
[Federal Register Volume 76, Number 85 (Tuesday, May 3, 2011)]
[Notices]
[Pages 24945-24947]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-10656]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-64350; File No. SR-NYSEAmex-2011-29]


Self-Regulatory Organizations; NYSE Amex LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Amending NYSE Amex 
Equities Rule 440B (Short Sales) To Modify the Exchange's Procedures 
for Early Termination of the Short Sale Price Test Restrictions of Rule 
201 of Regulation SHO Based on a Triggering Transaction That Another 
Exchange or a Self-Regulatory Organization Has Determined Was a Clearly 
Erroneous Execution

April 27, 2011.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that on April 25, 2011, NYSE Amex LLC (the ``Exchange'' or ``NYSE 
Amex'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I and II 
below, which Items have been substantially prepared by the self-

[[Page 24946]]

regulatory organization. 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\ 15 U.S.C. 78a.
    \3\ 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 NYSE Amex Equities Rule 440B (Short 
Sales) to modify the Exchange's procedures for early termination of the 
short sale price test restrictions of Rule 201 of Regulation SHO 
(``Rule 201'') \4\ under the Act based on a triggering transaction that 
another exchange or a self-regulatory organization (``SRO'') has 
determined was a clearly erroneous execution pursuant to the rules of 
that exchange or SRO. The text of the proposed rule change is available 
at the Exchange, the Commission's Public Reference Room, and http://www.nyse.com.
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    \4\ 17 CFR 242.201.
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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 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    On February 26, 2010, the Commission adopted amendments to Rule 
201.\5\ In order to implement the provisions of revised Rule 201, the 
Exchange amended NYSE Amex Equities Rule 440B (Short Sales) to (1) 
establish procedures for the Exchange, as a listing market, to 
determine that the short sale price test restrictions of Rule 201 have 
been triggered for a covered security, (2) establish the protocols for 
the handling of short sale orders by the Exchange, as a trading center, 
in the event the short sale price test restrictions of Rule 201 are 
triggered, including establishing what types of short sale orders will 
be re-priced to achieve a Permitted Price (as defined and calculated in 
NYSE Amex Equities Rule 440B(e)), in accordance with Rule 201, during a 
period when the short sale price test restrictions of Rule 201 are in 
effect (``Short Sale Period''), (3) establish the Exchange's procedures 
regarding the execution and display of permissible orders during a 
Short Sale Period, and the execution and display of orders marked 
``short exempt'' during such a period, (4) establish the Exchange's 
procedures regarding the permissible execution price of short sale 
orders in single-priced opening, re-opening and closing transactions 
during a Short Sale Period, and (5) provide that, during a Short Sale 
Period, Exchange systems will not execute or display a short sale order 
with respect to that security at a price that is less than or equal to 
the current national best bid, except as otherwise provided by NYSE 
Amex Equities Rule 440B and consistent with Rule 201.\6\
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    \5\ See Securities Exchange Act Release No. 61595 (February 26, 
2010), 75 FR 11232 (March 10, 2010) (File No. S7-08-09; Amendments 
to Regulation SHO) (``Rule 201 Adopting Release''). In the Rule 201 
Adopting Release, the Commission also adopted amendments to Rule 
200(g) of Regulation SHO to include a ``short exempt'' marking 
requirement. 17 CFR 242.200(g).
    \6\ See Securities Exchange Act Release No. 63974 (February 25, 
2010), 76 FR 11198 (March 4, 2010) (SR-NYSEAmex-2011-09).
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    Under NYSE Amex Equities Rule 440B(c), when the Exchange is the 
listing market for a covered security, Exchange systems will determine 
whether the short sale price test restrictions of Rule 201 have been 
triggered (i.e., that a covered security has experienced a decrease in 
price of 10% or more from the security's closing price as of the end of 
regular trading hours on the prior day) and will notify the single plan 
processor responsible for consolidation of information for the covered 
security pursuant to Rule 603(b) of Regulation NMS.\7\ Once the short 
sale price test restrictions of Rule 201 are triggered by the listing 
market, those restrictions will remain in effect until the close of 
trading on the next trading day.\8\
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    \7\ See 17 CFR 242.201(b)(3); 17 CFR 242.603(b). See also Rule 
201(a)(6) of Regulation SHO, which defines the term ``plan 
processor'' to have the same meaning as in Rule 600(b)(55) of 
Regulation NMS. 17 CFR 242.600(b)(55). The single plan processors 
are ``exclusive processors'' as defined under Section 3(a)(22) of 
the Act. See 15 U.S.C. 78c(a)(22).
    \8\ The short sale price test restrictions will remain in effect 
at all times when quotation information and the national best bid is 
collected, processed and disseminated pursuant to a national market 
system plan. This may extend beyond regular trading hours. Division 
of Trading & Markets: Responses to Frequently Asked Questions 
Concerning Rule 201 of Regulation SHO, at Q&A 2.1.
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    If, however, the Exchange determines that the short sale price test 
for a covered security was triggered because of a clearly erroneous 
execution on the Exchange,\9\ pursuant to NYSE Amex Equities Rule 
440B(d)(1), the Exchange may lift the short sale price test 
restrictions before the Short Sale Period ends for a security for which 
the Exchange is the listing market or, for a security listed on another 
market, notify the other market of the Exchange's determination that 
the triggering transaction was a clearly erroneous execution.
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    \9\ Determination of a ``clearly erroneous'' execution will be 
made in accordance with NYSE Amex Equities Rule 128.
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    For securities for which the Exchange is the listing market, 
Exchange Rule 440B currently addresses only clearly erroneous 
triggering transactions deemed to be clearly erroneous executions under 
the Exchange's rules, and does not address situations where another 
exchange or a SRO determines, under its respective rules, that a 
triggering transaction was a clearly erroneous execution. To address 
this scenario, the Exchange proposes to amend NYSE Amex Equities Rule 
440B(d)(1) to provide that the Exchange may also lift the short sale 
price test restrictions before the Short Sale Period ends, for covered 
securities for which the Exchange is the listing market, if the 
Exchange has been informed by another exchange or a SRO that a 
transaction in the covered security that occurred at the Trigger Price 
\10\ was a clearly erroneous execution, as determined by that exchange 
or SRO under its rules.\11\
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    \10\ The term ``Trigger Price'' is used in NYSE Amex Equities 
Rule 440B to refer to a decrease of 10% or more in a security's 
price from the security's closing price on the listing market as of 
the end of regular trading hours on the prior day. Under NYSE Amex 
Equities Rule 440B(c), the short sale price test restrictions of 
Rule 201 are triggered if a transaction in a covered security occurs 
at a Trigger Price.
    \11\ The Exchange will only lift the short sale price test 
restrictions before the Short Sale Period ends under these 
circumstances when informed by another exchange or a SRO that a 
triggering transaction has been determined to be a clearly erroneous 
execution under the rules of the exchange or SRO, consistent with 
the authority of that exchange or SRO for making such 
determinations.
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\12\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\13\ in particular, in that it is designed to, among 
other things, 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. The proposal is designed to 
refine the Exchange's written policies and procedures reasonably 
designed to

[[Page 24947]]

prevent the execution or display of a short sale order of a covered 
security in violation of the short sale price test restrictions 
established in Rule 201. To that end, the proposed rule change expands 
the ability of the Exchange, as a listing market, to lift short sale 
price test restrictions to include situations where another exchange or 
a SRO has determined that a triggering transaction was a clearly 
erroneous execution under the rules of that exchange or SRO.
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    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(5).
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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 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

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \14\ and Rule 19b-4(f)(6) thereunder.\15\ 
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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    \14\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \15\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) \16\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\17\ 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 immediately upon filing.
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    \16\ 17 CFR 240.19b-4(f)(6).
    \17\ 17 CFR 240.19b-4(f)(6)(iii).
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    The Commission has considered the Exchange's request to waive the 
30-day operative delay, and hereby grants the request. The Commission 
believes that waiving the 30-day operative delay is consistent with the 
protection of investors and the public interest, as it will permit the 
Exchange to lift Rule 201's short sale price test restrictions, in a 
covered security for which the Exchange is the listing market, when 
such restrictions were triggered by a transaction that another exchange 
or a SRO has determined to be a clearly erroneous execution, pursuant 
to the rules of that exchange or SRO.\18\ For this reason, the 
Commission designates the proposed rule change to be operative upon 
filing.
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    \18\ For the purposes only of waiving the 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 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 e-mail to rule-comments@sec.gov. Please include 
File Number SR-NYSEAmex-2011-29 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-2011-29. 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 website 
viewing and printing in the Commission's Public Reference Room, 100 F 
Street, NE., Washington, DC 20549-1090. Copies of the filing will also 
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-
NYSEAmex-2011-29 and should be submitted on or before May 24, 2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
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    \19\ 17 CFR 200.30-3(a)(12).
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Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-10656 Filed 5-2-11; 8:45 am]
BILLING CODE 8011-01-P


