Skip to Content

Notice

Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by NYSE Arca, Inc. Amending NYSE Arca Equities Rule 7.11 To Set Forth How the Exchange Will Handle Order Flow During a Regulatory Halt for a Security Listed on an Exchange Other Than NYSE Arca

Document Details

Information about this document as published in the Federal Register.

Published Document

This document has been published in the Federal Register. Use the PDF linked in the document sidebar for the official electronic format.

Start Preamble June 23, 2010.

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 June 22, 2010, NYSE Arca, Inc. (the “Exchange” or “NYSE Arca”) 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.

I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change

The Exchange proposes to amend NYSE Arca Equities Rule 7.11 to set forth how the Exchange will handle order flow during a regulatory halt for a security listed on an exchange other than NYSE Arca. 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 Arca Equities Rule 7.11 to revise how the Exchange will handle order flow during a regulatory halt for a security listed on an exchange other than NYSE Arca.

Rule 7.11 was approved by the Commission on June 10, 2010.[4] The Exchange filed to amend Rule 7.11 to add subsection (f) to the Rule, which addresses how orders will be handled when another primary listing market issues a trading pause or a regulatory halt.[5] Pursuant to Rule 7.11(f), upon the receipt of a trading pause or regulatory halt message from another primary listing market, the Exchange will take the following actions: (i) Maintain all resting orders in the Book; (ii) cancel any unexecuted portion of Market Orders and Pegged Orders; (iii) accept and process all cancellations; (iv) accept and route new Market Orders to the Start Printed Page 37867primary market; (v) accept and route PO and PO+ Orders to the primary market; and (vi) reject all other orders until the stock has reopened.

Before the amendment to add section (f) to the Rule, the Exchange accepted all entry and cancellation of orders during a regulatory halt invoked by another market. While the Exchange believes that it is appropriate during a regulatory halt to take the actions set forth in Rule 7.11(f), the Exchange notes that not all regulatory halts have the same basis and there are times when the Exchange believes that trading should continue, notwithstanding whether another market has invoked a regulatory halt. For example, if trading has halted on another market because of an initial public offering, the Exchange believes it should be able to accept order flow during such a halt.

To enable the Exchange to accept order flow during certain regulatory halts, the Exchange proposes to revert back to how it handled order flow during a regulatory halt before it amended Rule 7.11. As proposed, during a regulatory halt, the Exchange will continue to accept all order entry and cancellation messages and will not reject any orders during a regulatory halt. The Exchange therefore proposes to amend Rule 7.11(f) to delete the reference to regulatory halts. The Exchange will continue to follow the procedures set forth in Rule 7.11(f) when another primary listing market invokes a trading pause.

The Exchange also proposes a technical amendment to change the term “Corporation” to “Exchange” in Rule 7.11(d).

2. Statutory Basis

The statutory basis for the proposed rule change is Section 6(b)(5) of the Securities Exchange Act of 1934 (the “Act”),[6] which requires the rules of an exchange to promote just and equitable principles of trade, 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. The proposed rule change also is designed to support the principles of Section 11A(a)(1) [7] of the Act in that it seeks to assure fair competition among brokers and dealers and among exchange markets. The Exchange believes that the proposed rule meets these requirements in that it promotes transparency for how order flow will be handled during a regulatory halt for a security listed on an exchange other than NYSE Arca.

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 [8] and Rule 19b-4(f)(6) thereunder.[9] 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.

A proposed rule change filed under Rule 19b-4(f)(6) [10] normally does not become operative prior to 30 days after the date of the filing. However, pursuant to Rule 19b4(f)(6)(iii),[11] 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. The Commission notes that the Exchange, upon reflection, has decided to revert to its former manner of handling orders during regulatory halts. The proposed rule change does not raise any new substantive issues. For these reasons, the Commission believes that the waiver of the 30-day operative delay is consistent with the protection of investors and the public interest.[12]

At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate 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

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-NYSEARCA-2010-60. 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 copying in the Commission's Public Reference Room. Copies of the filing will also be available for inspection and copying at the NYSE's principal office and on its Internet Web site at http://www.nyse.com. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only Start Printed Page 37868information that you wish to make available publicly. All submissions should refer to File Number SR-NYSEARCA-2010-60 and should be submitted on or before July 21, 2010.

Start Signature

For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.[13]

Florence E. Harmon,

Deputy Secretary.

End Signature End Preamble

Footnotes

4.  See Securities Exchange Act Release No. 62252 (June 10, 2010), 75 FR 34186 (June 16, 2010) (SR-NYSEArca-2010-41).

Back to Citation

5.  See Securities Exchange Act Release No. 62281 (June 11, 2010), 75 FR 34504 (June 17, 2010) (SR-NYSEArca-2010-52).

Back to Citation

8.  15 U.S.C. 78s(b)(3)(A)(iii).

Back to Citation

11.  17 CFR 240.19b-4(f)(6)(iii).

Back to Citation

12.  For purposes only of waiving the 30-day operative delay of this proposal, the Commission has considered the proposed rule's impact on efficiency, competition and capital formation. 15 U.S.C. 78c(f).

Back to Citation

[FR Doc. 2010-15893 Filed 6-29-10; 8:45 am]

BILLING CODE 8010-01-P