Self-Regulatory Organizations; NYSE Alternext US LLC; Notice of Filing of Proposed Rule Change Amending Rules Governing the Trading of Listed Options on NYSE Amex, 80494-80502 [E8-31053]
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Federal Register / Vol. 73, No. 251 / Wednesday, December 31, 2008 / Notices
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 such 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–NYSE–
2008–101 and should be submitted on
or before January 21, 2009.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.11
Florence E. Harmon,
Acting Secretary.
[FR Doc. E8–31102 Filed 12–30–08; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–59142; File No. SR–
NYSEALTR–2008–14]
Self-Regulatory Organizations; NYSE
Alternext US LLC; Notice of Filing of
Proposed Rule Change Amending
Rules Governing the Trading of Listed
Options on NYSE Amex
pwalker on PROD1PC71 with NOTICES
December 22, 2008.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2
notice is hereby given that on December
19, 2008, NYSE Alternext US LLC
(‘‘NYSE Alternext’’, ‘‘NYSE Amex
Options’’, ‘‘NYSE Amex’’, or the
‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by the Exchange. The
11 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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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 its
rules governing the trading of listed
options on NYSE Amex. With this
filing, the Exchange proposes to a) adopt
new rules for the implementation of a
new trading platform for options, NYSE
Amex System (‘‘System’’) and (b) govern
open outcry trading at the Exchange’s
new location at 11 Wall Street, New
York, NY. The proposed new rule set
text is designated Section 900NY, and is
shown in the Exhibit 5.
The text of the proposed rule change
is available on the Exchange’s Web site
at https://www.nyse.com, at the
Exchange’s principal office, and at the
Commission’s Public Reference Room.
The text of Exhibit 5 is also available on
the Commission’s Web site (https://
www.sec.gov/rules/sro.shtml).
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
Exchange 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 introduce a
modern electronic trading platform to
support options trading, and in
addition, proposes to update and
reorganize open outcry trading at the
time of the migration to the new
platform and the move to a new Options
Trading Floor at 11 Wall Street, New
York, NY. The new rule set is proposed
as Section 900NY.
Rule Section 900NY will replace
certain existing NYSE Alternext Rules.
These are, under General Rules, Rule 1,
Hours of Business; Rule 2, Visitors; Rule
21, Appointment of the Senior
Supervisory Officer, Senior Floor
Officials, Exchange Officials and Floor
Officials; Rule 21, Authority of Floor
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Officials; Rule 27A, Allocation of
Options; Rule 170, Registration and
Functions of Specialists. Under Trading
of Options Contracts, the superseded
Rules are, in Section 1, Rule 900,
Applicability, Definitions and
References; in Section 2, Rule 918,
Trading Rotations, Halts, and
Suspensions; in Section 3, Rule 933,
Automatic Execution of Options Orders;
Rule 934, Limitation on Orders; Rule
936, Cancellation and Adjustment of
Equity Options Transactions; in Section
4, Rule 941, Operation of the Linkage;
Rule 942, Order Protection; Rule 943,
Locked Markets; Rule 944, Limitation
on Principal Order Access.
Additionally, Section 900NY will
replace, in Section 5—Floor Rules
Applicable to Options, Rule 950, Rules
of General Applicability; Rule 951,
Premium Bids and Offers; Rule 952,
Minimum Price Variations; Rule 953,
Acceptance of Bid or Offer; Rule 954,
Units of Trading; Rule 955, Floor
Reports of Exchange Options
Transactions; Rule 956, Open Orders on
‘‘Ex Date’’; Rule 957, Accounts, Orders
and Records of Registered Traders,
Designated NYSE Alternext Remote
Traders, Specialists and Associated
Persons; Rule 958, Options Transactions
of Registered Traders; Rule 958A,
Application of the Firm Quote Rule,
Rule 959, Accommodation Transactions;
in Section 9, Rule 992, Exchange
Options Market Data System; in Section
11—Stock Index Options, Rule 918C,
Trading Rotations, Halts and
Suspensions; and in ANTE Rules, all
Rules (Rule 900–ANTE through Rule
997–ANTE).
These Rules will be deleted in a
separate filing.
Various provisions contained in the
proposed rules define and describe the
use of a Routing Broker. A full
description of the relationship between
the Exchange and the Routing Broker
will be submitted in a separate filing.
NYSE Amex proposes to establish
rules for NYSE Amex System, a fully
automated trading system for
standardized equity and index options
intended to replace the Exchange’s
current options trading platform, ANTE.
The System will provide automatic
order execution capabilities in the
options securities listed and traded on
NYSE Amex. Market Makers will be
able to stream quotes to the System from
on the Trading Floor or remotely. The
proposed NYSE Amex System is an
electronic market structure which
encompasses customer priority while
essentially allowing market makers and
non customers to compete on a ‘‘size
pro rata’’ basis, and will be available for
the entry and execution of quotes and
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orders to ATP Holders. Participation
entitlements are reserved for Specialists,
e-Specialists, and Directed Order Market
Makers. The rules governing Specialists
and size pro rata trade allocation are
substantially based on rules which had
been approved for the Pacific Exchange
and its PCX Plus Platform; 3 additional
rules regarding e-Specialists are based
on approved rules of the Chicago Board
Options Exchange; 4 while rules
outlining entitlements of Directed Order
Market Makers are based on the rules of
the NASDAQ OMX PHLX, Inc.5
NYSE Alternext proposes to issue
Amex Trading Permits (‘‘ATPs’’), as
defined in proposed Rule 900.2NY(4),
for effecting approved securities
transaction on the Exchange’s Trading
Facilities. NYSE Alternext Rules 40,
350, 353, 353A, 358, 358A, 359, 359A,
and 359B are being amended to reflect
the change from 86 Trinity Permits to
Amex Trading Permits. Current 86
Trinity Permits will be easily converted
to Amex Trading Permits with a simple
conversion form submitted to the
Exchange. No material change is being
made to these Rules, although some
outdated provisions, such as the
requirement for a medical examination,
are being removed. The Exchange is also
eliminating the concept of ‘‘nominee’’.
Access to the NYSE Amex System and
business on the Trading Floor is limited
to Amex Trading Permit Holders (‘‘ATP
Holders’’), as defined in proposed Rule
900.2NY(5). ATP Holders are natural
persons, sole proprietorships,
partnerships, corporations, limited
liability companies, or other
organizations that have been issued an
ATP. References in the Rules of NYSE
Alternext to ‘‘member,’’ ‘‘member
organization,’’ and ‘‘86 Trinity Permit
Holder’’ should be deemed to be
references to ATP Holders. In addition,
within Rule Section 900NY,
(specifically Rules 920NY–928NY) are
rules which describe Market Makers,
Specialists, and electronic Specialists,
and their respective rights and
obligations. These are similar to NYSE
Arca rules 6.32–6.40.
In connection with the
implementation of the System, NYSE
Amex proposes to adopt definitions
applicable to activity on the System.
The most significant of the proposed
definitions are as follows:
Proposed NYSE Amex Rule
900.2NY(44). NOW Recipients. As
described further below, NYSE Amex
proposes to add ‘‘NOW Order’’ as a new
3 See SR–PCX–2003–36, Securities Exchange Act
Release No. 47838.
4 See CBOE Rules 8.87 and 8.92–8.94.
5 See PHLX Rule 1080(1).
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order type. Users will be permitted to
designate orders entered on the System
as ‘‘NOW Orders.’’ NOW Orders are
limit orders that are to be executed in
whole or in part on the System. Any
portion of such orders not executed on
the System will be routed to one or
more ‘‘NOW Recipients’’ for immediate
execution. ‘‘NOW Recipients’’ include
any Market Center (1) with which NYSE
Amex maintains an electronic linkage,
and (2) that provides instantaneous
responses to NOW Orders routed from
the System. NYSE Amex will designate
those Market Centers that qualify as
NOW Recipients and periodically
publish such information via its Web
site. Any portion of a NOW Order not
immediately executed by the NOW
Recipient will be cancelled. If a NOW
Order is not marketable when it is
submitted to the System, it will be
cancelled.
Proposed NYSE Amex Rule 900.3NY.
In addition to certain existing order
types (e.g., Limit Orders, Market
Orders), NYSE Amex is proposing to
add several new order types available
for entry on the System. These include
the following:
Proposed NYSE Amex Rule
900.3NY(c). Inside Limit Order. An
‘‘Inside Limit Order’’ is a Limit Order,
which, if routed away pursuant to Rule
964NY, will be routed to the market
participant with the best displayed
price. Any unfilled portion of the order
will not be routed to the next best price
level until all quotes at the current best
bid or offer are exhausted. If the order
is no longer marketable it will be ranked
in the Consolidated Book pursuant to
Rule 964NY.
Proposed NYSE Amex Rule
900.3NY(d). Working Order. Working
Orders consist of several existing order
types (i.e., All-or-None Orders, Stop
Order) as well as several new order
types (i.e., Reserve Orders, Stock
Contingency Orders, Tracking Orders).
Working orders are maintained in the
Consolidated Book Working Order
Process, are not disseminated on the
System and are executed in accordance
with NYSE Amex Rule 964NY. A
Working Order is any order that has a
conditional or undisplayed price and/or
size designated as a ‘‘Working Order’’ by
NYSE Amex, including, without
limitation:
(1) Reserve Order. A limit order with
a portion of the size displayed (‘‘display
size’’) and with a reserve portion of the
size (‘‘reserve size’’) that is not
displayed on the System.
(2) All-or-None Order (‘‘AON Order’’).
A Market or Limit Order that is to be
executed in its entirety or not at all.
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(3) Stop Order. A Stop Order is an
order that becomes a Market Order
when the market for a particular option
contract reaches a specified price. A
Stop Order to buy becomes a Market
Order when the option contract trades at
or above the stop price on the System
or another Market Center or when the
NYSE Amex bid is quoted at or above
the stop price. A Stop Order to sell
becomes a Market Order when the
option contract trades at or below the
stop price on the System or another
Market Center or when the NYSE Amex
offer is quoted at or below the stop
price. Stop Orders (including Stop Limit
Orders) shall not have standing in any
order process in the Consolidated Book
and shall not be displayed.
(4) Stop Limit Order. A Stop Limit
Order is an order that becomes a Limit
Order when the market for a particular
option contract reaches a specified
price. A Stop Limit Order to buy
becomes a Limit Order when the option
contract trades at or above the stop price
on the System or another Market Center
or when the NYSE Amex bid is quoted
at or above the stop price. A Stop Limit
Order to sell becomes a Limit Order
when the option contract trades at or
below the stop price on the System or
another Market Center or when the
NYSE Amex offer is quoted at or below
the stop price.
(5) Stock Contingency Order. An
option order the execution of which is
contingent upon the last sale price as
specified by the User of the underlying
stock traded at the primary marketplace.
(6) Tracking Order. A Tracking Order
is an undisplayed limit order that is
eligible for execution in the Working
Order Process against orders equal to or
less than the size of the Tracking Order.
While Tracking Orders are ranked at
their limit price, they are only eligible
for execution at a price that matches the
NBBO.
For instance, the NBBO market in a
series is 2.05–2.15, with a 2.10 Tracking
Order to buy 10 contracts, but the NYSE
Amex displayed bid is 2.00. An order is
received to sell 6 contracts at 2.05; this
order will be matched against the 2.10
buy Tracking Order at a price of 2.05,
matching the NBBO.
Similarly, with the same initial
scenario, a second Tracking Order to
buy 20 contracts paying 2.05 is placed
in the Consolidated Book. An order is
received to sell 15 contracts at 2.05.
This order is matched against the
second Tracking Order, since it outsizes
the first Tracking Order. It will be
executed at 2.05, the NBBO price.
If a Tracking Order is executed but
not exhausted, the remaining portion of
the order shall be cancelled, without
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routing the order to another market
center or market participant. A Tracking
Order shall not trade-through the NBBO.
Proposed NYSE Amex Rule
900.3NY(o). NOW Order. A ‘‘NOW
Order’’ is a Limit Order that is to be
executed in whole or in part on the
System, and the portion not so executed
will be routed pursuant to Rule 964NY
only to one or more NOW Recipients for
immediate execution as soon as the
order is received by the NOW Recipient.
Any portion not immediately executed
by the NOW Recipient will be
cancelled. If a NOW Order is not
marketable when it is submitted to
NYSE Arca System, it will be cancelled.
Proposed NYSE Amex Rule
900.3NY(p). PNP Order. A ‘‘PNP Order’’
(Post No Preference) is a Limit Order to
buy or sell that is to be executed in
whole or in part on NYSE Amex, and
the portion not so executed is to be
ranked in the Consolidated Book,
without routing any portion of the order
to another market center; provided,
however, NYSE Amex shall cancel a
PNP Order that would lock or cross the
NBBO.
Proposed NYSE Amex Rule 902NY.
NYSE Amex is proposing NYSE Amex
Rule 902NY to govern Access and
Conduct on the Trading Floor at its new
location at 11 Wall Street. Although the
Options Trading Floor will be
physically separated from the New York
Stock Exchange and NYSE Alternext
equity trading floor, the floors will be
managed and overseen by combined
NYSE Euronext employees, and the
standards of dress and conduct for the
Options Floor will be the same as the
standards for the equity floor. Rule
902NY also describes additional
standards of dress and conduct that will
apply to the Options Floor, consistent
with standards for the NYSE Arca
Options Trading Floor.6 ATP Holders on
the Trading Floor will be either Market
Makers (including Specialists) or Floor
Brokers.
The Exchange currently has four
general classifications of Market Maker:
Specialist, Registered Options Trader
(‘‘ROT’’), Supplemental Registered
Options Traders (‘‘SROT’’), and Remote
Registered Options Trader (‘‘RROT’’).
Under the proposed new Rules, these
will remain essentially the same,
although ROTs and SROTs will be
combined into one classification as
Floor Market Maker. RROTs will
become Remote Market Makers.
There will be no limit to the number
of Remote Market Makers, and no limit
to the number of Floor Market Makers.
The only significant change to the
6 See
NYSE Arca Rule 6.2.
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operations of Floor Market Makers is
that the ‘‘join quote’’ mechanism
described in Rule 958–ANTE (Options
Transactions of Registered Options
Traders and Supplemental Registered
Options Traders and Remote Registered
Options Traders) will not be available
on the new System, and each Floor
Market Maker will be required to submit
quotes though their own proprietary
quoting device.
Proposed NYSE Amex Rule 902.1NY.
Proposed NYSE Amex Rule 902.1NY
will govern access to the System and the
expected conduct of ATP Holders and
persons employed by or associated with
an ATP Holder. The Exchange also
proposes in Rule 902.1NY to allow
access to the System by Sponsored
Participants. ATP Holders, and persons
employed by or associated with any
ATP Holder, while using the facilities of
NYSE Amex, may not engage in
conduct: (i) Inconsistent with the
maintenance of a fair and orderly
market; (ii) apt to impair public
confidence in the operations of NYSE
Amex; or (iii) inconsistent with the
ordinary and efficient conduct of
business. Activities that may violate
these provisions include, but are not
limited to: (a) Failure of a Market Maker
to provide quotations in accordance
with Rule 925NY; (b) failure of a Market
Maker to bid or offer within the ranges
specified by Rule 925NY; (c) failure of
an ATP Holder to adequately supervise
a person employed by or associated
with such ATP Holder to ensure that
person’s compliance with NYSE Amex
Rules; (d) failure to abide by a
determination of NYSE Amex; and (e)
refusal to provide information requested
by NYSE Amex.
Proposed NYSE Amex Rule 920NY.
Proposed NYSE Amex Rule 920NY
defines ‘‘Market Maker’’ on the NYSE
Amex System. A Market Maker on the
System will be an ATP Holder
registered with NYSE Amex for the
purpose of submitting quotes
electronically and making transactions
as a dealer-specialist through the
System from on the trading floor or
remotely from off the trading floor. A
Market Maker submitting quotes
remotely is not eligible to participate in
trades effected in open outcry except to
the extent that such Market Maker’s
quotation represents the best bid or offer
on the Exchange (‘‘BBO’’). Market
Makers will be designated as specialists
on NYSE Amex for all purposes under
the Act and the Rules and Regulations
thereunder. A Market Maker on NYSE
Amex will be either a Specialist, a Floor
Market Maker or a Remote Market
Maker.
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A Specialist must provide continuous
two-sided quotations throughout the
trading day in its appointed issues for
90% of the time the Exchange is open
for trading in each issue. Specialists are
assigned a location on the Floor where
their issues will trade; e-Specialists are
Market Makers located off the Floor who
also have a 90% quoting obligation.
Remote Market Makers (‘‘RMMs’’) are
Market Makers who must provide
continuous two sided quotations
throughout the trading day in their
appointed issues for 60% of the time the
Exchange is open for trading in each
issue. RMMs are located off the Floor of
the Exchange, and generally have no
rights with respect to open outcry
transactions that take place on their
quoted prices.
Floor Market Makers (‘‘FMMs’’) are
Market Makers who also must provide
continuous two sided quotations
throughout the trading day in their
appointed issues for 60% of the time the
Exchange is open for trading in each
issue, and, in addition, are appointed to
a Trading Zone on the Floor.
Unless specified, or unless the context
requires otherwise, the term Market
Maker in the NYSE Amex Rules refers
to Specialists, Floor Market Makers, and
Remote Market Makers.7
Proposed NYSE Amex Rule 921.1NY.
The Exchange is proposing NYSE Amex
Rule 921.1NY to limit Remote Market
Maker access to the System to those
ATP Holders or officers, partners,
employees or associated persons of ATP
Holders that are registered with NYSE
Amex as Market Maker Authorized
Traders (‘‘MMATs’’). MMATs will be
required to pass an NYSE Amex
conducted examination to demonstrate
their knowledge of NYSE Amex rules
prior to being approved by NYSE Amex
as an MMAT. NYSE Amex also may
require a Remote Market Maker to
provide additional information NYSE
Amex considers necessary to establish
whether a person should be approved as
an MMAT. A person may be approved
conditionally as an MMAT subject to
any conditions NYSE Amex’s Chief
Regulatory Officer considers appropriate
in the interests of maintaining a fair and
orderly market.
Rule 921.1NY will permit NYSE
Amex to suspend or withdraw the
registration of an MMAT if NYSE Amex
determines that: (i) The person has
caused the Market Maker to fail to
comply with the Rules of NYSE Amex;
7 See e-mail dated December 22, 2008, from
Andrew B. Stevens, Chief Counsel—U.S. Equities &
Derivatives, NYSE Euronext, Inc., to Natasha
Cowen, Special Counsel, Division of Trading and
Markets, Commission (restoring certain
unintentionally omitted text).
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(ii) the person is not properly
performing the responsibilities of an
MMAT; (iii) the person has failed to
meet the conditions described above
(e.g., failed the Exchange administered
examination); or (iv) NYSE Amex
believes it is in the best interest of fair
and orderly markets. If NYSE Amex
suspends the registration of a person as
an MMAT, the Remote Market Maker
must not allow the person to submit
quotes and orders on NYSE Amex
System. The registration of an MMAT
also will be withdrawn upon the written
request of the ATP Holder for which the
MMAT is registered. Such written
request must be submitted on the form
prescribed by NYSE Amex.
Proposed NYSE Amex Rule 922NY.
Proposed NYSE Amex Rule 922NY is
based on NYSE Arca Rule 6.34,
prohibits ATP Holders who are
physically on the Floor from trading for
their own personal account or for an
account in which they have an interest,
unless part of their market making
obligations. Floor Brokers are thus
prohibited from trading for an account
for which they have an interest except
to resolve a bona fide error resulting
from their floor brokerage business.
Proposed NYSE Amex Rule 923NY.
NYSE Amex is proposing changes to the
manner in which Market Maker
appointments are made. Similar to
current NYSE Arca Rule 6.35, Market
Makers will be required to apply for an
appointment in one or more options
classes. NYSE Amex may appoint one
Specialist per option class, additional eSpecialists, and an unlimited number of
Market Makers in each class unless
NYSE Amex determines that the
number of Market Makers appointed to
a particular option class should be
limited whenever, in NYSE Amex’s
judgment, system capacity limits the
number of Market Makers who may
participate in a particular option class.
NYSE Amex is proposing to delineate
the number of classes per ATP that a
Market Maker may select for its
appointment as follows: (i) Market
Makers with one ATP will have up to
100 option issues included in their
appointment; (ii) Market Makers with
two ATPs will have up to 250 option
issues included in their appointment;
(iii) Market Makers with three ATPs will
have up to 750 option issues included
in their appointment; and (iv) Market
Makers with four ATPs will have all
option issues traded on NYSE Amex
included in their appointment. Market
Makers may select from among any
option issues traded on NYSE Amex for
inclusion in their appointment, subject
to the approval of NYSE Amex.
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In addition, Floor Market Makers
must select appointment to a Trading
Zone on the Floor. The issues assigned
to a Trading Zone by the Exchange will
not be counted towards the number of
issues per ATP selected by the Floor
Market Maker. All transactions by a
Market Maker in open outcry effected in
issues in their appointed Trading Zone
will be considered as transactions
within their primary appointment.
Specialists will be appointed to the
Trading Zone designated for their
issues.
NYSE Amex will continue to consider
the following factors when determining
whether to approve the appointment of
a Market Maker in each security: (i) The
Market Maker’s preference; (ii) the
financial resources available to the
Market Maker; (iii) the Market Maker’s
experience, expertise and past
performance in making markets,
including the Market Maker’s
performance in other securities; (iv) the
Market Maker’s operational capability;
and (v) the maintenance and
enhancement of competition among
Market Makers in each security in
which they are appointed.
Market Makers will be permitted to
change the option issues that are
included in their appointment, subject
to the approval of NYSE Amex and
provided that such request is made in a
form and manner prescribed by NYSE
Amex. In considering whether to
approve Market Makers’ request to
change their appointment, NYSE Amex
will consider the five factors set forth
directly above. Market Makers will be
permitted to withdraw from trading an
option issue that is within their
appointment by providing NYSE Amex
with three business days’ written notice
of such withdrawal. Market Makers who
fail to give advance written notice of
withdrawal to NYSE Amex may be
subject to formal disciplinary action
pursuant to NYSE Alternext Rule
Section 9A.
NYSE Amex will be permitted to
suspend or terminate any appointment
of a Market Maker in one or more option
issues under Rule 923NY whenever, in
NYSE Amex’s judgment, the interests of
a fair and orderly market are best served
by such action. A Market Maker will be
able to seek review of any action taken
by NYSE Amex pursuant to the
proposed Rule, including the denial of
the appointment for, or the termination
or suspension of, a Market Maker’s
appointment in an option issue or issues
in accordance with Rule Section 9A.
Market Makers will continue to be
required to trade at least 75% of their
contract volume per quarter in classes
within their appointment.
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80497
NYSE Amex will periodically conduct
an evaluation of Market Makers to
determine whether they have fulfilled
performance standards relating to,
among other things, quality of markets,
competition among Market Makers,
observance of ethical standards and
administrative factors. In so doing,
NYSE Amex may consider any relevant
information including, but not limited
to, the results of a Market Maker
evaluation, trading data, a Market
Maker’s regulatory history and such
other factors and data as may be
pertinent in the circumstances. If NYSE
Amex finds any failure by a Market
Maker to meet minimum performance
standards, NYSE Amex will be
permitted to take the following actions
after written notice and after
opportunity for hearing pursuant to
Section 9A: (i) Restrict appointments to
additional option issues in the Market
Maker’s primary appointment; (ii)
suspend, terminate or restrict an
appointment in one or more option
issues; or (iii) suspension, termination,
or restriction of the Market Maker’s
registration in general. If a Market
Maker’s appointment in an option issue
or issues has been terminated because it
failed to meet minimum performance
standards, the Market Maker will not be
re-appointed as a Market Maker in that
option issue or issues for a period not
to exceed six months.
Proposed NYSE Amex Rule 925NY.
NYSE Amex is proposing new Rule
925NY to outline Market Maker
obligations (i) generally, (ii) within a
Market Maker’s appointed classes, and
(iii) outside of a Market Maker’s
appointed classes on the System. Unlike
NYSE Arca Rule 6.37, upon which it is
based, NYSE Amex will not have an inperson requirement. In-person
requirements date back to a time when
the only way for Market Makers to meet
their obligations was to be present on
the Floor to respond to a call for a
market. In a modern marketplace, most
of the liquidity on the Exchange is
available electronically, and only
electronically submitted bids and offers
are able to be represented in the
disseminated quote. The intent of the
in-person requirement is actually better
served by the 60% quoting obligation
for Market Makers, and the requirement
to conduct 75% of one’s business within
one’s primary appointment.
Proposed NYSE Amex Rule 925.1NY.
NYSE Amex is proposing new Rule
925.1NY to outline Market Maker
quoting obligations on the System.
Market Makers will be required to
undertake a meaningful obligation to
provide continuous two-sided markets
in classes traded on the System.
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Proposed Rule 925.1NY generally is
consistent with NYSE Arca Rule 6.37B.
Under the proposed Rule, Market
Makers only will be permitted to enter
quotations in the classes included in
their appointment.
Proposed NYSE Amex Rule 925.2NY.
NYSE Amex is proposing new Rule
925.2NY that will allow Market Makers
to enter on the System all permitted
order types. However, orders do not
satisfy or contribute to meeting a Market
Maker’s quoting obligation; that
obligation is only satisfied by
submission of legal width quotes.
Proposed NYSE Amex Rules 927NY–
927.3NY. The Exchange describes in
proposed Rules 927NY–927.3NY
Specialists and their rights, duties, and
obligations, including the requirements
for Information Barriers for ATP Holders
affiliated with a Specialist.
Proposed NYSE Amex Rules
927.4NY–927.6NY. The Exchange is also
describing in proposed Rules 927.4NY–
927.6NY e-Specialists, who are Remote
Market Makers appointed to fulfill
certain obligations required of
Specialists. In addition to the Specialist,
it is possible to have multiple
e-Specialists.
Proposed NYSE Amex Rule 928NY.
NYSE Amex is proposing new Rule
928NY to provide a mechanism for
limiting Market Maker risk during
periods of increased and significant
trading activity on the System in a
Market Maker’s appointment. NYSE
Amex proposes setting the ‘‘n’’ period
for calculation of the number of trades
by a Market Maker at one second.
Furthermore, NYSE Amex will no
longer generate two-sided quotes on
behalf of a Specialist in the event that
there are no Market Makers quoting in
an issue. Rather, in the event that there
are no Market Makers quoting in the
issue, the best bids and offers of those
orders residing in the Consolidated
Book in the issue will be disseminated
as the BBO. If there are no Market
Makers quoting in the issue and there
are no orders in the Consolidated Book
in the issue, NYSE Amex System will
disseminate a bid of zero and an offer
of zero in that issue.
Proposed NYSE Amex Rule 930NY.
Proposed NYSE Amex Rule 930NY
defines a Floor Broker as an ATP Holder
who is registered with the Exchange for
the purpose, while on the Floor, to
accept and execute options orders
received from ATP Holders and, in
certain circumstances, orders from
others.
Proposed NYSE Amex Rules 931NY–
932NY. Proposed NYSE Amex Rules
931NY–932NY describe the registration
and authorization of Floor Brokers, and
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are substantially the same as NYSE Arca
Rules 6.44, 6.45, and 6.46.
Proposed NYSE Amex Rule 933NY.
Proposed NYSE Amex Rule 933NY
describes the responsibilities of Floor
Brokers, and is substantially the same as
NYSE Arca Rule 6.46, with the addition
of insuring compliance with Section
11(a)(1) of the Act. An ATP Holder must
ensure that each of its transactions
complies with Section 11(a) of the Act,
which generally prohibits an ATP
Holder from effecting a transaction
trading for its own account, the account
of an associated person, or an account
with respect to which it or an associated
person thereof exercises investment
discretion (each, a ‘‘covered account’’)
unless a valid exemption in the statute
or the rules thereunder applies.
In cases where a Floor Broker’s
transaction would occur at the same
price as one or more orders on the
electronic book, the Floor Broker, if it
can rely on no exception other than the
‘‘G’’ exception (Section 11(a)(1)(G); Rule
11a1–1(T)), must, in addition to
complying with the other requirements
of the ‘‘G’’ exemption, yield to all orders
in the Consolidated Book at the same
price if the Floor Broker has no ability
to determine that an order in the
Consolidated Book is not the order of a
non-ATP Holder. In addition, in the
case where an ATP Holder submits an
order to the book (or an order is
submitted on its behalf) and such ATP
Holder is relying on the ‘‘G’’ exemption,
the order must be entered as IOC.
In addition, when relying on the
exemption set forth in Rule 11a2–2(T)
under the Act, a Floor Broker may not
enter into the NYSE Alternext System
any order for a covered account,
including orders sent to it by an
affiliated ATP Holder from off the floor,
if the order is for such affiliated ATP
Holder’s own account, the account of an
associated person, or an account over
which it or an associated person
exercises investment discretion.
Proposed NYSE Amex Rule 934NY.
NYSE Amex is proposing Rules 934NY,
934.1NY, 934.2NY, and 934.3NY to
govern crosses effected on the trading
floor. Proposed Rule 934NY describes (i)
Customer-to-Customer crosses and (ii)
Non-facilitation (Regular Way) crosses.
Proposed Rule 934.1NY describes
Facilitation Cross Transactions.
Proposed Rule 934.2NY describes AtRisk Cross Transactions, while Proposed
Rule 934.3NY describes Solicitation. In
all cases, Floor Brokers must request
bids and offers for the option series
involved and make the Trading Crowd
and the Trading Official aware of the
request for market. Trading crowd
participants will be given a reasonable
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time to respond with the prices and
sizes at which they would be willing to
participate in the cross. With respect to
facilitations, Floor Brokers still will be
permitted to participate in up to 40% of
the balance of an order to be facilitated
once Customer bids or offers in the
Consolidated Book at or better than the
proposed execution price, have been
satisfied.
There is no electronic crossing
mechanism proposed for NYSE Amex
System at this time.
Proposed NYSE Amex Rule 935NY.
Proposed NYSE Amex Rule 935NY
requires Floor Brokers to expose agency
orders for a period of time before
attempting to execute them as Principal,
and is based on NYSE Arca Rule 6.47A.
Proposed NYSE Amex Rule 935NY.
The Exchange describes in proposed
Rule 935NY Discretionary Transactions,
and limits a Floor Broker’s use of
discretion on orders.
Proposed NYSE Amex Rule 937NY.
Proposed NYSE Amex Rule 937NY
limits a Floor Broker from acting as both
Principal and Agent in the Same
Transaction unless it is part of an error
resulting from the Floor Broker’s error
or omission.
Proposed NYSE Amex Rule 940NY.
Proposed NYSE Amex Rule 940NY
describes the obligations of Trading
Officials for fair, orderly, and
competitive market.
Proposed NYSE Amex Rule 952NY.
NYSE Amex is proposing new NYSE
Amex Rule 952NY to govern the
opening process, which traditionally
has been referred to as a ‘‘rotation,’’ and
which will be referred to as an
‘‘auction’’ on the NYSE Amex System.
A ‘‘Trading Auction’’ is a process by
which trading is initiated in a specified
options class. Trading Auctions may be
employed at the opening of NYSE Amex
each business day or to re-open trading
after a trading halt. Trading Auctions
will be conducted automatically by the
System.
The System will accept Market and
Limit Orders and quotes for inclusion in
the opening auction process (‘‘Auction
Process’’) until the Auction Process is
initiated in that option series. Prior to
the Auction Process, (‘‘pre-opening’’),
non-Market Makers will be able to
submit orders to the System and Market
Makers will be able to submit two-sided
quotes and orders to the System.
Contingency orders (except for ‘‘opening
only’’ orders) will not participate in the
Auction Process. Any eligible open
orders residing in the Consolidated
Book from the previous trading session
will be included in the Auction Process.
After the primary market for the
underlying security disseminates the
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opening trade or the opening quote (or
the first disseminated value for index
options), the related option series will
be opened automatically based on the
following principles and procedures:
a. The System will determine a single
price at which a particular option series
will be opened.
b. Orders and quotes in the System
will be matched up with one another
based on price-time priority. Orders at
or better than the opening price will
have priority over Market Maker quotes.
c. Orders in the Consolidated Book
that were not executed during the
Auction Process shall become eligible
for the Core Trading Session
immediately after the conclusion of the
Auction Process.
To determine the opening price in a
series, upon receipt of the first
consolidated quote or trade of the
underlying security, the System will
compare the OPRA NBBO market with
an instantaneous BBO market. NYSE
Amex System will generate an opening
trade if possible or open a series on the
quoted market. The System then will
send the NYSE Amex BBO quote to
OPRA.
The opening price of a series will be
the price, as determined by the System,
at which the greatest number of
contracts will trade at or nearest to the
midpoint of the initial NBBO
disseminated by OPRA, if any, or the
midpoint of the best quote bids and
quote offers in the Consolidated Book.
Midpoint pricing will not occur if that
price would result in an order or part of
an order being traded through. Instead
the Trading Auction will occur at that
limit price, or, if the limit price is
superior to the quoted market, within
the range of 75% of the best quote bid
and 125% of the best quote offer. The
same process will be followed to reopen
an option class after a trading halt.
Unmatched orders and Market Maker
quotes that are marketable against the
initial NBBO will ‘‘sweep’’ through the
Consolidated Book and be executed in
price/time priority. If the best price is at
an away Market Center(s), orders will be
routed away to the relevant Market
Center(s).
Proposed NYSE Amex Rule 953NY.
Proposed NYSE Amex Rule 953NY
outlines procedures for halting or
suspending trading in a class of options.
Proposed NYSE Amex Rule 954NY.
Proposed NYSE Amex Rule 954NY,
Order Identification, is based on NYSE
Arca Rule 6.66; however, the Exchange
is proposing to exclude the
requirements to identify the particular
ATP Holder when requesting a quote
and size from the crowd, in order to
avoid the possibility of disparate
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treatment. Additionally, the Exchange is
proposing to not include the
Commentaries found in NYSE Arca Rule
6.66, as the Exchange finds these
inconsistent with the efforts to make the
market transparent.
Proposed NYSE Amex Rules 955NY
and 956NY. Proposed NYSE Amex
Rules 955NY and 956NY describe the
requirements for order format and
system entry requirements, and the
elements required for keeping a record
of orders, and are based on NYSE Arca
Rules 6.67 and 6.68. The Exchange will
not maintain and preserve all electronic
orders on behalf of ATP Holders, but is
still bound by its own requirements to
preserve records of orders.
Proposed NYSE Amex Rule 957NY.
Proposed NYSE Amex Rule 957NY
describes the reporting duties of ATP
Holders. Although based on NYSE Arca
Rule 6.69, the Exchange is proposing to
require open outcry transactions
between a Floor Broker and a Market
Maker to be reported by the Floor
Broker, regardless of who is the seller.
The Floor Broker will already have the
order details systematized by virtue of it
being input into an Electronic Order
Capture device.
Proposed NYSE Amex Rule 958NY.
Proposed NYSE Amex Rule 958NY
determines that the execution price is
binding despite errors in reporting the
price and is based on NYSE Arca Rule
6.70.
Proposed NYSE Amex Rule 959NY.
Proposed NYSE Amex Rule 959NY
describes the meaning of premium bids
and offers, and is based on NYSE Arca
Rule 6.71.
Proposed NYSE Amex Rule 960NY.
Proposed NYSE Amex Rule 960NY
describes the minimum quoting
increments and the minimum trading
increments for options, and is based on
NYSE Arca Rule 6.72.
Proposed NYSE Amex Rule 961NY.
Proposed NYSE Amex Rule 961NY
outlines the manner of bidding or
offering, either electronically through
the NYSE Amex System, or in open
outcry, and is substantially the same as
NYSE Arca Rule 6.73.
Proposed NYSE Amex Rule 963NY.
Proposed NYSE Amex Rule 963NY
describes Priority and Order Allocation
Procedures for Open Outcry trading.
These provisions are substantially the
same as used on other floor based
options exchanges. Generally, bids and
offers are afforded priority on a price
time basis on response to a call for a
market. The Floor Broker or Market
Maker who calls for the market is
responsible for determining the
sequence in which bids or offers are
vocalized. If bids or offers are made
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80499
simultaneously, they will be on parity.
If an ATP Holder has previously
requested a market to fill an order, and
the crowd has provided a collective
response, then the order will be
allocated on a size pro rata basis.
Proposed NYSE Amex Rule 963NY.
Proposed Rule 963NY also provides for
a Specialist’s entitlement to 40% of the
balance of any order after Customer bids
and offers in the Consolidated book
have been satisfied; provided, however,
that the Specialist has vocally
responded to the Floor Broker’s call for
a market, and has responded with a
price that is at least equal to the best bid
or offer. In addition, the Rule describes
Priority on Split Price Transactions,
which are substantially the same as
approved in NYSE Arca Rule 6.75(h).
Proposed NYSE Amex Rule 963.1NY.
Proposed Rule 963.1NY describes the
proper trading procedures for complex
orders, which are based on NYSE Arca
Rule 6.75 Commentary .01. and NYSE
Arca Rule 6.91 Commentaries .01 and
.02.
Proposed NYSE Amex Rule 964NY.
NYSE Amex will display all nonmarketable Limit Orders in the Display
Order Process of the Consolidated Book.
Except as otherwise permitted by Rule
964NY, all bids and offers at all price
levels in the Consolidated Book will be
displayed on an anonymous basis. The
System also will disseminate current
consolidated quotations/last sale
information, and such other market
information as may be made available
from time to time pursuant to agreement
between NYSE Amex and other Market
Centers, consistent with the Plan for
Reporting of Consolidated Options Last
Sale Reports and Quotation Information.
Bids and offers will be ranked and
maintained in the Display Order Process
and/or Working Order Process of the
Consolidated Book according to account
type and price-time priority.
a. Within the Display Order Process
Limit Orders, with no other
conditions, and quotes will be ranked
based on account type and the specified
price and the time of original order or
quote entry. The display portion of
Reserve Orders (not the reserve size)
will be ranked in the Display Order
Process by account type and at the
specified limit price and the time of
order entry. When the display portion of
the Reserve Order is decremented
completely, the display portion of the
Reserve Order will be refreshed for
(1) The display amount; or
(2) The entire reserve amount, if the
remaining reserve amount is smaller
than the display amount, from the
reserve portion and shall be submitted
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and ranked at the specified limit price
and the new time that the displayed
portion of the order was refreshed.
b. Within the Working Order Process
(1) The reserve portion of Reserve
Orders will be ranked based on account
type and the specified limit price and
the time of original order entry. After
the displayed portion of a Reserve Order
is refreshed from the reserve portion,
the reserve portion remains ranked
based on the original time of order
entry, while the displayed portion is
sent to the Display Order Process with
a new time-stamp.
(2) All-or-None Orders will be ranked
based on account type and the specified
limit price and the time of order entry.
(3) Stop and Stop Limit Orders will be
ranked based on account type and the
specified stop price and the time of
order entry.
(4) Stock Contingency Orders will be
ranked based on account type and the
specified limit price and the time of
order entry.
(5) Tracking Orders will be ranked
based on account type and the specified
limit price and the time of order entry.
Consistent with Rule 602 under
Regulation NMS, the best-ranked
displayed bids and the best ranked
displayed offers in the Consolidated
Book and the aggregate displayed size of
such bids and offers associated with
such prices shall be collected and made
available to vendors for dissemination.
Proposed Rule 964NY also outlines
the applicable requirements for order
execution and priority on the System.
Incoming orders will be matched against
bids and offers in the System based on
price, account type, and time. For an
execution to occur in any order process,
the price must be equal to or better than
the NBBO, unless the System has routed
orders to away Market Centers at the
NBBO.
The NYSE Amex System first will
attempt to match incoming marketable
bids and offers against bids or offers in
the Display Order Process at the display
price of the resident bids or offers for
the total amount of option contracts
available at that price or for the size of
the incoming order, whichever is
smaller. For the purposes of proposed
Rule 964NY, the size of an incoming
Reserve Order will include the
displayed and reserve size, and the size
of the portion of the Reserve Order
resident in the Display Order Process is
equal to its displayed size.
NYSE Amex proposes to allocate
incoming marketable bids and offers as
follows:
(1) The incoming marketable bid or
offer will be matched against Customer
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orders in the Display Order Process at
the NBBO.
(2) If there are any remaining
contracts to be executed after matching
against Customer orders, and the
incoming marketable bid or offer has
been directed to a Directed Order
Market Maker, the Directed Order
Market Maker will receive 40% of the
balance of the order, provided the
Directed Order Market Maker is quoting
at the NBBO for at least that size.
(3) If the incoming marketable bid or
offer has not been directed to a Directed
Order Market Maker, or if the Directed
Order Market Maker is not quoting at
the NBBO, the bid or offer will be
matched against the Specialist Pool for
40% of the remaining balance of the bid
or offer, provided the Specialist Pool is
quoting at the NBBO for at least that
size.
(4) If the bid or offer has not been
executed in its entirety, the remaining
part of the order shall be matched
against non-customer bids and offers on
a size pro-rata basis.
If the original bid or offer is for 5
contracts or less, and has either not been
directed to a Directed Order Market
Maker, or the Directed Order Market
Maker is not quoting at the NBBO, the
entire bid or offer will be matched
against the bid or offer of the Specialist
Pool after being matched against any
customer bids or offers in the Display
Order Process, provided the Specialist
Pool is quoting at the NBBO. The
participants in the Specialist Pool will
be allocated orders of five contracts or
less on a rotating basis, provided the
participant’s quoted size is equal to or
greater than the size of the allocation.
The Exchange will monitor the sizes of
all orders received, and, on a quarterly
basis, will evaluate the percentage of
volume constituted by orders of five
contracts or less. If 40% or more of the
order flow is comprised of orders of five
contracts or less, the Exchange will
reduce the eligible size for orders
included in this provision.
If the bid or offer has not been
executed in its entirety, the remaining
part of the order shall be matched
against any Working Orders at or better
than the NBBO.
An incoming marketable bid or offer
will be matched against orders within
the Working Order Process in the order
of their ranking, at the price of the
displayed portion (for Reserve Orders)
or at the limit price (for most other
Working Order types), for the total
amount of option contracts available at
that price or for the size of the incoming
bid or offer, whichever is smaller.
Incoming marketable bids and offers
will be matched against Tracking Orders
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in the order of their ranking, but only
at a price equal to the NBBO, and only
if the incoming marketable bid or offer
is eligible for routing and is less than
the size of the Tracking Orders.
If an incoming marketable order has
not been executed in its entirety on the
System and it has been designated as an
order type that is eligible to be routed
away, the order will be routed for
execution to another Market Center(s).
The order will be routed, either in its
entirety or as component order, to
another Market Center(s) as a Limit
Order equal to the price and up to the
size of the quote published by the
Market Center(s). The remaining portion
of the order, if any, will be ranked and
displayed in the Consolidated Book in
accordance with the terms of such order
and such order shall be eligible for
execution pursuant to Rule 964NY. A
marketable Reserve Order may be routed
serially as component orders, such that
each component corresponds to the
display size of the Reserve Order.
An order that has been routed away
will remain outside of the System for a
prescribed period of time and may be
executed in whole or in part subject to
the applicable trading rules of the
relevant Market Center. While an order
remains outside of the System, it will
have no time standing, relative to other
orders received from Users at the same
price that may be executed against the
Consolidated Book.
Requests from Users to cancel their
orders while the orders are routed away
to another Market Center and remain
outside the System will be processed
subject to the applicable trading rules of
the relevant Market Center.
Where an order or portion of an order
is routed away and is not executed
either in whole or in part at the other
Market Center (i.e., all attempts at the
fill are declined or timed-out), the order
shall be ranked and displayed in the
Consolidated Book in accordance with
the terms of such order, and such order
shall be eligible for execution under
proposed Rule 964NY, but will not have
time standing relative to other orders
received from Users at the same price
while it was outside the System.
Proposed NYSE Amex Rule 964.1NY
describes Directed Orders, and is
substantially the same as NASDAQ
OMX PHLX Rule 1080(l). It would be
considered a violation of just and
equitable principals of trade and a
misuse of non public information for a
Directed Order Market Maker to become
aware of an impending Directed Order
so as to improve the quote to
momentarily match the NBBO, and then
worsen the price of the quote following
execution of the Directed Order.
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Proposed NYSE Amex Rule 964.2NY.
Proposed NYSE Amex Rule 964.2NY
describes the participation entitlement
of Specialists and e-Specialists, which
collectively comprise the Specialist
Pool, as defined in proposed Rule
900.3NY(y). Generally, the Specialist
Pool is entitled to 40% of the remaining
balance of an order after any orders on
behalf of Customers in the Consolidated
Book are satisfied. The Specialist’s
participation within the Pool is granted
extra weighting, with no more than 66
2/3% if there is only one e-Specialist,
and no more than 50% if there are two
or more e-Specialists.
Proposed NYSE Amex Rule 965NY.
Proposed NYSE Amex Rule 965NY,
Contract Made on Acceptance of Bid or
Offer, is based on NYSE Arca Rule 6.77
and on NYSE Alternext Rule 953—
ANTE.
Proposed NYSE Amex Rule 970NY.
Proposed NYSE Amex Rule 970NY is
substantially the same as NYSE Arca
Rule 6.86. Rule 970NY will state the
minimum quotation size will be one
contract. NYSE Arca Rule 6.86
Commentary .03 is proposed to be
designated as NYSE Amex Rule
970.1NY.
Proposed NYSE Amex Rule 975NY.
The Exchange is also proposing new
NYSE Amex Rule 975NY—Obvious
Errors and Catastrophic Errors.
Proposed Rule 975NY is substantially
based on NYSE Arca Rule 6.87.
Proposed NYSE Amex Rules 990NY–
993NY. Proposed NYSE Amex Rules
990NY–993NY describe the Operation
of the Linkage, Order Protection, Locked
and Crossed Markets, and Limitations
on Principal Order Access. These Rules
are essentially the same as the uniform
rules governing Linkage on all options
exchanges, including existing NYSE
Alternext Rules 940–944, and Rule 941
ANTE.
Proposed NYSE Amex Rule 995NY.
NYSE Amex proposes new Rule 995NY
which describes Prohibited Conduct.
The first section of the proposed rule
prohibits conduct that threatens,
harasses, intimidates, constitutes a
‘‘refusal to deal’’ or retaliates against
another ATP Holder or associated
person of an ATP Holder. The second
section prohibits de facto market
making through the use of Customer
orders, since Customer orders have
priority at any price over the bids and
offers of non-customers. The third
section prohibits ATP Holders who have
knowledge of the material terms and
conditions of an order, the execution of
which is imminent, from buying or
selling related options, underlying
securities, or related securities, until the
terms of the order are disclosed to the
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trading crowd, or the execution of the
order is no longer considered to be
imminent.
In addition, the Exchange is
proposing to add Part 1C to the
Supplementary Material of NYSE
Alternext Rule 476A. Part 1C lists
options rule violations and their
applicable fines that will be in effect
upon implementation of the NYSE
Amex System and the relocation of the
Trading Floor to 11 Wall Street, New
York, NY.
Current NYSE Alternext Rule 476
includes Sanctioning Guidelines in its
Supplementary Material. While the
principles to be considered in
determining sanctions will continue, the
guidelines after Supplementary Material
.01(C)(19) that describe specific types of
violations all pertain to the existing
NYSE Alternext Rules, and will not
apply to violations of Rules in Section
900NY.
The Exchange believes the proposed
new rules will reduce regulatory
confusion, encourage efficient
transactions on both the electronic
market and in open outcry trading, and
delineate an unambiguous standard for
conducting a fair and orderly market.
2. Statutory Basis
The Exchange believes that this filing
is consistent with Section 6(b) of the
Act,8 in general, and furthers the
objectives of Section 6(b)(5) of the Act,9
in particular, in that it is designed to
prevent fraudulent and manipulative
acts and practices, to promote just and
equitable principles of trade, to foster
cooperation and coordination with
persons engaged in facilitating
transactions in securities, and to remove
impediments to, and perfect the
mechanisms of a free and open market
and a national market system.
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.
8 15
9 15
PO 00000
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
Frm 00141
Fmt 4703
Sfmt 4703
80501
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 35 days of the date of
publication of this notice in the Federal
Register or within such longer period (i)
as the Commission may designate up to
90 days of such date if it finds such
longer period to be appropriate and
publishes its reasons for so finding or
(ii) as to which the self-regulatory
organization consents, the Commission
will:
(A) By order approve the proposed
rule change, or
(B) Institute proceedings to determine
whether the proposed rule change
should be disapproved.
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 rulecomments@sec.gov. Please include File
Number SR–NYSEALTR–2008–14 on
the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street, NE.,
Washington, DC 20549.
All submissions should refer to File
Number SR–NYSEALTR–2008–14. 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, 100 F Street, NE., Washington,
DC 20549, on official business days
between the hours of 10 a.m. and 3 p.m.
E:\FR\FM\31DEN1.SGM
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80502
Federal Register / Vol. 73, No. 251 / Wednesday, December 31, 2008 / Notices
Copies of such 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–2008–14 and
should be submitted on or before
January 21, 2009.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.10
Florence E. Harmon,
Acting Secretary.
[FR Doc. E8–31053 Filed 12–30–08; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–59144; File No. SR–
NYSEALTR–2008–12]
Self-Regulatory Organizations; NYSE
Alternext US LLC; Notice of Filing of
Proposed Rule Change To Establish Its
New Risk Management Gateway
Service
December 22, 2008.
Pursuant to section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2
notice is hereby given that on December
12, 2008, NYSE Alternext US LLC
(‘‘NYSE Alternext’’ or ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III below, which Items
have been prepared by the Exchange.
The Commission is publishing this
notice to solicit comments on the
proposed rule change from interested
persons.
pwalker on PROD1PC71 with NOTICES
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange, formerly the American
Stock Exchange LLC, is proposing to
establish its new Risk Management
Gateway (‘‘RMG’’) service.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission,
NYSE Alternext included statements
concerning the purpose of, and basis for,
10 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
VerDate Aug<31>2005
17:41 Dec 30, 2008
Jkt 217001
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. NYSE
Alternext has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to offer,
through NYSE Euronext Advanced
Trading Solutions, Inc., the RMG service
to NYSE Alternext members and
member organizations. NYSE Transact
Tools, Inc, a division of the NYSE
Euronext Advanced Trading Solutions
Group (‘‘NYXATS’’), owns RMG. RMG
is a part of the NYSE Alternext Trading
Systems (defined below) operated on
behalf of the Exchange by New York
Stock Exchange LLC (‘‘NYSE’’).3
Background
As described more fully in a related
rule filing,4 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 US LLC, and continues
to operate as a national securities
exchange registered under Section 6 of
the Securities Exchange Act of 1934, as
amended (the ‘‘Act’’).5 The effective
date of the Merger was October 1, 2008.
In connection with the Merger, on
December 1, 2008, the Exchange
relocated 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 trading
systems and facilities at 11 Wall Street
(the ‘‘NYSE Alternext Trading
Systems’’) are operated by the NYSE on
behalf of the Exchange.6
3 NYXATS similarly seeks to offer the same
services to the NYSE through a separate filing, SR–
NYSE–2008–101.
4 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).
5 15 U.S.C. 78f.
6 See Securities Exchange Act Release No. 58705
(October 1, 2008), 73 FR 58995 (October 8, 2008)
PO 00000
Frm 00142
Fmt 4703
Sfmt 4703
In order to implement the Equities
Relocation, the Exchange adopted NYSE
Rules 1–1004 as the NYSE Alternext
Equities Rules to govern trading on the
NYSE Alternext Trading Systems. Rule
54—NYSE Alternext Equities provides
that only members are permitted to
‘‘* * * make or accept bids or offers,
consummate transactions, or otherwise
transact business on the Floor for any
security admitted to dealings on the
[Exchange] * * *.’’ 7
Pursuant to Rule 123B—NYSE
Alternext Equities, however, the
Exchange permits NYSE Alternext
members and member organizations (a
‘‘Sponsoring Member Organization’’) to
sponsor access to Exchange systems by
non-member firms or customers
(‘‘Sponsored Participants’’). Rule
123B—NYSE Alternext Equities is a
general sponsored access rule that
permits a Sponsoring Member
Organization to sponsor a Sponsored
Participant’s access to Exchange systems
for the Sponsored Participant’s entry
and execution of orders on the
Exchange. Rule 123B—NYSE Alternext
Equities reflects the Exchange’s general
policy regarding sponsored access to the
Exchange; it does not govern access to
NYSE Alternext Bonds.8 NYSE Arca,
Inc. and other market centers similarly
permit sponsored access to their trading
systems.
RMG
Traditionally, the customers of a
member or member organization gave
orders to the member or member
organization and the member or member
organization then submitted those
orders to the Exchange on behalf of the
customer. By means of sponsored
access, a member or member
organization will allow its customers to
enter orders directly into the trading
systems of the Exchange as Sponsored
Participants, without the Sponsoring
Member Organization acting as an
intermediary.
To facilitate the ability of Sponsoring
Member Organizations to monitor and
oversee the sponsored access activity of
their Sponsored Participants, NYXATS
will offer an order-verification service to
Sponsoring Member Organizations. This
service will act as a risk filter by causing
the orders of Sponsored Participants to
pass through RMG prior to entering the
(SR–Amex 2008–63) (approving the Equities
Relocation).
7 See also Rule 2—NYSE Alternext Equities.
8 That is, currently, the provisions of Rule 123B—
NYSE Alternext Equities do not apply to Rule 86—
NYSE Alternext Equities as that rule independently
contains provisions related to how a user gains
sponsored access to the NYSE Alternext Bonds
system.
E:\FR\FM\31DEN1.SGM
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]]>Agencies
[Federal Register Volume 73, Number 251 (Wednesday, December 31, 2008)]
[Notices]
[Pages 80494-80502]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-31053]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-59142; File No. SR-NYSEALTR-2008-14]
Self-Regulatory Organizations; NYSE Alternext US LLC; Notice of
Filing of Proposed Rule Change Amending Rules Governing the Trading of
Listed Options on NYSE Amex
December 22, 2008.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on December 19, 2008, NYSE Alternext US LLC (``NYSE Alternext'', ``NYSE
Amex Options'', ``NYSE Amex'', or the ``Exchange'') filed with the
Securities and Exchange Commission (``Commission'') the proposed rule
change as described in Items I, II, and III below, which Items have
been prepared by the Exchange. 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 its rules governing the trading of
listed options on NYSE Amex. With this filing, the Exchange proposes to
a) adopt new rules for the implementation of a new trading platform for
options, NYSE Amex System (``System'') and (b) govern open outcry
trading at the Exchange's new location at 11 Wall Street, New York, NY.
The proposed new rule set text is designated Section 900NY, and is
shown in the Exhibit 5.
The text of the proposed rule change is available on the Exchange's
Web site at https://www.nyse.com, at the Exchange's principal office,
and at the Commission's Public Reference Room. The text of Exhibit 5 is
also available on the Commission's Web site (https://www.sec.gov/rules/
sro.shtml).
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 Exchange 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 introduce a modern electronic trading
platform to support options trading, and in addition, proposes to
update and reorganize open outcry trading at the time of the migration
to the new platform and the move to a new Options Trading Floor at 11
Wall Street, New York, NY. The new rule set is proposed as Section
900NY.
Rule Section 900NY will replace certain existing NYSE Alternext
Rules. These are, under General Rules, Rule 1, Hours of Business; Rule
2, Visitors; Rule 21, Appointment of the Senior Supervisory Officer,
Senior Floor Officials, Exchange Officials and Floor Officials; Rule
21, Authority of Floor Officials; Rule 27A, Allocation of Options; Rule
170, Registration and Functions of Specialists. Under Trading of
Options Contracts, the superseded Rules are, in Section 1, Rule 900,
Applicability, Definitions and References; in Section 2, Rule 918,
Trading Rotations, Halts, and Suspensions; in Section 3, Rule 933,
Automatic Execution of Options Orders; Rule 934, Limitation on Orders;
Rule 936, Cancellation and Adjustment of Equity Options Transactions;
in Section 4, Rule 941, Operation of the Linkage; Rule 942, Order
Protection; Rule 943, Locked Markets; Rule 944, Limitation on Principal
Order Access.
Additionally, Section 900NY will replace, in Section 5--Floor Rules
Applicable to Options, Rule 950, Rules of General Applicability; Rule
951, Premium Bids and Offers; Rule 952, Minimum Price Variations; Rule
953, Acceptance of Bid or Offer; Rule 954, Units of Trading; Rule 955,
Floor Reports of Exchange Options Transactions; Rule 956, Open Orders
on ``Ex Date''; Rule 957, Accounts, Orders and Records of Registered
Traders, Designated NYSE Alternext Remote Traders, Specialists and
Associated Persons; Rule 958, Options Transactions of Registered
Traders; Rule 958A, Application of the Firm Quote Rule, Rule 959,
Accommodation Transactions; in Section 9, Rule 992, Exchange Options
Market Data System; in Section 11--Stock Index Options, Rule 918C,
Trading Rotations, Halts and Suspensions; and in ANTE Rules, all Rules
(Rule 900-ANTE through Rule 997-ANTE).
These Rules will be deleted in a separate filing.
Various provisions contained in the proposed rules define and
describe the use of a Routing Broker. A full description of the
relationship between the Exchange and the Routing Broker will be
submitted in a separate filing.
NYSE Amex proposes to establish rules for NYSE Amex System, a fully
automated trading system for standardized equity and index options
intended to replace the Exchange's current options trading platform,
ANTE. The System will provide automatic order execution capabilities in
the options securities listed and traded on NYSE Amex. Market Makers
will be able to stream quotes to the System from on the Trading Floor
or remotely. The proposed NYSE Amex System is an electronic market
structure which encompasses customer priority while essentially
allowing market makers and non customers to compete on a ``size pro
rata'' basis, and will be available for the entry and execution of
quotes and
[[Page 80495]]
orders to ATP Holders. Participation entitlements are reserved for
Specialists, e-Specialists, and Directed Order Market Makers. The rules
governing Specialists and size pro rata trade allocation are
substantially based on rules which had been approved for the Pacific
Exchange and its PCX Plus Platform; \3\ additional rules regarding e-
Specialists are based on approved rules of the Chicago Board Options
Exchange; \4\ while rules outlining entitlements of Directed Order
Market Makers are based on the rules of the NASDAQ OMX PHLX, Inc.\5\
---------------------------------------------------------------------------
\3\ See SR-PCX-2003-36, Securities Exchange Act Release No.
47838.
\4\ See CBOE Rules 8.87 and 8.92-8.94.
\5\ See PHLX Rule 1080(1).
---------------------------------------------------------------------------
NYSE Alternext proposes to issue Amex Trading Permits (``ATPs''),
as defined in proposed Rule 900.2NY(4), for effecting approved
securities transaction on the Exchange's Trading Facilities. NYSE
Alternext Rules 40, 350, 353, 353A, 358, 358A, 359, 359A, and 359B are
being amended to reflect the change from 86 Trinity Permits to Amex
Trading Permits. Current 86 Trinity Permits will be easily converted to
Amex Trading Permits with a simple conversion form submitted to the
Exchange. No material change is being made to these Rules, although
some outdated provisions, such as the requirement for a medical
examination, are being removed. The Exchange is also eliminating the
concept of ``nominee''.
Access to the NYSE Amex System and business on the Trading Floor is
limited to Amex Trading Permit Holders (``ATP Holders''), as defined in
proposed Rule 900.2NY(5). ATP Holders are natural persons, sole
proprietorships, partnerships, corporations, limited liability
companies, or other organizations that have been issued an ATP.
References in the Rules of NYSE Alternext to ``member,'' ``member
organization,'' and ``86 Trinity Permit Holder'' should be deemed to be
references to ATP Holders. In addition, within Rule Section 900NY,
(specifically Rules 920NY-928NY) are rules which describe Market
Makers, Specialists, and electronic Specialists, and their respective
rights and obligations. These are similar to NYSE Arca rules 6.32-6.40.
In connection with the implementation of the System, NYSE Amex
proposes to adopt definitions applicable to activity on the System. The
most significant of the proposed definitions are as follows:
Proposed NYSE Amex Rule 900.2NY(44). NOW Recipients. As described
further below, NYSE Amex proposes to add ``NOW Order'' as a new order
type. Users will be permitted to designate orders entered on the System
as ``NOW Orders.'' NOW Orders are limit orders that are to be executed
in whole or in part on the System. Any portion of such orders not
executed on the System will be routed to one or more ``NOW Recipients''
for immediate execution. ``NOW Recipients'' include any Market Center
(1) with which NYSE Amex maintains an electronic linkage, and (2) that
provides instantaneous responses to NOW Orders routed from the System.
NYSE Amex will designate those Market Centers that qualify as NOW
Recipients and periodically publish such information via its Web site.
Any portion of a NOW Order not immediately executed by the NOW
Recipient will be cancelled. If a NOW Order is not marketable when it
is submitted to the System, it will be cancelled.
Proposed NYSE Amex Rule 900.3NY. In addition to certain existing
order types (e.g., Limit Orders, Market Orders), NYSE Amex is proposing
to add several new order types available for entry on the System. These
include the following:
Proposed NYSE Amex Rule 900.3NY(c). Inside Limit Order. An ``Inside
Limit Order'' is a Limit Order, which, if routed away pursuant to Rule
964NY, will be routed to the market participant with the best displayed
price. Any unfilled portion of the order will not be routed to the next
best price level until all quotes at the current best bid or offer are
exhausted. If the order is no longer marketable it will be ranked in
the Consolidated Book pursuant to Rule 964NY.
Proposed NYSE Amex Rule 900.3NY(d). Working Order. Working Orders
consist of several existing order types (i.e., All-or-None Orders, Stop
Order) as well as several new order types (i.e., Reserve Orders, Stock
Contingency Orders, Tracking Orders). Working orders are maintained in
the Consolidated Book Working Order Process, are not disseminated on
the System and are executed in accordance with NYSE Amex Rule 964NY. A
Working Order is any order that has a conditional or undisplayed price
and/or size designated as a ``Working Order'' by NYSE Amex, including,
without limitation:
(1) Reserve Order. A limit order with a portion of the size
displayed (``display size'') and with a reserve portion of the size
(``reserve size'') that is not displayed on the System.
(2) All-or-None Order (``AON Order''). A Market or Limit Order that
is to be executed in its entirety or not at all.
(3) Stop Order. A Stop Order is an order that becomes a Market
Order when the market for a particular option contract reaches a
specified price. A Stop Order to buy becomes a Market Order when the
option contract trades at or above the stop price on the System or
another Market Center or when the NYSE Amex bid is quoted at or above
the stop price. A Stop Order to sell becomes a Market Order when the
option contract trades at or below the stop price on the System or
another Market Center or when the NYSE Amex offer is quoted at or below
the stop price. Stop Orders (including Stop Limit Orders) shall not
have standing in any order process in the Consolidated Book and shall
not be displayed.
(4) Stop Limit Order. A Stop Limit Order is an order that becomes a
Limit Order when the market for a particular option contract reaches a
specified price. A Stop Limit Order to buy becomes a Limit Order when
the option contract trades at or above the stop price on the System or
another Market Center or when the NYSE Amex bid is quoted at or above
the stop price. A Stop Limit Order to sell becomes a Limit Order when
the option contract trades at or below the stop price on the System or
another Market Center or when the NYSE Amex offer is quoted at or below
the stop price.
(5) Stock Contingency Order. An option order the execution of which
is contingent upon the last sale price as specified by the User of the
underlying stock traded at the primary marketplace.
(6) Tracking Order. A Tracking Order is an undisplayed limit order
that is eligible for execution in the Working Order Process against
orders equal to or less than the size of the Tracking Order. While
Tracking Orders are ranked at their limit price, they are only eligible
for execution at a price that matches the NBBO.
For instance, the NBBO market in a series is 2.05-2.15, with a 2.10
Tracking Order to buy 10 contracts, but the NYSE Amex displayed bid is
2.00. An order is received to sell 6 contracts at 2.05; this order will
be matched against the 2.10 buy Tracking Order at a price of 2.05,
matching the NBBO.
Similarly, with the same initial scenario, a second Tracking Order
to buy 20 contracts paying 2.05 is placed in the Consolidated Book. An
order is received to sell 15 contracts at 2.05. This order is matched
against the second Tracking Order, since it outsizes the first Tracking
Order. It will be executed at 2.05, the NBBO price.
If a Tracking Order is executed but not exhausted, the remaining
portion of the order shall be cancelled, without
[[Page 80496]]
routing the order to another market center or market participant. A
Tracking Order shall not trade-through the NBBO.
Proposed NYSE Amex Rule 900.3NY(o). NOW Order. A ``NOW Order'' is a
Limit Order that is to be executed in whole or in part on the System,
and the portion not so executed will be routed pursuant to Rule 964NY
only to one or more NOW Recipients for immediate execution as soon as
the order is received by the NOW Recipient. Any portion not immediately
executed by the NOW Recipient will be cancelled. If a NOW Order is not
marketable when it is submitted to NYSE Arca System, it will be
cancelled.
Proposed NYSE Amex Rule 900.3NY(p). PNP Order. A ``PNP Order''
(Post No Preference) is a Limit Order to buy or sell that is to be
executed in whole or in part on NYSE Amex, and the portion not so
executed is to be ranked in the Consolidated Book, without routing any
portion of the order to another market center; provided, however, NYSE
Amex shall cancel a PNP Order that would lock or cross the NBBO.
Proposed NYSE Amex Rule 902NY. NYSE Amex is proposing NYSE Amex
Rule 902NY to govern Access and Conduct on the Trading Floor at its new
location at 11 Wall Street. Although the Options Trading Floor will be
physically separated from the New York Stock Exchange and NYSE
Alternext equity trading floor, the floors will be managed and overseen
by combined NYSE Euronext employees, and the standards of dress and
conduct for the Options Floor will be the same as the standards for the
equity floor. Rule 902NY also describes additional standards of dress
and conduct that will apply to the Options Floor, consistent with
standards for the NYSE Arca Options Trading Floor.\6\ ATP Holders on
the Trading Floor will be either Market Makers (including Specialists)
or Floor Brokers.
---------------------------------------------------------------------------
\6\ See NYSE Arca Rule 6.2.
---------------------------------------------------------------------------
The Exchange currently has four general classifications of Market
Maker: Specialist, Registered Options Trader (``ROT''), Supplemental
Registered Options Traders (``SROT''), and Remote Registered Options
Trader (``RROT''). Under the proposed new Rules, these will remain
essentially the same, although ROTs and SROTs will be combined into one
classification as Floor Market Maker. RROTs will become Remote Market
Makers.
There will be no limit to the number of Remote Market Makers, and
no limit to the number of Floor Market Makers. The only significant
change to the operations of Floor Market Makers is that the ``join
quote'' mechanism described in Rule 958-ANTE (Options Transactions of
Registered Options Traders and Supplemental Registered Options Traders
and Remote Registered Options Traders) will not be available on the new
System, and each Floor Market Maker will be required to submit quotes
though their own proprietary quoting device.
Proposed NYSE Amex Rule 902.1NY. Proposed NYSE Amex Rule 902.1NY
will govern access to the System and the expected conduct of ATP
Holders and persons employed by or associated with an ATP Holder. The
Exchange also proposes in Rule 902.1NY to allow access to the System by
Sponsored Participants. ATP Holders, and persons employed by or
associated with any ATP Holder, while using the facilities of NYSE
Amex, may not engage in conduct: (i) Inconsistent with the maintenance
of a fair and orderly market; (ii) apt to impair public confidence in
the operations of NYSE Amex; or (iii) inconsistent with the ordinary
and efficient conduct of business. Activities that may violate these
provisions include, but are not limited to: (a) Failure of a Market
Maker to provide quotations in accordance with Rule 925NY; (b) failure
of a Market Maker to bid or offer within the ranges specified by Rule
925NY; (c) failure of an ATP Holder to adequately supervise a person
employed by or associated with such ATP Holder to ensure that person's
compliance with NYSE Amex Rules; (d) failure to abide by a
determination of NYSE Amex; and (e) refusal to provide information
requested by NYSE Amex.
Proposed NYSE Amex Rule 920NY. Proposed NYSE Amex Rule 920NY
defines ``Market Maker'' on the NYSE Amex System. A Market Maker on the
System will be an ATP Holder registered with NYSE Amex for the purpose
of submitting quotes electronically and making transactions as a
dealer-specialist through the System from on the trading floor or
remotely from off the trading floor. A Market Maker submitting quotes
remotely is not eligible to participate in trades effected in open
outcry except to the extent that such Market Maker's quotation
represents the best bid or offer on the Exchange (``BBO''). Market
Makers will be designated as specialists on NYSE Amex for all purposes
under the Act and the Rules and Regulations thereunder. A Market Maker
on NYSE Amex will be either a Specialist, a Floor Market Maker or a
Remote Market Maker.
A Specialist must provide continuous two-sided quotations
throughout the trading day in its appointed issues for 90% of the time
the Exchange is open for trading in each issue. Specialists are
assigned a location on the Floor where their issues will trade; e-
Specialists are Market Makers located off the Floor who also have a 90%
quoting obligation.
Remote Market Makers (``RMMs'') are Market Makers who must provide
continuous two sided quotations throughout the trading day in their
appointed issues for 60% of the time the Exchange is open for trading
in each issue. RMMs are located off the Floor of the Exchange, and
generally have no rights with respect to open outcry transactions that
take place on their quoted prices.
Floor Market Makers (``FMMs'') are Market Makers who also must
provide continuous two sided quotations throughout the trading day in
their appointed issues for 60% of the time the Exchange is open for
trading in each issue, and, in addition, are appointed to a Trading
Zone on the Floor.
Unless specified, or unless the context requires otherwise, the
term Market Maker in the NYSE Amex Rules refers to Specialists, Floor
Market Makers, and Remote Market Makers.\7\
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\7\ See e-mail dated December 22, 2008, from Andrew B. Stevens,
Chief Counsel--U.S. Equities & Derivatives, NYSE Euronext, Inc., to
Natasha Cowen, Special Counsel, Division of Trading and Markets,
Commission (restoring certain unintentionally omitted text).
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Proposed NYSE Amex Rule 921.1NY. The Exchange is proposing NYSE
Amex Rule 921.1NY to limit Remote Market Maker access to the System to
those ATP Holders or officers, partners, employees or associated
persons of ATP Holders that are registered with NYSE Amex as Market
Maker Authorized Traders (``MMATs''). MMATs will be required to pass an
NYSE Amex conducted examination to demonstrate their knowledge of NYSE
Amex rules prior to being approved by NYSE Amex as an MMAT. NYSE Amex
also may require a Remote Market Maker to provide additional
information NYSE Amex considers necessary to establish whether a person
should be approved as an MMAT. A person may be approved conditionally
as an MMAT subject to any conditions NYSE Amex's Chief Regulatory
Officer considers appropriate in the interests of maintaining a fair
and orderly market.
Rule 921.1NY will permit NYSE Amex to suspend or withdraw the
registration of an MMAT if NYSE Amex determines that: (i) The person
has caused the Market Maker to fail to comply with the Rules of NYSE
Amex;
[[Page 80497]]
(ii) the person is not properly performing the responsibilities of an
MMAT; (iii) the person has failed to meet the conditions described
above (e.g., failed the Exchange administered examination); or (iv)
NYSE Amex believes it is in the best interest of fair and orderly
markets. If NYSE Amex suspends the registration of a person as an MMAT,
the Remote Market Maker must not allow the person to submit quotes and
orders on NYSE Amex System. The registration of an MMAT also will be
withdrawn upon the written request of the ATP Holder for which the MMAT
is registered. Such written request must be submitted on the form
prescribed by NYSE Amex.
Proposed NYSE Amex Rule 922NY. Proposed NYSE Amex Rule 922NY is
based on NYSE Arca Rule 6.34, prohibits ATP Holders who are physically
on the Floor from trading for their own personal account or for an
account in which they have an interest, unless part of their market
making obligations. Floor Brokers are thus prohibited from trading for
an account for which they have an interest except to resolve a bona
fide error resulting from their floor brokerage business.
Proposed NYSE Amex Rule 923NY. NYSE Amex is proposing changes to
the manner in which Market Maker appointments are made. Similar to
current NYSE Arca Rule 6.35, Market Makers will be required to apply
for an appointment in one or more options classes. NYSE Amex may
appoint one Specialist per option class, additional e-Specialists, and
an unlimited number of Market Makers in each class unless NYSE Amex
determines that the number of Market Makers appointed to a particular
option class should be limited whenever, in NYSE Amex's judgment,
system capacity limits the number of Market Makers who may participate
in a particular option class.
NYSE Amex is proposing to delineate the number of classes per ATP
that a Market Maker may select for its appointment as follows: (i)
Market Makers with one ATP will have up to 100 option issues included
in their appointment; (ii) Market Makers with two ATPs will have up to
250 option issues included in their appointment; (iii) Market Makers
with three ATPs will have up to 750 option issues included in their
appointment; and (iv) Market Makers with four ATPs will have all option
issues traded on NYSE Amex included in their appointment. Market Makers
may select from among any option issues traded on NYSE Amex for
inclusion in their appointment, subject to the approval of NYSE Amex.
In addition, Floor Market Makers must select appointment to a
Trading Zone on the Floor. The issues assigned to a Trading Zone by the
Exchange will not be counted towards the number of issues per ATP
selected by the Floor Market Maker. All transactions by a Market Maker
in open outcry effected in issues in their appointed Trading Zone will
be considered as transactions within their primary appointment.
Specialists will be appointed to the Trading Zone designated for their
issues.
NYSE Amex will continue to consider the following factors when
determining whether to approve the appointment of a Market Maker in
each security: (i) The Market Maker's preference; (ii) the financial
resources available to the Market Maker; (iii) the Market Maker's
experience, expertise and past performance in making markets, including
the Market Maker's performance in other securities; (iv) the Market
Maker's operational capability; and (v) the maintenance and enhancement
of competition among Market Makers in each security in which they are
appointed.
Market Makers will be permitted to change the option issues that
are included in their appointment, subject to the approval of NYSE Amex
and provided that such request is made in a form and manner prescribed
by NYSE Amex. In considering whether to approve Market Makers' request
to change their appointment, NYSE Amex will consider the five factors
set forth directly above. Market Makers will be permitted to withdraw
from trading an option issue that is within their appointment by
providing NYSE Amex with three business days' written notice of such
withdrawal. Market Makers who fail to give advance written notice of
withdrawal to NYSE Amex may be subject to formal disciplinary action
pursuant to NYSE Alternext Rule Section 9A.
NYSE Amex will be permitted to suspend or terminate any appointment
of a Market Maker in one or more option issues under Rule 923NY
whenever, in NYSE Amex's judgment, the interests of a fair and orderly
market are best served by such action. A Market Maker will be able to
seek review of any action taken by NYSE Amex pursuant to the proposed
Rule, including the denial of the appointment for, or the termination
or suspension of, a Market Maker's appointment in an option issue or
issues in accordance with Rule Section 9A.
Market Makers will continue to be required to trade at least 75% of
their contract volume per quarter in classes within their appointment.
NYSE Amex will periodically conduct an evaluation of Market Makers
to determine whether they have fulfilled performance standards relating
to, among other things, quality of markets, competition among Market
Makers, observance of ethical standards and administrative factors. In
so doing, NYSE Amex may consider any relevant information including,
but not limited to, the results of a Market Maker evaluation, trading
data, a Market Maker's regulatory history and such other factors and
data as may be pertinent in the circumstances. If NYSE Amex finds any
failure by a Market Maker to meet minimum performance standards, NYSE
Amex will be permitted to take the following actions after written
notice and after opportunity for hearing pursuant to Section 9A: (i)
Restrict appointments to additional option issues in the Market Maker's
primary appointment; (ii) suspend, terminate or restrict an appointment
in one or more option issues; or (iii) suspension, termination, or
restriction of the Market Maker's registration in general. If a Market
Maker's appointment in an option issue or issues has been terminated
because it failed to meet minimum performance standards, the Market
Maker will not be re-appointed as a Market Maker in that option issue
or issues for a period not to exceed six months.
Proposed NYSE Amex Rule 925NY. NYSE Amex is proposing new Rule
925NY to outline Market Maker obligations (i) generally, (ii) within a
Market Maker's appointed classes, and (iii) outside of a Market Maker's
appointed classes on the System. Unlike NYSE Arca Rule 6.37, upon which
it is based, NYSE Amex will not have an in-person requirement. In-
person requirements date back to a time when the only way for Market
Makers to meet their obligations was to be present on the Floor to
respond to a call for a market. In a modern marketplace, most of the
liquidity on the Exchange is available electronically, and only
electronically submitted bids and offers are able to be represented in
the disseminated quote. The intent of the in-person requirement is
actually better served by the 60% quoting obligation for Market Makers,
and the requirement to conduct 75% of one's business within one's
primary appointment.
Proposed NYSE Amex Rule 925.1NY. NYSE Amex is proposing new Rule
925.1NY to outline Market Maker quoting obligations on the System.
Market Makers will be required to undertake a meaningful obligation to
provide continuous two-sided markets in classes traded on the System.
[[Page 80498]]
Proposed Rule 925.1NY generally is consistent with NYSE Arca Rule
6.37B. Under the proposed Rule, Market Makers only will be permitted to
enter quotations in the classes included in their appointment.
Proposed NYSE Amex Rule 925.2NY. NYSE Amex is proposing new Rule
925.2NY that will allow Market Makers to enter on the System all
permitted order types. However, orders do not satisfy or contribute to
meeting a Market Maker's quoting obligation; that obligation is only
satisfied by submission of legal width quotes.
Proposed NYSE Amex Rules 927NY-927.3NY. The Exchange describes in
proposed Rules 927NY-927.3NY Specialists and their rights, duties, and
obligations, including the requirements for Information Barriers for
ATP Holders affiliated with a Specialist.
Proposed NYSE Amex Rules 927.4NY-927.6NY. The Exchange is also
describing in proposed Rules 927.4NY-927.6NY e-Specialists, who are
Remote Market Makers appointed to fulfill certain obligations required
of Specialists. In addition to the Specialist, it is possible to have
multiple e-Specialists.
Proposed NYSE Amex Rule 928NY. NYSE Amex is proposing new Rule
928NY to provide a mechanism for limiting Market Maker risk during
periods of increased and significant trading activity on the System in
a Market Maker's appointment. NYSE Amex proposes setting the ``n''
period for calculation of the number of trades by a Market Maker at one
second. Furthermore, NYSE Amex will no longer generate two-sided quotes
on behalf of a Specialist in the event that there are no Market Makers
quoting in an issue. Rather, in the event that there are no Market
Makers quoting in the issue, the best bids and offers of those orders
residing in the Consolidated Book in the issue will be disseminated as
the BBO. If there are no Market Makers quoting in the issue and there
are no orders in the Consolidated Book in the issue, NYSE Amex System
will disseminate a bid of zero and an offer of zero in that issue.
Proposed NYSE Amex Rule 930NY. Proposed NYSE Amex Rule 930NY
defines a Floor Broker as an ATP Holder who is registered with the
Exchange for the purpose, while on the Floor, to accept and execute
options orders received from ATP Holders and, in certain circumstances,
orders from others.
Proposed NYSE Amex Rules 931NY-932NY. Proposed NYSE Amex Rules
931NY-932NY describe the registration and authorization of Floor
Brokers, and are substantially the same as NYSE Arca Rules 6.44, 6.45,
and 6.46.
Proposed NYSE Amex Rule 933NY. Proposed NYSE Amex Rule 933NY
describes the responsibilities of Floor Brokers, and is substantially
the same as NYSE Arca Rule 6.46, with the addition of insuring
compliance with Section 11(a)(1) of the Act. An ATP Holder must ensure
that each of its transactions complies with Section 11(a) of the Act,
which generally prohibits an ATP Holder from effecting a transaction
trading for its own account, the account of an associated person, or an
account with respect to which it or an associated person thereof
exercises investment discretion (each, a ``covered account'') unless a
valid exemption in the statute or the rules thereunder applies.
In cases where a Floor Broker's transaction would occur at the same
price as one or more orders on the electronic book, the Floor Broker,
if it can rely on no exception other than the ``G'' exception (Section
11(a)(1)(G); Rule 11a1-1(T)), must, in addition to complying with the
other requirements of the ``G'' exemption, yield to all orders in the
Consolidated Book at the same price if the Floor Broker has no ability
to determine that an order in the Consolidated Book is not the order of
a non-ATP Holder. In addition, in the case where an ATP Holder submits
an order to the book (or an order is submitted on its behalf) and such
ATP Holder is relying on the ``G'' exemption, the order must be entered
as IOC.
In addition, when relying on the exemption set forth in Rule 11a2-
2(T) under the Act, a Floor Broker may not enter into the NYSE
Alternext System any order for a covered account, including orders sent
to it by an affiliated ATP Holder from off the floor, if the order is
for such affiliated ATP Holder's own account, the account of an
associated person, or an account over which it or an associated person
exercises investment discretion.
Proposed NYSE Amex Rule 934NY. NYSE Amex is proposing Rules 934NY,
934.1NY, 934.2NY, and 934.3NY to govern crosses effected on the trading
floor. Proposed Rule 934NY describes (i) Customer-to-Customer crosses
and (ii) Non-facilitation (Regular Way) crosses. Proposed Rule 934.1NY
describes Facilitation Cross Transactions. Proposed Rule 934.2NY
describes At-Risk Cross Transactions, while Proposed Rule 934.3NY
describes Solicitation. In all cases, Floor Brokers must request bids
and offers for the option series involved and make the Trading Crowd
and the Trading Official aware of the request for market. Trading crowd
participants will be given a reasonable time to respond with the prices
and sizes at which they would be willing to participate in the cross.
With respect to facilitations, Floor Brokers still will be permitted to
participate in up to 40% of the balance of an order to be facilitated
once Customer bids or offers in the Consolidated Book at or better than
the proposed execution price, have been satisfied.
There is no electronic crossing mechanism proposed for NYSE Amex
System at this time.
Proposed NYSE Amex Rule 935NY. Proposed NYSE Amex Rule 935NY
requires Floor Brokers to expose agency orders for a period of time
before attempting to execute them as Principal, and is based on NYSE
Arca Rule 6.47A.
Proposed NYSE Amex Rule 935NY. The Exchange describes in proposed
Rule 935NY Discretionary Transactions, and limits a Floor Broker's use
of discretion on orders.
Proposed NYSE Amex Rule 937NY. Proposed NYSE Amex Rule 937NY limits
a Floor Broker from acting as both Principal and Agent in the Same
Transaction unless it is part of an error resulting from the Floor
Broker's error or omission.
Proposed NYSE Amex Rule 940NY. Proposed NYSE Amex Rule 940NY
describes the obligations of Trading Officials for fair, orderly, and
competitive market.
Proposed NYSE Amex Rule 952NY. NYSE Amex is proposing new NYSE Amex
Rule 952NY to govern the opening process, which traditionally has been
referred to as a ``rotation,'' and which will be referred to as an
``auction'' on the NYSE Amex System. A ``Trading Auction'' is a process
by which trading is initiated in a specified options class. Trading
Auctions may be employed at the opening of NYSE Amex each business day
or to re-open trading after a trading halt. Trading Auctions will be
conducted automatically by the System.
The System will accept Market and Limit Orders and quotes for
inclusion in the opening auction process (``Auction Process'') until
the Auction Process is initiated in that option series. Prior to the
Auction Process, (``pre-opening''), non-Market Makers will be able to
submit orders to the System and Market Makers will be able to submit
two-sided quotes and orders to the System. Contingency orders (except
for ``opening only'' orders) will not participate in the Auction
Process. Any eligible open orders residing in the Consolidated Book
from the previous trading session will be included in the Auction
Process. After the primary market for the underlying security
disseminates the
[[Page 80499]]
opening trade or the opening quote (or the first disseminated value for
index options), the related option series will be opened automatically
based on the following principles and procedures:
a. The System will determine a single price at which a particular
option series will be opened.
b. Orders and quotes in the System will be matched up with one
another based on price-time priority. Orders at or better than the
opening price will have priority over Market Maker quotes.
c. Orders in the Consolidated Book that were not executed during
the Auction Process shall become eligible for the Core Trading Session
immediately after the conclusion of the Auction Process.
To determine the opening price in a series, upon receipt of the
first consolidated quote or trade of the underlying security, the
System will compare the OPRA NBBO market with an instantaneous BBO
market. NYSE Amex System will generate an opening trade if possible or
open a series on the quoted market. The System then will send the NYSE
Amex BBO quote to OPRA.
The opening price of a series will be the price, as determined by
the System, at which the greatest number of contracts will trade at or
nearest to the midpoint of the initial NBBO disseminated by OPRA, if
any, or the midpoint of the best quote bids and quote offers in the
Consolidated Book. Midpoint pricing will not occur if that price would
result in an order or part of an order being traded through. Instead
the Trading Auction will occur at that limit price, or, if the limit
price is superior to the quoted market, within the range of 75% of the
best quote bid and 125% of the best quote offer. The same process will
be followed to reopen an option class after a trading halt.
Unmatched orders and Market Maker quotes that are marketable
against the initial NBBO will ``sweep'' through the Consolidated Book
and be executed in price/time priority. If the best price is at an away
Market Center(s), orders will be routed away to the relevant Market
Center(s).
Proposed NYSE Amex Rule 953NY. Proposed NYSE Amex Rule 953NY
outlines procedures for halting or suspending trading in a class of
options.
Proposed NYSE Amex Rule 954NY. Proposed NYSE Amex Rule 954NY, Order
Identification, is based on NYSE Arca Rule 6.66; however, the Exchange
is proposing to exclude the requirements to identify the particular ATP
Holder when requesting a quote and size from the crowd, in order to
avoid the possibility of disparate treatment. Additionally, the
Exchange is proposing to not include the Commentaries found in NYSE
Arca Rule 6.66, as the Exchange finds these inconsistent with the
efforts to make the market transparent.
Proposed NYSE Amex Rules 955NY and 956NY. Proposed NYSE Amex Rules
955NY and 956NY describe the requirements for order format and system
entry requirements, and the elements required for keeping a record of
orders, and are based on NYSE Arca Rules 6.67 and 6.68. The Exchange
will not maintain and preserve all electronic orders on behalf of ATP
Holders, but is still bound by its own requirements to preserve records
of orders.
Proposed NYSE Amex Rule 957NY. Proposed NYSE Amex Rule 957NY
describes the reporting duties of ATP Holders. Although based on NYSE
Arca Rule 6.69, the Exchange is proposing to require open outcry
transactions between a Floor Broker and a Market Maker to be reported
by the Floor Broker, regardless of who is the seller. The Floor Broker
will already have the order details systematized by virtue of it being
input into an Electronic Order Capture device.
Proposed NYSE Amex Rule 958NY. Proposed NYSE Amex Rule 958NY
determines that the execution price is binding despite errors in
reporting the price and is based on NYSE Arca Rule 6.70.
Proposed NYSE Amex Rule 959NY. Proposed NYSE Amex Rule 959NY
describes the meaning of premium bids and offers, and is based on NYSE
Arca Rule 6.71.
Proposed NYSE Amex Rule 960NY. Proposed NYSE Amex Rule 960NY
describes the minimum quoting increments and the minimum trading
increments for options, and is based on NYSE Arca Rule 6.72.
Proposed NYSE Amex Rule 961NY. Proposed NYSE Amex Rule 961NY
outlines the manner of bidding or offering, either electronically
through the NYSE Amex System, or in open outcry, and is substantially
the same as NYSE Arca Rule 6.73.
Proposed NYSE Amex Rule 963NY. Proposed NYSE Amex Rule 963NY
describes Priority and Order Allocation Procedures for Open Outcry
trading. These provisions are substantially the same as used on other
floor based options exchanges. Generally, bids and offers are afforded
priority on a price time basis on response to a call for a market. The
Floor Broker or Market Maker who calls for the market is responsible
for determining the sequence in which bids or offers are vocalized. If
bids or offers are made simultaneously, they will be on parity. If an
ATP Holder has previously requested a market to fill an order, and the
crowd has provided a collective response, then the order will be
allocated on a size pro rata basis.
Proposed NYSE Amex Rule 963NY. Proposed Rule 963NY also provides
for a Specialist's entitlement to 40% of the balance of any order after
Customer bids and offers in the Consolidated book have been satisfied;
provided, however, that the Specialist has vocally responded to the
Floor Broker's call for a market, and has responded with a price that
is at least equal to the best bid or offer. In addition, the Rule
describes Priority on Split Price Transactions, which are substantially
the same as approved in NYSE Arca Rule 6.75(h).
Proposed NYSE Amex Rule 963.1NY. Proposed Rule 963.1NY describes
the proper trading procedures for complex orders, which are based on
NYSE Arca Rule 6.75 Commentary .01. and NYSE Arca Rule 6.91
Commentaries .01 and .02.
Proposed NYSE Amex Rule 964NY. NYSE Amex will display all non-
marketable Limit Orders in the Display Order Process of the
Consolidated Book. Except as otherwise permitted by Rule 964NY, all
bids and offers at all price levels in the Consolidated Book will be
displayed on an anonymous basis. The System also will disseminate
current consolidated quotations/last sale information, and such other
market information as may be made available from time to time pursuant
to agreement between NYSE Amex and other Market Centers, consistent
with the Plan for Reporting of Consolidated Options Last Sale Reports
and Quotation Information.
Bids and offers will be ranked and maintained in the Display Order
Process and/or Working Order Process of the Consolidated Book according
to account type and price-time priority.
a. Within the Display Order Process
Limit Orders, with no other conditions, and quotes will be ranked
based on account type and the specified price and the time of original
order or quote entry. The display portion of Reserve Orders (not the
reserve size) will be ranked in the Display Order Process by account
type and at the specified limit price and the time of order entry. When
the display portion of the Reserve Order is decremented completely, the
display portion of the Reserve Order will be refreshed for
(1) The display amount; or
(2) The entire reserve amount, if the remaining reserve amount is
smaller than the display amount, from the reserve portion and shall be
submitted
[[Page 80500]]
and ranked at the specified limit price and the new time that the
displayed portion of the order was refreshed.
b. Within the Working Order Process
(1) The reserve portion of Reserve Orders will be ranked based on
account type and the specified limit price and the time of original
order entry. After the displayed portion of a Reserve Order is
refreshed from the reserve portion, the reserve portion remains ranked
based on the original time of order entry, while the displayed portion
is sent to the Display Order Process with a new time-stamp.
(2) All-or-None Orders will be ranked based on account type and the
specified limit price and the time of order entry.
(3) Stop and Stop Limit Orders will be ranked based on account type
and the specified stop price and the time of order entry.
(4) Stock Contingency Orders will be ranked based on account type
and the specified limit price and the time of order entry.
(5) Tracking Orders will be ranked based on account type and the
specified limit price and the time of order entry.
Consistent with Rule 602 under Regulation NMS, the best-ranked
displayed bids and the best ranked displayed offers in the Consolidated
Book and the aggregate displayed size of such bids and offers
associated with such prices shall be collected and made available to
vendors for dissemination.
Proposed Rule 964NY also outlines the applicable requirements for
order execution and priority on the System. Incoming orders will be
matched against bids and offers in the System based on price, account
type, and time. For an execution to occur in any order process, the
price must be equal to or better than the NBBO, unless the System has
routed orders to away Market Centers at the NBBO.
The NYSE Amex System first will attempt to match incoming
marketable bids and offers against bids or offers in the Display Order
Process at the display price of the resident bids or offers for the
total amount of option contracts available at that price or for the
size of the incoming order, whichever is smaller. For the purposes of
proposed Rule 964NY, the size of an incoming Reserve Order will include
the displayed and reserve size, and the size of the portion of the
Reserve Order resident in the Display Order Process is equal to its
displayed size.
NYSE Amex proposes to allocate incoming marketable bids and offers
as follows:
(1) The incoming marketable bid or offer will be matched against
Customer orders in the Display Order Process at the NBBO.
(2) If there are any remaining contracts to be executed after
matching against Customer orders, and the incoming marketable bid or
offer has been directed to a Directed Order Market Maker, the Directed
Order Market Maker will receive 40% of the balance of the order,
provided the Directed Order Market Maker is quoting at the NBBO for at
least that size.
(3) If the incoming marketable bid or offer has not been directed
to a Directed Order Market Maker, or if the Directed Order Market Maker
is not quoting at the NBBO, the bid or offer will be matched against
the Specialist Pool for 40% of the remaining balance of the bid or
offer, provided the Specialist Pool is quoting at the NBBO for at least
that size.
(4) If the bid or offer has not been executed in its entirety, the
remaining part of the order shall be matched against non-customer bids
and offers on a size pro-rata basis.
If the original bid or offer is for 5 contracts or less, and has
either not been directed to a Directed Order Market Maker, or the
Directed Order Market Maker is not quoting at the NBBO, the entire bid
or offer will be matched against the bid or offer of the Specialist
Pool after being matched against any customer bids or offers in the
Display Order Process, provided the Specialist Pool is quoting at the
NBBO. The participants in the Specialist Pool will be allocated orders
of five contracts or less on a rotating basis, provided the
participant's quoted size is equal to or greater than the size of the
allocation. The Exchange will monitor the sizes of all orders received,
and, on a quarterly basis, will evaluate the percentage of volume
constituted by orders of five contracts or less. If 40% or more of the
order flow is comprised of orders of five contracts or less, the
Exchange will reduce the eligible size for orders included in this
provision.
If the bid or offer has not been executed in its entirety, the
remaining part of the order shall be matched against any Working Orders
at or better than the NBBO.
An incoming marketable bid or offer will be matched against orders
within the Working Order Process in the order of their ranking, at the
price of the displayed portion (for Reserve Orders) or at the limit
price (for most other Working Order types), for the total amount of
option contracts available at that price or for the size of the
incoming bid or offer, whichever is smaller. Incoming marketable bids
and offers will be matched against Tracking Orders in the order of
their ranking, but only at a price equal to the NBBO, and only if the
incoming marketable bid or offer is eligible for routing and is less
than the size of the Tracking Orders.
If an incoming marketable order has not been executed in its
entirety on the System and it has been designated as an order type that
is eligible to be routed away, the order will be routed for execution
to another Market Center(s).
The order will be routed, either in its entirety or as component
order, to another Market Center(s) as a Limit Order equal to the price
and up to the size of the quote published by the Market Center(s). The
remaining portion of the order, if any, will be ranked and displayed in
the Consolidated Book in accordance with the terms of such order and
such order shall be eligible for execution pursuant to Rule 964NY. A
marketable Reserve Order may be routed serially as component orders,
such that each component corresponds to the display size of the Reserve
Order.
An order that has been routed away will remain outside of the
System for a prescribed period of time and may be executed in whole or
in part subject to the applicable trading rules of the relevant Market
Center. While an order remains outside of the System, it will have no
time standing, relative to other orders received from Users at the same
price that may be executed against the Consolidated Book.
Requests from Users to cancel their orders while the orders are
routed away to another Market Center and remain outside the System will
be processed subject to the applicable trading rules of the relevant
Market Center.
Where an order or portion of an order is routed away and is not
executed either in whole or in part at the other Market Center (i.e.,
all attempts at the fill are declined or timed-out), the order shall be
ranked and displayed in the Consolidated Book in accordance with the
terms of such order, and such order shall be eligible for execution
under proposed Rule 964NY, but will not have time standing relative to
other orders received from Users at the same price while it was outside
the System.
Proposed NYSE Amex Rule 964.1NY describes Directed Orders, and is
substantially the same as NASDAQ OMX PHLX Rule 1080(l). It would be
considered a violation of just and equitable principals of trade and a
misuse of non public information for a Directed Order Market Maker to
become aware of an impending Directed Order so as to improve the quote
to momentarily match the NBBO, and then worsen the price of the quote
following execution of the Directed Order.
[[Page 80501]]
Proposed NYSE Amex Rule 964.2NY. Proposed NYSE Amex Rule 964.2NY
describes the participation entitlement of Specialists and e-
Specialists, which collectively comprise the Specialist Pool, as
defined in proposed Rule 900.3NY(y). Generally, the Specialist Pool is
entitled to 40% of the remaining balance of an order after any orders
on behalf of Customers in the Consolidated Book are satisfied. The
Specialist's participation within the Pool is granted extra weighting,
with no more than 66 2/3% if there is only one e-Specialist, and no
more than 50% if there are two or more e-Specialists.
Proposed NYSE Amex Rule 965NY. Proposed NYSE Amex Rule 965NY,
Contract Made on Acceptance of Bid or Offer, is based on NYSE Arca Rule
6.77 and on NYSE Alternext Rule 953--ANTE.
Proposed NYSE Amex Rule 970NY. Proposed NYSE Amex Rule 970NY is
substantially the same as NYSE Arca Rule 6.86. Rule 970NY will state
the minimum quotation size will be one contract. NYSE Arca Rule 6.86
Commentary .03 is proposed to be designated as NYSE Amex Rule 970.1NY.
Proposed NYSE Amex Rule 975NY. The Exchange is also proposing new
NYSE Amex Rule 975NY--Obvious Errors and Catastrophic Errors. Proposed
Rule 975NY is substantially based on NYSE Arca Rule 6.87.
Proposed NYSE Amex Rules 990NY-993NY. Proposed NYSE Amex Rules
990NY-993NY describe the Operation of the Linkage, Order Protection,
Locked and Crossed Markets, and Limitations on Principal Order Access.
These Rules are essentially the same as the uniform rules governing
Linkage on all options exchanges, including existing NYSE Alternext
Rules 940-944, and Rule 941 ANTE.
Proposed NYSE Amex Rule 995NY. NYSE Amex proposes new Rule 995NY
which describes Prohibited Conduct. The first section of the proposed
rule prohibits conduct that threatens, harasses, intimidates,
constitutes a ``refusal to deal'' or retaliates against another ATP
Holder or associated person of an ATP Holder. The second section
prohibits de facto market making through the use of Customer orders,
since Customer orders have priority at any price over the bids and
offers of non-customers. The third section prohibits ATP Holders who
have knowledge of the material terms and conditions of an order, the
execution of which is imminent, from buying or selling related options,
underlying securities, or related securities, until the terms of the
order are disclosed to the trading crowd, or the execution of the order
is no longer considered to be imminent.
In addition, the Exchange is proposing to add Part 1C to the
Supplementary Material of NYSE Alternext Rule 476A. Part 1C lists
options rule violations and their applicable fines that will be in
effect upon implementation of the NYSE Amex System and the relocation
of the Trading Floor to 11 Wall Street, New York, NY.
Current NYSE Alternext Rule 476 includes Sanctioning Guidelines in
its Supplementary Material. While the principles to be considered in
determining sanctions will continue, the guidelines after Supplementary
Material .01(C)(19) that describe specific types of violations all
pertain to the existing NYSE Alternext Rules, and will not apply to
violations of Rules in Section 900NY.
The Exchange believes the proposed new rules will reduce regulatory
confusion, encourage efficient transactions on both the electronic
market and in open outcry trading, and delineate an unambiguous
standard for conducting a fair and orderly market.
2. Statutory Basis
The Exchange believes that this filing is consistent with Section
6(b) of the Act,\8\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\9\ in particular, in that it is designed to prevent
fraudulent and manipulative acts and practices, to promote just and
equitable principles of trade, to foster cooperation and coordination
with persons engaged in facilitating transactions in securities, and to
remove impediments to, and perfect the mechanisms of a free and open
market and a national market system.
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\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 35 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(A) By order approve the proposed rule change, or
(B) Institute proceedings to determine whether the proposed rule
change should be disapproved.
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-2008-14 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street, NE., Washington, DC 20549.
All submissions should refer to File Number SR-NYSEALTR-2008-14. 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, 100 F Street,
NE., Washington, DC 20549, on official business days between the hours
of 10 a.m. and 3 p.m.
[[Page 80502]]
Copies of such 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-2008-14 and should be submitted
on or before January 21, 2009.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-31053 Filed 12-30-08; 8:45 am]
BILLING CODE 8011-01-P
