Federal Register / Vol. 74, No. 194 / Thursday, October 8, 2009 / Notices 51931 

8 15 U.S.C. 78s(b)(3)(A). 

9 17 CFR 240.19b–4(f)(6). 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. 

10 17 CFR 240.19b–4(f)(6). 

11 17 CFR 240.19b–4(f)(6). 

12For purposes only of waiving the 30-day 

operative delay, the Commission has considered the 

proposal’s impact on efficiency, competition, and 

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

13See Securities Exchange Act Release No. 60706 

(September 22, 2009), 74 FR 49416 (September 28, 

2009) (NYSEArca–2009–36). 

14 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3 17 CFR 240.19b–4(f)(6). 

of investors and the protection of the 

public interest. 

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 

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 8 and Rule 19b– 

4(f)(6) thereunder.9

A proposed rule change filed 

pursuant to Rule 19b–4(f)(6) under the 

Act 10 normally does not become 

operative for 30 days after the date of its 

filing. However, Rule 19b–4(f)(6) 11

permits the Commission to designate a 

shorter time if such action is consistent 

with the protection of investors and the 

public interest. The Exchange requests 

that the Commission waive the 30-day 

operative delay so that it may 

implement the new rule on October 5, 

2009, the same date as the other equities 

exchanges. The Commission believes 

that waiving the 30-day operative delay 

is consistent with the protection of 

investors and the public interest 

because it will allow the Exchange to 

begin applying the new rule on the same 

date as the other equities exchanges.12

Application of the new rule on this date 

should help foster transparency and 

consistency among those exchanges that 

adopt clearly erroneous execution rules 

substantially similar to those previously 

approved by the Commission.13 For 

these reasons, the Commission 

designates that the proposed rule 

change become operative on October 5, 

2009. 

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission may summarily abrogate 

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–2009–103 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–2009–103. 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 inspection and copying 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–NYSE–2009–103 and 

should be submitted on or before 

October 29, 2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.14

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–24245 Filed 10–7–09; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60777; File No. SR–BX– 

2009–060] 

Self-Regulatory Organizations; 

NASDAQ OMX BX; Notice of Filing and 

Immediate Effectiveness of a Proposal 

To Amend Exchange Rule 11890 

Governing Clearly Erroneous 

Executions Pursuant to Section 

19(b)(1) of the Securities Exchange Act 

of 1934 (‘‘Act’’) 1 and Rule 

DATES: October 2, 2009. 

19b–4 thereunder,2 notice is hereby 

given that on October 1, 2009, NASDAQ 

OMX BX (‘‘Exchange’’ or ‘‘BX’’) 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. BX has 

designated the proposed rule change as 

constituting a rule change under Rule 

19b-4(f)(6) under the Act,3 which 

renders the proposal effective upon 

filing with the Commission. 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 

BX is proposing to amend Exchange 

Rule 11890 governing clearly erroneous 

executions. The text of the filing is 

available at http:// 

mstockstill on DSKH9S0YB1PROD with NOTICES

51932 Federal Register / Vol. 74, No. 194 / Thursday, October 8, 2009 / Notices 

4 Designated Officers of the Exchange and 

designated employees of the Exchange or The 

NASDAQ Stock Market LLC who are authorized to 

act on behalf of the Exchange pursuant to the 

Regulatory Service Agreement (RSA) between the 

Exchange and NASDAQ Stock Market LLC 

(collectively ‘‘Officials’’) would have authority to 

review member initiated requests under Rule 

11890(a). This will allow one Official to review 

related transactions in affiliated markets to expedite 

and ensure uniformity of decisions among affiliated 

exchanges. 

nasdaqomx.cchwallstreet.com 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, BX 

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. BX 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 

The Exchange proposes to amend 

Exchange Rule 11890 in order to 

improve the Exchange’s rule regarding 

clearly erroneous executions. The 

proposed changes are part of a marketwide effort designed to provide 

transparency and finality with respect to 

clearly erroneous executions. This effort 

seeks to achieve consistent results for 

participants across U.S. equities 

exchanges while maintaining a fair and 

orderly market, protecting investors and 

protecting the public interest. In 

addition, the Exchange has attempted to 

shorten and combine existing sections 

of Rule 11890 and has incorporated all 

of the prior Interpretive Materials into 

the body of the rule. The Exchange 

believes this will create a clearer and 

more concise rule that will assist market 

participants in complying with its 

terms. The proposed changes are more 

fully discussed below. 

Definition 

The Exchange will amend the 

meaning of the definition of a clearly 

erroneous execution, to add clarifying 

language with respect to cancelled 

trades. The proposed change identifies 

that a transaction made in error and 

agreed to be canceled by both parties or 

determined by the Exchange to be 

clearly erroneous will be removed from 

the Consolidated Tape. A trade will 

only be removed from the Consolidated 

Tape when the determination is deemed 

final and any applicable appeals have 

been exhausted. 

Member Initiated Review Requests 

The Exchange proposes to amend 

Rule 11890 to update the procedures for 

requesting a review of a clearly 

erroneous transaction. The Exchange 

proposes that requests for review must 

be received by the exchange within 30 

minutes of the execution time for orders 

initially routed to and executed on the 

Exchange. This is consistent with the 

Exchange’s current practice and will be 

applied uniformly by other markets to 

provide a level of consistency and 

certainty across market centers. As is 

the case under the current rule, the 

Exchange proposes that members 

submit certain essential identifying 

information with the request including 

the time of the transaction(s), security 

symbol(s), number of shares, price(s), 

side (bought or sold), and factual basis 

for believing that the trade is clearly 

erroneous. The current rule allows 

members additional time to file at 

market open. However, the Exchange 

believes that a uniform 30 minutes is an 

appropriate time frame for all trades that 

affords the requesting party sufficient 

time to gather and submit all required 

information. 

The proposed rule also requires the 

Exchange to notify the counterparty to 

a trade upon receipt of a timely filed 

request for review that satisfies the 

numerical guidelines set forth within 

the Rule (referred to in the proposed 

amendments as ‘‘Numerical 

Guidelines,’’ which are discussed in 

detail below). This proposed language 

eliminates the requirement that 

counterparties be notified of every 

request for a ruling and instead requires 

notice only when a request is filed in a 

timely manner and satisfies the 

Numerical Guidelines. This change 

alleviates the burden on the Exchange of 

notifying the counterparties when a 

request for review does not merit a 

ruling to break the trades at issue. 

In addition, notification may be by 

one of several means, including press 

release, system status, web posting or 

any other method reasonably expected 

to provide rapid notice to many market 

participants. For example, the Exchange 

anticipates streamlining the notification 

process for counterparties when the 

Exchange receives a high volume of 

clearly erroneous filings. In such 

circumstances it might issue an 

electronic system status message 

indicating which trades were under 

review instead of more time consuming 

individual calls to each counterparty. 

This will benefit market participants by 

expediting notification that trades are 

under review and the decision with 

respect to particular trades. The 

Exchange would advise market 

participants of what notification 

processes it will use through a Notice to 

Members or Head Trader Alert. 

Routed Executions 

The Exchange proposes to give other 

market centers an additional 30 minutes 

from the receipt of their participant’s 

timely filing to request a ruling, but no 

longer than 60 minutes from the time of 

the execution under review. This 

provision accounts for those executions 

initially directed to an away market 

center and subsequently routed by that 

away market center to the Exchange. 

For example, assume an order is 

initially routed by a participant to 

Market Center A and subsequently 

routed to the Exchange where the order 

is executed at a price outside of the 

Numerical Guidelines. Without 

additional time Market Center A might 

be late in filing with the Exchange if its 

customer takes almost 30 minutes to file 

the original complaint. The proposal 

would give Market Center A up to 30 

additional minutes from the time its 

customer files with Market Center A to 

file with the Exchange for review. This 

provision caps the filing deadline for an 

away market center at 60 minutes from 

the time of the execution under review. 

Outlier Transactions 

The proposed amendments to Rule 

11890 provide that an Official 4 may 

consider requests for review received 

after thirty minutes, but not longer than 

sixty minutes after the execution in 

question in the case of an Outlier 

Transaction. An Outlier Transaction is a 

transaction where (1) the execution 

price of the security is greater than three 

times the current Numerical Guidelines, 

or (2) the execution price of the security 

breaches the 52-week high or low, in 

which case NASDAQ may consider 

Additional Factors to determine if the 

transaction qualifies for review or if the 

Exchange shall decline to act. 

Deletion of Current Rule 

11890(a)(2)(D) Inside Price Minimum 

Thresholds 

The Exchange proposes to delete the 

inside price minimum thresholds that 

currently apply to transactions during 

regular market hours (9:30 a.m. to 4:00 

p.m.). These thresholds establish which 

trades are eligible for review and are 

different than the Numerical Guidelines. 

The Exchange believes that these 

thresholds, which predate the use of 

Numerical Guidelines, add an extra 

layer of complexity to the filing process 

mstockstill on DSKH9S0YB1PROD with NOTICES

Federal Register / Vol. 74, No. 194 / Thursday, October 8, 2009 / Notices 51933 

5The Core Trading Session begins at 9:30 a.m. 

and ends at 4 p.m. 

6The Opening Session begins at 7 a.m. and 

concludes with the start of the Core Trading 

Session. The Late Trading Session begins at the end 

of the Core Trading Session and continues until 8 

p.m. 

without providing any meaningful 

benefit to investors or the Exchange. 

Numerical Guidelines 

Currently, the Interpretive Materials 

to Rule 11890 provide specific 

numerical guidelines for determining 

what constitutes a clearly erroneous 

transaction. The Exchange proposes 

codifying these numerical thresholds, 

referred to as ‘‘Numerical Guidelines,’’ 

in the rule to explicitly state what 

constitutes a clearly erroneous 

execution. The proposal also adds 

Numerical Guidelines for leveraged 

ETFs and ETNs, which are securities 

that have become increasingly popular 

since the original numerical thresholds 

were adopted. The proposed Numerical 

Guidelines state that a transaction 

executed during the Core Trading 

Session 5 or the Opening and Late 

Trading Sessions 6 may be found to be 

clearly erroneous only if the price of the 

transaction is greater in the case of a 

buy, or less in the case of a sale, than 

the reference price by an amount that 

equals or exceeds the Numerical 

Guidelines for a particular transaction 

category. The Reference Price shall be 

equal to the consolidated last sale 

immediately prior to the execution 

under review, unless unusual 

circumstances are present. 

The proposed Numerical Guidelines 

for sales greater than $0.00 and up to 

and including $25.00 are 10% for the 

Core Trading Session and 20% for the 

Opening and Late Trading Sessions. The 

proposed Numerical Guidelines for 

sales greater than $25.00 up to and 

including $50.00 are 5% for the Core 

Trading Session and 10% for Opening 

and Late Trading Sessions. The 

proposed Numerical Guidelines for 

sales greater than $50.00 are 3% for the 

Core Trading Session and 6% for 

Opening and Late Trading Sessions. A 

filing involving five or more securities 

by the same member may be considered 

a ‘‘Multi-Stock Event.’’ In the case of a 

Multi-Stock Event, the proposed 

guidelines are 10% for the Core Trading 

Session and 10% for the Opening and 

Late Trading Sessions. In the case of 

Leveraged ETF/ETN securities, the 

above guidelines are to be multiplied by 

the leverage multiplier of the security. 

Executions that do not meet or exceed 

the Numerical Guidelines will not be 

eligible to be broken under this section. 

The following chart summarizes the 

proposed Numerical Guidelines. 

Reference price: Consolidated Last Sale 

Core Trading Session Numerical 

Guidelines (subject transaction’s % difference from the Consolidated Last 

Sale): 

Opening and Late Trading Session Numerical Guidelines (subject transaction’s % difference from the Consolidated Last Sale): 

Greater than $0.00 up to and including $25.00 ...................... 10% ....................................................... 20%. 

Greater than $25.00 up to and including $50.00 .................... 5% ......................................................... 10%. 

Greater than $50.00 ................................................................. 3% ......................................................... 6%. 

Filings involving five or more securities by the same participant may be considered a ‘‘Multi-Stock Event’’.10% ....................................................... 10%. 

Leveraged ETF/ETN securities ................................................ Core Trading Session Numerical 

Guidelines multiplied by the leverage 

multiplier (i.e. 2×).

Core Trading Session Numerical 

Guidelines multiplied by the leverage 

multiplier (i.e. 2×). 

The following example explains the 

application of these guidelines. ABC has 

a consolidated last sale of $10.00. 

During the Core Trading Session 

Customer A enters a market order to buy 

10,000 shares, although it had intended 

a market order for 1,000 shares. 

Executions occur, moving through the 

depth of the Exchange Book, as follows: 

Trade #1—1000 shares @ $10.00 (0% 

difference from Reference Price) 

Trade #2—5000 shares @ $10.50 (5% 

difference from Reference Price) 

Trade #3—2000 shares @ $11.00 (10% 

difference from Reference Price) 

Trade #4—1000 shares @ $11.50 (15% 

difference from Reference Price) 

Trade #5—1000 shares @ $12.00 (20% 

difference from Reference Price) 

In this example, to be clearly 

erroneous the trades must be at a price 

that is at least 10% higher than the 

consolidated last sale prior to the series 

of executions. Absent any Unusual 

Circumstances or Additional Factors 

(each discussed below), the Exchange 

Official would break trades #3 through 

#5, priced at $11.00 and above, as 

clearly erroneous, but would let stand 

trades #1 and #2. If instead the trade 

happened in the Late Trading Session, 

where a 20% difference from the 

Reference Price is required for trades to 

be clearly erroneous, the Official would 

break only Trade #5 and trades #1 

through #4 would stand. 

Establishing Numerical Guidelines 

within the rule gives regulatory 

transparency and consistency in the 

application of the rules of the Exchange. 

These Numerical Guidelines, which are 

substantially similar to existing 

Exchange guidance, represent the 

general consensus developed based on 

the collective experiences of a marketwide group. The Exchange believes that 

the Numerical Guidelines are fair and 

appropriate and apply evenly to all 

participants. 

Unusual Circumstances 

The Exchange further proposes that in 

unusual circumstances the Exchange 

may, in its discretion and with a view 

toward maintaining a fair and orderly 

market and protecting investors and the 

public interest, use a Reference Price 

other than the consolidated last sale. 

‘‘Unusual Circumstances’’ may include 

periods of extreme market volatility, 

sustained illiquidity, or widespread 

system issues. Other Reference Prices 

that the Exchange may use would 

include the consolidated inside price, 

the consolidated opening price, the 

consolidated prior close, or the 

consolidated last sale prior to a series of 

executions. 

Under the proposed rule the Exchange 

may also use a higher Numerical 

Guideline if, after market participants 

have been alerted to erroneous activity, 

the price of the security returns toward 

its prior trading range but continues to 

trade beyond the price it would have 

normally been broken. 

Joint Market Rulings 

In the interest of achieving 

consistency across markets, the proposal 

would give the Exchange the ability to 

use a different Reference Price and/or 

Numerical Guideline in events that 

involve other markets. In these 

instances the Reference Price would be 

determined based on a consensus 

among the exchanges where the 

transactions occurred. 

Additional Factors 

mstockstill on DSKH9S0YB1PROD with NOTICES

51934 Federal Register / Vol. 74, No. 194 / Thursday, October 8, 2009 / Notices 

7Currently only Executive Vice Presidents 

designated by the Exchange’s President are eligible 

to make rulings under Rule 11890(b). The Exchange 

proposes to expand this to include other officers 

from the Exchange and senior level employees of 

the Exchange or The NASDAQ Stock Market LLC 

‘‘Senior Officials’’ who are authorized to act on 

behalf of the Exchange pursuant to the Regulatory 

Service Agreement (RSA) between the Exchange 

and NASDAQ Stock Market LLC. All designated 

Exchange Officers and a subset of senior level 

employees will be designated as ‘‘Senior Officials’’ 

with the authority to review transactions pursuant 

to Rule 11890(b). The Exchange anticipates that 

only a subset of more senior employees allowed to 

review transactions under Rule 11890(a) would be 

authorized to review trades under Rule 11890(b). 

This will allow one Senior Official to review related 

transactions in affiliated markets to expedite and 

ensure uniformity of decisions among affiliated 

exchanges. The Exchange’s Chief Regulatory Officer 

would designate Officials and Senior Officials with 

relevant market experience to adjudicate these 

matters. 

8 15 U.S.C. 78f. 

9 15 U.S.C. 78f(b)(5). 

The proposed amendments to Rule 

11890 also enumerate some additional 

factors that an Official may consider 

when determining whether an execution 

is clearly erroneous. These factors 

include, but are not limited to, system 

malfunctions or disruptions, volume 

and volatility for the security, derivative 

securities products that correspond to 

greater than 100% in the direction of a 

tracking index, news released for the 

security, whether trading in the security 

was recently halted/resumed, whether 

the security is an IPO, whether the 

security was subject to a stock-split, 

reorganization, or other corporate 

action, overall market conditions, 

Opening and Late Session executions, 

validity of the consolidated tapes trades 

and quotes, consideration of primary 

market indications, and executions 

inconsistent with the trading pattern in 

the stock. Each additional factor shall be 

considered with a view toward 

maintaining a fair and orderly market, 

the protection of investors and the 

public interest. The Exchange believes 

market participants recognize that such 

factors will be considered in reviewing 

potentially erroneous trades because 

Rule 11890 currently includes similar 

provisions. 

Numerical Guidelines Applicable to 

Volatile Market Opens 

The proposed amendments give the 

Exchange the ability to expand the 

Numerical Guidelines applicable to 

transactions occurring between 9:30 

a.m. and 10 a.m. based on the 

disseminated value of the S&P 500 

Futures at 9:15 a.m. When the S&P 

Futures are up or down 3%, or up to but 

not including 5% at 9:15 a.m., the 

Numerical Guidelines are doubled. 

When the S&P Futures are up or down 

5% or greater at 9:15 a.m., the 

Numerical Guidelines are tripled. The 

Exchange believes that the S&P 500 

futures contract is an appropriate and 

reliable barometer of market activity 

prior to the market opening due to its 

broad based market coverage and deep 

liquidity. Using the S&P 500 Futures 

disseminated value at 9:15 a.m. as the 

barometer of market activity, the 

Exchange is providing a transparent 

means of offering adjusted guidelines in 

times of volatile market activity. 

Review Procedures 

Initial Determination 

The Exchange proposes adding 

language stating that a determination 

shall be made generally within 30 

minutes of receipt of the complaint, but 

in no case later than the start of Core 

Trading on the following trading day. 

Rulings made outside of 30 minutes will 

not fail for lack of timeliness. The 

guideline simply provides participants 

an appropriate expectation that a ruling 

will generally be made within 30 

minutes and in no case later than the 

start of Core Trading on the following 

trading day. 

Appeals 

The current rule provides that the 

Market Operation Review Committee 

(‘‘MORC’’) shall review and render a 

decision upon an appeal. The proposed 

rule offers more definite guidelines to 

ensure the expedient resolution of 

appeals. It requires the MORC to review 

appeals as soon as practicable, but 

generally on the same day as the 

executions under review. Appeals 

received between 3 p.m. ET and the 

close of trading in the Late Trading 

Session should be made as soon as 

practicable, but in no case later than the 

trading day following the date of the 

execution under review. While 

decisions by the MORC that do not meet 

these time guidelines will still be valid, 

these guidelines will provide 

participants with reasonable 

expectations of when a ruling on appeal 

will generally be made. As is currently 

the case, all decisions rendered under 

Rule 11890(a) (complaints of market 

participants) will be subject to appeal to 

the MORC as will decisions rendered by 

a Senior Official under Rule 11890(b) 

(decisions on the Exchange’s own 

motion), except in cases where the 

Senior Official determines that the 

ruling should not be eligible for appeal 

because finality is necessary to maintain 

a fair and orderly market and to protect 

investors and the public interest. This 

provision simply clarifies the fact that 

nothing in the proposed rule limits or 

impedes the rights of the parties to 

arbitrate their dispute. 

Exchange Acting on Its Own Motion 

The proposed rule would allow a 

designated ‘‘Senior Official’’ of the 

Exchange7 to review executions 

pursuant to Rule 11890(b). The 

Exchange’s Rule 11890(b) is consistent 

with NYSE ARCA, Inc.’s Rule 7.10(g). 

The Senior Official’s decision would 

still be guided by the Numerical 

Guidelines (including the Multi-Stock 

Event 10% threshold), Unusual 

Circumstances and Additional Factors 

outlined above. In extraordinary 

circumstances a Senior Official may 

apply a lower Numerical Guideline if 

such action is necessary to maintain a 

fair and orderly market or protect 

investors and the public interest. In 

some instances the Exchange may detect 

a single execution that breaches the 

Numerical Guidelines but is not the 

subject of a ruling request. This 

provision gives the Exchange the ability 

to review such executions. In other 

cases, clearly erroneous executions 

commonly involve multiple parties and 

multiple executions. All affected parties 

may not request a ruling. The Exchange 

proposes this provision to permit a 

Senior Official to rule on a group of 

transactions related to the same 

occurrence or event as a whole, without 

a formal request for a ruling from every 

affected party. 

As is currently the case, the Exchange 

could break all trades in a security if a 

pervasive mistake resulted in trading 

that should not have occurred. For 

example, trades in a security that was 

incorrectly authorized for trading prior 

to the date of its actual initial public 

offering would all be broken. Similarly, 

if the Exchange systems executed orders 

at a price that was inconsistent with the 

rules governing the operation of the 

system, either due to an Exchange 

system error or because an underlying 

erroneous order resulted in an 

erroneous price, the Exchange may 

break all of the affected trades. 

This rule change shall be effective 

October 5, 2009. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

the provisions of Section 6 of the Act,8

in general, and with Section 6(b)(5) of 

the Act,9 in particular, in that the 

proposal is designed to prevent 

fraudulent and manipulative acts and 

practices, to promote just and equitable 

principles of trade, to foster cooperation 

and coordination with persons engaged 

in regulating, clearing, settling, 

processing information with respect to, 

and facilitating transactions in 

securities, to remove impediments to 

and perfect the mechanism of a free and 

open market and a national market 

mstockstill on DSKH9S0YB1PROD with NOTICES

Federal Register / Vol. 74, No. 194 / Thursday, October 8, 2009 / Notices 51935 

10 15 U.S.C. 78s(b)(3)(A). 

11 17 CFR 240.19b–4(f)(6). 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. 

12 17 CFR 240.19b–4(f)(6). 

13 17 CFR 240.19b–4(f)(6). 

14For purposes only of waiving the 30-day 

operative delay, the Commission has considered the 

proposal’s impact on efficiency, competition, and 

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

15See Securities Exchange Act Release No. 60706 

(September 22, 2009), 74 FR 49416 (September 28, 

2009) (NYSEArca–2009–36). 

16 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3 17 CFR 240.19b–4(f)(6). 

system, and, in general, to protect 

investors and the public interest. The 

proposed rule change would coordinate 

standards of review of clearly erroneous 

trades across markets, thereby 

eliminating conflicting rulings among 

exchanges and disparate treatment of 

similarly priced trades. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

BX does not believe that the proposed 

rule change will impose any burden on 

competition 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 

Written comments were neither 

solicited nor received. 

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 Act10 and Rule 19b– 

4(f)(6) thereunder.11

A proposed rule change filed 

pursuant to Rule 19b–4(f)(6) under the 

Act12 normally does not become 

operative for 30 days after the date of its 

filing. However, Rule 19b–4(f)(6)13

permits the Commission to designate a 

shorter time if such action is consistent 

with the protection of investors and the 

public interest. The Exchange requests 

that the Commission waive the 30-day 

operative delay so that it may 

implement the new rule on October 5, 

2009, the same date as the other equities 

exchanges. The Commission believes 

that waiving the 30-day operative delay 

is consistent with the protection of 

investors and the public interest 

because it will allow the Exchange to 

begin applying the new rule on the same 

date as the other equities exchanges.14

Application of the new rule on this date 

should help foster transparency and 

consistency among those exchanges that 

adopt clearly erroneous execution rules 

substantially similar to those previously 

approved by the Commission.15 For 

these reasons, the Commission 

designates that the proposed rule 

change become operative on October 5, 

2009. 

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission may summarily abrogate 

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–BX–2009–060 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–BX–2009–060. 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 inspection and copying 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–BX–2009–060 and should 

be submitted on or before October 29, 

2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.16

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–24244 Filed 10–7–09; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60775; File No. SR–CHX– 

2009–11] 

Self-Regulatory Organizations; 

Chicago Stock Exchange, Inc.; Notice 

of Filing and Immediate Effectiveness 

of a Proposal Relating to Exchange 

Rule Regarding Clearly Erroneous 

Transactions 

October 2, 2009. 

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 October 

1, 2009, Chicago Stock Exchange, Inc. 

(‘‘Exchange’’ or ‘‘CHX’’) 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. CHX has designated 

the proposed rule change as constituting 

a rule change under Rule 19b–4(f)(6) 

under the Act,3 which renders the 

proposal effective upon filing with the 

Commission. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

mstockstill on DSKH9S0YB1PROD with NOTICES