Document ID: SEC-2010-0764-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Financial Industry Regulatory Authority, Inc.
Posted Date: 2010-05-24T04:00Z

[Federal Register: May 24, 2010 (Volume 75, Number 99)]
[Notices]               
[Page 28841-28842]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr24my10-97]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62133; File No. SR-FINRA-2010-025]

 
Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing of Proposed Rule Change To Amend 
FINRA Rule 6121 (Trading Halts Due to Extraordinary Market Volatility)

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, Financial Industry Regulatory Authority, Inc. 
(``FINRA'') filed with the Securities and Exchange Commission (``SEC'' 
or ``Commission'') the proposed rule change as described in Items I, 
II, and III below, which Items have been prepared by FINRA. 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

    FINRA is proposing to amend FINRA Rule 6121 (Trading Halts Due to 
Extraordinary Market Volatility) to permit FINRA to halt trading by 
FINRA members otherwise than on an exchange where a primary listing 
market has issued a trading pause due to extraordinary market 
conditions.
    The text of the proposed rule change is available on FINRA's Web 
site at http://www.finra.org, at the principal office of FINRA and at 
the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, FINRA included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. FINRA has prepared summaries, set forth in sections A, 
B, and C below, of the most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    In October 2008, FINRA adopted FINRA Rule 6121 (Trading Halts Due 
to Extraordinary Market Volatility) to permit FINRA to halt over-the-
counter (``OTC'') trading of NMS stocks \3\ if other major U.S. 
securities markets initiate market-wide trading halts in response to 
their rules or extraordinary market conditions or if otherwise directed 
by the SEC.\4\ This proposed rule change was designed to further the 
goal of coordinated self-regulatory organization (``SRO'') action to 
address potentially destabilizing market volatility, consistent with 
the circuit breaker trading halt authority of the exchanges.
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    \3\ NMS stock means any NMS security other than an option. See 
SEC Rule 600 of Regulation NMS.
    \4\ See Securities Exchange Act Release No. 58753 (October 8, 
2008), 73 FR 61177 (October 15, 2008) (Notice of Filing and 
Immediate Effectiveness of File No. SR-FINRA-2008-048).
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    On May 18, 2010, several national securities exchanges filed new 
rules with the Commission to provide the exchanges with authority to 
issue trading pauses for individual securities if the price of such 
security moves 10% or more from a sale in a preceding five-minute 
period. These changes would provide uniform market-wide trading pause 
standards for individual securities in the S&P 500[reg] Index that 
experience a rapid price movement. Consistent with the exchanges' 
proposals and in consultation with the staff of the Commission, FINRA 
is proposing to amend FINRA Rule 6121 to add new Supplementary Material 
.01 to provide that if a primary listing market has issued an 
individual stock trading pause under its rules, FINRA will halt trading 
otherwise than on an exchange 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 or the primary listing market has 
issued notice that it cannot resume trading for a reason other than a 
significant imbalance, FINRA may permit the resumption of trading 
otherwise than on an exchange if trading has commenced on at least one 
other national securities exchange.

[[Page 28842]]

Consistent with the exchanges, FINRA is proposing that this rule be 
implemented as a pilot set to end on December 10, 2010, so that the 
markets may assess the effect of the new rules on the markets. During 
this pilot period, the rule would be in effect only with respect to 
securities included in the S&P 500[supreg] Index.
    FINRA has requested that the Commission approve the proposed rule 
change on an accelerated basis, so that it may become operative on June 
7, 2010, and fully rolled out across all eligible securities by June 
14, 2010.
2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(6) of the Act,\5\ which requires, among 
other things, that FINRA rules must be designed to prevent fraudulent 
and manipulative acts and practices, to promote just and equitable 
principles of trade and, in general, to protect investors and the 
public interest. FINRA believes that the proposed rule change is 
consistent with the trading pause rules of other SROs and will promote 
the goal of investor protection by further providing for a coordinated 
means to address potentially destabilizing market volatility.
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    \5\ 15 U.S.C. 78o-3(b)(6).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    FINRA 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.

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 such proposed rule change, or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.\6\
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    \6\ The Commission notes that the exchange has requested 
accelerated approval of the filing.
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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-FINRA-2010-025 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-FINRA-2010-025. This 
file number should be included on the subject line if e-mail is used. 
To help the Commission process and review your comments more 
efficiently, please use only one method. The Commission will post all 
comments on the Commission's Internet Web site (http://www.sec.gov/
rules/sro.shtml). Copies of the submission, all subsequent amendments, 
all written statements with respect to the proposed rule change that 
are filed with the Commission, and all written communications relating 
to the proposed rule change between the Commission and any person, 
other than those that may be withheld from the public in accordance 
with the provisions of 5 U.S.C. 552, will be available for Web site 
viewing and printing in the Commission's Public Reference Room, 100 F 
Street, NE., Washington, DC 20549, on official business days between 
the hours of 10 a.m. and 3 p.m. Copies of such filing also will be 
available for inspection and copying at the principal office of FINRA. 
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-FINRA-2010-025 
and should be submitted on or before June 3, 2010.\7\
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    \7\ The Commission believes that a 10-day comment period is 
reasonable, given the urgency of the matter. It will provide 
adequate time for comment.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-12426 Filed 5-21-10; 8:45 am]
BILLING CODE 8010-01-P