61802 Federal Register / Vol. 75, No. 193 / Wednesday, October 6, 2010 / Notices 

12 15 U.S.C. 78f(b). 

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

14See 17 CFR 242.602(a)(3)(i) and (ii). 

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

16 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. 

17 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

of the Act 12 in general, and furthers the 

objectives of Section 6(b)(5) of the Act 13

in particular, in that it is designed 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 Exchange further believes that the 

proposal is consistent with the SEC 

Quote Rule’s provisions regarding nonfirm quotations.14 Specifically, Rule 

602(a)(3)(i) provides that if, at any time 

a national securities exchange is open 

for trading, the exchange determines, 

pursuant to rules approved by the 

Commission, that the level of trading 

activities or the existence of unusual 

market conditions is such that the 

exchange is incapable of collecting, 

processing, and making available to 

vendors the data for a subject security 

required to be made available in a 

manner that accurately reflects the 

current state of the market on such 

exchange, such exchange shall 

immediately notify all specified persons 

of that determination and, upon such 

notification, the exchange is relieved of 

its obligations under paragraphs (a)(1) 

and (2) of Rule 602 relating to collecting 

and disseminating quotations, subject to 

certain other provisions of Rule 

602(a)(3). 

By proposing to disseminate a bid of 

$0.00 for a size of zero contracts, or an 

offer of $0.00 for a size of zero contracts 

in certain situations delineated above in 

the Exchange’s rules, the Exchange 

believes that it is adequately 

communicating that it is non-firm on 

that side of the market in compliance 

with the Quote Rule. 

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 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 either 

solicited or 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 after the date of 

the filing, or such shorter time as the 

Commission may designate, it has 

become effective pursuant to 19(b)(3)(A) 

of the Act 15 and Rule 19b–4(f)(6) 16

thereunder. 

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. If the 

Commission takes such action, the 

Commission shall institute proceedings 

to determine whether the proposed rule 

should be approved or disapproved. 

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–Phlx–2010–134 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–Phlx–2010–134. 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, 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–Phlx–2010–134 and should 

be submitted on or before October 27, 

2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.17

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–25138 Filed 10–5–10; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63023; File No. SR–Phlx– 

2010–125] 

Self-Regulatory Organizations; 

NASDAQ OMX PHLX LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change Regarding 

Clearly Erroneous Transactions 

September 30, 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 

September 22, 2010, NASDAQ OMX 

PHLX LLC (‘‘PHLX’’ or the ‘‘Exchange’’) 

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. 

mstockstill on DSKH9S0YB1PROD with NOTICES

Federal Register / Vol. 75, No. 193 / Wednesday, October 6, 2010 / Notices 61803 

3Securities Exchange Act Release No. 62877 

(September 9, 2010), 75 FR 56633 (September 16, 

2010) (SR–PHLX–2010–79). 

4Securities Exchange Act Release No. 62886 

(September 10, 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; 

SR–NYSEArca–2010–58). 

5The Exchange is also amending text in 

paragraphs (a)(2)(A)(iii)B. and (e)(1) to correct 

minor typographical errors in the text of the rule. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend 

PHLX Rule 3312, governing clearly 

erroneous executions on the NASDAQ 

OMX PSX system (‘‘PSX’’). The text of 

the proposed rule change is available 

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

nasdaqomxphlx.cchwallstreet.com, at 

the Exchange’s principal office, at the 

Commission’s Web site at http:// 

www.sec.gov, 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. The text of 

these statements may be examined at 

the places specified in Item III below, 

and is set forth in Sections A, B, and C 

below. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange is proposing 

modifications to its Rule 3312, entitled 

Clearly Erroneous Transactions. Rule 

3312 was recently approved by the 

Commission in connection with a 

proposal to resume trading of NMS 

stocks through the Exchange’s PSX 

system.3 The proposed changes are 

designed to conform Rule 3312 to 

changes that were recently approved to 

the corresponding rules of The 

NASDAQ Stock Market (the ‘‘NASDAQ 

Exchange’’) and NASDAQ OMX BX 

(‘‘BX’’), and other exchanges.4 First, the 

Exchange proposes replacing existing 

paragraph (a)(2)(C)(ii) of Rule 3312, 

entitled ‘‘Unusual Circumstances and 

Joint Market Rulings’’ with a new 

paragraph, entitled ‘‘Multi-Stock Events 

Involving Twenty or More Securities.’’ 

Second, the Exchange is replacing 

existing paragraph (a)(2)(C)(iv) of Rule 

3312, entitled ‘‘Numerical Guidelines 

Applicable to Volatile Market Opens’’ 

with a new paragraph, entitled 

‘‘Individual Stock Trading Pauses.’’ 

Third, the Exchange is proposing 

changes to existing paragraph (b) of Rule 

3312 to eliminate the ability of the 

Exchange to deviate from the Numerical 

Guidelines contained in paragraph 

(a)(2)(C)(i) when deciding which 

transactions will be reviewed by the 

Exchange as potentially clearly 

erroneous. Fourth, the Exchange 

proposes modifications to paragraphs 

(a)(2)(C)(i) and (iii) of Rule 3312 

consistent with the proposed changes to 

paragraphs (a)(2)(C)(ii) and (iv). Finally, 

the Exchange proposes amending 

paragraph (c)(1), related to appeals of 

clearly erroneous execution decisions 

by the Exchange, to preserve nonappealability of all joint rulings between 

the Exchange and one or more other 

market centers.5 As proposed, the 

provisions of paragraph (a)(2)(C), 

paragraph (b) and paragraph (c)(1) of 

Rule 3312, as amended by this filing, 

would be in effect during a pilot period 

set to end on December 10, 2010. If the 

pilot is not either extended or made 

permanent by December 10, 2010, the 

prior versions of paragraph (a)(2)(C), 

paragraph (b) and paragraph (c)(1) of 

Rule 3312 would be in effect. 

The Exchange is proposing the rule 

changes described below in consultation 

with other markets 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 market 

and subsequent transactions that occur 

before the trading pause is in effect on 

the Exchange. The Exchange has also 

proposed additional changes to Rule 

3312 that reduce the ability of the 

Exchange to deviate from the objective 

standards set forth in the Rule. In 

addition, the Exchange is modifying 

certain defined terms in the rule to 

match definitions used by other 

exchanges in order to avoid the risk of 

confusion. The proposed changes are 

described in further detail below. 

Revised Paragraph (a)(2)(C)(ii) Related 

to Multi-Stock Events Involving Twenty 

or More Securities 

The Exchange proposes to eliminate 

the majority of existing paragraph 

(a)(2)(C)(ii), which provides flexibility 

to the Exchange to use different 

Numerical Guidelines or Reference 

Prices in various ‘‘Unusual 

Circumstances.’’ The Exchange proposes 

to replace this paragraph with new 

language that would apply to MultiStock Events involving twenty or more 

securities whose executions occurred 

within a period of five minutes or less. 

The revised paragraph would retain 

language making clear that during 

Multi-Stock Events involving twenty or 

more securities the number of affected 

transactions may be such that 

immediate finality is necessary to 

maintain a fair and orderly market and 

to protect investors and the public 

interest. Accordingly, in such 

circumstances, decisions made by the 

Exchange in consultation with other 

markets could not be appealed. Further, 

as proposed, in connection with reviews 

of Multi-Stock Events involving twenty 

or more securities, the Exchange may 

use a Reference Price other than 

consolidated last sale in its review of 

potentially clearly erroneous 

executions. With the exception of those 

securities under review that are subject 

to an individual stock trading pause as 

described in proposed paragraph 

(a)(2)(C)(iv), and to ensure consistent 

application across market centers when 

proposed paragraph (a)(2)(C)(ii) is 

invoked, the Exchange will promptly 

coordinate with the other market centers 

to determine the appropriate review 

period, which may be greater than the 

period of five minutes or less that 

triggered application of proposed 

paragraph (a)(2)(C)(ii), as well as select 

one or more specific points in time prior 

to the transactions in question and use 

transaction prices at or immediately 

prior to the one or more specific points 

in time selected as the Reference Price. 

The Exchange will nullify as clearly 

erroneous all transactions that are at 

prices equal to or greater than 30% 

away from the Reference Price in each 

affected security during the review 

period selected by the Exchange and 

other markets consistent with the 

proposed paragraph (a)(2)(C)(ii). 

Because the Exchange and other 

market centers are adopting a different 

threshold and standards to handle largescale market events, which would 

include events occurring during times of 

high volatility at the beginning of 

regular trading hours, the Exchange 

proposes deletion of paragraph 

(a)(2)(C)(iv) (‘‘Numerical Guidelines 

Applicable to Volatile Market Opens’’) 

of the existing rule. The Exchange 

believes that this provision is no longer 

necessary, and if maintained, could 

result in extremely high Numerical 

Guidelines (up to 90%) in certain 

circumstances. 

mstockstill on DSKH9S0YB1PROD with NOTICES

61804 Federal Register / Vol. 75, No. 193 / Wednesday, October 6, 2010 / Notices 

6Prior to the launch of trading on PSX, the 

Exchange will submit a proposed rule change to 

amend Rule 3100(a)(4) to reflect changes recently 

approved to the corresponding rules of other 

exchanges. Securities Exchange Act Release No. 

62884 (September 10, 2010), 75 FR 56618 

(September 16, 2010) (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; SR–NSX–2010–08). Securities 

Exchange Act Release No. 62884 amended trading 

pause rules originally adopted by PSX in SR– 

PHLX–2010–79, supra n. 3, and by other exchanges 

in Securities Exchange Act Release No. 62252 (June 

10, 2010), 75 FR 34186 (June 16, 2010) (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; SR–CBOE–2010–047). 

7The term ‘‘Regular Trading Hours’’ is being 

renamed from ‘‘Core Session’’ in Rule 3312(a)(2)(B) 

as the time between 9:30 a.m. and 4 p.m. Eastern 

Time. According to rules of the primary listing 

markets, an individual stock trading pause can be 

issued based on a Trigger Trade that occurs at any 

time between 9:45 a.m. and 3:35 p.m. Eastern Time. 

See NASDAQ Exchange Rule 4120(a)(11), NYSE 

Rule 80C, and NYSE Arca Rule 7.11. 

Revised Paragraph (a)(2)(C)(iv) Related 

to Individual Stock Trading Pauses 

The NASDAQ Exchange and other 

primary listing markets for U.S. stocks 

recently amended 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 fiveminute period, and other exchanges 

have amended their rules to follow 

these trading pauses. In this regard, the 

Exchange’s approved rules for PSX 

pause trading in an individual stock 

when the primary listing market for 

such stock issues a trading pause, as 

provided in Rule 3100(a)(4).6 As 

described above, the Exchange is 

proposing to eliminate existing 

paragraph (a)(2)(C)(iv) (‘‘Numerical 

Guidelines Applicable to Volatile 

Market Opens’’). The Exchange proposes 

adopting a rule, numbered as 

(a)(2)(C)(iv) following such elimination, 

that will provide for uniform treatment 

of clearly erroneous execution reviews 

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 on the 

Exchange. The proposed rule change is 

necessary to provide greater certainty of 

the clearly erroneous Reference Price for 

transactions that trigger a trading pause 

(the ‘‘Trigger Trade’’) and subsequent 

transactions occurring between the time 

of the Trigger Trade and the time the 

trading pause message is received by the 

Exchange from the single plan processor 

responsible for consolidation and 

dissemination of information for the 

security and put into effect on the 

Exchange, especially under highly 

volatile and active market conditions. 

The Exchange proposes to revise 

paragraph (a)(2)(C)(iv) of Rule 3312 to 

allow the Exchange to use the price that 

triggered a trading pause in an 

individual stock (the ‘‘Trading Pause 

Trigger Price’’) as the Reference Price for 

clearly erroneous execution reviews of a 

Trigger Trade and transactions that 

occur immediately after a Trigger Trade 

but before a trading pause is in effect on 

the Exchange. As proposed, the phrase 

‘‘Trading Pause Trigger Price’’ shall 

mean the price that triggered a trading 

pause pursuant to PHLX Rule 

3100(a)(4). The Trading Pause Trigger 

Price reflects a price calculated by the 

primary listing market over a rolling 

five-minute period and may differ from 

the execution price of a transaction that 

triggered a trading pause. The Exchange 

will rely on the primary listing market 

that issued an individual stock trading 

pause to determine and communicate 

the Trading Pause Trigger Price for such 

stock. The Exchange proposes to make 

clear in the text that the proposed 

standards in paragraph (a)(2)(C)(iv) 

apply regardless of whether the security 

at issue is part of a Multi-Stock Event 

involving five or more securities as 

described in proposed paragraphs 

(a)(2)(C)(i) and (ii). 

As proposed, the Numerical 

Guidelines set forth in PHLX Rule 

3312(a)(2)(C)(i), other than those 

Numerical Guidelines applicable to 

Multi-Stock Events, would apply to 

reviews of Trigger Trades and 

subsequent transactions. The Exchange 

proposes to review, on its own motion 

pursuant to paragraph (b)(2) of the Rule, 

all transactions that trigger a trading 

pause and subsequent transactions 

occurring before the trading pause is in 

effect on the Exchange. The Exchange 

has proposed to limit such reviews to 

reviews of transactions that executed at 

a price lower than the Trading Pause 

Trigger Price in the event of a price 

decline and higher than the Trading 

Pause Trigger Price in the event of a 

price rise. Because the proposed rules 

for trading pauses would only apply 

within Regular Trading Hours,7 an 

execution would be reviewed and 

nullified as clearly erroneous if it 

exceeds the following thresholds: 

Reference price or product Numerical guidelines (Subject transaction’s % difference from the Trading Pause Trigger Price) 

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

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

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

Leveraged ETF/ETN securities ................................................................ Regular Trading Hours Numerical Guidelines multiplied by the leverage 

multiplier (i.e., 2x). 

Revisions to Paragraph (b) 

To be consistent with other 

exchanges, the Exchange is eliminating 

paragraph (b) and adding new 

paragraphs (b)(1) and (b)(2) to separate 

System Disruptions from Own Motion 

situations. Consistent with other 

proposals made in this filing, the 

Exchange proposes modifying paragraph 

(b) to eliminate the ability of a Senior 

Official to deviate from the Numerical 

Guidelines contained in the Rule other 

than under very limited circumstances 

set forth in paragraph (a)(2)(C)(iii). 

New paragraph (b)(1) provides a 

Senior Official of the Exchange the 

ability on his or her own motion, to 

review and rule on executions that 

result from ‘‘any disruption or a 

malfunction in the operation of any 

electronic communications and trading 

facilities of the Exchange, or 

extraordinary market conditions or 

other circumstances in which the 

nullification of transactions may be 

necessary for the maintenance of a fair 

and orderly market or the protection of 

investors and the public interest exist.’’ 

New paragraph (b)(2) is similar to 

existing Rule 3312(b) and covers other 

situations where the Exchange may act 

on its own motion. Without 

modification, the language 

‘‘extraordinary market conditions or 

other circumstances * * *’’ in current 

Rule 3312(b) would leave the Exchange 

with broad discretion to deviate from 

the Numerical Guidelines set forth in 

mstockstill on DSKH9S0YB1PROD with NOTICES

Federal Register / Vol. 75, No. 193 / Wednesday, October 6, 2010 / Notices 61805 

8 15 U.S.C. 78f(b). 

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

10 15 U.S.C. 78k–1(a)(1). 

paragraph (a)(2)(C)(i). Thus, the 

Exchange proposes narrowing the scope 

of paragraph (b) so that it only permits 

the Exchange to nullify transactions 

consistent with that paragraph 

(including at a lower Numerical 

Guideline) if there is a disruption or 

malfunction in the use of the Exchange’s 

system covered by proposed Rule 

3312(b)(1). 

For the same reason, the Exchange 

proposes eliminating the words ‘‘use or’’ 

from the language in subsection (b) to 

make clear that the provision only 

applies to a disruption or malfunction of 

the Exchange’s system (and not of a user 

of the Exchange’s systems). 

Paragraph (b)(2) gives a Senior 

Official of the Exchange the ability on 

his or her own motion to review 

transactions as potentially clearly 

erroneous. Consistent with the goal of 

achieving more objective and standard 

results, the Exchange proposes deleting 

language in existing paragraph (b) that 

would allow the Exchange to deviate 

from the Numerical Guidelines 

contained in paragraph (a)(2)(C)(i). In 

addition, the Exchange proposes to 

make clear that any Senior Official 

reviewing transactions on his or her 

own motion must follow the guidelines 

set forth in proposed paragraph 

(a)(2)(C)(iv), if applicable. Accordingly, 

the Exchange proposes to modify 

paragraph (b)(2) to state that an officer 

must rely on paragraphs (a)(2)(C)(i)–(iv) 

of Rule 3312 when reviewing 

transactions on his or her own motion. 

Additional Conforming Revisions to 

Paragraphs (a)(2)(C)(i) and (a)(2)(C)(iii) 

Based on proposed paragraph 

(a)(2)(C)(ii), the Exchange has proposed 

certain conforming changes to 

paragraphs (a)(2)(C)(i) and (iii) of the 

existing Rule, as described below. 

Under current Rule 3312, a 

transaction may be found to be clearly 

erroneous only if the price of the 

transaction to buy (sell) that is the 

subject of the complaint is greater than 

(less than) the Reference Price by an 

amount that equals or exceeds the 

Numerical Guidelines set forth in 

paragraphs (a)(2)(C)(i) of the Rule. The 

‘‘Reference Price’’ is currently defined as 

‘‘the consolidated last sale immediately 

prior to the execution(s) under review 

except for in Unusual Circumstances 

* * * .’’ The Exchange proposes 

modifying paragraph (a)(2)(C)(i) 

consistent with the changes described 

above such that the Exchange shall use 

the consolidated last sale immediately 

prior to the execution(s) under review as 

the Reference Price except for: (A) 

Multi-Stock Events involving twenty or 

more securities, as described in 

proposed paragraph (a)(2)(C)(ii); (B) 

transactions not involving a Multi-Stock 

Event as described in proposed 

paragraph (a)(2)(C)(ii) that trigger a 

trading pause and subsequent 

transactions, as described in proposed 

paragraph (a)(2)(C)(iv), in which case 

the Reference Price shall be determined 

in accordance with that paragraph 

(a)(2)(C)(iv); and (C) in other 

circumstances, such as, for example, 

relevant news impacting a security or 

securities, periods of extreme market 

volatility, sustained illiquidity, or 

widespread system issues, where use of 

a different Reference Price is necessary 

for the maintenance of a fair and orderly 

market and the protection of investors 

and the public interest. The Exchange 

also proposes modifying paragraph 

(a)(2)(C)(i) to reduce uncertainty as to 

the applicability of the Numerical 

Guidelines, by requiring a finding that 

an execution was clearly erroneous if 

such execution exceeds the Numerical 

Guidelines, subject only to the 

Additional Factors included in 

paragraph (a)(2)(C)(iii). Moreover, the 

Exchange proposes revising the existing 

description for Multi-Stock Events that 

is contained on the Numerical 

Guidelines chart to make clear that 

different Numerical Guidelines apply 

for Multi-Stock Events involving five or 

more, but less than twenty, securities 

whose executions occurred within a 

period of five minutes or less. In 

addition, the Exchange proposes adding 

to the Numerical Guidelines chart a row 

that contains the Numerical Guidelines 

(30%) for Multi-Stock Events involving 

twenty or more securities whose 

executions occurred within a period of 

five minutes or less. 

The Exchange proposes clarifying 

paragraph (a)(2)(C)(iii) to make clear 

that the additional factors set forth in 

that paragraph are not intended to 

provide any discretion to an Exchange 

official to deviate from the guidelines 

that apply to Multi-Stock Events or to 

transactions in securities subject to 

individual stock trading pauses. 

The Exchange also proposes 

amending paragraph (c)(1), related to 

appeals of clearly erroneous execution 

decisions by the Exchange, to preserve 

non-appealability of all joint rulings 

between the Exchange and one or more 

other market centers. The Exchange 

believes that certainty and consistency 

is critical to reviews of related 

executions that span multiple market 

centers. Accordingly, although the 

Exchange has proposed deletion of such 

language from existing paragraph 

(a)(2)(C)(iii), the Exchange proposes 

adding such language back in to 

paragraph (c)(1) to make clear that joint 

market rulings are not appealable. 

Finally, the Exchange is amending 

text in paragraphs (a)(2)(A)(iii)B. and 

(e)(1) to correct minor typographical 

errors in the text of the existing rule. 

2. Statutory Basis 

The rule change proposed in this 

submission is consistent with the 

requirements of the Act and the rules 

and regulations thereunder that are 

applicable to a national securities 

exchange, and, in particular, with the 

requirements of Section 6(b) of the Act.8

In particular, the proposed change is 

consistent with Section 6(b)(5) of the 

Act,9 because it would promote just and 

equitable principles of trade, remove 

impediments to, and perfect the 

mechanism of, a free and open market 

and a national market system, and, in 

general, protect investors and the public 

interest. The proposed rule change is 

also designed to support the principles 

of Section 11A(a)(1) 10 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 reviews of 

potentially clearly erroneous executions 

in various contexts, including reviews 

in the context of a Multi-Stock Event 

involving twenty or more securities and 

reviews resulting from a Trigger Trade 

and any executions occurring 

immediately after a Trigger Trade but 

before a trading pause is in effect on the 

Exchange. Further, the Exchange 

believes that the proposed changes 

enhance the objectivity of decisions 

made by the Exchange with respect to 

clearly erroneous executions. 

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 

Written comments were neither 

solicited nor received. 

mstockstill on DSKH9S0YB1PROD with NOTICES

61806 Federal Register / Vol. 75, No. 193 / Wednesday, October 6, 2010 / Notices 

11 15 U.S.C. 78s(b)(3)(A). 

12 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, along with a brief 

description and text of 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. 

13For 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). 

14The text of the proposed rule change is 

available on the Commission’s Web site at http:// 

www.sec.gov. 

15 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Public Law No. 111–203, 124 Stat. 1376 

(2010). 

4See Securities Exchange Act Release No. 62827 

(September 1, 2010), 75 FR 54673. 

5See e-mail from Peter Shapiro, Managing 

Director, Swap Financial Group, LLC, dated 

September 14, 2010 (‘‘Swap Financial Letter’’); 

email from Kevin Olson, dated September 17, 2010 

(‘‘Olson Letter’’); letter from Mike Nicholas, Chief 

Executive Officer, Bond Dealers of America, dated 

September 17, 2010 (‘‘Bond Dealers Letter’’); letter 

from Robert W. Doty, President, American 

Governmental Financial Services, dated September 

21, 2010 (‘‘AGFS Letter I’’); letter from Joy A. 

Howard, Principal, WM Financial Strategies, dated 

September 21, 2010 (‘‘WM Financial Letter’’); letter 

from Steve Apfelbacher, President, National 

Association of Independent Public Finance 

Advisors, dated September 22, 2010 (‘‘NAIPFA 

Letter’’); letter from Michael Decker, Managing 

Director and Co-Head, Municipal Securities 

Division, Securities Industry and Financial Markets 

Association, dated September 22, 2010 (‘‘SIFMA 

Letter’’); letter from Susan Gaffney, Director, Federal 

Liaison Center, Government Finance Officers 

Association, dated September 22, 2010 (‘‘GFOA 

Letter’’); letter from Thomas M. DeMars, Managing 

Principal, Fieldman, Rolapp & Associates, dated 

September 22, 2010 (‘‘Fieldman Letter’’); letter from 

Lawrence P. Sandor, Senior Associate General 

Counsel, MSRB, dated September 23, 2010 (‘‘MSRB 

Response Letter’’); email from Robert W. Doty, 

President, American Governmental Financial 

Services, dated September 27, 2010 (‘‘AGFS Letter 

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; or (iii) become 

operative for 30 days after the date of 

the filing, or such shorter time as the 

Commission may designate, if 

consistent with the protection of 

investors and the public interest, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 11 and Rule 19b– 

4(f)(6) thereunder.12

The Exchange has requested that the 

Commission waive the 30-day operative 

delay. The Commission hereby grants 

that request.13 The Commission believes 

that waiver of the operative delay is 

consistent with the protection of 

investors and the public interest 

because it has recently approved Phlx’s 

proposal to initiate trading on PSX, 

which it plans to do on October 8, 2010, 

and believes that the proposed rule 

change should be implemented on that 

date to ensure that the Exchange’s rules 

on clearly erroneous trades are 

consistent with the recently approved 

changes to the clearly erroneous 

execution rules of the other markets. 

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. If the 

Commission takes such action, the 

Commission shall institute proceedings 

to determine whether the proposed rule 

should be approved or disapproved. 

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 

No. SR–Phlx–2010–125 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 No. 

SR–Phlx–2010–125. 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 

Web site (http://www.sec.gov/rules/ 

sro.shtml). Copies of the submission,14

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 Phlx. 

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 No. 

SR–Phlx–2010–125 and should be 

submitted on or before October 27, 

2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.15

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–25137 Filed 10–5–10; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63025; File No. SR–MSRB– 

2010–08] 

Self-Regulatory Organizations; 

Municipal Securities Rulemaking 

Board; Notice of Filing of Amendment 

No. 1 to and Order Granting 

Accelerated Approval of a Proposed 

Rule Change, as Modified by 

Amendment No. 1, to Amend Rule A– 

3, on Membership on the Board, To 

Comply With the Dodd-Frank Wall 

Street Reform and Consumer 

Protection Act 

September 30, 2010. 

On August 27, 2010, the Municipal 

Securities Rulemaking Board (‘‘Board’’ 

or ‘‘MSRB’’) filed with the Securities and 

Exchange Commission (‘‘Commission’’), 

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

Securities Exchange Act of 1934 

(‘‘Exchange Act’’) 1 and Rule 19b–4 

thereunder,2 a proposed rule change to 

amend MSRB Rule A–3, on membership 

on the Board, to comply with the 

requirements of the Dodd-Frank Wall 

Street Reform and Consumer Protection 

Act (‘‘Dodd-Frank Act’’).3 The 

Commission published the proposed 

rule change for comment in the Federal 

Register on September 8, 2010.4 The 

Commission received ten comment 

letters, the MSRB’s response, and a 

supplemental response to the MSRB’s 

response.5 On September 30, 2010, the 

mstockstill on DSKH9S0YB1PROD with NOTICES