Federal Register / Vol. 76, No. 157 / Monday, August 15, 2011 / Notices 50525 

13 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

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

4 17 CFR 240.19b–4(f)(2). 

5A Member is any registered broker or dealer that 

has been admitted to membership in the Exchange. 

6As defined in BATS Rules 21.1(d)(7) and 

21.9(a)(2). 

7As defined on the Exchange’s fee schedule, a 

‘‘Customer’’ order is any transaction identified by 

a Member for clearing in the Customer range at the 

Options Clearing Corporation (‘‘OCC’’). 

8As set forth on the Exchange’s fee schedule, and 

consistent with the definition of a Customer order, 

classification as Firm and Market Maker orders 

depends on the identification by a Member of the 

applicable clearing range at the OCC. 

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–CHX–2011–24 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–CHX–2011–24. 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–CHX– 

2011–24 and should be submitted on or 

before September 6, 2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.13

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. 2011–20700 Filed 8–12–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–65076; File No. SR–BATS– 

2011–024] 

Self-Regulatory Organizations; BATS 

Exchange, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change Related to Fees for Use 

of BATS Exchange, Inc. 

August 9, 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 July 29, 

2011, BATS Exchange, Inc. (the 

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

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III below, which Items have been 

prepared by the Exchange. The 

Exchange has designated the proposed 

rule change as one establishing or 

changing a member due, fee, or other 

charge imposed by the Exchange under 

Section 19(b)(3)(A)(ii) of the Act 3 and 

Rule 19b–4(f)(2) thereunder,4 which 

renders the proposed rule change 

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 

The Exchange proposes [sic] amend 

the fee schedule applicable to 

Members 5 and non-members of the 

Exchange pursuant to BATS Rules 

15.1(a) and (c). While changes to the fee 

schedule pursuant to this proposal will 

be effective upon filing, the changes will 

become operative on August 1, 2011. 

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, at the 

Commission’s Public Reference Room, 

and on the Commission’s Web site at 

http://www.sec.gov. 

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 proposes to modify the 

‘‘Options Pricing’’ section of its fee 

schedule to: (i) Increase the fees 

applicable to removing liquidity from 

the BATS options market (‘‘BATS 

Options’’); (ii) decrease the rebates 

applicable to adding liquidity to BATS 

Options; (iii) decrease the rebates paid, 

subject to average daily volume 

requirements, for orders that set either 

the national best bid (the ‘‘NBB’’) or the 

national best offer (the ‘‘NBO’’); (iv) 

adopt a program to incentivize 

sustained, aggressive quoting in certain 

specified options series (the ‘‘Quoting 

Incentive Program’’ or ‘‘QIP’’); and (v) 

adopt a change to the standard routing 

fee for the CYCLE, RECYCLE, Parallel D, 

Parallel 2D, and Destination Specific 

routing strategies 6 charged for routing 

Customer 7 orders to certain markets. 

(i) Increase to Liquidity Removal Fees 

The Exchange currently charges 

standard fees of $0.30 per contract for 

Customer orders and $0.40 per contract 

for Firm and Market Maker 8 orders that 

remove liquidity from BATS Options. 

The Exchange proposes to increase this 

fee to $0.32 per contract for Customer 

orders and $0.42 per contract for Firm 

and Market Maker orders that remove 

liquidity from BATS Options, subject to 

potential reduction for any Member 

with an ADV of 0.30% or more of 

average TCV on BATS Options, as 

described below. 

The Exchange currently maintains a 

tiered pricing structure through which 

Members can realize lower liquidity 

removal fees if such Members have an 


srobinson on DSK4SPTVN1PROD with NOTICES
50526 Federal Register / Vol. 76, No. 157 / Monday, August 15, 2011 / Notices 

9As defined on the Exchange’s fee schedule, ADV 

is average daily volume calculated as the number 

of contracts added or removed, combined, per day 

on a monthly basis. The fee schedule also provides 

that routed contracts are not included in ADV 

calculation. 

10As defined on the Exchange’s fee schedule, 

TCV is total consolidated volume calculated as the 

volume reported by all exchanges to the 

consolidated transaction reporting plan for the 

month for which the fees apply. 

11See Securities Exchange Act Release No. 57253 

(February 1, 2008), 73 FR 7352 (February 7, 2008) 

(SR–Phlx–2008–08) (notice of filing and immediate 

effectiveness to amend fees applicable to the 

Philadelphia Stock Exchange, including adopting a 

tiered subsidy that does not apply to Customer-toCustomer transactions). 

12An order that is entered at the most aggressive 

price both on the BATS Options book and 

according to then current OPRA data will be 

determined to have set the NBB or NBO for 

purposes of the NBBO Setter Rebate without regard 

to whether a more aggressive order is entered prior 

to the original order being executed. 

13As defined on the fee schedule, Make/Take 

pricing refers to executions at the identified 

Exchange under which ‘‘Post Liquidity’’ or ‘‘Maker’’ 

rebates (‘‘Make’’) are credited by that exchange and 

‘‘Take Liquidity’’ or ‘‘Taker’’ fees (‘‘Take’’) are 

charged by that exchange. 

average daily volume (‘‘ADV’’) 9 equal to 

or greater than 0.30% of average total 

consolidated volume (‘‘TCV’’).10 For 

Members reaching this volume 

threshold, the Exchange currently 

charges a fee of $0.27 per contract for 

Customer orders and $0.37 per contract 

for Firm and Market Maker orders. 

Thus, such Members currently save 

$0.03 per contract as compared to the 

standard fee to remove liquidity. While 

the Exchange proposes [sic] maintain 

this $0.03 savings per contract for those 

reaching the volume tier, due to the 

proposed increase described above for 

standard liquidity removal, the 

Exchange proposes to increase liquidity 

removal fees for Members that reach the 

volume tier by $0.02 per contract. 

Accordingly, for Members reaching the 

volume threshold, the Exchange will 

charge a fee of $0.29 per contract for 

Customer orders and $0.39 per contract 

for Firm and Market Maker orders. 

(ii) Decrease to Liquidity Adding Rebate 

The Exchange currently provides a 

rebate of $0.25 per contract for all 

Customer orders that add liquidity to 

BATS Options. The Exchange proposes 

to reduce the rebate for adding liquidity 

to $0.22 for Customer orders. 

The Exchange currently provides a 

rebate of $0.25 per contract for Firm and 

Market Maker orders that are removed 

by Customer orders and $0.35 per 

contract for orders that are removed by 

Firm or Market Maker orders. The 

removing Member’s fee is determined 

without regard to the capacity of the 

adding party. Consistent with the 

reduction of Customer rebates described 

above, the Exchange proposes to reduce 

each of these liquidity adding rebates by 

$0.03. Accordingly, the Exchange 

proposes to provide a rebate of $0.22 per 

contract for Firm and Market Maker 

orders that are removed by Customer 

orders and $0.32 per contract for orders 

that are removed by Firm or Market 

Maker orders. As is the case under the 

current pricing structure, the removing 

Member’s fee will be determined 

without regard to the capacity of the 

adding party. 

The Exchange believes that, because 

Members can neither see the capacity of 

orders in the Exchange’s order book nor 

determine the capacity of the Member 

that removes an order, the proposal will 

not disadvantage public investors or 

Members. Lastly, the Exchange believes 

that the proposed change to the fee 

schedule is substantively similar to a 

pricing plan in place at NASDAQ OMX 

PHLX.11

(iii) Decrease to Rebates for NBBO Setter 

Rebate Program 

The Exchange currently offers a rebate 

upon execution for all orders that add 

liquidity that sets either the NBB or 

NBO (the ‘‘NBBO Setter Rebate’’),12

subject to certain volume requirements. 

The NBBO Setter Rebate currently 

offered by the Exchange to such 

Members is $0.40 per contract for 

Members with an ADV equal to or 

greater than 0.30% of average TCV but 

less than 1% of average TCV and $0.50 

per contract for Members with an ADV 

equal to or greater than 1% of TCV. The 

Exchange proposes to reduce the rebates 

paid to Members under the NBBO Setter 

Program by $0.05 per contract. 

Accordingly, the Exchange will provide 

an NBBO Setter Rebate of $0.35 per 

contract for Members with an ADV 

equal to or greater than 0.30% of 

average TCV but less than 1% of average 

TCV and $0.45 per contract for Members 

with an ADV equal to or greater than 

1% of TCV. 

(iv) Adoption of Quoting Incentive 

Program (QIP) 

BATS Options proposes to introduce 

a Quoting Incentive Program (QIP), 

through which BATS Options will 

provide a rebate of $0.03 per contract, 

in addition to any other liquidity rebate 

other than an NBBO Setter Program 

liquidity rebate, for executions subject 

to the QIP. The QIP will only apply to 

executions in options overlying XLF, 

CSCO, PFE, ORCL, and XRT. To qualify 

for the QIP a BATS Options Market 

Maker must be at the NBB or NBO 70% 

of the time for series trading between 

$0.03 and $5.00 for the front three (3) 

expiration months in that underlying 

during the current trading month. A 

Member not registered as a BATS 

Market Maker can also qualify for the 

QIP by quoting at the NBB or NBO 80% 

of the time in the same series. 

The Exchange will determine whether 

a market maker qualifies for QIP rebates 

at the end of each month by looking 

back at each Member’s (including BATS 

Options Market Makers) quoting 

statistics during that month. If at the 

end of the month a Market Maker meets 

the 70% criteria or a Member that is not 

registered as a BATS Options Market 

Maker meets the 80% criteria, the 

Exchange will provide the additional 

rebate for all executions subject to the 

QIP executed by that Market Maker or 

Member during that month. The 

Exchange will provide Members with a 

report on a daily basis with quoting 

statistics so such Members can 

determine whether or not they are 

meeting the QIP criteria. As noted 

above, the QIP will not be additive to 

NBBO Setter Program rebates. The 

Exchange is not proposing to impose 

any ADV requirements in order to 

qualify for the QIP at this time. 

(v) Change to Standard Routing Fee 

The Exchange currently charges a flat 

fee per contract of $0.06 for all 

executions of Customer orders routed 

through the CYCLE, RECYCLE, Parallel 

D, Parallel 2D and Destination Specific 

routing strategies in non-‘‘Make/Take’’ 

issues,13 if applicable, routed to NYSE 

Amex, NYSE Arca, the Boston Options 

Exchange, the Chicago Board Options 

Exchange, the International Securities 

Exchange, or NASDAQ OMX PHLX. The 

Exchange’s current fee of $0.06 per 

contract is the same amount per contract 

as the direct clearing costs paid by the 

Exchange in connection with the 

routing of Customer orders. However, 

there are additional infrastructure costs, 

including membership fees and 

connectivity costs, that are not captured 

by this fee. In order to recover 

additional fees to account for 

infrastructure costs related to routing, 

the Exchange proposes to increase this 

routing fee to $0.10 per contract. In 

contrast to Customer orders, the 

Exchange’s fees for Firm and Market 

Maker orders already provide the 

Exchange with some additional revenue 

to cover infrastructure costs. 

Accordingly, the Exchange is not 

proposing to adjust its fees for routed 

Firm or Market Maker orders at this 

time. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 


srobinson on DSK4SPTVN1PROD with NOTICES
Federal Register / Vol. 76, No. 157 / Monday, August 15, 2011 / Notices 50527 

14 15 U.S.C. 78f. 

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

16See Securities Exchange Act Release No. 61869 

(April 7, 2010), 75 FR 19449 (April 14, 2010) (SR– 

ISE–2010–25) (notice of filing and immediate 

effectiveness of changes to fees and rebates 

including adoption of specific rebates for market 

makers qualifying for the Market Maker Plus 

program). 

17 15 U.S.C. 78s(b)(3)(A)(ii). 

18 17 CFR 240.19b–4(f)(2). 

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 of the Act.14

Specifically, the Exchange believes that 

the proposed rule change is consistent 

with Section 6(b)(4) of the Act,15 in that 

it provides for the equitable allocation 

of reasonable dues, fees and other 

charges among members and other 

persons using any facility or system 

which the Exchange operates or 

controls. The Exchange notes that it 

operates in a highly competitive market 

in which market participants can 

readily direct order flow to competing 

venues if they deem fee levels at a 

particular venue to be excessive. 

The changes to Exchange execution 

fees and rebates proposed by this filing 

are intended to attract order flow to the 

Exchange by continuing to offer 

competitive pricing while also creating 

incentives to providing aggressively 

priced displayed liquidity. While 

Members that remove liquidity from the 

Exchange and/or route Customer orders 

through the Exchange’s standard routing 

strategies will pay higher fees and 

Members that add liquidity to the 

Exchange will receive lower rebates due 

to the proposal, the increased revenue 

received by the Exchange will be used 

to fund programs that the Exchange 

believes will attract additional liquidity 

and thus improve the depth of liquidity 

available on the Exchange. Accordingly, 

the Exchange believes that the higher 

access and routing fees and lower 

rebates will benefit Members’ results in 

trading on the Exchange to the extent 

the tiered rebate structure offered by the 

Exchange for adding liquidity, the 

continued operation of the NBBO Setter 

Program, and the adoption of the 

Quoting Incentive Program (QIP) 

incentivize liquidity providers to 

provide more aggressively priced 

liquidity. 

Despite the increase in fees and 

decrease in rebates for all Members, the 

Exchange also believes that its proposed 

fee structure is fair and equitable as the 

Exchange’s standard fees generally still 

remain lower, and standard rebates 

generally still remain higher, than 

standard fees charged and rebates paid 

by other markets with similar fee 

structures, such as NYSE Arca and 

Nasdaq. The Exchange further believes 

that the proposed change to the 

Exchange’s standard routing fee for 

Customer orders to certain venues is 

competitive, fair and reasonable, and 

non-discriminatory in that the increase 

will allow the Exchange to cover 

additional infrastructure costs attendant 

with offering routing services. The 

Exchange also notes that although 

routing options are available to all 

Members, Members are not required to 

use the Exchange’s routing services, but 

instead, the Exchange’s routing services 

are completely optional. Members can 

manage their own routing to different 

options exchanges or can utilize a 

myriad of other routing solutions that 

are available to market participants. 

Additional revenue generated through 

the increased liquidity removal and 

routing fees as well as reduction of 

certain rebates, as described above, will 

allow the Exchange to offer competitive 

pricing and incentives, such as the 

NBBO Setter Program and QIP. 

The Exchange believes that 

continuing to base its tiered fee 

structure and NBBO Setter Program 

based on overall TCV, rather than a 

static number of contracts irrespective 

of overall volume in the options 

industry, is a fair and equitable 

approach to pricing. Volume-based tiers 

such as the tiers in place on the 

Exchange have been widely adopted in 

the equities markets, and are equitable 

and not unfairly discriminatory because 

they are open to all members on an 

equal basis and provide rebates that are 

reasonably related to the value to an 

exchange’s market quality associated 

with higher levels of market activity, 

such as higher levels of liquidity 

provision and introduction of higher 

volumes of orders into the price and 

volume discovery process. Accordingly, 

the Exchange believes that the proposal 

is not unfairly discriminatory because it 

is consistent with the overall goals of 

enhancing market quality. 

Additionally, the Exchange believes 

that the proposed Quoting Incentive 

Program, similar to a fee structure in 

place on at least one of the Exchange’s 

competitors,16 will incentivize the 

provision of competitively priced, 

sustained liquidity that will create 

tighter spreads, benefitting both 

Members and public investors. The 

Exchange further believes that 

conditioning a Member’s ability to 

receive the QIP’s additional rebate on 

reaching one of the Exchange’s quoting 

tiers is consistent with the Act for the 

reasons described above with respect to 

volume-based tiers. The Exchange also 

believes that providing a slightly lower 

threshold for meeting the QIP to 

registered BATS Options Market Makers 

appropriately incentivizes Members of 

BATS Options to register with the 

Exchange as Options Market Makers. 

While the Exchange does wish to allow 

participation in the QIP by all Members, 

the Exchange believes that registration 

by additional Members as Market 

Makers will help to continue to increase 

the breadth and depth of quotations 

available on the Exchange. The 

Exchange notes that in addition to the 

fact that the QIP will be available to all 

Members, the proposal is not unfairly 

discriminatory despite a slightly higher 

quotation requirement for non-Market 

Makers due to the fact that registration 

as a BATS Options Market Maker is 

equally available to all Members. 

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 

No written comments were solicited 

or received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Pursuant to Section 19(b)(3)(A)(ii) of 

the Act 17 and Rule 19b–4(f)(2) 

thereunder,18 the Exchange has 

designated this proposal as establishing 

or changing a due, fee, or other charge 

applicable to the Exchange’s Members 

and non-members, which renders the 

proposed rule change effective upon 

filing. 

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: 


srobinson on DSK4SPTVN1PROD with NOTICES
50528 Federal Register / Vol. 76, No. 157 / Monday, August 15, 2011 / Notices 

19 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). 

4See Securities Exchange Act Release No. 64237 

(April 7, 2011), 76 FR 20782 (April 13, 2011) 

(Notice of Filing and Immediate Effectiveness of 

File No. SR–FINRA–2011–014). 

5See Securities Exchange Act Release No. 62885 

(September 10, 2010), 75 FR 56641 (September 16, 

2010) (Order Approving File No. SR–FINRA–2010– 

032). 

6 15 U.S.C. 78o–3(b)(6). 

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–BATS–2011–024 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–BATS–2011–024. 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 the 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 

available publicly. All submissions 

should refer to File Number SR–BATS– 

2011–024 and should be submitted on 

or before September 6, 2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.19

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. 2011–20699 Filed 8–12–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–65075; File No. SR–FINRA– 

2011–037] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Extend the Pilot 

Period of Amendments to FINRA Rule 

11892 Governing Clearly Erroneous 

Transactions 

August 9, 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 5, 

2011, Financial Industry Regulatory 

Authority, Inc. (‘‘FINRA’’) filed with the 

Securities and Exchange Commission 

(‘‘SEC’’ or ‘‘Commission’’) the proposed 

rule change as described in Items I and 

II below, which Items have been 

prepared by FINRA. FINRA has 

designated the proposed rule change as 

constituting a ‘‘non-controversial’’ rule 

change under paragraph (f)(6) of Rule 

19b–4 under the Act,3 which renders 

the proposal effective upon receipt of 

this filing by 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 

FINRA is proposing to amend FINRA 

Rule 11892 (Clearly Erroneous 

Transactions in Exchange-Listed 

Securities) to extend the effective date 

of the pilot, which is currently 

scheduled to expire on August 11, 2011, 

until January 31, 2012. 

The text of the proposed rule change 

is available on FINRA’s Web site at 

http://www.finra.org, at the principal 

office of FINRA 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, 

FINRA 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. FINRA 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 the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

FINRA proposes to amend FINRA 

Rule 11892.02 to extend the effective 

date of the amendments set forth in File 

No. SR–FINRA–2010–032 (the ‘‘pilot’’), 

which are currently scheduled to expire 

on August 11, 2011, until January 31, 

2012.4

The pilot was drafted in consultation 

with other self-regulatory organizations 

(‘‘SROs’’) and Commission staff to 

provide for uniform treatment: (1) Of 

clearly erroneous execution reviews in 

Multi-Stock 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 listing market and 

subsequent transactions that occur 

before the trading pause is in effect for 

transactions otherwise than on an 

exchange. FINRA also implemented 

additional changes to the Rule as part of 

the pilot that reduce the ability of 

FINRA to deviate from the objective 

standards set forth in the Rule.5

The extension proposed herein would 

allow the pilot to continue to operate 

without interruption while FINRA and 

the other SROs further assess whether 

the pilot should be adopted 

permanently and whether other 

initiatives should be adopted in lieu of 

the current pilot. 

2. Statutory Basis 

FINRA believes that the proposed rule 

change is consistent with the provisions 

of Section 15A(b)(6) of the Act,6 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 clearly erroneous rules of other 

SROs and will promote the goal of 

transparency and uniformity across 

markets concerning reviews of 

potentially clearly erroneous executions 

in various contexts. Further, FINRA 


srobinson on DSK4SPTVN1PROD with NOTICES