Self-Regulatory Organizations; NYSE Alternext U.S. LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Conform Its Rules With Those of the New York Stock Exchange, 73683-73687 [E8-28680]
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Federal Register / Vol. 73, No. 233 / Wednesday, December 3, 2008 / Notices
this filing, or such shorter time as the
Commission may designate, if
consistent with the protection of
investors and the public interest.17
The Exchange has requested that the
Commission waive the 30-day operative
delay, and designate the proposal as
operative as of December 1, 2008. NYSE
Alternext notes that it has previously
announced its intention to relocate its
equities and bonds trading from the 86
Trinity Trading Systems to the NYSE
Alternext Trading Systems and NYSE
Alternext Bonds on December 1, 2008,
and has previously advised the
Commission staff of its intention to
harmonize the rules between NYSE and
NYSE Alternext in order to facilitate
this transition. Moreover, the Exchange
believes that this filing is noncontroversial because it is consistent
with one that was previously submitted
by NYSE for immediate effectiveness.18
The Commission hereby grants the
Exchange’s request 19 and believes that
waiving the 30-day operative delay is
consistent with the protection of
investors and the public interest. The
rule being adopted through this filing is
based on a previously established rule
of NYSE, and does not appear to raise
any novel or significant issues.
Furthermore, waiving the operative
delay will facilitate the Equities
Relocation, which is scheduled to occur
on December 1, 2008. Therefore, the
Commission designates the proposal
operative as of December 1, 2008.
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
jlentini on PROD1PC65 with NOTICES
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–NYSEALTR–2008–11 the
subject line.
17 In addition, Rule 19b–4(f)(6) requires a selfregulatory organization to give the Commission
written notice of its intent to file 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. The
Commission has determined to waive the five-day
pre-filing period in this case.
18 See Securities Exchange Act Release No. 59025
(November 26, 2008) (SR–NYSE–2008–123).
19 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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Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street, NE.,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–NYSEALTR–2008–11. 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 (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 inspection and copying in
the Commission’s Public Reference
Room, on official business days between
the hours of 10 a.m. and 3 p.m. Copies
of the filing also will 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–
NYSEALTR–2008–11 and should be
submitted on or before December 24,
2008.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.20
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E8–28679 Filed 12–2–08; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–59022; File No. SR–
NYSEALTR–2008–10]
Self-Regulatory Organizations; NYSE
Alternext U.S. LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Conform Its Rules
With Those of the New York Stock
Exchange
November 26, 2008.
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
November 26, 2008, NYSE Alternext
U.S. LLC (the ‘‘Exchange’’ or ‘‘NYSE
Alternext’’) 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
certain NYSE Alternext Equities Rules
to conform with amendments to certain
NYSE Rules filed by the New York
Stock Exchange LLC (‘‘NYSE’’), and also
additional technical amendments.
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. The text of the proposed
rule change is available on the
Exchange’s Web site, at the Exchange’s
principal office, and at the
Commission’s Public Reference Room.
1 15
20 17
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CFR 200.30–3(a)(12).
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CFR 240.19b–4.
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A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The purpose of the proposed rule
changes is to amend certain NYSE
Alternext Equities Rules to conform
with amendments to certain NYSE
Rules filed by the NYSE.
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Background
As described more fully in a related
rule filing, NYSE Euronext acquired The
Amex Membership Corporation
(‘‘AMC’’) pursuant to an Agreement and
Plan of Merger, dated January 17, 2008
(the ‘‘Merger’’). In connection with the
Merger, the Exchange’s predecessor, the
American Stock Exchange LLC
(‘‘Amex’’), a subsidiary of AMC, became
a subsidiary of NYSE Euronext called
NYSE Alternext U.S. LLC,3 and will
continue to operate as a national
securities exchange registered under
Section 6 of the Act.4 The effective date
of the Merger was October 1, 2008.
In connection with the Merger, the
Exchange will relocate all equities
trading conducted on the Exchange
legacy trading systems and facilities
located at 86 Trinity Place, New York,
New York (the ‘‘86 Trinity Trading
Systems’’), to trading systems and
facilities located at 11 Wall Street, New
York, New York (the ‘‘Equities
Relocation’’). The Exchange’s equity
trading systems and facilities at 11 Wall
Street (the ‘‘NYSE Alternext Trading
Systems’’) will be operated by the NYSE
on behalf of the Exchange.5
Similarly, the Exchange will relocate
the trading of certain debt securities
currently conducted on the 86 Trinity
Trading Systems to an automated bond
trading system (the ‘‘Bonds Relocation’’)
that will be operated by the NYSE on
behalf of the Exchange (‘‘NYSE
Alternext Bonds’’). The Exchange will
also relocate all options trading
currently conducted on the 86 Trinity
Trading Systems to new facilities of the
Exchange to be located at 11 Wall Street,
which will use a trading system based
on the options trading system used by
NYSE Arca, Inc. (‘‘NYSE Arca’’) (the
‘‘Options Relocation’’).6
3 See Securities Exchange Act Release No. 58673
(September 29, 2008), 73 FR 57707 (October 3,
2008) (SR–NYSE–2008–60 and SR–Amex 2008–62)
(approving the Merger).
4 15 U.S.C. 78f.
5 See Securities Exchange Act Release No. 58705
(October 1, 2008), 73 FR 58995 (October 8, 2008)
(SR–Amex 2008–63) (approving the Equities
Relocation).
6 See Securities Exchange Act Release No. 58833
(October 22, 2008), 73 FR 64642 (October 30, 2008)
(SR–NYSE–2008–106) and Securities Exchange Act
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Post-Merger, all Exchange members
and member organizations that were
authorized to trade on the Exchange
before the Merger will receive trading
permits (referred to as ‘‘86 Trinity
Permits’’) that authorize continued
trading on the 86 Trinity Trading
Systems. Holders of the 86 Trinity
Permits are eligible to apply for NYSE
Alternext equities trading licenses or
options trading permits upon the
Equities or Options Relocation, as
applicable.7 In addition, pursuant to the
Merger, all NYSE Alternext members
and member organizations that apply for
NYSE Alternext equities trading
licenses are automatically waived in as
NYSE members and member
organizations.8 Similarly, all NYSE
members and member organizations are
automatically waived in as NYSE
Alternext members and member
organizations.9
The NYSE Alternext Equities Rules
In order to implement the Equities
and Bonds Relocations, the Exchange
adopted NYSE Rules 1–1004 as the
NYSE Alternext Equities Rules to
govern all equities trading on the NYSE
Alternext Trading Systems and NYSE
Alternext Bonds. Because the NYSE
Alternext Trading Systems and NYSE
Alternext Bonds will be operated by the
NYSE on behalf of the Exchange, the
NYSE Alternext Equities Rules are
substantially identical to the existing
NYSE Rules, subject to such changes as
were necessary to apply the rules to the
Exchange. The NYSE Alternext Equities
Rules are based on the NYSE Rules in
their form as of July 18, 2008. NYSE
Alternext Equities Rule 86, which is the
principal rule governing trading on
NYSE Alternext Bonds, is based on
NYSE Rule 86 in the form it existed as
of October 1, 2008.10
Release No. 58839 (October 23, 2008), 73 FR 64645
(October 30, 2008) (SR–NYSEALTR–2008–03)
(together, approving the Bonds Relocation). The
Exchange will submit a separate rule filing to adopt
a new rule set to govern NYSE Alternext options
trading following the Options Relocation.
7 See Securities Exchange Act Release No. 58706
(October 1, 2008), 73 FR 59019 (October 8, 2008)
(SR–NYSE–2008–70) (describing and approving
membership rule changes related to the Merger);
Securities Exchange Act Release No. 58705 (October
1, 2008), 73 FR 58995 (October 8, 2008) (SR–Amex
2008–63) (approving the Equities Relocation).
8 See NYSE Rules 2.10 and 2.20. NYSE Alternext
members and member organizations will have a sixmonth grace period within which to meet NYSE
and NYSE Alternext Equities membership
requirements. See NYSE Rule 300.10T and NYSE
Alternext Equities Rule 300.10T.
9 See NYSE Alternext Equities Rules 2.10 and .20.
10 See Securities Exchange Act Release No. 58705
(October 1, 2008), 73 FR 58995 (October 8, 2008)
(SR–Amex 2008–63) (approving the Equities
Relocation). See also Securities Exchange Act
Release No. 58833 (October 22, 2008), 73 FR 64642
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Proposed Amendments to NYSE
Alternext Equities Rules
The NYSE Alternext Equities Rules
will become operative as of the date of
the Equities and Bonds Relocations. In
the interim period since the filing and
approval of the Equities Relocation, the
NYSE has filed rule changes to some of
its rules governing trading on its trading
systems that would also impact trading
on the NYSE Alternext Trading Systems
and NYSE Alternext Bonds. The
Exchange therefore proposes to amend
the NYSE Alternext Equities Rules to
conform to these rule changes, subject to
such minor, technical changes as are
necessary to apply the amended rules to
the Exchange. Unless specifically noted,
NYSE Alternext is proposing no
substantive changes in this filing from
the rule text approved for NYSE by the
Commission or adopted pursuant to an
immediately effective filing. The
changes are summarized broadly below:
• Revisions and amendments to
various NYSE Alternext and NYSE
Alternext Equities rules necessary to
implement the ‘‘New Market Model’’
adopted by the NYSE (‘‘NMM’’); 11
• Revision of Rule 98–NYSE
Alternext Equities and amendments to
related rules (including the deletion of
Rule 102–NYSE Alternext Equities)
concerning the structure and operation
of member organization specialist (now
known as ‘‘DMMs’’) units and risk
management; 12
(October 30, 2008) (SR–NYSE–2008–106) and
Securities Exchange Act Release No. 58839 (October
23, 2008), 73 FR 64645 (October 30, 2008) (SR–
NYSEALTR–2008–03) (together, approving the
Bonds Relocation).
11 In adopting what it calls the ‘‘New Market
Model’’, the NYSE proposed a number of changes
to its marketplace, including (i) Providing market
participants with additional abilities to post hidden
liquidity on Exchange systems; (ii) creating a
Designated Market Maker (‘‘DMM’’) and phasing
out the NYSE specialist; and (iii) enhancing the
speed of execution through technological
enhancements and a reduction in message traffic
between NYSE trading systems and its DMMs. See
Securities Exchange Act Release No. 58845 (October
24, 2008), 73 FR 64379 (October 29, 2008) (SR–
NYSE–2008–46) (adopting NMM). See also
Securities Exchange Act Release No. 58971
(November 17, 2008), 73 FR 71070 (November 24,
2008) (SR–NYSE–2008–115) (amendments thereto).
With the exception of the DMM net capital
requirements (addressed separately in this filing),
NYSE Alternext is not proposing any additional
substantive changes in this filing different from the
rule text approved for NYSE by the Commission or
adopted pursuant to an immediately effective filing,
although it is including corresponding technical
rule changes to change references to ‘‘specialists’’
or internal cross-references that were incorrect or
not included in the original NYSE filings (see Rules
2A(c)–, 15(b)–, 70.25–, 92(d)–, 98(c)–, 123(g)–,
123E(f)–, 124(f)–, 325–, 431–, 440G.10– and 900–
(chart of rules)–NYSE Alternext Equities).
12 The NYSE revised the regulatory requirements
under its Rule 98 concerning how member
organizations structure their DMM operations and
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• Revisions to Rules 103A–NYSE
Alternext Equities and 103B–NYSE
Alternext Equities, Non-NYSE Alternext
Equities Rule 476A, and amendments to
related rules (including the deletion of
Rule 106–NYSE Alternext Equities)
concerning the allocation of registered
securities to DMMs; 13
manage their risks, including: (i) Redefining the
persons to whom NYSE Rule 98 would apply; (ii)
allowing DMM operations to be integrated into
better capitalized member organizations; (iii)
permitting a DMM unit to share nontrading-related
services with its parent member organization or
approved persons; and (iv) providing flexibility to
member organizations and their approved persons
in how to conduct risk management of DMM
operations. In addition the NYSE also made
conforming amendments to other NYSE rules that
rely on NYSE Rule 98 exemptions for approved
persons. See Securities Exchange Act Release No.
58328 (August 7, 2008), 73 FR 48260 (August 18,
2008) (SR–NYSE–2008–45).
NYSE Alternext is proposing no substantive
changes in this filing from the rule text approved
for NYSE by the Commission or adopted pursuant
to an immediately effective filing, except to the
extent that proposed Rule 98 (Former)–NYSE
Alternext Equities is based on legacy Amex Rule
193. At the time NYSE Alternext Equities Rules
were initially adopted, the Exchange adopted legacy
Amex Rule 193 in place of NYSE Rules 98 and 98A.
See Securities Exchange Act Release No. 58705
(October 1, 2008), 73 FR 58995 (October 8, 2008)
(SR–Amex 2008–63). Thus, the proposed
amendments to create Rule 98 (Former)–NYSE
Alternext Equities differ in form, though not in
substance, from those proposed to create NYSE
Rule 98 (Former).
13 The NYSE modified its Allocation Policy to (i)
Discontinue the use of the Specialist Performance
Evaluation Questionnaire (‘‘SPEQ’’), (ii) establish a
single quantifiable objective measure to determine
a DMM unit’s eligibility to participate in the
allocation process, and (iii) provide issuers with
more choice in the selection of their DMM unit. As
part of these modifications, the NYSE eliminated its
Allocation Committee as the overseer of the
allocation process and the Allocation Panel from
which the Allocation Committee members were
selected. The NYSE also eliminated its Market
Performance Committee as the entity that
responsible for reallocating securities. See
Securities Exchange Act Release No. 58857 (October
24, 2008), 73 FR 65435 (November 3, 2008) (SR–
NYSE–2008–52). The NYSE filing specified that at
least three DMM units (out of six) shall be
presented for selection by issuers. Because NYSE
Alternext has fewer DMM units (four, instead of
six), NYSE Alternext is proposing to change the
number of DMM units presented to two. If three of
the four firms are not eligible to receive new
allocations under the Allocation rules (e.g., if they
have not complied with the mandatory quoting
requirements for new allocations), then the
remaining eligible firm shall be required to apply
for the allocation.
In addition, the Exchange proposes to modify
Sections IV(A) and VI(F) of Rule 103B–NYSE
Alternext Equities to eliminate cross-references to
other NYSE Rules that are inapplicable to NYSE
Alternext. Specifically, in Section IV(A), the
Exchange removed cross-references to Rule 806.01
of the NYSE Listed Company Manual, which
concerns the reallocation of a security at the issuer’s
request. The Exchange instead proposes to crossreference and add supplementary Rule 103B.10–
NYSE Alternext Equities, which will track NYSE
Listed Company Manual Rule 806.01. The NYSE
Rule was adopted as immediately effective. See
Securities Exchange Act Release No. 57232 (January
30, 2008), 73 FR 6755 (February 5, 2008) (SR–
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• Amendments to various member
firm conduct rules that are ‘‘Common
Rules’’ shared with NYSE and the
Financial Industry Regulatory Authority
(‘‘FINRA’’) to conform with changes
made by FINRA to its versions of these
rules; 14
• Amendments to Rule 48–NYSE
Alternext Equities concerning extremely
volatile market conditions and closing
procedures; 15
• Adoption of Rule 123B.30–NYSE
Alternext Equities to provide for a
standard sponsored access provision for
the Exchange; 16
• Amendments to Rule 123D–NYSE
Alternext Equities regarding the
elimination of the provision governing
sub-penny trading halts; 17
NYSE–2008–08). In Section VI(F) the Exchange
proposes to change the cross-reference to Rule 102
of the NYSE Listed Company Manual to Section 101
of the NYSE Alternext Company Guide.
14 The amendments made by FINRA (and NYSE)
include: (i) Replacing the term ‘‘allied member’’
with the newly defined category of ‘‘principal
executive’’; (ii) repositioning and consolidating all
‘‘Buy-In’’ requirements and procedures (see Rules
283, 285–290–NYSE Alternext Equities) into one
rule (Rule 282–NYSE Alternext Equities); (iii)
moving certain provisions of Common Rules to
other Common Rules; (iv) deleting Common Rules
that are obsolete or no longer applicable; (v)
eliminating certain provisions of Common Rules
that do not have a corresponding NASD equivalent
and therefore are unnecessary; (vi) amendments to
further harmonize certain NYSE and NASD Rules;
(vii) deleting Common Rules that are substantively
duplicative of existing NASD Rules and procedures;
(viii) limiting application of Common Rule 345(a)
to securities lending representatives and
supervisors only; and (ix) making corresponding
technical changes to other rules as needed. See
Securities Exchange Act Release No. 58549
(September 15, 2008), 73 FR 54444 (September 19,
2008) (SR–NYSE–2008–80).
NYSE Alternext is not proposing any substantive
changes in this filing different from the rule text
approved for NYSE by the Commission or adopted
pursuant to an immediately effective filing,
although it is including corresponding technical
changes to other rules not included in the original
FINRA filing since they are not Common Rules
subject to FINRA’s review (see Rules 17, 22, 25, 91,
93, 96, 99 (Former), 104T, 105, 112, 113 (Former),
122–123, 123G, 304–304A, 308–309, 410A, 422,
456–460–NYSE Alternext Equities and Non-NYSE
Alternext Equities Rules 475–476A). In addition,
FINRA did not make corresponding amendments to
NYSE Rules 344 and 350 even though they are
Common Rules. NYSE Alternext has included its
version of these rules in its amendments.
15 The NYSE amended its Rule 48 to provide it
with the ability to suspend certain requirements at
the closing when extremely high market volatility
could negatively affect the ability to ensure a fair
and orderly close. See Securities Exchange Act
Release No. 58743 (October 7, 2008), 73 FR 60742
(October 14, 2008) (SR–NYSE–2008–102).
16 See Securities Exchange Release No. 58429
(August 27, 2008), 73 FR 51676 (September 4, 2008)
(SR–NYSE–2008–71) and Securities Exchange Act
Release No. 58758 (October 8, 2008), 73 FR 62352
(October 20, 2008) (SR–NYSE–2008–100).
17 At the time Regulation NMS was originally
implemented, the NYSE’s trading systems were not
able to accommodate sub-penny executions on
orders routed to better-priced protected quotations
and could not recognize a quote disseminated by
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• Modification of Rule 1000–NYSE
Alternext Equities to change the
Liquidity Replenishment Point (‘‘LRP’’)
values; 18
• Amendments to Rule 431–NYSE
Alternext Equities to codify the portfolio
margin program set forth in paragraph
(g) regarding (i) monitoring concentrated
equity positions and (ii) timing of day
trading margin calls; 19
• Adoption of an operative date of
March 31, 2009, for Rule 92(c)(3)–
Alternext Equities, to correspond with
the operative date of NYSE Rule
92(c)(3); 20 and
• Technical amendments to Rule 17–
NYSE Alternext Equities.21
As noted in footnote 11, NYSE
Alternext is retaining the net capital
requirements it adopted with the NYSE
Alternext Equities Rules (see current
Rule 104.20, .23 and .24–NYSE
Alternext Equities) but it will move
them to new Rules 103.20 and .21–
NYSE Alternext Equities to track the
rule organization adopted by the NYSE.
another market center if such quote had a subpenny component. To prevent its systems from
inadvertently trading through better protected
quotations, the NYSE adopted Rule 123D(3), which
provided that trading would be halted in any
security whose price was about to fall below $1.00
and to route any subsequent orders received for that
security to NYSE Arca, Inc. The NYSE now has the
technical capability to recognize protected
quotations with a sub-penny component in its
round-lot market and to accommodate away market
executions in sub-pennies in compliance with
Regulation NMS and so it removed Rule 123D(3).
See Securities Exchange Act Release No. 58936
(November 13, 2008), 73 FR 69704 (November 19,
2008) (SR–NYSE–2008–117).
18 The NYSE amended its Rule 1000 to double the
current LRP ranges in order to limit the number of
times that an LRP is reached and the total number
of times during the trading day that automatic
execution is suspended as a result of an LRP being
triggered. See Securities Exchange Act Release No.
58629 (September 24, 2008), 73 FR 57183 (October
1, 2008) (SR–NYSE–2008–85).
19 The NYSE amended its Common Rule 431 to
conform with amendments made by FINRA to its
version of the rule. See Securities Exchange Act
Release Nos. 58261 and 58269 (July 30, 2008), 73
FR 46114 and 46116 (August 7, 2008) (SR–NYSE–
2008–65 and –66).
20 In July 2007, in connection with the on-going
harmonization of NYSE Rule 92 with FINRA’s
Manning Rule (NASD Rule 2111 and IM–2110–2),
the NYSE amended Rule 92(c)(3) to require member
firms to submit order execution reports to the
NYSE’s Front End Systemic Capture (‘‘FESC’’)
database when executing riskless principal
transactions. Because the rule change has required
both the NYSE and member firms to make certain
technological changes to their trading and order
management systems, and to provide additional
time for NYSE and FINRA to fully harmonize NYSE
Rule 92 and FINRA’s Manning Rule, the NYSE
proposed delaying the operative date for
implementation of NYSE Rule 92(c)(3) until March
31, 2009. See Securities Exchange Act Release No.
57682 (April 17, 2008), 73 FR 22193 (April 24,
2008) (SR–NYSE–2008–29).
21 See Securities Exchange Act Release No. 58137
(July 10, 2008), 73 FR 41145 (July 17, 2008) (SR–
NYSE–2008–55).
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The Exchange is also adding provisions
in 103.20(a)(i) and (ii) to provide that
any Structured Products that are not
subject to a trading halt pursuant to
Rule 123D(4)–NYSE Alternext Equities
as of the date of the Equities Relocation
will be eligible to be allocated to a DMM
if necessary until the security is halted
and traded on NYSE Arca in accordance
with that rule.22
The Exchange is also adding
provisions (vii) through (x) to 103.20(a)–
NYSE Alternext Equities. These
provisions address DMM net capital
issues, including the use of financing to
meet net capital requirements, the
requirement that a DMM meet the net
capital requirements without including
an investment account and the so-called
‘‘early warning’’ requirements. These
provisions were supposed to have been
included in the original NYSE Alternext
Equities filing but were mistakenly not
included.23
In addition, the Exchange proposes to
amend Rule 440H–NYSE Alternext
Equities concerning accumulated
Section 31 fees held by the Exchange
and its members and member
organizations. In May 2008, the
Commission approved Amex’s (the
Exchange’s predecessor) adoption of
Commentary .01 to Rule 393, which
allows firms, on a one-time-only basis,
to voluntarily remit to the Exchange
historically accumulated Section 31
funds, which may be used to pay the
Exchange’s current Section 31 fees. In
addition, a member or member
organization may designate all or part of
the accumulated fees held by the
Exchange and allocated to such member
to be used by the Exchange in
accordance with the Rule. To the extent
the payment of these historically
accumulated funds or Exchange
accumulated funds is in excess of the
Section 31 fees due the Commission
from the Exchange, such surplus shall
be used by the Exchange to offset
regulatory costs. The Exchange recently
filed to extend the provisions of
Commentary .01 to Rule 393 until
January 13, 2009, and proposes
amendments to Rule 440H–NYSE
22 See Securities Exchange Act Release No. 58705
(October 1, 2008), 73 FR 58995 (October 8, 2008)
(SR–Amex 2008–63) (approving the Equities
Relocation). The new language included in
103.20(a)(i) and (ii) was approved in the filing for
the NMM submitted by the NYSE. See Securities
Exchange Act Release No. 58845 (October 24, 2008),
73 FR 64379 (October 29, 2008) (SR–NYSE–2008–
46) (adopting NMM).
23 See Non-NYSE Alternext Equities Rule 171,
Commentaries .01, .03, .06 and .07. These
provisions were filed and approved by the
Commission. See, e.g., Securities Exchange Act
Release No. 47703 (April 18, 2003), 68 FR 22425
(April 28, 2003) (SR–AMEX–2002–104).
VerDate Aug<31>2005
13:59 Dec 02, 2008
Jkt 217001
Alternext Equities to accommodate the
extension and to ensure its applicability
to Exchange members and member
organizations operating under the NYSE
Alternext Equities Rules after the
Equities Relocation.24
The Exchange also proposes to adopt
a new Rule 128–NYSE Alternext
Equities concerning clearly erroneous
executions, which will be operative
until January 9, 2009. As described in
the related rule filing, at the time the
Exchange adopted the NYSE Alternext
Equities Rules, it did not import the
NYSE’s rule governing clearly erroneous
executions (NYSE Rule 128) because it
was under review and was anticipated
that it would be amended prior to the
date of the Equities Relocation.
However, that has not happened and the
Exchange now proposes to delete the
current Rule 128–NYSE Alternext
Equities and adopt a new Rule 128–
NYSE Alternext Equities that is based
on the NYSE’s current Rule 128. In this
way the two exchanges will have the
same clearly erroneous execution
procedures that are operative during the
same time frame.25
Finally, the Exchange proposes
additional technical amendments to
Rules 51–, 55–, 61–, 72–, 79A–, 86– and
123D–NYSE Alternext Equities to reflect
proper internal cross-references to other
NYSE Alternext Equities rules and to
Rules 342.16–.19–NYSE Alternext
Equities to add text inadvertently left
out of the NYSE Alternext Equities rule
set when it was adopted.26
Operative Date
The Exchange proposes that the
operative date of the proposed rule
changes be the date of the Equities and
Bonds Relocations, currently scheduled
for December 1, 2008.
24 See
Securities Exchange Act Release No. 58933
(November 12, 2008), 73 FR 69712 (November 19,
2008) (SR–NYSEALT–2008–05) (proposed
extension of Commentary .01 to Rule 393
concerning accumulated Section 31 fees). See also
Securities Exchange Act Release No. 58108 (July 7,
2008), 73 FR 40413 (July 14, 2008) (SR–NYSE–
2007–64) (approving similar amendments to NYSE
Rule 440H).
25 See Securities Exchange Act Release No. 58705
(October 1, 2008), 73 FR 58995 (October 8, 2008)
(SR–Amex 2008–63) (approving the Equities
Relocation). The NYSE’s current version of its Rule
128 was approved by the Commission in February
2008 and is operative until January 9, 2009. See
Securities Exchange Act Release No. 57323
(February 13, 2008), 73 FR 9371 (February 20, 2008)
(SR–NYSE–2008–09) (adopting NYSE Rule 128);
Securities Exchange Act Release No. 58732 (October
3, 2008), 73 FR 61183 (October 15, 2008) (SR–
NYSE–2008–99) (extending the sunset provision of
the rule).
26 See Securities Exchange Act Release No. 58705
(October 1, 2008), 73 FR 58995 (October 8, 2008)
(SR–Amex 2008–63) (approving the Equities
Relocation).
PO 00000
Frm 00049
Fmt 4703
Sfmt 4703
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act,27 in general, and furthers the
objectives of Section 6(b)(5) of the Act,28
in particular, in that it is designed to
prevent fraudulent and manipulative
acts and practices, 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
changes also support the principles of
Section 11A(a)(1) 29 of the Act in that
they seek to ensure the economically
efficient execution of securities
transactions and fair competition among
brokers and dealers and among
exchange markets. The Exchange
believes that the proposed rule changes
are necessary and appropriate to reflect
the recent changes to the NYSE
Alternext market, the NYSE Alternext
Trading Systems and the member
conduct rules that govern NYSE
Alternext members and member
organizations.
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 believes that this
proposal qualifies for immediate
effectiveness upon filing as a noncontroversial rule change pursuant to
Section 19(b)(3)(A) of the Act 30 and
Rule 19b–4(f)(6) thereunder.31 The
Exchange asserts that the proposed rule
change (i) Will not significantly affect
the protection of investors or the public
interest, (ii) will not impose any
significant burden on competition, and
(iii) by its terms, will not become
operative for 30 days after the date of
this filing, or such shorter time as the
27 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
29 15 U.S.C. 78k–1(a)(1).
30 15 U.S.C. 78s(b)(3)(A).
31 17 CFR 240.19b–4(f)(6).
28 15
E:\FR\FM\03DEN1.SGM
03DEN1
Federal Register / Vol. 73, No. 233 / Wednesday, December 3, 2008 / Notices
jlentini on PROD1PC65 with NOTICES
Commission may designate, if
consistent with the protection of
investors and the public interest.32
NYSE Alternext has requested that the
Commission waive the 30-day operative
delay and designate the proposal as
operative as of December 1, 2008. NYSE
Alternext notes that it has previously
announced its intention to relocate its
equities and bonds trading from the 86
Trinity Trading Systems to the NYSE
Alternext Trading Systems and NYSE
Alternext Bonds on December 1, 2008,
and has previously advised the
Commission staff of its intention to
harmonize the rules between NYSE and
NYSE Alternext in order to facilitate
this transition. NYSE Alternext further
notes that relocating the trading is a
complex operation that involves
numerous simultaneous actions. NYSE
Alternext argues that the 30-day waiting
period would make it impossible for
NYSE Alternext to meet the December 1,
2008 relocation deadline, which would
adversely affect the competitiveness of
the Exchange and its members, and
would impair the ability of investors
and public customers of those members
to effectively trade their securities.
Moreover, the Exchange believes that
this filing is non-controversial because
it raises no novel issues and is
consistent with the Commission’s prior
approvals of the rule filings upon which
this filing is modeled.33 As noted above,
the proposed rule change is based on
rule text that was previously approved
by the Commission for NYSE or
previously submitted by NYSE for
immediate effectiveness. Except as
specifically noted, and subject to such
minor technical changes as are
necessary to apply the rules to the
Exchange, NYSE Alternext is adopting
the NYSE rules in the form that they
were approved by the Commission for
NYSE.
The Commission hereby grants the
Exchange’s request 34 and believes that
waiving the 30-day operative delay is
consistent with the protection of
investors and the public interest. The
rules being adopted through this filing
are based on previously established
rules of NYSE (or in a few cases Amex),
32 17 CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6) requires a self-regulatory organization to give
the Commission written notice of its intent to file
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. The Exchange has satisfied this
requirement.
33 See supra footnotes 12–27 for a list of all
relevant filings.
34 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).
VerDate Aug<31>2005
13:59 Dec 02, 2008
Jkt 217001
73687
submitted on or before December 24,
2008.
and they do not appear to raise any
novel or significant issues. Furthermore,
waiving the operative delay will
facilitate the Equities and Bonds
Relocations, which are scheduled to
occur on December 1, 2008. Therefore,
the Commission designates the proposal
operative as of December 1, 2008.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.35
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E8–28680 Filed 12–2–08; 8:45 am]
IV. Solicitation of Comments
BILLING CODE 8011–01–P
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 (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–NYSEALTR–2008–10 on
the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street, NE.,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–NYSEALTR–2008–10. 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 (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 inspection and copying in
the Commission’s Public Reference
Room, on official business days between
the hours of 10 a.m. and 3 p.m. Copies
of the filing also will 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–
NYSEALTR–2008–10 and should be
PO 00000
Frm 00050
Fmt 4703
Sfmt 4703
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
Notice of Intent To Request Revision
From the Office of Management and
Budget of a Currently Approved
Information Collection Activity,
Request for Comments; Agricultural
Aircraft Operator Certificate
Application
Federal Aviation
Administration (FAA), DOT.
ACTION: Notice and request for
comments.
AGENCY:
SUMMARY: The FAA invites public
comments about our intention to request
the Office of Management and Budget
(OMB) to approve a current information
collection. Certain organizations may
apply to perform certification functions
on behalf of the FAA. Standards have
been established for the certification of
agricultural aircraft. The information
collected shows applicant compliance
and eligibility for certification by FAA.
DATES: Please submit comments by
February 2, 2009.
FOR FURTHER INFORMATION CONTACT:
Carla Mauney on (202) 267–9895, or by
e-mail at: Carla.Mauney@faa.gov.
SUPPLEMENTARY INFORMATION:
Federal Aviation Administration (FAA)
Title: Agricultural Aircraft Operator
Certificate Application.
Type of Request: Extension without
change of an approved collection.
OMB Control Number: 2120–0049.
Form(s): 8710–3.
Affected Public: A total of 3,980
Respondents.
Frequency: The information is
collected on occasion.
Estimated Average Burden per
Response: Approximately 3.5 hours per
response.
Estimated Annual Burden Hours: An
estimated 14,037 hours annually.
Abstract: Standards have been
established for the certification of
agricultural aircraft. The information
collected shows applicant compliance
and eligibility for certification by FAA.
35 17
E:\FR\FM\03DEN1.SGM
CFR 200.30–3(a)(12).
03DEN1
]]>Agencies
[Federal Register Volume 73, Number 233 (Wednesday, December 3, 2008)]
[Notices]
[Pages 73683-73687]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-28680]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-59022; File No. SR-NYSEALTR-2008-10]
Self-Regulatory Organizations; NYSE Alternext U.S. LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Conform
Its Rules With Those of the New York Stock Exchange
November 26, 2008.
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 November 26, 2008, NYSE Alternext U.S. LLC (the ``Exchange''
or ``NYSE Alternext'') 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.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend certain NYSE Alternext Equities
Rules to conform with amendments to certain NYSE Rules filed by the New
York Stock Exchange LLC (``NYSE''), and also additional technical
amendments.
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. The text of the proposed rule
change is available on the Exchange's Web site, at the Exchange's
principal office, and at the Commission's Public Reference Room.
[[Page 73684]]
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of the proposed rule changes is to amend certain NYSE
Alternext Equities Rules to conform with amendments to certain NYSE
Rules filed by the NYSE.
Background
As described more fully in a related rule filing, NYSE Euronext
acquired The Amex Membership Corporation (``AMC'') pursuant to an
Agreement and Plan of Merger, dated January 17, 2008 (the ``Merger'').
In connection with the Merger, the Exchange's predecessor, the American
Stock Exchange LLC (``Amex''), a subsidiary of AMC, became a subsidiary
of NYSE Euronext called NYSE Alternext U.S. LLC,\3\ and will continue
to operate as a national securities exchange registered under Section 6
of the Act.\4\ The effective date of the Merger was October 1, 2008.
---------------------------------------------------------------------------
\3\ See Securities Exchange Act Release No. 58673 (September 29,
2008), 73 FR 57707 (October 3, 2008) (SR-NYSE-2008-60 and SR-Amex
2008-62) (approving the Merger).
\4\ 15 U.S.C. 78f.
---------------------------------------------------------------------------
In connection with the Merger, the Exchange will relocate all
equities trading conducted on the Exchange legacy trading systems and
facilities located at 86 Trinity Place, New York, New York (the ``86
Trinity Trading Systems''), to trading systems and facilities located
at 11 Wall Street, New York, New York (the ``Equities Relocation'').
The Exchange's equity trading systems and facilities at 11 Wall Street
(the ``NYSE Alternext Trading Systems'') will be operated by the NYSE
on behalf of the Exchange.\5\
---------------------------------------------------------------------------
\5\ See Securities Exchange Act Release No. 58705 (October 1,
2008), 73 FR 58995 (October 8, 2008) (SR-Amex 2008-63) (approving
the Equities Relocation).
---------------------------------------------------------------------------
Similarly, the Exchange will relocate the trading of certain debt
securities currently conducted on the 86 Trinity Trading Systems to an
automated bond trading system (the ``Bonds Relocation'') that will be
operated by the NYSE on behalf of the Exchange (``NYSE Alternext
Bonds''). The Exchange will also relocate all options trading currently
conducted on the 86 Trinity Trading Systems to new facilities of the
Exchange to be located at 11 Wall Street, which will use a trading
system based on the options trading system used by NYSE Arca, Inc.
(``NYSE Arca'') (the ``Options Relocation'').\6\
---------------------------------------------------------------------------
\6\ See Securities Exchange Act Release No. 58833 (October 22,
2008), 73 FR 64642 (October 30, 2008) (SR-NYSE-2008-106) and
Securities Exchange Act Release No. 58839 (October 23, 2008), 73 FR
64645 (October 30, 2008) (SR-NYSEALTR-2008-03) (together, approving
the Bonds Relocation). The Exchange will submit a separate rule
filing to adopt a new rule set to govern NYSE Alternext options
trading following the Options Relocation.
---------------------------------------------------------------------------
Post-Merger, all Exchange members and member organizations that
were authorized to trade on the Exchange before the Merger will receive
trading permits (referred to as ``86 Trinity Permits'') that authorize
continued trading on the 86 Trinity Trading Systems. Holders of the 86
Trinity Permits are eligible to apply for NYSE Alternext equities
trading licenses or options trading permits upon the Equities or
Options Relocation, as applicable.\7\ In addition, pursuant to the
Merger, all NYSE Alternext members and member organizations that apply
for NYSE Alternext equities trading licenses are automatically waived
in as NYSE members and member organizations.\8\ Similarly, all NYSE
members and member organizations are automatically waived in as NYSE
Alternext members and member organizations.\9\
---------------------------------------------------------------------------
\7\ See Securities Exchange Act Release No. 58706 (October 1,
2008), 73 FR 59019 (October 8, 2008) (SR-NYSE-2008-70) (describing
and approving membership rule changes related to the Merger);
Securities Exchange Act Release No. 58705 (October 1, 2008), 73 FR
58995 (October 8, 2008) (SR-Amex 2008-63) (approving the Equities
Relocation).
\8\ See NYSE Rules 2.10 and 2.20. NYSE Alternext members and
member organizations will have a six-month grace period within which
to meet NYSE and NYSE Alternext Equities membership requirements.
See NYSE Rule 300.10T and NYSE Alternext Equities Rule 300.10T.
\9\ See NYSE Alternext Equities Rules 2.10 and .20.
---------------------------------------------------------------------------
The NYSE Alternext Equities Rules
In order to implement the Equities and Bonds Relocations, the
Exchange adopted NYSE Rules 1-1004 as the NYSE Alternext Equities Rules
to govern all equities trading on the NYSE Alternext Trading Systems
and NYSE Alternext Bonds. Because the NYSE Alternext Trading Systems
and NYSE Alternext Bonds will be operated by the NYSE on behalf of the
Exchange, the NYSE Alternext Equities Rules are substantially identical
to the existing NYSE Rules, subject to such changes as were necessary
to apply the rules to the Exchange. The NYSE Alternext Equities Rules
are based on the NYSE Rules in their form as of July 18, 2008. NYSE
Alternext Equities Rule 86, which is the principal rule governing
trading on NYSE Alternext Bonds, is based on NYSE Rule 86 in the form
it existed as of October 1, 2008.\10\
---------------------------------------------------------------------------
\10\ See Securities Exchange Act Release No. 58705 (October 1,
2008), 73 FR 58995 (October 8, 2008) (SR-Amex 2008-63) (approving
the Equities Relocation). See also Securities Exchange Act Release
No. 58833 (October 22, 2008), 73 FR 64642 (October 30, 2008) (SR-
NYSE-2008-106) and Securities Exchange Act Release No. 58839
(October 23, 2008), 73 FR 64645 (October 30, 2008) (SR-NYSEALTR-
2008-03) (together, approving the Bonds Relocation).
---------------------------------------------------------------------------
Proposed Amendments to NYSE Alternext Equities Rules
The NYSE Alternext Equities Rules will become operative as of the
date of the Equities and Bonds Relocations. In the interim period since
the filing and approval of the Equities Relocation, the NYSE has filed
rule changes to some of its rules governing trading on its trading
systems that would also impact trading on the NYSE Alternext Trading
Systems and NYSE Alternext Bonds. The Exchange therefore proposes to
amend the NYSE Alternext Equities Rules to conform to these rule
changes, subject to such minor, technical changes as are necessary to
apply the amended rules to the Exchange. Unless specifically noted,
NYSE Alternext is proposing no substantive changes in this filing from
the rule text approved for NYSE by the Commission or adopted pursuant
to an immediately effective filing. The changes are summarized broadly
below:
Revisions and amendments to various NYSE Alternext and
NYSE Alternext Equities rules necessary to implement the ``New Market
Model'' adopted by the NYSE (``NMM''); \11\
---------------------------------------------------------------------------
\11\ In adopting what it calls the ``New Market Model'', the
NYSE proposed a number of changes to its marketplace, including (i)
Providing market participants with additional abilities to post
hidden liquidity on Exchange systems; (ii) creating a Designated
Market Maker (``DMM'') and phasing out the NYSE specialist; and
(iii) enhancing the speed of execution through technological
enhancements and a reduction in message traffic between NYSE trading
systems and its DMMs. See Securities Exchange Act Release No. 58845
(October 24, 2008), 73 FR 64379 (October 29, 2008) (SR-NYSE-2008-46)
(adopting NMM). See also Securities Exchange Act Release No. 58971
(November 17, 2008), 73 FR 71070 (November 24, 2008) (SR-NYSE-2008-
115) (amendments thereto).
With the exception of the DMM net capital requirements
(addressed separately in this filing), NYSE Alternext is not
proposing any additional substantive changes in this filing
different from the rule text approved for NYSE by the Commission or
adopted pursuant to an immediately effective filing, although it is
including corresponding technical rule changes to change references
to ``specialists'' or internal cross-references that were incorrect
or not included in the original NYSE filings (see Rules 2A(c)-,
15(b)-, 70.25-, 92(d)-, 98(c)-, 123(g)-, 123E(f)-, 124(f)-, 325-,
431-, 440G.10- and 900-(chart of rules)-NYSE Alternext Equities).
---------------------------------------------------------------------------
Revision of Rule 98-NYSE Alternext Equities and amendments
to related rules (including the deletion of Rule 102-NYSE Alternext
Equities) concerning the structure and operation of member organization
specialist (now known as ``DMMs'') units and risk management; \12\
---------------------------------------------------------------------------
\12\ The NYSE revised the regulatory requirements under its Rule
98 concerning how member organizations structure their DMM
operations and manage their risks, including: (i) Redefining the
persons to whom NYSE Rule 98 would apply; (ii) allowing DMM
operations to be integrated into better capitalized member
organizations; (iii) permitting a DMM unit to share nontrading-
related services with its parent member organization or approved
persons; and (iv) providing flexibility to member organizations and
their approved persons in how to conduct risk management of DMM
operations. In addition the NYSE also made conforming amendments to
other NYSE rules that rely on NYSE Rule 98 exemptions for approved
persons. See Securities Exchange Act Release No. 58328 (August 7,
2008), 73 FR 48260 (August 18, 2008) (SR-NYSE-2008-45).
NYSE Alternext is proposing no substantive changes in this
filing from the rule text approved for NYSE by the Commission or
adopted pursuant to an immediately effective filing, except to the
extent that proposed Rule 98 (Former)-NYSE Alternext Equities is
based on legacy Amex Rule 193. At the time NYSE Alternext Equities
Rules were initially adopted, the Exchange adopted legacy Amex Rule
193 in place of NYSE Rules 98 and 98A. See Securities Exchange Act
Release No. 58705 (October 1, 2008), 73 FR 58995 (October 8, 2008)
(SR-Amex 2008-63). Thus, the proposed amendments to create Rule 98
(Former)-NYSE Alternext Equities differ in form, though not in
substance, from those proposed to create NYSE Rule 98 (Former).
---------------------------------------------------------------------------
[[Page 73685]]
Revisions to Rules 103A-NYSE Alternext Equities and 103B-
NYSE Alternext Equities, Non-NYSE Alternext Equities Rule 476A, and
amendments to related rules (including the deletion of Rule 106-NYSE
Alternext Equities) concerning the allocation of registered securities
to DMMs; \13\
---------------------------------------------------------------------------
\13\ The NYSE modified its Allocation Policy to (i) Discontinue
the use of the Specialist Performance Evaluation Questionnaire
(``SPEQ''), (ii) establish a single quantifiable objective measure
to determine a DMM unit's eligibility to participate in the
allocation process, and (iii) provide issuers with more choice in
the selection of their DMM unit. As part of these modifications, the
NYSE eliminated its Allocation Committee as the overseer of the
allocation process and the Allocation Panel from which the
Allocation Committee members were selected. The NYSE also eliminated
its Market Performance Committee as the entity that responsible for
reallocating securities. See Securities Exchange Act Release No.
58857 (October 24, 2008), 73 FR 65435 (November 3, 2008) (SR-NYSE-
2008-52). The NYSE filing specified that at least three DMM units
(out of six) shall be presented for selection by issuers. Because
NYSE Alternext has fewer DMM units (four, instead of six), NYSE
Alternext is proposing to change the number of DMM units presented
to two. If three of the four firms are not eligible to receive new
allocations under the Allocation rules (e.g., if they have not
complied with the mandatory quoting requirements for new
allocations), then the remaining eligible firm shall be required to
apply for the allocation.
In addition, the Exchange proposes to modify Sections IV(A) and
VI(F) of Rule 103B-NYSE Alternext Equities to eliminate cross-
references to other NYSE Rules that are inapplicable to NYSE
Alternext. Specifically, in Section IV(A), the Exchange removed
cross-references to Rule 806.01 of the NYSE Listed Company Manual,
which concerns the reallocation of a security at the issuer's
request. The Exchange instead proposes to cross-reference and add
supplementary Rule 103B.10-NYSE Alternext Equities, which will track
NYSE Listed Company Manual Rule 806.01. The NYSE Rule was adopted as
immediately effective. See Securities Exchange Act Release No. 57232
(January 30, 2008), 73 FR 6755 (February 5, 2008) (SR-NYSE-2008-08).
In Section VI(F) the Exchange proposes to change the cross-reference
to Rule 102 of the NYSE Listed Company Manual to Section 101 of the
NYSE Alternext Company Guide.
---------------------------------------------------------------------------
Amendments to various member firm conduct rules that are
``Common Rules'' shared with NYSE and the Financial Industry Regulatory
Authority (``FINRA'') to conform with changes made by FINRA to its
versions of these rules; \14\
---------------------------------------------------------------------------
\14\ The amendments made by FINRA (and NYSE) include: (i)
Replacing the term ``allied member'' with the newly defined category
of ``principal executive''; (ii) repositioning and consolidating all
``Buy-In'' requirements and procedures (see Rules 283, 285-290-NYSE
Alternext Equities) into one rule (Rule 282-NYSE Alternext
Equities); (iii) moving certain provisions of Common Rules to other
Common Rules; (iv) deleting Common Rules that are obsolete or no
longer applicable; (v) eliminating certain provisions of Common
Rules that do not have a corresponding NASD equivalent and therefore
are unnecessary; (vi) amendments to further harmonize certain NYSE
and NASD Rules; (vii) deleting Common Rules that are substantively
duplicative of existing NASD Rules and procedures; (viii) limiting
application of Common Rule 345(a) to securities lending
representatives and supervisors only; and (ix) making corresponding
technical changes to other rules as needed. See Securities Exchange
Act Release No. 58549 (September 15, 2008), 73 FR 54444 (September
19, 2008) (SR-NYSE-2008-80).
NYSE Alternext is not proposing any substantive changes in this
filing different from the rule text approved for NYSE by the
Commission or adopted pursuant to an immediately effective filing,
although it is including corresponding technical changes to other
rules not included in the original FINRA filing since they are not
Common Rules subject to FINRA's review (see Rules 17, 22, 25, 91,
93, 96, 99 (Former), 104T, 105, 112, 113 (Former), 122-123, 123G,
304-304A, 308-309, 410A, 422, 456-460-NYSE Alternext Equities and
Non-NYSE Alternext Equities Rules 475-476A). In addition, FINRA did
not make corresponding amendments to NYSE Rules 344 and 350 even
though they are Common Rules. NYSE Alternext has included its
version of these rules in its amendments.
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Amendments to Rule 48-NYSE Alternext Equities concerning
extremely volatile market conditions and closing procedures; \15\
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\15\ The NYSE amended its Rule 48 to provide it with the ability
to suspend certain requirements at the closing when extremely high
market volatility could negatively affect the ability to ensure a
fair and orderly close. See Securities Exchange Act Release No.
58743 (October 7, 2008), 73 FR 60742 (October 14, 2008) (SR-NYSE-
2008-102).
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Adoption of Rule 123B.30-NYSE Alternext Equities to
provide for a standard sponsored access provision for the Exchange;
\16\
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\16\ See Securities Exchange Release No. 58429 (August 27,
2008), 73 FR 51676 (September 4, 2008) (SR-NYSE-2008-71) and
Securities Exchange Act Release No. 58758 (October 8, 2008), 73 FR
62352 (October 20, 2008) (SR-NYSE-2008-100).
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Amendments to Rule 123D-NYSE Alternext Equities regarding
the elimination of the provision governing sub-penny trading halts;
\17\
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\17\ At the time Regulation NMS was originally implemented, the
NYSE's trading systems were not able to accommodate sub-penny
executions on orders routed to better-priced protected quotations
and could not recognize a quote disseminated by another market
center if such quote had a sub-penny component. To prevent its
systems from inadvertently trading through better protected
quotations, the NYSE adopted Rule 123D(3), which provided that
trading would be halted in any security whose price was about to
fall below $1.00 and to route any subsequent orders received for
that security to NYSE Arca, Inc. The NYSE now has the technical
capability to recognize protected quotations with a sub-penny
component in its round-lot market and to accommodate away market
executions in sub-pennies in compliance with Regulation NMS and so
it removed Rule 123D(3). See Securities Exchange Act Release No.
58936 (November 13, 2008), 73 FR 69704 (November 19, 2008) (SR-NYSE-
2008-117).
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Modification of Rule 1000-NYSE Alternext Equities to
change the Liquidity Replenishment Point (``LRP'') values; \18\
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\18\ The NYSE amended its Rule 1000 to double the current LRP
ranges in order to limit the number of times that an LRP is reached
and the total number of times during the trading day that automatic
execution is suspended as a result of an LRP being triggered. See
Securities Exchange Act Release No. 58629 (September 24, 2008), 73
FR 57183 (October 1, 2008) (SR-NYSE-2008-85).
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Amendments to Rule 431-NYSE Alternext Equities to codify
the portfolio margin program set forth in paragraph (g) regarding (i)
monitoring concentrated equity positions and (ii) timing of day trading
margin calls; \19\
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\19\ The NYSE amended its Common Rule 431 to conform with
amendments made by FINRA to its version of the rule. See Securities
Exchange Act Release Nos. 58261 and 58269 (July 30, 2008), 73 FR
46114 and 46116 (August 7, 2008) (SR-NYSE-2008-65 and -66).
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Adoption of an operative date of March 31, 2009, for Rule
92(c)(3)-Alternext Equities, to correspond with the operative date of
NYSE Rule 92(c)(3); \20\ and
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\20\ In July 2007, in connection with the on-going harmonization
of NYSE Rule 92 with FINRA's Manning Rule (NASD Rule 2111 and IM-
2110-2), the NYSE amended Rule 92(c)(3) to require member firms to
submit order execution reports to the NYSE's Front End Systemic
Capture (``FESC'') database when executing riskless principal
transactions. Because the rule change has required both the NYSE and
member firms to make certain technological changes to their trading
and order management systems, and to provide additional time for
NYSE and FINRA to fully harmonize NYSE Rule 92 and FINRA's Manning
Rule, the NYSE proposed delaying the operative date for
implementation of NYSE Rule 92(c)(3) until March 31, 2009. See
Securities Exchange Act Release No. 57682 (April 17, 2008), 73 FR
22193 (April 24, 2008) (SR-NYSE-2008-29).
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Technical amendments to Rule 17-NYSE Alternext
Equities.\21\
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\21\ See Securities Exchange Act Release No. 58137 (July 10,
2008), 73 FR 41145 (July 17, 2008) (SR-NYSE-2008-55).
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As noted in footnote 11, NYSE Alternext is retaining the net
capital requirements it adopted with the NYSE Alternext Equities Rules
(see current Rule 104.20, .23 and .24-NYSE Alternext Equities) but it
will move them to new Rules 103.20 and .21-NYSE Alternext Equities to
track the rule organization adopted by the NYSE.
[[Page 73686]]
The Exchange is also adding provisions in 103.20(a)(i) and (ii) to
provide that any Structured Products that are not subject to a trading
halt pursuant to Rule 123D(4)-NYSE Alternext Equities as of the date of
the Equities Relocation will be eligible to be allocated to a DMM if
necessary until the security is halted and traded on NYSE Arca in
accordance with that rule.\22\
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\22\ See Securities Exchange Act Release No. 58705 (October 1,
2008), 73 FR 58995 (October 8, 2008) (SR-Amex 2008-63) (approving
the Equities Relocation). The new language included in 103.20(a)(i)
and (ii) was approved in the filing for the NMM submitted by the
NYSE. See Securities Exchange Act Release No. 58845 (October 24,
2008), 73 FR 64379 (October 29, 2008) (SR-NYSE-2008-46) (adopting
NMM).
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The Exchange is also adding provisions (vii) through (x) to
103.20(a)-NYSE Alternext Equities. These provisions address DMM net
capital issues, including the use of financing to meet net capital
requirements, the requirement that a DMM meet the net capital
requirements without including an investment account and the so-called
``early warning'' requirements. These provisions were supposed to have
been included in the original NYSE Alternext Equities filing but were
mistakenly not included.\23\
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\23\ See Non-NYSE Alternext Equities Rule 171, Commentaries .01,
.03, .06 and .07. These provisions were filed and approved by the
Commission. See, e.g., Securities Exchange Act Release No. 47703
(April 18, 2003), 68 FR 22425 (April 28, 2003) (SR-AMEX-2002-104).
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In addition, the Exchange proposes to amend Rule 440H-NYSE
Alternext Equities concerning accumulated Section 31 fees held by the
Exchange and its members and member organizations. In May 2008, the
Commission approved Amex's (the Exchange's predecessor) adoption of
Commentary .01 to Rule 393, which allows firms, on a one-time-only
basis, to voluntarily remit to the Exchange historically accumulated
Section 31 funds, which may be used to pay the Exchange's current
Section 31 fees. In addition, a member or member organization may
designate all or part of the accumulated fees held by the Exchange and
allocated to such member to be used by the Exchange in accordance with
the Rule. To the extent the payment of these historically accumulated
funds or Exchange accumulated funds is in excess of the Section 31 fees
due the Commission from the Exchange, such surplus shall be used by the
Exchange to offset regulatory costs. The Exchange recently filed to
extend the provisions of Commentary .01 to Rule 393 until January 13,
2009, and proposes amendments to Rule 440H-NYSE Alternext Equities to
accommodate the extension and to ensure its applicability to Exchange
members and member organizations operating under the NYSE Alternext
Equities Rules after the Equities Relocation.\24\
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\24\ See Securities Exchange Act Release No. 58933 (November 12,
2008), 73 FR 69712 (November 19, 2008) (SR-NYSEALT-2008-05)
(proposed extension of Commentary .01 to Rule 393 concerning
accumulated Section 31 fees). See also Securities Exchange Act
Release No. 58108 (July 7, 2008), 73 FR 40413 (July 14, 2008) (SR-
NYSE-2007-64) (approving similar amendments to NYSE Rule 440H).
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The Exchange also proposes to adopt a new Rule 128-NYSE Alternext
Equities concerning clearly erroneous executions, which will be
operative until January 9, 2009. As described in the related rule
filing, at the time the Exchange adopted the NYSE Alternext Equities
Rules, it did not import the NYSE's rule governing clearly erroneous
executions (NYSE Rule 128) because it was under review and was
anticipated that it would be amended prior to the date of the Equities
Relocation. However, that has not happened and the Exchange now
proposes to delete the current Rule 128-NYSE Alternext Equities and
adopt a new Rule 128-NYSE Alternext Equities that is based on the
NYSE's current Rule 128. In this way the two exchanges will have the
same clearly erroneous execution procedures that are operative during
the same time frame.\25\
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\25\ See Securities Exchange Act Release No. 58705 (October 1,
2008), 73 FR 58995 (October 8, 2008) (SR-Amex 2008-63) (approving
the Equities Relocation). The NYSE's current version of its Rule 128
was approved by the Commission in February 2008 and is operative
until January 9, 2009. See Securities Exchange Act Release No. 57323
(February 13, 2008), 73 FR 9371 (February 20, 2008) (SR-NYSE-2008-
09) (adopting NYSE Rule 128); Securities Exchange Act Release No.
58732 (October 3, 2008), 73 FR 61183 (October 15, 2008) (SR-NYSE-
2008-99) (extending the sunset provision of the rule).
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Finally, the Exchange proposes additional technical amendments to
Rules 51-, 55-, 61-, 72-, 79A-, 86- and 123D-NYSE Alternext Equities to
reflect proper internal cross-references to other NYSE Alternext
Equities rules and to Rules 342.16-.19-NYSE Alternext Equities to add
text inadvertently left out of the NYSE Alternext Equities rule set
when it was adopted.\26\
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\26\ See Securities Exchange Act Release No. 58705 (October 1,
2008), 73 FR 58995 (October 8, 2008) (SR-Amex 2008-63) (approving
the Equities Relocation).
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Operative Date
The Exchange proposes that the operative date of the proposed rule
changes be the date of the Equities and Bonds Relocations, currently
scheduled for December 1, 2008.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\27\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\28\ in particular, in that it is designed to
prevent fraudulent and manipulative acts and practices, 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 changes also support the principles of Section 11A(a)(1)
\29\ of the Act in that they seek to ensure the economically efficient
execution of securities transactions and fair competition among brokers
and dealers and among exchange markets. The Exchange believes that the
proposed rule changes are necessary and appropriate to reflect the
recent changes to the NYSE Alternext market, the NYSE Alternext Trading
Systems and the member conduct rules that govern NYSE Alternext members
and member organizations.
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\27\ 15 U.S.C. 78f(b).
\28\ 15 U.S.C. 78f(b)(5).
\29\ 15 U.S.C. 78k-1(a)(1).
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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 believes that this proposal qualifies for immediate
effectiveness upon filing as a non-controversial rule change pursuant
to Section 19(b)(3)(A) of the Act \30\ and Rule 19b-4(f)(6)
thereunder.\31\ The Exchange asserts that the proposed rule change (i)
Will not significantly affect the protection of investors or the public
interest, (ii) will not impose any significant burden on competition,
and (iii) by its terms, will not become operative for 30 days after the
date of this filing, or such shorter time as the
[[Page 73687]]
Commission may designate, if consistent with the protection of
investors and the public interest.\32\
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\30\ 15 U.S.C. 78s(b)(3)(A).
\31\ 17 CFR 240.19b-4(f)(6).
\32\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file 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.
The Exchange has satisfied this requirement.
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NYSE Alternext has requested that the Commission waive the 30-day
operative delay and designate the proposal as operative as of December
1, 2008. NYSE Alternext notes that it has previously announced its
intention to relocate its equities and bonds trading from the 86
Trinity Trading Systems to the NYSE Alternext Trading Systems and NYSE
Alternext Bonds on December 1, 2008, and has previously advised the
Commission staff of its intention to harmonize the rules between NYSE
and NYSE Alternext in order to facilitate this transition. NYSE
Alternext further notes that relocating the trading is a complex
operation that involves numerous simultaneous actions. NYSE Alternext
argues that the 30-day waiting period would make it impossible for NYSE
Alternext to meet the December 1, 2008 relocation deadline, which would
adversely affect the competitiveness of the Exchange and its members,
and would impair the ability of investors and public customers of those
members to effectively trade their securities.
Moreover, the Exchange believes that this filing is non-
controversial because it raises no novel issues and is consistent with
the Commission's prior approvals of the rule filings upon which this
filing is modeled.\33\ As noted above, the proposed rule change is
based on rule text that was previously approved by the Commission for
NYSE or previously submitted by NYSE for immediate effectiveness.
Except as specifically noted, and subject to such minor technical
changes as are necessary to apply the rules to the Exchange, NYSE
Alternext is adopting the NYSE rules in the form that they were
approved by the Commission for NYSE.
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\33\ See supra footnotes 12-27 for a list of all relevant
filings.
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The Commission hereby grants the Exchange's request \34\ and
believes that waiving the 30-day operative delay is consistent with the
protection of investors and the public interest. The rules being
adopted through this filing are based on previously established rules
of NYSE (or in a few cases Amex), and they do not appear to raise any
novel or significant issues. Furthermore, waiving the operative delay
will facilitate the Equities and Bonds Relocations, which are scheduled
to occur on December 1, 2008. Therefore, the Commission designates the
proposal operative as of December 1, 2008.
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\34\ 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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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 (https://
www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-NYSEALTR-2008-10 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSEALTR-2008-10. 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 (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 inspection
and copying in the Commission's Public Reference Room, on official
business days between the hours of 10 a.m. and 3 p.m. Copies of the
filing also will 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-NYSEALTR-2008-10 and should be submitted on or before
December 24, 2008.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\35\
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\35\ 17 CFR 200.30-3(a)(12).
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J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E8-28680 Filed 12-2-08; 8:45 am]
BILLING CODE 8011-01-P
