Document ID: SEC-2013-0503-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: National Stock Exchange, Inc.
Posted Date: 2013-03-14T04:00Z

[Federal Register Volume 78, Number 50 (Thursday, March 14, 2013)]
[Notices]
[Pages 16325-16329]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-05892]

[[Page 16325]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-69087; File No. SR-NSX-2013-09]

Self-Regulatory Organizations; National Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend the Exchange's Rules To Comply With the Requirements of the Plan 
To Address Extraordinary Market Volatility Submitted to the Commission 
Pursuant to Rule 608 of Regulation NMS

March 8, 2013.
    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 March 1, 2013, National Stock Exchange, Inc. (``NSX[supreg]'' 
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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is proposing to amend its Rules to comply with the 
National Market System Plan, also known as Limit Up/Limit Down, 
established pursuant to Rule 608 of the Exchange Act, to address 
extraordinary market volatility (the ``Regulation NMS Plan to Address 
Extraordinary Market Volatility'' or ``Plan'').\3\ Specifically, the 
Exchange proposes to: (1) Adopt new Exchange Rule 11.24 incorporating 
the requirements of the Regulation NMS Plan to Address Extraordinary 
Market Volatility into the Exchange Rules by discussing how the 
Exchange will handle orders and halt trading pursuant to the Plan; (2) 
amend Exchange Rule 11.11 to discuss how undisplayed ``pegged'' orders 
would be handled under proposed Exchange Rule 11.24; (3) amend Exchange 
Rule 11.15 to explicitly state that orders must be executed in 
accordance with proposed Exchange Rule 11.24; and (4) amend Exchange 
Rule 11.20 so that the portion addressing trading pauses conform with 
the Plan. The Exchange has designated this proposal as non-
controversial and provided the Commission with the notice required by 
Rule 19b-4(f)(6)(iii) under the Act.\4\ The text of the proposed rule 
change is available on the Exchange's Web site at http://www.nsx.com, 
at the principal office of the Exchange, and at the Commission's Public 
Reference Room.
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    \3\ See Appendix A to Securities Exchange Act Release No. 67091 
(May 31, 2012) 77 FR 33498 (June 6, 2012).
    \4\ 17 CFR 240.19b-4(f)(6)(iii).
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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: (1) Adopt new Exchange Rule 11.24 
incorporating the requirements of the Regulation NMS Plan to Address 
Extraordinary Market Volatility into the Exchange Rules by discussing 
how the Exchange will handle orders and halt trading pursuant to the 
Plan; (2) amend Exchange Rule 11.11 to discuss how undisplayed 
``pegged'' orders would be handled under proposed Exchange Rule 11.24; 
(3) amend Exchange Rule 11.15 to explicitly state that orders must be 
executed in accordance with proposed Exchange Rule 11.24; and (4) amend 
Exchange Rule 11.20B so that the provisions relating to Trading Pauses 
\5\ conform with the Plan.
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    \5\ Unless otherwise specified, capitalized terms used in this 
rule filing are based on defined terms in the Plan.
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Summary
    Since May 6, 2010, when the markets experienced excessive 
volatility in an abbreviated time period, i.e., the ``flash crash,'' 
the national securities exchanges that list and trade equity securities 
and the Financial Industry Regulatory Authority (``FINRA'') have 
implemented market-wide measures that are designed to restore investor 
confidence in the markets by reducing the potential for excessive 
volatility. The measures adopted include pilot plans for stock-by-stock 
trading pauses \6\ and related changes to the equities market clearly 
erroneous execution rules,\7\ and more stringent equity market maker 
quoting requirements.\8\ On May 31, 2012, the Commission approved the 
Plan, on a pilot basis.\9\ In addition, the Commission approved changes 
to the equity market-wide circuit breaker rules on a pilot basis to 
coincide with the pilot period of the Plan.\10\
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    \6\ See e.g., NSX Rule 11.20B.
    \7\ See e.g., NSX Rule 11.19.
    \8\ See e.g., NSX Rule 11.8(a)(1)(B)(iv) and (v).
    \9\ See Securities Exchange Act Release No. 67091 (May 31, 2012) 
77 FR 33498 (June 6, 2012) (Order approving, on a Pilot Basis, the 
National Market System Plan to Address Extraordinary Market 
Activity).
    \10\ See Securities Exchange Act Release No. 67090 (May 31, 
2012), 77 FR 33531 (June 6, 2012) (SR-BATS-2011-038; SR-BYX-2011-
025; SR-BX-2011-068; SR-CBOE-2011-087; SR-C2-2011-024; SR-CHX-2011-
30; SR-EDGA-2011-31; SR-EDGX-2011-30; SRFINRA-2011-054; SR-ISE-2011-
61; SR-NASDAQ-2011-131; SR-NSX-2011-11; SRNYSE-2011-48; SR-NYSEAmex-
2011-73; SR-NYSEArca-2011-68; SR-Phlx-2011-129).
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    The Plan is designed to prevent trades in NMS Stocks from occurring 
outside of specified Price Bands. As described more fully below, the 
Price Bands are coupled with Trading Pauses to accommodate more 
fundamental price moves (as opposed to erroneous trades or momentary 
gaps in liquidity). All trading centers in NMS Stocks, including both 
those operated by Participants and those operated by members of 
Participants, are required to establish, maintain, and enforce written 
policies and procedures that are reasonably designed to comply with the 
requirements specified in the Plan.\11\
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    \11\ The Exchange is a Participant in the Plan.
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    As set forth in more detail in the Plan, Price Bands consisting of 
a Lower Price Band and an Upper Price Band for each NMS Stock are 
calculated by the Processors.\12\ When the National Best Bid (Offer) is 
below (above) the Lower (Upper) Price Band, the Processors shall 
disseminate such National Best Bid (Offer) with an appropriate flag 
identifying it as unexecutable. When the National Best Bid (Offer) is 
equal to the Upper (Lower) Price Band, the Processors shall distribute 
such National Best Bid (Offer) with an appropriate flag identifying it 
as a Limit State Quotation.\13\ All trading centers in NMS Stocks must 
maintain written policies and procedures that are reasonably designed 
to prevent the display of offers below the Lower Price Band and bids 
above the Upper Price Band for NMS Stocks. Notwithstanding this 
requirement, the Processor shall display an offer below the Lower Price

[[Page 16326]]

Band or a bid above the Upper Price Band, but with a flag that it is 
non-executable. Such bids or offers shall not be included in the 
National Best Bid or National Best Offer calculations.\14\
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    \12\ See Section (V)(A) of the Plan.
    \13\ See Section VI(A) of the Plan.
    \14\ See Section VI(A)(3) of the Plan.
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    Trading in an NMS Stock immediately enters a Limit State if the 
National Best Bid/Offer equals but does not cross the Upper (Lower) 
Price Band.\15\ Trading for an NMS stock exits in a Limit State if, 
within 15 seconds of entering the Limit State, all Limit State 
Quotations were executed or canceled in their entirety. If the market 
does not exit a Limit State within 15 seconds, then the Primary Listing 
Exchange would declare a five-minute trading pause pursuant to Section 
VII of the LULD Plan, which would be applicable to all markets trading 
the security.\16\
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    \15\ See Section VI(B)(1) of the Plan.
    \16\ The primary listing market would declare a trading pause in 
an NMS Stock; upon notification by the primary listing market, the 
Processor would disseminate this information to the public. No 
trades in that NMS Stock could occur during the trading pause, but 
all bids and offers may be displayed. See Section VII(A) of the 
Plan.
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    In addition, the Plan defines a Straddle State as when the National 
Best Bid (Offer) is below (above) the Lower (Upper) Price Band and the 
NMS Stock is not in a Limit State. For example, assume the Lower Price 
Band for an NMS Stock is $9.50 and the Upper Price Band is $10.50, such 
NMS stock would be in a Straddle State if the National Best Bid were 
below $9.50, and therefore non-executable, and the National Best Offer 
were above $9.50 (including a National Best Offer that could be above 
$10.50). If an NMS Stock is in a Straddle State and trading in that 
stock deviates from normal trading characteristics, the Primary Listing 
Exchange may declare a trading pause for that NMS Stock.
Proposed Exchange Rule 11.24, Limit Up-Limit Down
    Under the Plan, the Exchange is required to establish, maintain, 
and enforce written policies and procedures reasonably designed to 
comply with the Limit Up-Limit Down and Trading Pause requirements of 
the Plan. The Exchange, therefore, proposes to adopt new Exchange Rule 
11.24, Limit Up-Limit Down, to address the treatment of certain orders 
on the Exchange in order to prevent executions outside the Price Bands 
and to comply with the requirements of the Plan.
Implementation Schedule
    To coincide with the effective date of the Regulation NMS Plan to 
Address Extraordinary Market Volatility, the Exchange proposes to add 
Exchange Rule 11.24(a) the Exchange will implement the proposed rule 
change as a one-year pilot program in two Phases: Phase I of the Plan 
implementation will begin on April 8, 2013, and apply to select symbols 
from the Tier 1 NMS Stocks identified in Appendix A of the Plan, with 
full Phase I implementation for all Tier I NMS Stocks completed three 
months later. Phase II of the Plan will commence six months after April 
8, 2013 and apply to all remaining NMS Stocks (except rights and 
warrants).
    The Exchange proposes to add Exchange Rule 11.24(b)(1) to define 
that the ``Plan'' means the Plan to Address Extraordinary Market 
Volatility pursuant to Rule 608 of Regulation NMS under the Securities 
Exchange Act of 1934, Exhibit A to Securities Exchange Act Release No. 
67091 (May 31, 2012) 77 FR 33498 (June 6, 2012), as it may be amended 
from time to time. In addition, proposed Rule 11.24(b)(2) provides that 
all capitalized terms, not otherwise defined in this Rule, shall have 
the meanings set forth in the Plan or Exchange Rules. The Exchange 
proposes to add Rule 11.24(c) to state that the Exchange is a 
Participant in, and subject to the applicable requirements of, the 
Plan, which establishes procedures to address extraordinary volatility 
in NMS Stocks.
    The Exchange proposes to add Rule 11.24(d) to provide that member 
organizations shall comply with the applicable provisions of the Plan. 
The Exchange believes that this requirement will help ensure the 
compliance by its members with the provisions of the Plan as required 
pursuant to Section II(B) of the Plan.\17\
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    \17\ See Section II(B) of the Plan.
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Order Execution and Re-Pricing
    The Exchange also proposes to add Exchange Rule 11.24(e) explicitly 
stating that the Exchange will not execute or display orders outside of 
a specified Price Band for an NMS Stock during Regular Trading Hours, 
unless specifically exempted from the Plan.\18\ The Exchange believes 
that this requirement is reasonably designed to help ensure the 
compliance with the limit up-limit down and trading pause requirements 
specified in the Plan, by preventing executions outside the Price Bands 
as required pursuant to Section VI(A)(1) of the Plan.\19\
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    \18\ Under Exchange Rule 1.5(R), ``Regular Trading Hours'' means 
between 9:30 a.m. and 4:00 p.m. Eastern Time.
    \19\ See Section II(B) of the Plan.
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    Depending on the User's \20\ instruction, however, under proposed 
Rule 11.24(f)(1), any incoming limit-priced order (other than an IOC 
order) to buy (sell) that is priced above (below) the upper (lower) 
Price Band shall be repriced to the upper (lower) Price Band. Exchange 
systems shall also re-price the resting limit-priced interest to buy 
(sell) to the upper (lower) Price Band if the Price Band moves and the 
price of the resting limit-priced interest to buy (sell) moves above 
(below) the upper (lower) Price Band. Any interest that is re-priced 
pursuant to this Rule shall retain the time stamp of original order 
entry. Proposed Exchange Rule 11.24(f)(2), would permit a User to 
instruct the Exchange, on an order-by-order basis, to not re-price its 
order to the upper or lower Price Band. In such cases, the order will 
only execute against orders posted on the NSX Book resting within the 
Price Bands. Any unexecuted portion will be cancelled if it would 
result in an execution outside of the Price Bands. Under proposed Rule 
11.24(f)(3), should the Price Band move so that a previously accepted 
limit-priced order is now priced outside of the Price Band, the order 
will either be re-priced to the new Price Band or cancelled if the User 
instructed the Exchange not to re-price its order. Under proposed 
Exchange Rule 11.24(g), an incoming limit-priced order (other than an 
IOC order) to sell (buy) that is priced below (above) the upper (lower) 
Price Band will be accepted by the Exchange and eligible for inclusion 
in the Exchange's Protected BBO.\21\ However, the Exchange will not 
execute such orders until the Price Band moves in such a way that the 
order is now priced within the Price Band.
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    \20\ Under Exchange Rule 1.5(U), ``User'' means any ETP Holder 
or Sponsored Participant who is authorized to obtain access to the 
System pursuant to Exchange Rule 11.9.
    \21\ Under Exchange Rule 1.5(P), ``Protected BBO'' means the 
better of either the protected national best bid or offer or the 
displayed top-of-book.
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    In addition, the Exchange proposes the following provisions 
regarding the re-pricing and/or cancelling of certain trading interest:
     Immediate-or-Cancel Orders. Under Exchange Rule 
11.11(b)(1), an ``Immediate-or-Cancel (``IOC'') Order'' is a ``limit 
order that is to be executed in whole or in part as soon as such order 
is received, and the portion not so executed is to be treated as 
cancelled.'' \22\ Under the proposed Exchange Rule 11.24(f), the 
Exchange will accept an IOC Order that is priced, explicitly or not, 
outside of the Price

[[Page 16327]]

Band. However, the IOC Order will only execute against orders posted on 
the NSX Book resting within the Price Band. Any unexecuted portion of 
an IOC Order will be cancelled if it would result in an execution 
outside of the Price Band.
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    \22\ IOC Orders are not eligible for routing away pursuant to 
Exchange Rule 11.15.
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     Market Orders. Under Exchange Rule 11.11(a)(1), 
a ``Market Order'' is ``an order to buy or sell a stated amount of a 
security that is to be executed at the best price obtainable when the 
order reaches the Exchange.'' \23\ Under proposed Rule 11.24(g), the 
Exchange will execute Market Orders at or better than the opposite side 
of the Price Band (i.e., a sell order to the lower Price Band and a buy 
order to the upper Price Band). Any unexecuted portion of a Market 
Order will be cancelled if it would result in an execution outside of 
the Price Band.
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    \23\ Under Exchange Rule 11.11(a)(1), a market order that is 
designated as ``NSX Only'' will be cancelled if when reaching the 
Exchange, it cannot be executed in accordance with Rule 11.15(a)(i) 
on the System. Market orders that are not designated as ``NSX Only'' 
and that cannot be executed in accordance with Rule 11.15(a)(i) on 
the System when reaching the Exchange will be eligible for routing 
away pursuant to Rule 11.15.
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Pegged Orders Under Exchange Rule 11.11(c)(2)(A)
    Under Exchange Rule 11.11(c)(2)(A), a ``Zero Display Reserve 
Order'' is a Reserve Order \24\ with zero display quantity. The price 
of a Zero Display Reserve Order may be set (``pegged'') to track the 
buy-side of the Protected Best Bid or Offer (``BBO''),\25\ the sell-
side of the Protected BBO, or the midpoint of the Protected BBO. A 
pegged Zero Display Reserve Order that tracks the midpoint is defined 
as a Midpoint Peg Zero Display Reserve Order. Exchange Rule 
11.11(c)(2)(A) also defines a ``Market Peg'' order as ``[a] pegged Zero 
Display Reserve Order which tracks the inside quote of the opposite 
side of the market and a pegged Zero Display Reserve Order that tracks 
the inside quote of the same side of the market is defined as a 
``Primary Peg.''
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    \24\ Under Exchange Rule 11.11(c)(2), a ``Reserve Order'' is a 
``limit order with a portion of the quantity displayed (``display 
quantity'') and with a reserve portion of the quantity (``reserve 
quantity'') that is not displayed.''
    \25\ Exchange Rule 1.5. ``Protected BBO'' is defined as ``the 
better of the following: (a) [t]he Protected NBBO or (b) [t]he 
displayed Top of Book.''
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    The Pegging of a Market Peg, Primary Peg or a Midpoint Peg Zero 
Display Reserve Order could result in the order being re-priced to a 
price outside of the Price Bands. To avoid such an occurrence, the 
Exchange proposed under Exchange Rules 11.11(c)(2)(A) and 11.24(h) that 
Market Peg or Midpoint Peg Zero Display Orders that would be ``pegged'' 
to a price outside of the Price Bands to instead be ``pegged'' to the 
upper or lower Price Band, respectively (i.e., a buy order to the upper 
Price Band and a sell order to the lower Price Band). In accordance 
with proposed Exchange Rule 11.24(d), a User may indicate to the 
Exchange, on an order-by-order basis, to not peg the order to the upper 
or lower Price Band, respectively. In such case, the System will reject 
the order if it would result in a price outside of the Price Band.
    The following examples describe how Market Peg, Primary Peg and 
Midpoint Peg Zero Display Orders would be repriced under the proposed 
Exchange Rule 11.11(c)(2)(A) and 11.24(g). The Exchange's Protected BBO 
is 26.00 x 27.00 and Price Bands are 26.51 x 27.50.
     A Market Peg buy order would be pegged to the opposite 
side of the Exchange Protected BBO unless pegging to the upper Price 
Band provides the User a better price. In this example, the Exchange 
would price the order at 27.00.
     A Market Peg sell order would be pegged to the opposite 
side of the Exchange's Protected BBO unless pegging to the lower Price 
Band provides the User a better price. In this example, the Exchange 
would price the order at 26.51.
     A Primary Peg buy order would be pegged to the same side 
of the Exchange's Protected BBO unless pegging to the upper Price Band 
provides the User a better price. In this example, the Exchange would 
price the order at 26.00.
     A Primary Peg sell order would be pegged to the same side 
of the Exchange's Protected BBO unless pegging to the lower Price Band 
provides the User a better price. In this example, the Exchange would 
price the order at 27.00.
     A Midpoint Peg would be pegged to the midpoint of the 
Exchange's Protected BBO unless pegging to the lower Price Band (for a 
sell order) or pegging to the upper Price Band (for a buy order) 
provides the User with a better price. In this example, midpoint buy 
orders would be priced at 26.50; midpoint sell orders would be priced 
at 26.51.
    The Exchange believes these provisions are reasonably designed to 
prevent executions outside the Price Bands as required by the Limit Up-
Limit Down and Trading Pause requirements specified in the Plan. The 
Exchange believes that allowing a trading interest that would otherwise 
execute outside the Prices Bands to re-price and keep its original time 
stamp helps to ensure that a trading interest retains its priority 
while preventing executions in violation with the Limit Up-Limit Down 
and Trading Pause requirements. The Exchange notes that retention of an 
original timestamp, when an interest is re-priced, occurs only under 
the operation of this Rule in order to prevent executions outside of 
the Price Bands and to comply with the new Plan. The Exchange believes 
that adding certainty to the treatment and priority of a trading 
interest in these situations will encourage market participants to 
continue to provide liquidity to the Exchange, and thus promoting a 
fair and orderly market.
    The Exchange proposes Rule 11.24(k) that provides that the Exchange 
shall route orders to an away market in accordance with Rule 
11.15(a)(ii) regardless of whether the away market is displaying a sell 
(buy) quote that is above (below) the Upper (Lower) Price Band. The 
Exchange believes that this provision is reasonable since the Price 
Bands may move while the order is en route thereby permitting the away 
market center to execute the order in compliance with the Limit Up-
Limit Down and Trading Pause requirements specified in the Plan.
Trading Pauses in Individual Securities Due to Extraordinary Market 
Volatility
    Consistent with the Plan's requirements for the Exchange to 
establish, maintain, and enforce policies and procedures that are 
reasonably designed to comply with the Trading Pause requirements 
specified in the Plan, the Exchange also proposes to amend the Rules 
regarding Trading Pauses to correspond with the Plan. The Exchange 
proposes to provide that during Phase 1 of the Plan, a Trading Pause in 
Tier 1 NMS Stocks subject to the requirements of the Plan, shall be 
subject to the Plan requirements and Exchange Rule 11.20(b); a Trading 
Pause in Tier 1 NMS Stocks not yet subject to the requirements of the 
Plan shall be subject to the requirements in paragraphs (a)-(f) of this 
Rule; and a Trading Pause in Tier 2 NMS Stocks shall be subject to the 
requirements set forth in Exchange Rule 11.20(a)(1)(B)-(f). The 
proposed change will allow the Trading Pause requirements in Exchange 
Rule 11.24(a)(1) to continue to apply to Tier 1 NMS Stocks during the 
beginning of Phase I until they are subject to the Plan requirements. 
Once the Plan has been fully implemented and all NMS Stocks are subject 
to the Plan, a Trading Pause under the Plan shall be subject to 
Exchange Rule 11.20(b). In addition, the Exchange proposes to replace 
references to ``Circuit Breaker Security'' with

[[Page 16328]]

``security'' to coincide with the terms of the Plan. These proposed 
changes are designed to comply with Section VIII of the Plan to ensure 
implementation of the Plan's requirements.\26\
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    \26\ See Section VIII of the Plan.
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    In addition, the Exchange proposes Rule 11.20(g) that provides that 
the Exchange may declare a Trading Pause for an NMS Stock listed on the 
Exchange when (i) the National Best Bid (Offer) is below (above) the 
Lower (Upper) Price Band and the NMS Stock is not in a Limit State; and 
(ii) trading in that NMS Stock deviates from normal trading 
characteristics. An Officer of the Exchange, or other senior level 
employee, may declare such Trading Pause during a Straddle State if 
such Trading Pause would support the Plan's goal to address 
extraordinary market volatility.\27\ The Exchange believes that this 
provision is reasonably designed to comply with the requirements of 
Section VII(a)(2) of the Plan.\28\
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    \27\ The Exchange will develop written policies and procedures 
to determine when to declare a Trading Pause in such circumstance.
    \28\ See Section VII(a)(2) of the Plan.
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Exchange Rule 11.15, Order Execution
    Under Exchange Rule 11.15, any execution to occur during Regular 
Trading Hours must be priced equal to or better than the Protected 
NBBO,\29\ unless the order is marked and an Intermarket Sweep Order 
\30\ or unless the execution falls within another exception set forth 
in Rule 611(b) of Regulation NMS of the Act. The Exchange proposes to 
amend Exchange Rule 11.15 to also require that the order must be 
executable in accordance with Exchange Rule 11.24, Limit Up-Limit Down. 
This change is designed to add consistency to Exchange Rules and to 
explicitly require that orders be executed in accordance with Exchange 
Rule 11.24, which set forth the Plan's requirements.
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    \29\ Under Exchange Rule 1.5(P), ``Protected NBBO'' is defined 
as ``the national best bid or offer that is a protected quotation.''
    \30\ Rule 600(b)(30) of Regulations NMS. 17 CFR 242.600(b)(30).
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the requirements of Section 6(b) of the Exchange Act.\31\ In 
addition, the rule furthers the objective of Section 6(b)(5) of the 
Exchange Act \32\ by promoting just and equitable principles of trade, 
removing impediments to, and perfecting the mechanisms of, a free and 
open national market system while protecting investors and the public 
interest. The proposal furthers this cause by ensuring that the 
Exchange systems will not display or execute a trading interest outside 
the Price Bands as required by the limit up-limit down and trading 
pause requirements specified in the Plan.
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    \31\ 15 U.S.C. 78f(b).
    \32\ 15 U.S.C. 78f(b)(5).
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    The proposal will also ensure that a trading interest on the 
Exchange is either re-priced to maintain priority, or canceled in a 
manner that promotes just and equitable principles of trade and removes 
impediments to, and perfects the mechanism of, a free and open market 
and a national market system. Specifically, the proposal will help 
allow market participants to continue to trade NMS Stocks within Price 
Bands in compliance with the Plan and with certainty on how varying 
orders and trading interests will be treated. Ultimately, by reducing 
uncertainty regarding the treatment and priority of a trading interest 
with the Price Bands, market participants will be encouraged to 
continue to provide liquidity during times of extraordinary market 
volatility that occur during Regular Trading Hours.
    The proposal also promotes just and equitable principles of trade 
and removes impediments to, and perfects the mechanism of, a free and 
open market and a national market system by ensuring that orders in NMS 
Stocks are not routed to other exchanges in situations where an 
execution may occur outside Price Bands, and thereby is reasonably 
designed to prevent an execution outside the Price Bands in a manner 
that promotes compliance with the limit up-limit down and trading pause 
requirements specified in the Plan.

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. All national securities 
exchanges are required to establish, maintain, and enforce policies and 
procedures reasonably designed to comply with the requirements of the 
Plan. Every member of those exchanges, including ETP Holder of the 
Exchange, are subject to those procedures and prevented from executing 
an order in an NMS Stock outside of the Price Bands prescribed by the 
Plan. The Plan also sets forth uniform requirements under which each 
exchange is to halt trading in the event a NMS Stock does not exit a 
Limit State in a timely manner. Therefore, the Exchange believes the 
proposed rule change does not 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 on the proposed rule change were neither solicited 
nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \33\ and Rule 19b-4(f)(6) thereunder.\34\ 
Because the 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 prior to 
30 days from the date on which it was filed, or such shorter time as 
the Commission may designate, if consistent with the protection of 
investors and the public interest, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.
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    \33\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \34\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires the Exchange to give the Commission written notice of the 
Exchange's 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.
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    At any time within 60 days of the filing of such 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 email to rule-comments@sec.gov. Please include 
File Number SR-NSX-2013-09 on the subject line.

[[Page 16329]]

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-NSX-2013-09. This file 
number should be included on the subject line if email 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 
10:00 a.m. and 3:00 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-NSX-2013-09 and should be 
submitted on or before April 4, 2013.
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    \35\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\35\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-05892 Filed 3-13-13; 8:45 am]
BILLING CODE 8011-01-P