Document ID: SEC-2011-0676-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Amex LLC
Posted Date: 2011-05-12T04:00Z

[Federal Register Volume 76, Number 92 (Thursday, May 12, 2011)]
[Notices]
[Pages 27708-27710]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-11612]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-64421; File No. SR-NYSEAmex-2011-32]

Self-Regulatory Organizations; NYSE Amex LLC; Notice of Filing of 
Proposed Rule Change Amending Rule 80C--NYSE Amex Equities To Include 
Additional Securities in the Pilot by Which Such Rule Operates and 
Amending Rule 104--NYSE Amex Equities To Simplify Certain Aspects of 
the Text While Also Conforming Certain of the Percentages Thereunder to 
the Proposed Changes to Rule 80C

May 6, 2011.
    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 4, 2011, NYSE Amex LLC (``NYSE Amex'' or the ``Exchange'') filed 
with the Securities and Exchange Commission (``SEC'' or ``Commission'') 
the proposed rule change as described in Items I and II below, which 
Items have been prepared by NYSE Amex. 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 proposes to amend Rule 80C--NYSE Amex Equities to 
include additional securities in the pilot by which such rule operates 
and amend Rule 104--NYSE Amex Equities to simplify certain aspects of 
the text while also conforming certain of the percentages thereunder to 
the proposed changes to Rule 80C. The text of the proposed rule change 
is available at the Exchange, the Commission's Public Reference Room, 
and http://www.nyse.com.

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

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

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

1. Purpose
    The Exchange proposes to amend Rule 80C to include additional 
securities in the pilot by which such rule operates and amend Rule 104 
to simplify certain aspects of the text while also conforming certain 
of the percentages thereunder to the proposed changes to Rule 80C.
    The Commission approved Rule 80C on a pilot basis on June 10, 2010 
to provide for trading pauses in individual securities due to 
extraordinary market volatility (``Trading Pause'') in all securities 
included within the S&P 500[supreg] Index (``S&P 500'') (``Trading 
Pause Pilot'' or ``Pilot'').\3\ The Exchange noted in its

[[Page 27709]]

filing to adopt Rule 80C that during the Pilot period it would continue 
to assess whether additional securities need to be added and whether 
the parameters of Rule 80C would need to be modified to accommodate 
trading characteristics of different securities. The Exchange 
subsequently received approval to add to the Pilot the securities 
included in the Russell 1000[supreg]> Index (``Russell 1000'') as well 
as the Invesco PowerShares QQQ exchange-traded fund (symbol: QQQQ).\4\
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    \3\ The Commission approved the Trading Pause Pilot for all 
equities exchanges and FINRA. See Securities Exchange Act Release 
No. 62252 (June 10, 2010), 75 FR 34186 (June 16, 2010) (File Nos. 
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; and SR-
CBOE-2010-047) and Securities Exchange Act Release No. 62251 (June 
10, 2010), 75 FR 34183 (June 16, 2010) (SR-FINRA-2010-025). The 
Exchange submitted a proposed rule change shortly after the initial 
Commission approval order to clarify the procedures applicable to 
reopening. See Securities Exchange Act Release No. 62883 (June 11, 
2010), 75 FR 34501 (June 17, 2010) (SR-NYSEAmex-2010-56).
    \4\ The Commission approved the addition to the Trading Pause 
Pilot of the securities included in the Russell 1000 and a specified 
list of Exchange Traded Products (``ETPs''), where applicable, for 
all equities exchanges and FINRA. See Securities Exchange Act 
Release No. 62884 (September 10, 2010), 75 FR 56618 (September 16, 
2010) (File Nos. 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; and SR-NSX-2010-08 and Securities Exchange Act 
Release No. 62883 (September 10, 2010), 75 FR 56608 (September 16, 
2010) (SR-FINRA-2010-033). The Exchange submitted a proposed rule 
change shortly after the addition of the Russell 1000 securities and 
QQQQ to extend the operation of the Pilot, which was set to expire 
on December 10, 2010, until April 11, 2011. See Securities Exchange 
Act Release No. 63501 (December 9, 2010), 75 FR 78307 (December 15, 
2010) (SR-NYSEAmex-2010-117). The Pilot is currently set to expire 
on the earlier of August 11, 2011 or the date on which a limit up/
limit down mechanism to address extraordinary market volatility, if 
adopted, applies. See Securities Exchange Act Release No. 64206 
(April 6, 2011), 76 FR 20418 (April 12, 2011) (SR-NYSEAmex-2011-23).
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    The Exchange has continued to assess whether additional securities 
need to be added to the Pilot and whether the parameters of Rule 80C 
need to be modified to accommodate trading characteristics of different 
securities. In consultation with other markets and the staff of the 
Commission, the Exchange proposes to include all NMS stocks within the 
Pilot that are not already included therein, but to apply a wider 
Threshold Move percentage to the newly added securities. Accordingly, 
the Exchange proposes to delete Supplementary Material .10 to Rule 80C, 
as the text therein would no longer be necessary.
    The Exchange proposes that the Threshold Move required to trigger a 
Trading Pause for the proposed new securities be 30% or more for such 
securities priced at $1 or higher and 50% or more for such securities 
priced less than $1.\5\ The Exchange believes that these percentages 
are commensurate with the characteristics shared by the proposed new 
securities within these price ranges and would promote the objectives 
of the Trading Pause Pilot to reduce the negative impacts of 
unanticipated price movements in a security. In particular, the 
proposed additional stocks are those not currently included in the S&P 
500, Russell 1000, or specified ETPs, and therefore are more likely to 
be less liquid securities or securities with lower trading volumes. 
Accordingly, the Exchange believes that broader Threshold Move 
percentages would be appropriate. Similarly, because leveraged ETPs 
trade at a ratio against the associated index, a broader Threshold Move 
percentage would also be appropriate for leveraged ETPs. In addition, 
the Exchange believes that a 50% threshold move is appropriate for 
securities trading under a dollar to reflect that price movements of 
such lower-priced stocks equate to a higher percentage move than a 
similar price change would be for a higher-priced stock.
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    \5\ Under the proposed rule change, the price of a security 
would be based on the closing price on the previous trading day, or, 
if no closing price exists, the last sale reported to the 
Consolidated Tape on the previous trading day.
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    The Exchange proposes to include new subsections 80C(a)(i), (ii) 
and (iii) to reflect the distinction between the applicable Threshold 
Move percentages for current Pilot securities and the proposed new 
securities to be included within the Pilot.\6\ The Exchange is not 
proposing any other changes to the text of Rule 80C or the operation of 
the Pilot, and will continue to assess whether the parameters for 
invoking a Trading Pause continue to be appropriate and whether the 
parameters should be modified.
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    \6\ The Exchange is not proposing a change to the Threshold Move 
percentage applicable to securities currently included within the 
current Pilot. However, the changes proposed herein would require 
that certain rule text pertaining to the Threshold Move for the 
existing Pilot securities be reorganized within Rule 80C.
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    The proposed changes to the Pilot, if approved, would require that 
the text of Rule 104(a)(1)(B)(iii) and (iv), which pertains to the 
pricing obligations that Designated Market Makers (``DMMs'') are 
required to adhere to, be amended to correct the cross-references 
therein to Rule 80C and the Threshold Move thereunder. Specifically, 
the Exchange proposes to remove any text from Rule 104(a)(1)(B)(iii) 
and (iv) addressing NMS stocks that are not subject to the Pilot 
because no such securities would exist and such text would therefore be 
unnecessary. The Exchange also proposes to simplify Rule 
104(a)(1)(B)(iii) and (iv) by explicitly stating the percentages that 
are applicable thereunder and the times during the trading day when 
Rule 80C is not in effect. The Exchange notes that part of this 
proposed change would be substantive, in that the percentages under 
Rule 104(a)(1)(B)(iii) and (iv) would decrease slightly for the 
proposed new securities priced at $1 or greater. The Exchange believes 
that this proposed substantive change would not have a significant 
impact on DMM pricing obligations and is reasonable because it would 
ensure that the designated quoting percentages in Rule 104(a)(1)(B) are 
within a narrower range than the percentages necessary to trigger a 
Trading Pause.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Securities Exchange Act of 1934 (the ``Act''),\7\ in general, and 
furthers the objectives of Section 6(b)(5),\8\ in particular, in that 
it is designed to prevent fraudulent and manipulative acts and 
practices, to promote just and equitable principles of trade, to foster 
cooperation and coordination with persons engaged in facilitating 
transactions in securities, and to remove impediments to and perfect 
the mechanism of a free and open market and a national market system. 
The proposed rule change also is designed to support the principles of 
Section 11A(a)(1) \9\ of the Act in that it seeks to ensure fair 
competition among brokers and dealers and among exchange markets. The 
Exchange believes that the proposed rule meets these requirements 
because it expands the scope of the Pilot to cover all NMS stocks while 
adjusting the parameters of the rule for different securities in a 
manner that will promote uniformity across markets concerning decisions 
to pause trading in a security when there are significant price 
movements. Additionally, the proposed changes would ensure that the 
designated quoting percentages in Rule 104(a)(1)(B) are within a 
narrower range than the percentages necessary to trigger a Trading 
Pause.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
    \9\ 15 U.S.C. 78k-1(a)(1).
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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

[[Page 27710]]

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 solicited or received with respect to the 
proposed rule change.

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

    Within 45 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 or disapprove such proposed rule change, or
    (B) Institute proceedings to determine whether the proposed rule 
change should be 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 rule-comments@sec.gov. Please include 
File Number SR-NYSEAmex-2011-32 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-NYSEAmex-2011-32. 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 NYSE 
Amex. 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-
NYSEAmex-2011-32 and should be submitted on or before June 2, 2011.
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    \10\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-11612 Filed 5-11-11; 8:45 am]
BILLING CODE 8011-01-P