Document ID: SEC-2010-1114-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: EDGX Exchange, Inc.
Posted Date: 2010-07-23T04:00Z

[Federal Register Volume 75, Number 141 (Friday, July 23, 2010)]
[Notices]
[Pages 43214-43215]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-18068]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62517; File No. SR-EDGX-2010-07]

Self-Regulatory Organizations; EDGX Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Amend 
EDGX Rule 11.14

July 16, 2010.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on July 13, 2010, the EDGX Exchange, Inc. (the ``Exchange'' or 
``self-regulatory organization'' or the ``EDGX'') 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 self-regulatory organization. The Exchange has 
designated the proposed rule change as constituting a ``non-
controversial'' rule change under paragraph (f)(6) of Rule 19b-4 under 
the Act,\3\ which renders the proposal effective upon receipt of this 
filing by the Commission. The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend EDGX Rule 11.14 regarding Trading 
Halts Due to Extraordinary Market Volatility to make a technical 
amendment to the rule text. The text of the proposed rule change is 
available on the Exchange's Internet website at http://www.directedge.com, at the principal office of the Exchange, 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 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 these statements may be examined at 
the places specified in Item IV below. The self-regulatory organization 
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 Exchange recently amended EDGX Rule 11.14 (Trading Halts Due to 
Extraordinary Market Volatility) 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 in 
Interpretation and Policy .05 to Rule 11.14. The primary listing 
markets for U.S. stocks 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 five-
minute period. Amendments to Rule 11.14 were approved by the Commission 
on June 10, 2010.\4\ The Exchange subsequently filed to amend Rule 
11.14 to add additional Circuit Breaker Securities, including those in 
the Russell 1000[supreg] Index (``Russell 1000'') and specified

[[Page 43215]]

Exchange Traded Products (``ETP'') to the pilot rule.\5\
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    \4\ See Securities Exchange Act Release No. 62252 (June 10, 
2010) (SR-EDGX-2010-01).
    \5\ See Securities Exchange Act Release No. 62418 (June 30, 
2010) (SR-EDGX-2010-05).
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    The Exchange now proposes to make a technical amendment to EDGX 
Rule 11.14 to clarify that on the occurrence of any trading halt under 
Rule 11.14, only outstanding Post Only orders (as defined in Rule 
11.5(c)(5)) in the system will be cancelled. Currently, Rule 11.14 
states that all outstanding orders in the system will be cancelled. 
This amendment is necessary to comport the rule with how the Exchange's 
systems operate. In addition, the Exchange believes that a narrower 
cancellation policy will facilitate the formation of additional 
liquidity for the halted security, thus increasing price stability upon 
the reopening following the halt.
2. Statutory Basis
    The statutory basis for the proposed rule change is Section 6(b)(5) 
of the Act,\6\ which requires the rules of an exchange to promote just 
and equitable principles of trade, to remove impediments to and perfect 
the mechanism of a free and open market and a national market system 
and, in general, to protect investors and the public interest. The 
proposed rule change also is designed to support the principles of 
Section 11A(a)(1) \7\ 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 seeks to promote transparency for how order flow will be 
handled during a trading pause.
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    \6\ 15 U.S.C. 78f(b)(5).
    \7\ 15 U.S.C. 78k 1(a)(1).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    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

    The Exchange has not solicited, and does not intend to solicit, 
comments on this proposed rule change. The Exchange has not received 
any unsolicited written comments from members or other interested 
parties.

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

    Because the foregoing proposed rule change does not:
    (i) Significantly affect the protection of investors or the public 
interest;
    (ii) Impose any significant burden on competition; and
    (iii) Become operative for 30 days from the date on which it was 
filed, or such shorter time as the Commission may designate, 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 \8\ and 
Rule 19b-4(f)(6) thereunder.\9\
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires the self-regulatory organization to submit to the 
Commission written notice of its intent to file the proposed rule 
change, along with a brief description and text of the proposed rule 
change, at least five business days prior to the 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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    A proposed rule change filed under Rule 19b-4(f)(6) \10\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\11\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay so that the proposal 
may become operative upon filing. The Exchange believes that this rule 
filing should become effective upon filing to ensure transparency in 
the U.S. equities markets for how order flow will be handled during a 
trading pause under Rule 11.14. Because the filing clarifies how order 
flow will be handled during a trading pause, the Commission believes it 
is consistent with the protection of investors and the public interest 
to waive the 30-day operative delay and hereby grants such waiver.\12\ 
Accordingly, the Commission designates the proposed rule change 
operative upon filing with the Commission.
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    \10\ 17 CFR 240.19b-4(f)(6).
    \11\ 17 CFR 240.19b-4(f)(6)(iii).
    \12\ For purposes only of waiving the 30-day operative delay of 
this proposal, the Commission has considered the proposed rule's 
impact on efficiency, competition, and capital formation. See 15 
U.S.C. 78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission may summarily abrogate such rule change if it 
appears to the Commission that such action is necessary or appropriate 
in the public interest, for the protection of investors, or otherwise 
in furtherance of the purposes of the Act.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-EDGX-2010-07 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-EDGX-2010-07. 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 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 
available publicly. All submissions should refer to File Number SR-
EDGX-2010-07 and should be submitted on or before August 13, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-18068 Filed 7-22-10; 8:45 am]
BILLING CODE 8010-01-P