28828 Federal Register / Vol. 75, No. 99 / Monday, May 24, 2010 / Notices 

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

2 17 CFR 240.19b–4. 

3The text of the proposed rule change is available 

from BX’s Web site at http:// 

nasdaqomxbx.cchwallstreet.com/NASDAQOMXBX/ 

Filings/, at the Exchange’s principal office, and at 

the Commission’s Public Reference Room. 

structured finance product (i.e., the 

sponsor, underwriter, and issuer) how 

they intend to market and sell the 

structured finance product and how 

they intend to engage in any secondary 

market activities (i.e., re-sales) of the 

structured finance product. An NRSRO 

may choose to obtain from the arranger 

a representation upon which the 

NRSRO can reasonably rely that sales of 

the structured finance product will meet 

this condition. Factors relevant to the 

analysis of whether such reliance would 

be reasonable would include, but not be 

limited to: (1) Ongoing or prior failures 

by the arranger to adhere to its 

representations; or (2) a pattern of 

conduct by the arranger where it fails to 

promptly correct breaches of its 

representations. 

V. Request for Comment 

The Commission notes that it intends 

to monitor the use of this temporary 

exemption to evaluate whether it is 

being used for transactions that meet the 

above-described conditions. If the 

Commission discovers that this 

temporary exemption is being used 

otherwise, it will consider whether 

further action is appropriate, including 

whether to revise or revoke the 

exemption. In this connection, the 

Commission requests comment on the 

following: 

• With respect to foreign regulators, 

regulations, and laws, what specific 

conflicts, if any, will arise from the 

application of Rule 17g–5(a)(3)? 

• Do any NRSROs, or credit rating 

agencies considering applying for 

registration as an NRSRO, intend to use 

information required to be provided on 

password-protected Internet Web sites 

by Rule 17g–5(a)(3) to determine and 

monitor credit ratings with respect to 

credit ratings that are being exempted 

from the requirements of Rule 17g– 

5(a)(3)? NRSROs or credit rating 

agencies that intend to use such 

information to determine and monitor 

credit ratings with respect to credit 

ratings that are being exempted are 

asked to provide specific details on 

when they expect to be ready to 

determine and monitor such credit 

ratings. 

• What are the different types of 

structured finance and similar products 

used outside the U.S.? What factors 

should determine whether an 

instrument sold entirely or primarily 

outside of the U.S. is a structured 

finance product? 

• What actions are NRSROs taking to 

prepare to comply with Rule 17g– 

5(a)(3)’s application to credit ratings 

that are being exempted by this order? 

What specific costs—compliance, 

operational, and any others—will be 

associated with that compliance, 

including costs to arrangers? 

Comments may be submitted by any 

of the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/ 

rules/exorders.shtml); or 

• Send an e-mail to rulecomments@sec.gov. Please include File 

Number S7–04–09 on the subject line; 

or 

• Use the Federal eRulemaking Portal 

(http://www.regulations.gov). Follow the 

instructions for submitting comments. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 

100 F St., NE., Washington, DC 20549– 

1090. 

All submissions should refer to File 

Number S7–04–09. This file number 

should be included on the subject line 

if e-mail is used. To help us 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/ 

exorders.shtml). Comments are also 

available for Web site viewing and 

printing in the Commission’s Public 

Reference Room, 100 F St., NE., 

Washington, DC 20549 on official 

business days between the hours of 

10 a.m. and 3 p.m. 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. 

VI. Conclusion 

For the foregoing reasons, the 

Commission believes it would be 

necessary or appropriate in the public 

interest and consistent with the 

protection of investors to grant a 

temporary exemption from the 

requirements in Rule 17g–5(a)(3) with 

respect to certain credit ratings. 

Accordingly, it is hereby ordered, 

pursuant to Section 36 of the Exchange 

Act, that a nationally recognized 

statistical rating organization is exempt 

until December 2, 2010 from the 

requirements in Rule 17g–5(a)(3) (17 

CFR 240.17g–5(a)(3)) for credit ratings 

where: 

(1) The issuer of the security or 

money market instrument is not a U.S. 

person (as defined under Securities Act 

Rule 902(k)); and 

(2) The nationally recognized 

statistical rating organization has a 

reasonable basis to conclude that the 

structured finance product will be 

offered and sold upon issuance, and that 

any arranger linked to the structured 

finance product will effect transactions 

of the structured finance product after 

issuance, only in transactions that occur 

outside the U.S. 

By the Commission. 

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. 2010–12373 Filed 5–21–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–62124; File No. SR–BX– 

2010–037] 

Self-Regulatory Organizations; Notice 

of Filing of a Proposed Rule Change by 

NASDAQ OMX BX, Inc. To Adopt Rule 

4120(a)(11) Concerning Individual 

Stock Trading Pauses and To Adopt 

Related IM–4120–3 

May 19, 2010. 

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 May 18, 

2010, NASDAQ OMX BX, Inc. (the 

‘‘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. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange is filing this proposed 

rule change to adopt Rule 4120(a)(11) 

concerning individual stock trading 

pauses in certain securities, and to 

adopt related IM–4120–3. 

The text of the proposed rule change 

is below. Proposed new language is in 

italics and proposed deletions are in 

[brackets].3

* * * * * 

4120. Trading Halts 

(a) Authority to Initiate Trading Halts or 

Pauses 

WReier-Aviles on DSKGBLS3C1PROD with NOTICES

Federal Register / Vol. 75, No. 99 / Monday, May 24, 2010 / Notices 28829 

4 15 U.S.C. 78f. 

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

6 15 U.S.C. 78k–1(a)(1). 

7The Commission notes that the Exchange has 

requested accelerated approval of the filing. 

In circumstances in which the Exchange 

deems it necessary to protect investors and 

the public interest, the Exchange, pursuant to 

the procedures set forth in paragraph (c): 

(1)–(10) No change. 

(11) If a primary listing market issues an 

individual stock trading pause in any of the 

Circuit Breaker Securities, as defined in IM– 

4120–3, the Exchange will pause trading in 

that security until trading has resumed on 

the primary listing market. If, however, 

trading has not resumed on the primary 

listing market and ten minutes have passed 

since the individual stock trading pause 

message has been received from the 

responsible single plan processor, the 

Exchange may resume trading in such stock. 

(b)–(c) No change. 

IM–4120–1. No change. 

IM–4120–2. No change. 

IM–4120–3. Circuit Breaker Securities Pilot 

The provisions of paragraph (a)(11) of this 

Rule shall be in effect during a pilot set to 

end on December 10, 2010. During the pilot, 

the term ‘‘Circuit Breaker Securities’’ shall 

mean the securities included in the S&P 

500 ® Index. 

* * * * * 

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 

The primary listing markets for U.S. 

stocks are in the process of amending 

their rules so that they may, from time 

to time, issue a trading pause for an 

individual security if the price of such 

security moves 10% or more from a sale 

in a preceding five-minute period. The 

Exchange is proposing the rule change 

described below in consultation with 

other markets and Commission staff to 

provide for uniform market-wide 

trading pause standards for individual 

securities in the S&P 500 ® Index, as set 

forth below. The Exchange is not 

currently the primary listing market for 

any securities, and thus, will not be 

issuing any trading pauses pursuant to 

its rules. 

The Exchange proposes to add a new 

paragraph to BX Rule 4120(a) to allow 

the Exchange to pause trading in an 

individual stock when the primary 

listing market for such stock issues a 

trading pause in any Circuit Breaker 

Securities, as defined below and in 

proposed IM–4120–3. If, however, 

trading has not resumed on the primary 

listing market and ten minutes have 

passed since the individual stock 

trading pause message has been 

received from the responsible single 

plan processor, the Exchange may 

resume trading in such stock. 

The proposed rule would apply to 

trading pauses issued by primary listing 

markets in ‘‘Circuit Breaker Securities,’’ 

as defined in proposed IM–4120–3. 

Specifically, on a pilot basis, set to end 

on December 10, 2010, Circuit Breaker 

Securities would mean the securities 

included in the S&P 500 ® Index. Thus, 

proposed paragraph (11) of the Rule 

would be in effect only with respect to 

securities in the S&P 500 ® Index. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

the provisions of Section 6 of the Act,4

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

the Act,5 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 

system, and, in general, to protect 

investors and the public interest. The 

proposed rule change is also designed to 

support the principles of Section 

11A(a)(1) 6 of the Act in that it seeks to 

assure fair competition among brokers 

and dealers and among exchange 

markets. The Exchange believes that the 

proposed rule meets these requirements 

in that it promotes transparency and 

uniformity across markets concerning 

decisions to pause trading in a security 

when there are significant price 

movements. 

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 

Within 35 days of the date of 

publication of this notice in the Federal 

Register or within such longer period (i) 

as the Commission may designate up to 

90 days of such date if it finds such 

longer period to be appropriate and 

publishes its reasons for so finding or 

(ii) as to which the self-regulatory 

organization consents, the Commission 

will: 

(A) By order approve the proposed 

rule change, or 

(B) Institute proceedings to determine 

whether the proposed rule change 

should be disapproved.7

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 Exchange 

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–2010–037 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–2010–037. 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 

WReier-Aviles on DSKGBLS3C1PROD with NOTICES

28830 Federal Register / Vol. 75, No. 99 / Monday, May 24, 2010 / Notices 

8The Commission believes that a 10-day 

comment period is reasonable, given the urgency of 

the matter. It will provide adequate time for 

comment. 

9 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

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–BX– 

2010–037 and should be submitted on 

or before June 3, 2010.8

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.9

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–12416 Filed 5–21–10; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–62128; File No. SR– 

NYSEArca–2010–41] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing of a 

Proposed Rule Change Adding NYSE 

Arca Equities Rule 7.11 To Provide for 

a Trading Pause for Individual 

Securities When the Price Moves 10 

Percent or More 

May 19, 2010. 

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 May 18, 

2010, NYSE Arca, Inc. (‘‘NYSE Arca’’ or 

the ‘‘Exchange’’) 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 NYSE Arca. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to add NYSE 

Arca Equities Rule 7.11 to provide for a 

trading pause for individual securities 

when the price moves 10 percent or 

more. A copy of this filing is available 

on the Exchange’s Web site at http:// 

www.nyse.com, at the Exchange’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 

self-regulatory organization included 

statements concerning the purpose of, 

and basis for, the proposed rule change 

and discussed any comments it received 

on the proposed rule change. The text 

of those statements may be examined at 

the places specified in Item IV below. 

The Exchange has prepared summaries, 

set forth in sections A, B, and C below, 

of the most significant parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to add NYSE 

Arca Equities Rule 7.11 to provide for a 

trading pause for individual securities 

for which the Exchange is the primary 

listing market if the price of such 

security moves 10% or more from a sale 

in a preceding five-minute period. The 

Exchange is proposing this rule addition 

in consultation with other markets and 

staff of the Securities and Exchange 

Commission to provide for uniform 

market-wide trading pause standards for 

individual securities in the S&P 500®

Index that experience rapid price 

movement, as set forth below. 

The Exchange is proposing that this 

rule be implemented on a pilot basis, set 

to end on December 10, 2010. During 

this pilot period, the rule would be in 

effect only with respect to securities 

included in the S&P 500® Index 

securities. During that pilot period, the 

Exchange will continue to assess 

whether additional securities need to be 

added and whether the parameters of 

the rule would need to be modified to 

accommodate trading characteristics of 

different securities. 

As proposed, NYSE Arca Equities 

Rule 7.11 would enable the Exchange to 

pause trading in an individual security 

listed on the Exchange if the price 

moves by 10% as compared to prices of 

that security in the preceding fiveminute period during a trading day, 

which period is defined as a ‘‘Trading 

Pause.’’ To enable the market to absorb 

the opening price of a security and to 

participate in the close, as proposed, the 

proposed rule would be in effect from 

6:45 a.m. to 12:35 p.m., Pacific Time. 

Proposed NYSE Arca Equities Rule 

7.11(b) sets forth the re-opening 

procedures following a Trading Pause. 

As proposed, the Exchange will re-open 

trading in the security at the end of the 

Trading Pause subject to the procedures 

set forth in NYSE Arca Equities Rule 

7.35 for a Trading Halt Auction. As 

proposed, in the event of a significant 

imbalance, the Exchange may delay the 

re-opening of the security past the fiveminute Trading Pause period. The 

Exchange will notify other markets if it 

cannot reopen because of issues 

unrelated to an order imbalance, thereby 

enabling other markets to resume 

trading even if the primary market has 

not re-opened. The Exchange notes that 

if it re-opens the security after other 

markets have resumed trading, such 

reopening is subject to Rule 611(b)(3) of 

Regulation NMS as an exception to the 

Order Protection Rule. 

The 10% or more move in price will 

be calculated every second by 

comparing each last consolidated sale 

price of a security (‘‘Trigger Trade’’) 

during the preceding second to a 

reference price (the ‘‘Calculation Time’’). 

For purposes of this calculation, the 

reference price shall be any transaction 

in that security printed to the 

Consolidated Tape during the fiveminute period before the Calculation 

Time. Because the calculation period 

begins at 6:45 a.m., trades occurring 

after 6:45 a.m. may be a Trigger Trade, 

however, the reference price(s) for such 

Trigger Trades will begin at 6:45 a.m. In 

such case, in the first five minutes of the 

calculation period, the reference prices 

for a Trigger Trade will not be based on 

five minutes of trading in that security. 

For example, a trade at 6:45:05 will be 

compared only to trades between 

6:45:00 and 6:45:05. The last potential 

Trigger Trade will be at 12:35 p.m., so 

that such Trading Pause will end at 

12:40 p.m. 

As proposed, only regular way, insequence transactions qualify as either a 

Trigger Trade or a reference price. To 

ensure that erroneous executions do not 

trigger a Trading Pause, the Exchange 

also proposes that it can exclude a 

transaction price from use as a reference 

price or Trigger Trade if it concludes 

that the transaction price resulted from 

an erroneous execution. 

The proposed rule further provides 

that if a Trading Pause is triggered, the 

WReier-Aviles on DSKGBLS3C1PROD with NOTICES