51076 Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Notices 

7For example, under the current structure, a 

CMM that owns or leases three CMM trading rights 

is obligated to continuously quote a minimum of 

120 options classes. Under the new structure, a 

CMM with three trading rights could seek 

appointment for only three options classes (one for 

each trading right), thus making the inactivity fee 

ineffective. 

8 In approving this proposed rule change the 

Commission has considered the proposed rule’s 

impact on efficiency, competition, and capital 

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

9 15 U.S.C. 78f. 

10 15 U.S.C. 78f(b)(5). 11 15 U.S.C. 78f(b)(4). 12The Commission also notes that the new 

structure is similar to the Chicago Board Options 

Exchange’s (‘‘CBOE’’) rules, which permit its 

market makers to choose the options to which they 

are appointed. See CBOE Rule 8.3. 13 ISE Rule 802(e)–(f). 14Pursuant to Rule 804(a)(2), PMMs have the 

obligation to provide continuous quotations in all 

of the series of all of the options to which they are 

appointed. 

15 ISE Rule 804(e)(2)(iii). 

16 ISE Rule 804(e)(2)(iii). 

17 ISE Rule 802(e)(2)(iv). 

18 15 U.S.C. 78f(b)(4). 

19 15 U.S.C. 78s(b)(2). 

20 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

classes may only initiate intra-day 

quoting in 40 additional classes. 

Additionally, under the proposal the 

Exchange will retain the current 

requirement that once a CMM enters a 

quotation in an appointed options class, 

it must maintain continuous quotations 

for that series and at least 60% of the 

series of the options class until the close 

of trading that day. CMMs will also 

continue to be subject to the quotation 

requirements contained in Rule 803 and 

804. If a CMM receives Preferenced 

Orders in an options class, it will 

continue to be required to maintain 

continuous quotations in at least 90% of 

the series in that class. The Exchange 

will continue to have the ability under 

its rules to call upon a CMM to submit 

quotations in one or more series of an 

options class to which the CMM is 

appointed. 

Finally, the Exchange proposes to 

terminate its current CMM inactivity 

fee. That fee currently imposes a charge 

of $25,000 a month for CMM trading 

rights that are not active. The purpose 

of the fee is to help recoup a portion of 

the income that the Exchange loses 

when market makers do not operate 

their trading rights and generate 

transaction-based revenue. Under the 

proposed CMM trading rights structure, 

the Exchange does not believe that the 

inactivity fee is appropriate or 

necessary, as CMMs will now be able to 

manage the number of options classes to 

which they are appointed.7 Moreover, 

the Exchange believes that there will be 

increased demand for CMM trading 

rights, and that owners of such rights 

will have a financial incentive to sell or 

lease any unused trading rights. If this 

does not turn out to be the case, the 

Exchange states that it will consider 

reinstituting some form of inactivity fee 

that is appropriate for the new structure. 

III. Discussion and Commission 

Findings 

The Commission 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 

exchange 8 and, in particular, the 

requirements of Section 6 of the Act.9

Specifically, the Commission finds that 

the proposed rule change is consistent 

with Section 6(b)(5) of the Act,10 which 

requires, among other things, that the 

rules of a national securities exchange 

be 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 system, and, in 

general, to protect investors and the 

public interest and are not designed to 

permit unfair discrimination between 

customers, issuers, brokers or dealers. 

The Commission also believes that the 

proposal is consistent with Section 

6(b)(4) of the Act,11 which requires that 

the rules of a national securities 

exchange provide for the equitable 

allocation of reasonable fees and other 

charges among the Exchange’s members 

and issuers and other persons using its 

facilities. 

In particular, the Commission 

believes that the proposal should allow 

CMMs additional flexibility to choosing 

their appointed classes.12 The 

Commission notes that potential market 

makers will be able to purchase or lease 

newly-available CMM trading rights. 

Under the proposal, CMMs can select 

the options classes to which they seek 

appointment, but the Exchange retains 

the authority to make such 

appointments and to remove 

appointments from CMMs based on 

their performance.13 In addition, 

because a PMM will continue to be 

appointed to each options class, there 

will continue to be continuous, twosided quotations in all options listed on 

the Exchange.14

The Exchange proposes to limit the 

number of appointed options classes in 

which a CMM can initiate intraday 

quoting to the number of options classes 

in which it participates in the opening 

rotation. The Commission notes that 

CMMs will also continue to be subject 

to the quotation requirements contained 

in Rules 803 and 804. In addition, once 

a CMM enters a quotation in an 

appointed options class, it must 

maintain continuous quotations for that 

series and at least 60% of the series of 

the options class until the close of 

trading that day.15 If a CMM receives 

Preferenced Orders in an options class, 

it will continue to be required to 

maintain continuous quotations in at 

least 90% of the series in that class.16

Also, the Exchange will continue to 

have the ability under its rules to call 

upon a CMM to submit quotations in 

one or more series of an options class 

to which the CMM is appointed.17

Finally, the Exchange proposes to 

eliminate its current charge of $25,000 

a month for CMM trading rights that are 

not active. The Exchange states that the 

inactivity fee is not appropriate or 

necessary, as CMMs will now be able to 

manage the number of options classes to 

which they are appointed. The 

Commission believes that the proposal 

is consistent with Section 6(b)(4) of the 

Act.18

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,19 that the 

proposed rule change (SR–ISE–2011– 

33), be, and hereby is, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.20

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. 2011–20901 Filed 8–16–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–65104; File No. SR– 

NASDAQ–2011–116] 

Self-Regulatory Organizations; The 

NASDAQ Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Amend the 

Clearly Erroneous Rule in Light of 

Changes to the Single Stock Trading 

Pause Process 

August 11, 2011. 

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

Securities Exchange Act of 1934 

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

notice is hereby given that on August 8, 

2011, The NASDAQ Stock Market LLC 

(‘‘Exchange’’), filed with the Securities 


Emcdonald on DSK2BSOYB1PROD with NOTICES
Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Notices 51077 

3For purposes of this filing, the term 

‘‘Exchanges’’ refers collectively to BATS Exchange, 

Inc., BATS Y–Exchange, Inc., NASDAQ OMX BX, 

Inc., Chicago Board Options Exchange, Inc., 

Chicago Stock Exchange, Inc., EDGA Exchange, 

Inc., EDGX Exchange, Inc., International Securities 

Exchange LLC, The NASDAQ Stock Market LLC, 

New York Stock Exchange LLC, NYSE Amex LLC, 

NYSE Arca, Inc., National Stock Exchange, Inc., and 

NASDAX [sic] OMX PHLX LLC. 

4Rule 4120(a)(11). The pauses under Rule 

4120(a)(11) occur when a security’s price moves by 

the applicable percentage within a five minute 

period between 9:45 a.m. and 3:35 p.m., or in the 

case of an early scheduled close, 25 minutes before 

the close of trading. Such pauses last for five 

minutes. At the conclusion of the pause period, the 

security is opened pursuant to the Halt Cross 

process under Rule 4753. 

5Securities Exchange Act Release Nos. 62252 

(June 10, 2010), 75 FR 34186 (June 16, 2010) (File 

Nos. SR–BATS–2010–014; SR–EDGA–2010– 01; 

SR–EDGX–2010–01; SR–BX–2010–037; SR–ISE– 

2010–48; SR–NYSE–2010–39; SR–NYSEAmex– 

2010–46; SR–NYSEArca–2010–41; SR–NASDAQ– 

2010–061; SR–CHX–2010–10; SR–NSX–2010–05; 

and SR–CBOE–2010–047); 62251 (June 10, 2010), 

75 FR 34183 (June 16, 2010) (SR–FINRA–2010– 

025). 

6See e.g., Securities Exchange Act Release Nos. 

62884 (September 10, 2010), 75 FR 56618 

(September 16, 2010) (File Nos. SR–BATS–2010– 

018; SR–BX–2010–044; SR–CBOE–2010–065; SR– 

CHX–2010–14; SR–EDGA–2010–05; SR–EDGX– 

2010–05; SR–ISE–2010–66; SR–NASDAQ–2010– 

079; SR–NYSE–2010–49; SR–NYSEAmex–2010–63; 

SR–NYSEArca–2010–61; and SR–NSX–2010–08); 

and Securities Exchange Act Release No. 62883 

(September 10, 2010), 75 FR 56608 (September 16, 

2010) (SR–FINRA–2010–033). 

7Securities Exchange Act Release No. 62886 

(September 16 [sic], 2010), 75 FR 56613 (September 

16, 2010) (File Nos. SR–BATS–2010–016; SR–BX– 

2010–040; SR–CBOE–2010–056; SR–CHX–2010–13; 

SR–EDGA–2010–03; SR–EDGX–2010–03; SR–ISE– 

2010–62; SR–NASDAQ–2010–076; SR–NSX–2010– 

07; SR–NYSE–2010–47; SR–NYSEAmex–2010–60; 

and SR–NYSEArca–2010–58). 

8Pursuant to Rule 11890(a)(2)(C)(1), a security 

with a Reference Price of greater than zero and up 

to and including $25 is subject to a 10% threshold; 

a security with a Reference Price of greater than $25 

and up to and including $50 is subject to a 5% 

threshold; and a security with a Reference Price of 

greater than $50 is subject to a 3% threshold. 

9Rule 11890(a)(2)(C)(4). 

10Securities Exchange Act Release No. 64735 

(June 23, 2011), 76 FR 38243 (June 29, 2011) (File 

Nos. SR–BATS–2011–016; SR–BYX–2011–011; SR– 

BX–2011–025; SR–CBOE–2011–049; SR–CHX– 

2011–09; SR–EDGA–2011–15; SR–EDGX–2011–14; 

SR–FINRA–2011–023; SR–ISE–2011–028; SR– 

NASDAQ–2011–067; SR–NYSE–2011–21; SR– 

NYSEAmex–2011–32; SR–NYSEArca–2011–26; SR– 

NSX–2011–06; SR–Phlx–2011–64). 

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 the Substance 

of the Proposed Rule Change 

The Exchange proposes to extend the 

pilot period of recent amendments to 

Rule 11890, concerning clearly 

erroneous transactions, so that the rule 

will continue to operate in the same 

manner after changes to the single stock 

trading pause process are effective. 

The text of the proposed rule change 

is available from NASDAQ’s Web site at 

http://nasdaq.cchwallstreet.com/ 

Filings/, at NASDAQ’s principal office, 

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 aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

Background 

The Exchanges 3 and FINRA, in 

consultation with the Commission, have 

made changes to their respective rules 

in a concerted effort to strengthen the 

markets after the severe market 

disruption that occurred on May 6, 

2010. One such effort by the Exchanges 

and FINRA was to adopt a uniform 

trading pause process during periods of 

extraordinary market volatility as a pilot 

in S&P 500 Index stocks (‘‘Pause 

Pilot’’),4 approved by the Commission 

on June 10, 2010.5 On September 10, 

2010, the Commission approved the 

Exchanges’ and FINRA’s proposals to 

add the securities included in the 

Russell 1000 Index and specified ETPs 

to the Pause Pilot.6 On September 10, 

2010, the Commission also approved 

changes proposed by the Exchanges to 

amend certain of their respective rules 

to set forth clearer standards and curtail 

their discretion with respect to breaking 

erroneous trades.7 The changes, among 

other things, provided uniform 

treatment of clearly erroneous execution 

reviews in the event of transactions that 

result in the issuance of an individual 

stock trading pause pursuant to the 

Pause Pilot on the listing market and 

those that occur up to the time the 

trading pause message is received by the 

other markets from the single plan 

processor responsible for consolidation 

and dissemination of information for the 

security (‘‘Latency Trades’’). 

As part of the changes to the clearly 

erroneous process under Rule 11890, 

NASDAQ replaced existing Rule 

11890(a)(2)(C)(4) with all new text to 

provide clarity in the clearly erroneous 

process when a Pause Pilot trading 

pause is triggered. Pursuant to Rule 

11890(a)(2)(C)(4), Latency Trades will 

be broken by the exchange if they 

exceed the applicable percentage from 

the Reference Price, as noted in the table 

found under Rule 11890(a)(2)(C)(1).8

The Reference Price, for purposes of 

Rule 11890(a)(2)(C)(4), is the price that 

triggered a trading pause pursuant to the 

Pause Pilot (the ‘‘Trading Pause Trigger 

Price’’). As such, Latency Trades that 

occur on NASDAQ would be broken by 

the exchange pursuant to Rule 

11890(a)(2)(C)(4) if the transaction 

occurred at either three, five or ten 

percent above the Trading Pause Trigger 

Price.9

On June 23, 2011, the Commission 

approved a joint proposal to expand the 

respective Pause Pilot rules of the 

Exchanges and FINRA to include all 

remaining NMS stocks (‘‘Phase III 

Securities’’).10 The new pilot rules, 

which will be implemented on August 

8, 2011, not only expand the application 

of the Pause Pilot, but also apply larger 

percentage moves that trigger a pause to 

the Phase III Securities. NASDAQ 

amended its Pause Pilot rule, Rule 

4120(a)(11), by adding three new 

subparagraphs to address the treatment 

of the Phase III Securities. The rule 

applicable to the original Pause Pilot 

securities was placed in new Rule 

4120(a)(11)(A). The rules applicable to 

the Phase III Securities were placed in 

new Rules 4120(a)(11)(B) and (C). A 

pause under Rule 4120(a)(11)(B) is 

triggered by a 30 percent price move 

within a five minute period in a Phase 

III Security that had a closing price on 

the previous trading day of $1 or more. 

A pause under Rule 4120(a)(11)(C) is 

triggered by a 50 percent price move 

within a five minute period in a Phase 

III Security that had a closing price on 

the previous trading day of less than $1. 

If no prior day closing price is available, 

the last sale reported to the 

Consolidated Tape on the previous 

trading day is used. 

The Issue 

The recently-approved changes to the 

Pause Pilot will have the unintended 

effect of removing the Phase III 

Securities from the normal clearly 

erroneous process and potentially result 

in unfair outcomes in the face of severe 


Emcdonald on DSK2BSOYB1PROD with NOTICES
51078 Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Notices 

11 Id. 

12NASDAQ notes that the Exchanges are filing 

similar proposals to make the changes proposed 

herein. 

13 15 U.S.C. 78f(b)(5). 

14 15 U.S.C. 78k–1(a)(1). 

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

volatility in such securities. Phase III 

Securities are currently subject to the 

clearly erroneous process under Rules 

11890(a)(2)(C)(1)–(3), which apply to all 

securities except the current Pause Pilot 

securities subject to a pause. For 

purposes of transactions in securities 

not involving Pause Pilot securities, or 

transactions involving Pause Pilot 

securities that occur when there is not 

a pause pursuant to the Pause Pilot, the 

Reference Price is the consolidated last 

sale price immediately prior to the 

execution(s) under review, subject to 

certain exceptions.11 As noted above, 

the Trading Pause Trigger Price is used 

as the Reference Price when a Pause 

Pilot pause is in effect. As a 

consequence, under the current rules a 

Latency Trade is subject to the clearly 

erroneous thresholds based on the 

Trading Pause Trigger Price, which 

represents a ten percent or greater move 

in the transacted price of the security in 

a five minute period. 

Under the new Pause Pilot rules, a 

Latency Trade in a Phase III Security 

occurs only after either a 30 or 50 

percent (or greater) move in the 

transacted price of the security in a five 

minute period. As a result, a member 

firm that trades in a Phase III Security 

that triggers a clearly erroneous 

threshold of three, five or ten percent 

from the Reference Price, yet falls below 

the Pause Pilot trigger of either 30 or 50 

percent, would be able to avail 

themselves of a clearly erroneous 

review. A similarly situated member 

firm that transacts in the same security 

as a Latency Trade at a price equal to 

or greater than the Phase III Security 

thresholds, yet less than the clearly 

erroneous thresholds under Rule 

11890(a)(2)(C)(1), would not be able to 

avail themselves of the clearly 

erroneous process. Another member 

firm that transacts in the same security 

as a Latency Trade that exceeds three, 

five or ten percent from the Trading 

Pause Trigger Price would automatically 

receive clearly erroneous relief. 

NASDAQ believes that this would be an 

inequitable result and an arbitrary 

application of the clearly erroneous 

process. Specifically, NASDAQ believes 

that, since the 30 and 50 percent triggers 

of the Pause Pilot are substantially 

greater than the 10 percent threshold of 

the original Pause Pilot, the Phase III 

Securities should remain under the 

current clearly erroneous process of 

Rules 11890(a)(2)(C)(1)–(3). 

Applying the clearly erroneous 

process under Rules 11890(a)(2)(C)(1)– 

(3) to the Phase III Securities would 

allow NASDAQ to review all 

transactions that exceed the normal 

clearly erroneous thresholds and 

Reference Price, and, importantly, avoid 

arbitrary selection of ‘‘winners’’ and 

‘‘losers’’ in the face of severe volatile 

moves in a security of 30 or 50 percent 

over a five minute period. For example, 

a member firm that trades in a security 

subject to Rule 4120(a)(11)(B) or (C) that 

triggers a clearly erroneous threshold of 

three, five or ten percent, yet falls below 

the Pause Pilot trigger threshold trading 

at 29 percent from the prior day’s 

closing price, would be potentially 

entitled to a clearly erroneous break 

pursuant Rule 11890(a)(2)(C)(1). Should 

trading in that same stock trigger a 

trading pause at a price of 30 or 50 

percent greater than the prior day’s 

close, the member firm would not be 

entitled to a clearly erroneous trade 

break unless that trade exceeded three, 

five or ten percent beyond the price that 

triggered the pause. This scenario 

causes an inequity among a group of 

member firms that have transactions in 

the Phase III Securities falling between 

the three, five and ten percent 

thresholds from the Reference Price 

under the normal Rule 11890(a)(2)(C)(1) 

clearly erroneous process and the Pause 

Pilot clearly erroneous triggers of three, 

five or ten percent away from the 

Trading Pause Trigger Price. Such 

member firms would not be provided 

relief under the clearly erroneous rules 

merely due to the imposition of a Pause 

Pilot halt, notwithstanding that other 

member firms with transactions that 

occur at the same rolling five minute 

percentage difference. NASDAQ 

believes a better outcome is to afford all 

members transacting in Phase III 

Securities the opportunity of having 

such trades reviewed. 

Summary 

The expansion of the Pause Pilot to 

the Phase III Securities will have the 

unintended consequence of setting the 

point at which a clearly erroneous 

transaction occurs once a Pause Pilot 

pause is initiated far beyond the triggers 

applied prior to the expansion, which 

will, in turn, prevent certain market 

participants from availing themselves of 

the clearly erroneous rules, 

notwithstanding that other similarly 

situated participants are able to do so. 

NASDAQ believes that this would be an 

arbitrary application of the clearly 

erroneous process in a manner that is 

unfair and not consistent with the spirit 

and purpose of the rule. Accordingly, 

NASDAQ is proposing to amend Rules 

11890(a)(2)(C)(1)–(4) to specify that Rule 

11890(a)(2)(C)(4) applies only to the 

current securities of Pause Pilot, as 

found under Rule 4120(a)(11)(A).12

2. Statutory Basis 

The statutory basis for the proposed 

rule change is Section 6(b)(5) of the 

Securities Exchange Act of 1934 (the 

‘‘Act’’),13 which requires the rules of an 

exchange to promote just and equitable 

principles of trade, to remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system and, in 

general, to protect investors and the 

public interest. The proposed rule 

change also is designed to support the 

principles of Section 11A(a)(1) 14 of the 

Act in that it seeks to assure fair 

competition among brokers and dealers 

and among exchange markets. NASDAQ 

believes that the proposed rule meets 

these requirements in that it promotes 

transparency and uniformity across 

markets concerning decisions to break 

erroneous trades, yet also ensures fair 

application of the process so that 

similarly situated member firms are 

provided the same opportunity of a 

clearly erroneous review. NASDAQ 

notes that the changes proposed herein 

will in no way interfere with the 

operation of the Pause Pilot process, as 

amended. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will result in 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act, as amended. 

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 Act 15 and Rule 19b– 


Emcdonald on DSK2BSOYB1PROD with NOTICES
Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Notices 51079 

16 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. 

17For 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). 

18 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3For purposes of this filing, the term 

‘‘Exchanges’’ refers collectively to BATS Exchange, 

Inc., BATS Y–Exchange, Inc., NASDAQ OMX BX, 

Inc., Chicago Board Options Exchange, Inc., 

Chicago Stock Exchange, Inc., EDGA Exchange, 

Inc., EDGX Exchange, Inc., International Securities 

Exchange LLC, The NASDAQ Stock Market LLC, 

New York Stock Exchange LLC, NYSE Amex LLC, 

NYSE Arca, Inc., National Stock Exchange, Inc., and 

NASDAX [sic] OMX PHLX LLC. 

4(f)(6)(iii) thereunder.16 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 clearly erroneous rules to 

continue to operate as they did prior to 

the effectiveness of the Pause Pilot 

expansion to Phase III Securities so that 

similarly situated member firms are 

provided the same opportunity of a 

clearly erroneous review. Accordingly, 

the Commission waives the 30-day 

operative delay requirement and 

designates the proposed rule change as 

operative upon filing with the 

Commission.17

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–NASDAQ–2011–116 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–NASDAQ–2011–116. 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 

NASDAQ. 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– 

NASDAQ–2011–116 and should be 

submitted on or before September 7, 

2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.18

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. 2011–20905 Filed 8–16–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–65106; File No. SR–Phlx– 

2011–114] 

Self-Regulatory Organizations; 

NASDAQ OMX PHLX LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Amend the 

Clearly Erroneous Rule in Light of 

Changes to the Single Stock Trading 

Pause Process 

August 11, 2011. 

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

Securities Exchange Act of 1934 

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

notice is hereby given that on August 8, 

2011, NASDAQ OMX PHLX LLC 

(‘‘PHLX’’), 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 PHLX. 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 the Substance 

of the Proposed Rule Change 

PHLX proposes to amend Rule 3312, 

governing clearly erroneous executions 

on the NASDAQ OMX PSX system, so 

that the rule will continue to operate in 

the same manner after changes to the 

single stock trading pause process are 

effective. 

The text of the proposed rule change 

is available from PHLX’s Web site at 

http:// 

nasdaqomxphlx.cchwallstreet.com/ 

NASDAQOMXPHLX/Filings/, at PHLX’s 

principal office, 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, 

PHLX 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. PHLX 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 

Background 

The Exchanges 3 and FINRA, in 

consultation with the Commission, have 

made changes to their respective rules 

in a concerted effort to strengthen the 

markets after the severe market 

disruption that occurred on May 6, 

2010. One such effort by the Exchanges 

and FINRA was to adopt a uniform 

trading pause process during periods of 


Emcdonald on DSK2BSOYB1PROD with NOTICES