Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change That Constitutes a Stated Interpretation With Respect to the Meaning, Administration, and Enforcement of Rule 46, 61360-61361 [2014-24228]
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[Federal Register Volume 79, Number 197 (Friday, October 10, 2014)] [Notices] [Pages 61360-61361] From the Federal Register Online via the Government Printing Office [www.gpo.gov] [FR Doc No: 2014-24228] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-73304; File No. SR-NYSE-2014-54] Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change That Constitutes a Stated Interpretation With Respect to the Meaning, Administration, and Enforcement of Rule 46 October 6, 2014. 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 October 2, 2014, 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, II, and III 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. --------------------------------------------------------------------------- \1\ 15 U.S.C.78s(b)(1). \2\ 15 U.S.C. 78a. \3\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of the Substance of the Proposed Rule Change The Exchange proposes a rule change that constitutes a stated interpretation with respect to the meaning, administration, and enforcement of Rule 46. The Exchange is not proposing any changes to the text of the current version of Rule 46. The proposed rule change is available on the Exchange's Web site at www.nyse.com, at the principal office of the Exchange, 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, 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 New York Stock Exchange LLC (``NYSE'' or the ``Exchange'') proposes a rule change that constitutes a stated interpretation with respect to the meaning, administration, and enforcement of Rule 46 in connection with the transfer of qualified Intercontinental Exchange, Inc. (``ICE'') staff Floor Governors to NYSE Regulation, Inc. (``NYSE Regulation''). Rule 46 permits the Exchange to appoint active NYSE members \4\ as Floor Officials.\5\ Rule 46 also permits the Exchange to appoint ``qualified'' ICE employees to act as Floor Governors, one of the more senior types of Floor Officials.\6\ Supplementary Material .10 defines ``qualified'' employees as ``employees of ICE or any of its subsidiaries, excluding employees of NYSE Regulation, Inc., who shall have satisfied any applicable testing or qualification required by the NYSE for all Floor Governors.'' --------------------------------------------------------------------------- \4\ Rule 2(a) states that the term ``member,'' when referring to a natural person, means a natural person associated with a member organization who has been approved by the Exchange and designated by such member organization to effect transactions on the Exchange trading Floor or any facility thereof. \5\ Floor Officials are delegated certain authority from the Board of Directors of the Exchange to supervise and regulate active openings and unusual situations that arise in connection with the making of bids, offers or transactions on the trading Floor, and to review and approve certain trading actions, such as trades to be effected at wide variations in price and delayed openings and trading halts. \6\ Pursuant to Rules 46 and 46A, Floor Governors are one of several ranks of the broader category of Floor Officials, including, in order of increasing seniority, Floor Officials, Senior Floor Officials, Executive Floor Officials, Floor Governors and Executive Floor Governors. See Securities Exchange Act Release No. 57627 (April 4, 2008), 73 FR 19919 (April 11, 2008) (SR-NYSE-2008-19). --------------------------------------------------------------------------- The prohibition on appointing NYSE Regulation employees to act as Floor Governors was put in place when the ``qualified Exchange employee'' category of Floor Official was adopted in 2008.\7\ The prohibition was necessary to avoid potential conflicts of interest insofar as the process for qualifying Floor Officials, including Floor Governors, was performed by NYSE Regulation.\8\ However, while Rule 46 prohibits appointment of NYSE Regulation employees to act as Floor Governors, the Exchange believes that the Rule does not prohibit already qualified Floor Governors from becoming NYSE Regulation employees. The hiring by NYSE Regulation of ICE employees or members who are already [[Page 61361]] qualified to act as Floor Governors would not involve NYSE Regulation in qualifying those individuals to act as Floor Governors under Rule 46 and would therefore not give rise to the real or apparent conflict of interest the prohibition was intended to avoid. --------------------------------------------------------------------------- \7\ See Securities Exchange Act Release No. 34-57627 (April 4, 2008), 73 FR 19919 (April 11, 2008) (SR-NYSE-2007-2). \8\ NYSE Regulation examined the fitness of prospective Floor Officials and administered a mandatory education program, which all candidates for Floor Official, including Floor Governor, had to complete. NYSE Regulation also administered a qualifying examination. See Securities Exchange Act Release No. 34-57627 (April 4, 2008), 73 FR 19919 (April 11, 2008) (SR-NYSE-2007-2). On June 14, 2010, the Exchange, NYSE Regulation and FINRA [sic] retained the Financial Industry Regulatory Authority (``FINRA'') pursuant to a Regulatory Services Agreement (``RSA'') to perform the market surveillance, enforcement and other miscellaneous functions that up to that point had been performed by NYSE Regulation, including all education and testing-related regulatory services on behalf of NYSE Regulation, including the Floor Official mandatory education program and qualification testing. See Securities Exchange Act Release No. 62355 (June 22, 2010), 75 FR 36729 (June 28, 2010) (SR-NYSE-2010- 46). --------------------------------------------------------------------------- The Exchange believes that the proposed interpretation would facilitate the contemplated transfer of existing ICE staff Floor Governors to NYSE Regulation. The individuals that would transfer to NYSE Regulation are experienced former Floor members who served as senior-level Floor Officials before becoming employees of ICE and are already qualified and have been appointed to act as staff Floor Governors. Because NYSE Regulation is not proposing to qualify additional staff not already approved as Floor Governors, the Exchange believes there would be no violation of Rule 46. In addition, the interpretation does not in any way affect the role of Floor Officials or alter the safeguards in place to ensure that staff Floor Governors are knowledgeable and able to effectively intervene when needed on the Exchange trading Floor.\9\ Finally, NYSE Regulation does not propose to seek to qualify existing NYSE Regulation employees as staff Floor Governors. --------------------------------------------------------------------------- \9\ See Securities Exchange Act Release No. 34-57627 (April 4, 2008), 73 FR 19919 (April 11, 2008) (SR-NYSE-2007-2). These safeguards include, among other things, that qualified Exchange employees, like qualified members, need to be appointed by the Exchange's chairman in consultation with the Executive Floor Governors and NYSE Regulation Board of Directors and approved by the Board of Directors. --------------------------------------------------------------------------- 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act,\10\ in general, and furthers the objectives of Section 6(b)(5) of the Act,\11\ in particular, because it is designed to prevent fraudulent and manipulative acts and practices, promote just and equitable principles of trade, remove impediments to and perfect the mechanism of a free and open market and a national market system, and protect investors and the public interest. The Exchange believes that the proposed stated interpretation helps prevent fraudulent and manipulative acts and practices by continuing to require high standards for qualified Exchange employees to act as Floor Governors in addition to members. Similarly, the proposed stated interpretation promotes just and equitable principles of trade and removes impediments to and perfects the mechanism of a free and open market by ensuring that qualified Exchange employees are knowledgeable and able to effectively intervene on the Exchange trading Floor as needed. For the same reasons, the proposal is also designed to protect investors as well as the public interest. --------------------------------------------------------------------------- \10\ 15 U.S.C. 78f(b). \11\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- 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. The proposed rule change is intended to effect a change that constitutes a stated policy, practice or interpretation with respect to the meaning, administration, or enforcement of an existing rule and therefore would not impose any burden on competition. 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 foregoing rule change has become effective pursuant to Section 19(b)(3)(A) \12\ of the Act and Rule 19b-4(f)(1) \13\ thereunder. The proposed rule change effects a change that constitutes a stated policy, practice or interpretation with respect to the meaning, administration, or enforcement of an existing rule. --------------------------------------------------------------------------- \12\ 15 U.S.C. 78s(b)(3)(A). \13\ 17 CFR 240.19b-4(f)(6). --------------------------------------------------------------------------- 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 CommentsUse the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or Send an email to rule-comments@sec.gov. Please include File Number SR-NYSE-2014-54 on the subject line. Paper Comments Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-NYSE-2014-54. 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 (https://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 offices 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-NYSE-2014-54, and should be submitted on or before October 31, 2014. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\14\ Kevin M. O'Neill, Deputy Secretary. --------------------------------------------------------------------------- \14\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- [FR Doc. 2014-24228 Filed 10-9-14; 8:45 am] BILLING CODE 8011-01-P
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