Document ID: SEC-2013-0307-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Financial Industry Regulatory Authority, Inc.
Posted Date: 2013-02-12T05:00Z

[Federal Register Volume 78, Number 29 (Tuesday, February 12, 2013)]
[Notices]
[Pages 9968-9969]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-03189]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68855; File No. SR-FINRA-2013-010]

Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of 
Proposed Rule Change To Extend the Individual Stock Trading Pause Pilot 
Program

February 6, 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 February 1, 2013, Financial Industry Regulatory Authority, Inc. 
(``FINRA'') 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 FINRA. FINRA 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C.78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 17 CFR 240.19b-4(f)(b).
---------------------------------------------------------------------------

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 extend the effective date of the 
pilot, which is currently scheduled to expire on February 4, 2013, 
until the earlier of the initial date of operations of the Regulation 
NMS Plan to Address Extraordinary Market Volatility or February 4, 
2014.
    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
    FINRA proposes to amend FINRA Rule 6121.01 (Trading Pauses), which 
provides for trading pauses in individual securities due to 
extraordinary market volatility, to extend the effective date of the 
pilot by which such rule operates from the current scheduled expiration 
date of February 4, 2013,\4\ until the earlier of the initial date of 
operations of the Regulation NMS Plan to Address Extraordinary Market 
Volatility \5\ or February 4, 2014. The pilot will continue to operate 
as to individual securities until such security is subject to the 
Regulation NMS Plan to Address Extraordinary Market Volatility.
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 67578 (August 2, 
2012), 77 FR 47469 (August 8, 2012) (Notice of Filing and Immediate 
Effectiveness of File No. SR-FINRA-2012-037).
    \5\ See Securities Exchange Act Release No. 67091 (May 31, 
2012), 77 FR 33498 (June 6, 2012) (File No. 4-631) (Order Approving, 
on a Pilot Basis, the National Market System Plan To Address 
Extraordinary Market Volatility).
---------------------------------------------------------------------------

    FINRA Rule 6121.01 provides 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. The pilot was 
developed and implemented as a market-wide initiative by FINRA and 
other self-regulatory organizations (``SROs'') in consultation with the 
Commission staff and is currently applicable to all NMS stocks (other 
than rights and warrants) and specified exchange-traded products.\6\
---------------------------------------------------------------------------

    \6\ See Securities Exchange Act Release No. 65819 (November 23, 
2011), 76 FR 74105 (November 30, 2011) (Notice of Filing and 
Immediate Effectiveness of File No. SR-FINRA-2011-068).
---------------------------------------------------------------------------

    The extension proposed herein would allow the pilot to continue to 
operate without interruption until implementation of the Regulation NMS 
Plan to Address Extraordinary Market Volatility. The Regulation NMS 
Plan to Address Extraordinary Market Volatility will not begin initial 
operations on February 4, 2013 as previously planned, but has been 
delayed until April 8, 2013.\7\ If the Regulation NMS Plan to Address 
Extraordinary Market Volatility has an initial date of operations 
before February 4, 2014, the trading pause pilot would expire at that 
time.
---------------------------------------------------------------------------

    \7\ See Letter from Janet McGinness, EVP & Corporate Secretary, 
General Counsel, NYSE Markets, to Elizabeth M. Murphy, Secretary, 
SEC dated January 17, 2013.
---------------------------------------------------------------------------

    FINRA has filed the proposed rule change for immediate 
effectiveness. The effective date of this proposed rule change will be 
the date of filing.
2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(6) of the Act,\8\ 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 meets 
these requirements in that it promotes uniformity across markets 
concerning decisions to pause trading in a security when there are 
significant price movements.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78o-3(b)(6).
---------------------------------------------------------------------------

    Additionally, extension of the pilot until the earlier of the 
initial date of operations of the Regulation NMS Plan to Address 
Extraordinary Market Volatility or February 4, 2014 would allow the 
pilot to continue to operate without interruption while FINRA, the 
other SROs and the Commission further assess the effect of the pilot on 
the marketplace or whether other initiatives should be adopted in lieu 
of the current pilot, which contributes to the protection of investors 
and the public interest.

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

[[Page 9969]]

of the purposes of the Act. The proposed changes are being made to 
extend the operation of the trading pause pilot until the earlier of 
the initial date of operations of the Regulation NMS Plan to Address 
Extraordinary Market Volatility or February 4, 2014, and would allow 
the pilot to continue to operate without interruption until 
implementation of the Regulation NMS Plan to Address Extraordinary 
Market Volatility, which contributes to the protection of investors and 
the public interest. Other SROs are subject to the same trading pause 
requirements specified in the Regulation NMS Plan to Address 
Extraordinary Market Volatility. Thus, the proposed rule change will 
not impose any burden on competition while providing trading pause 
requirements specified in the Regulation NMS Plan to Address 
Extraordinary Market Volatility.

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

    FINRA has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \9\ and Rule 19b-4(f)(6) thereunder.\10\ 
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.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \10\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires FINRA to give the Commission written notice of FINRA'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. FINRA 
has satisfied this requirement.
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) \11\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\12\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. FINRA has asked the 
Commission to waive the 30-day operative delay so that the proposal may 
become operative immediately upon filing. The Commission believes that 
waiving the 30-day operative delay is consistent with the protection of 
investors and the public interest because such waiver would allow the 
pilot program to continue uninterrupted. Accordingly, the Commission 
hereby grants FINRA's request and designates the proposal operative 
upon filing. \13\
---------------------------------------------------------------------------

    \11\ 17 CFR 240.19b-4(f)(6).
    \12\ 17 CFR 240.19b-4(f)(6)(iii).
    \13\ For 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).
---------------------------------------------------------------------------

    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-FINRA-2013-010 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-2013-010. 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 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 publicly available. All 
submissions should refer to File Number SR-FINRA-2013-010 and should be 
submitted on or before March 5, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
---------------------------------------------------------------------------

    \14\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-03189 Filed 2-11-13; 8:45 am]
BILLING CODE 8011-01-P