
[Federal Register Volume 76, Number 157 (Monday, August 15, 2011)]
[Notices]
[Pages 50505-50506]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-20635]



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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-65064; File No. SR-NYSE-2011-41]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Amending NYSE Rule 128, Clearly Erroneous Executions, To Extend the 
Effective Date of the Pilot Until January 31, 2012

August 9, 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 August 5, 2011, New York Stock Exchange LLC (``NYSE'' or 
the ``Exchange'') 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 prepared by the self-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 Rule 128, which governs clearly 
erroneous executions, to extend the effective date of the pilot by 
which portions of such Rule operate until January 31, 2012. The pilot 
is currently scheduled to expire on August 11, 2011. 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend NYSE Rule 128, which governs clearly 
erroneous executions, to extend the effective date of the pilot by 
which portions of such Rule operate, until January 31, 2012. The pilot 
is currently scheduled to expire on August 11, 2011.\4\
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    \4\ See Securities Exchange Act Release No. 62886 (September 10, 
2010), 75 FR 56613 (September 16, 2010) (SR-NYSE-2010-47). See also 
Securities Exchange Act Release Nos. 63479 (December 9, 2010), 75 FR 
78274 (December 15, 2010) (SR-NYSE-2010-80) and 64232 (April 7, 
2011), 76 FR 20735 (April 13, 2011) (SR-NYSE-2011-17).
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    On September 10, 2010, the Commission approved, on a pilot basis, 
market-wide amendments to exchanges' rules for clearly erroneous 
executions to set forth clearer standards and curtail discretion with 
respect to breaking erroneous trades. In connection with this pilot 
initiative, the Exchange amended NYSE Rule 128(c), (e)(2), (f), and 
(g). The amendments provide for uniform treatment of clearly erroneous 
execution reviews (1) in Multi-Stock Events \5\ involving twenty or 
more securities, and (2) in the event transactions occur that result in 
the issuance of an individual security trading pause by the primary 
market and subsequent transactions that occur before the trading pause 
is in effect on the Exchange.\6\ The amendments also eliminated appeals 
of certain rulings made in conjunction with other exchanges with 
respect to clearly erroneous transactions and limited the Exchange's 
discretion to deviate from Numerical Guidelines set forth in the Rule 
in the event of system disruptions or malfunctions.
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    \5\ Terms not defined herein are defined in NYSE Rule 128.
    \6\ Separately, the Exchange has proposed [sic] extend the 
effective date of the trading pause pilot under NYSE Rule 80C, which 
requires to [sic] the Exchange to pause trading in an individual 
security listed on the Exchange if the price moves by a specified 
percentage as compared to prices of that security in the preceding 
five-minute period during a trading day. See SR-NYSE-2011-40.
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    If the pilot were not extended, the prior versions of paragraphs 
(c), (e)(2), (f), and (g) of Rule 128 would be in effect, and the NYSE 
would have different rules than other exchanges and greater discretion 
in connection with breaking clearly erroneous transactions. The 
Exchange proposes to extend the pilot amendments to NYSE Rule 128 until 
January 31, 2012 in order to maintain uniform rules across markets and 
allow the pilot to continue to operate without interruption during the 
same period that the Rule 80C trading pause rule pilot is also in 
effect. Extension of the pilot would permit the Exchange, other 
national securities exchanges and the Commission to further assess the 
effect of the pilot on the marketplace, including whether additional 
measures should be added, whether the parameters of the rule should be 
modified or whether other initiatives should be adopted in lieu of the 
current pilot.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) \7\ of the 
Act, 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, 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. More specifically, the NYSE believes that the 
extension of the pilot would help assure that the determination of 
whether a clearly erroneous trade has occurred will be based on clear 
and objective criteria, and that the resolution of the incident will 
occur promptly through a transparent process. The proposed rule change 
would also help assure consistent results in handling erroneous trades 
across the U.S. markets, thus furthering fair and orderly markets, the 
protection of investors and the public interest.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 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

    Because the foregoing proposed rule change does not: (i) 
Significantly affect

[[Page 50506]]

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, it has become effective pursuant to Section 
19(b)(3)(A) of the Act \9\ and Rule 19b-4(f)(6)(iii) thereunder.\10\ 
The Exchange 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 will allow the pilot program to continue 
uninterrupted and help ensure uniformity among the national securities 
exchanges and FINRA with respect to the treatment of clearly erroneous 
transactions.\11\ Accordingly, the Commission waives the 30-day 
operative delay requirement and designates the proposed rule change as 
operative upon filing with the Commission.
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-
4(f)(6)(iii) requires that a self-regulatory organization 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 filing of the 
proposed rule change, or such shorter time as designated by the 
Commission. The Commission notes that the Exchange has satisfied 
this requirement.
    \11\ 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).
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    At any time within 60 days of the filing of the 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-NYSE-2011-41 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-NYSE-2011-41. 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. 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-NYSE-2011-41 and should be 
submitted on or before September 6, 2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-20635 Filed 8-12-11; 8:45 am]
BILLING CODE 8011-01-P


