the provisions of the Act noted above 

because it would ensure that FINRA has 

a sufficient number of qualified 

arbitrators readily available to resolve 

promissory note cases. 

III. Discussion of Comment Letters 

The Commission did not receive any 

comment letters regarding the proposed 

rule change. 

IV. Commission Findings 

The Commission has carefully 

reviewed the proposed rule change and 

finds that the proposed rule change is 

consistent with the requirements of the 

Act and the rules and regulations 

thereunder applicable to a national 

securities association.10 In particular, 

the Commission finds that the proposed 

rule change is consistent with Section 

15A(b)(6) of the Act,11 which requires, 

among other things, that FINRA rules 

must be designed to 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. More 

specifically, the Commission finds that 

the proposed rule change to allow chairqualified arbitrators to hear promissory 

note cases would help to ensure that 

there are sufficient number of qualified 

arbitrators readily available to resolve 

such cases. 

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