Self-Regulatory Organizations; NYSE Alternext US LLC; Notice of Filing of Proposed Rule Change To Establish Its New Risk Management Gateway Service, 80502-80504 [E8-31101]

Download as PDF 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 31DEN1 pwalker on PROD1PC71 with NOTICES Federal Register / Vol. 73, No. 251 / Wednesday, December 31, 2008 / Notices Exchange’s trading systems for execution. When a Sponsored Participant’s order passes through RMG, RMG software determines whether the order complies with order criteria that the Sponsoring Member Organization has established for that Sponsored Participant. The order criteria pertain to such matters as the size of the order (per order or daily quantity limits) or the credit limit (per order or daily value) that the Sponsoring Member Organization has established for the Sponsored Participant. Additional risk filters may also be selected by the Sponsoring Member Organization relating to specific symbols or end users. If the order is consistent with the parameters set by the Sponsoring Member Organization, then RMG allows the order to continue along its path to the Exchange’s trading systems. If the order falls outside of those parameters, then RMG returns the order to the Sponsored Participant. RMG will only return an order to the Sponsored Participant when the order fails to comply with the criteria set by the Sponsoring Member Organization. RMG software interacts with orders only prior to the orders’ entry into the Exchange’s trading system for execution. RMG does not have order execution or trade reporting capabilities (though it will allow a Sponsoring Member Organization to monitor the orders of its Sponsored Participants). RMG maintains a record of all messages relating to Sponsored Participants’ transactions and supplies a copy of such messages to the applicable Sponsoring Member Organization. The Sponsoring Member Organization, and not RMG, will have full responsibility for ensuring that Sponsored Participants’ sponsored access to the Exchange complies with the Exchange’s sponsored access rules. The use of RMG by a Member Organization does not automatically constitute compliance with Exchange rules. NYXATS will host RMG software on NYXATS’ infrastructure. After passing through RMG software, each order will enter the NYSE Common Customer Gateway (CCG) 9 for connectivity to the Exchange’s matching engine. In the future NYXATS may integrate RMG into the NYSE CCG for more direct access to the Exchange’s matching engine. The Exchange does not require Sponsoring Member Organizations to use RMG (even when it is integrated 9 The NYSE CCG is a part of the NYSE Alternext Trading Systems, operated on behalf of the Exchange by NYSE. VerDate Aug<31>2005 17:41 Dec 30, 2008 Jkt 217001 into NYSE CCG in the future). Sponsoring Member Organizations are free to use a competing riskmanagement service or to use none at all. The Exchange will not provide preferential treatment to Sponsoring Member Organizations using RMG. The Exchange proposes to make RMG available to its members and member organizations pursuant to contractual arrangements. The Exchange believes that RMG will offer its members and member organizations another option in the efficient risk management of its Sponsored Participant’s access to the NYSE Alternext Trading Systems. 80503 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 Exchange 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, 2. Statutory Basis including whether the proposed rule change is consistent with the Act. The basis under the Act for this proposed rule change is the requirement Comments may be submitted by any of under section 6(b)(5) 10 that an Exchange the following methods: have rules that are designed to promote Electronic Comments just and equitable principles of trade, to • Use the Commission’s Internet remove impediments to and perfect the comment form (http://www.sec.gov/ mechanism of a free and open market rules/sro.shtml); or and a national market system and, in • Send an e-mail to rulegeneral, to protect investors and the comments@sec.gov. Please include File public interest. The proposed rule No. SR–NYSEALTR–2008–12 on the change also is designed to support the subject line. principles of section 11A(a)(1) 11 in that it seeks to assure economically efficient Paper Comments execution of securities transactions, • Send paper comments in triplicate make it practicable for brokers to to Secretary, Securities and Exchange execute investors’ orders in the best Commission, Station Place, 100 F Street, market and provide an opportunity for NE., Washington, DC 20549–1090. investors’ orders to be executed without All submissions should refer to File the participation of a dealer. The Number SR–NYSEALTR–2008–12. This Exchange believes that RMG is file number should be included on the consistent with all the aforementioned subject line if e-mail is used. To help the principles because it fosters competition Commission process and review your by providing another option in the comments more efficiently, please use efficient risk management of trading on only one method. The Commission will the Exchange without the participation post all comments on the Commission’s of a dealer. Internet Web site (http://www.sec.gov/ rules/sro.shtml). Copies of the B. Self-Regulatory Organization’s submission, all subsequent Statement on Burden on Competition amendments, all written statements The Exchange does not believe that with respect to the proposed rule the proposed rule change will impose change that are filed with the any burden on competition that is not Commission, and all written necessary or appropriate in furtherance communications relating to the of the purposes of the Act. proposed rule change between the C. Self-Regulatory Organization’s Commission and any person, other than Statement on Comments on the those that may be withheld from the Proposed Rule Change Received From public in accordance with the Members, Participants, or Others provisions of 5 U.S.C. 552, will be available for inspection and copying in No written comments were solicited or received with respect to the proposed the Commission’s Public Reference Room, on official business days between rule change. the hours of 10 a.m. and 3 p.m. Copies III. Date of Effectiveness of the of such filing also will be available for Proposed Rule Change and Timing for inspection and copying at the principal Commission Action office of the Exchange. All comments received will be posted without change; Within 35 days of the date of publication of this notice in the Federal the Commission does not edit personal identifying information from 10 15 U.S.C. 78f(b)(5). submissions. You should submit only 11 15 U.S.C. 78k–1(a)(1). information that you wish to make PO 00000 Frm 00143 Fmt 4703 Sfmt 4703 E:\FR\FM\31DEN1.SGM 31DEN1 80504 Federal Register / Vol. 73, No. 251 / Wednesday, December 31, 2008 / Notices available publicly. All submissions should refer to File Number SR– NYSEALTR–2008–12 and should be submitted on or before January 21, 2009. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.12 Florence E. Harmon, Acting Secretary. [FR Doc. E8–31101 Filed 12–30–08; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–59146; File No. SR– NYSEArca–2008–136] Self-Regulatory Organizations; Notice of Filing of Proposed Rule Change by NYSE Arca, Inc. Amending NYSE Arca Equities Rule 5.2(j)(6), the Exchange’s Initial Listing Standards for Equity Index-Linked Securities, CommodityLinked Securities, Currency-Linked Securities, Fixed Income Index-Linked Securities, Futures-Linked Securities and Multifactor Index-Linked Securities December 22, 2008. Pursuant to section 19(b)(1) 1 of the Securities Exchange Act of 1934 (the ‘‘Act’’) 2 and Rule 19b–4 thereunder,3 notice is hereby given that on December 10, 2008, NYSE Arca, Inc. (‘‘NYSE Arca’’ 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 proposes to amend NYSE Arca Equities Rule 5.2(j)(6), the Exchange’s initial listing standards for Equity Index-Linked Securities, Commodity-Linked Securities, Currency-Linked Securities, Fixed Income Index-Linked Securities, Futures-Linked Securities and Multifactor Index-Linked Securities. The text of the proposed rule change is available on the Exchange’s Web site at http://www.nyse.com, at the Exchange’s principal office and at the Commission’s Public Reference Room. 12 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 15 U.S.C. 78a. 3 17 CFR 240.19b–4. 1 15 VerDate Aug<31>2005 17:41 Dec 30, 2008 Jkt 217001 II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange is proposing to amend NYSE Arca Equities Rule 5.2(j)(6), the Exchange’s initial listing standards for Equity Index-Linked Securities, Commodity-Linked Securities, Currency-Linked Securities, Fixed Income Index-Linked Securities, Futures-Linked Securities and Multifactor Index-Linked Securities (‘‘Index-Linked Securities’’), to provide for greater flexibility in the listing criteria for such securities, as set forth below. Currently, Rule 5.2(j)(6)(A)(d) provides that the payment at maturity of a cash amount for Index-Linked Securities may or may not provide for a multiple of the direct or inverse performance of an underlying Reference Asset,4 and in no event will a loss or 4 As defined in Rule 5.2(j)(6), ‘‘Reference Assets’’ include ‘‘Equity Reference Assets,’’ which consist of an underlying index or indexes of equity securities; ‘‘Commodity Reference Assets,’’ which consist of a basket or index of one or more physical commodities or commodity futures, options or other commodity derivatives or Commodity-Based Trust Shares (as defined in Rule 8.201); ‘‘Currency Reference Assets,’’ which include a basket or index of one or more currencies, or options or currency futures or other currency derivatives or Currency Trust Shares (as defined in Rule 8.202); ‘‘Fixed Income Reference Asset’’ which consist of one or more indexes or portfolios of notes, bonds, debentures or evidence of indebtedness that include, but are not limited to, U.S. Department of Treasury securities, government-sponsored entity securities, municipal securities, trust preferred securities, supranational debt and debt of a foreign country or a subdivision thereof; ‘‘Futures Reference Asset’’ which consists of an index of (a) futures on Treasury Securities, GSE Securities, supranational debt and debt of a foreign country or a subdivision thereof, or options or other derivatives on any of the foregoing; or (b) interest rate futures or options or derivatives; and ‘‘Multifactor Reference Asset’’ which consists of any combination of two or more Equity Reference Assets, Commodity Reference Assets, Currency Reference Assets, Fixed Income Reference Assets or Futures Reference Assets. PO 00000 Frm 00144 Fmt 4703 Sfmt 4703 negative payment at maturity be accelerated by a multiple that exceeds twice the performance of an underlying Reference Asset. The Exchange proposes to amend Rule 5.2(j)(6)(A)(d) to allow the Exchange to consider for listing and trading Index-Linked Securities that provide that in no event will a loss or negative payment at maturity be accelerated by a multiple that exceeds three times the performance of an underlying Reference Asset. The Exchange proposes these changes in order to allow the Exchange to initially consider for listing and trading Index-Linked Securities that employ investment strategies similar or analogous to certain Exchange-Traded Funds which list and trade on the Exchange pursuant to NYSE Arca Equities Rule 5.2(j)(3).5 Currently, Exchange-Traded Funds are able to seek daily investment results, before fees and expenses, that correspond to three times the inverse or opposite of the daily performance (¥300%) of the underlying indexes. Limitation on Leverage In connection with Index-Linked Securities that seek to provide investment results, before fees and expenses, in an amount that exceeds ¥300% of the percentage performance of the underlying benchmark index, the Exchange’s proposal would continue to require specific Commission approval pursuant to section 19(b)(2) of the Act.6 In particular, NYSE Arca Equities Rule 5.2(j)(6) would expressly prohibit IndexLinked Securities that seek to provide investment results, before fees and expenses, in an amount that exceeds ¥300% of the percentage performance of the underlying benchmark index, from being approved by the Exchange for listing and trading pursuant to Rule 19b–4(e) under the Act.7 The Exchange believes that a ¥300% limitation will permit Index-Linked Securities to provide investors with an incremental additional degree of leverage similar to instruments available to professional investors to manage risk. In addition, recommendations to investors of transactions in IndexLinked Securities are subject to the customer suitability requirements of NYSE Arca Equities Rule 9.2, as discussed below. 5 See Securities Exchange Act Release No. 58825 (October 21, 2008), 73 FR 63756 (October 27, 2008) (SR–NYSEArca–2008–89). Order approving inverse fund shares that cannot exceed ¥300% of the inverse or opposite of the daily performance of an underlying index. 6 15 U.S.C. 78s(b)(2). 7 17 CFR 240.19b–4(e). E:\FR\FM\31DEN1.SGM 31DEN1

Agencies

[Federal Register Volume 73, Number 251 (Wednesday, December 31, 2008)]
[Notices]
[Pages 80502-80504]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-31101]


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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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange, 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, 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\
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    \3\ NYXATS similarly seeks to offer the same services to the 
NYSE through a separate filing, SR-NYSE-2008-101.
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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.
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    \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.
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    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\
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    \6\ See Securities Exchange Act Release No. 58705 (October 1, 
2008), 73 FR 58995 (October 8, 2008) (SR-Amex 2008-63) (approving 
the Equities Relocation).
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    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\
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    \7\ See also Rule 2--NYSE Alternext Equities.
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    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.
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    \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.
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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

[[Page 80503]]

Exchange's trading systems for execution. When a Sponsored 
Participant's order passes through RMG, RMG software determines whether 
the order complies with order criteria that the Sponsoring Member 
Organization has established for that Sponsored Participant. The order 
criteria pertain to such matters as the size of the order (per order or 
daily quantity limits) or the credit limit (per order or daily value) 
that the Sponsoring Member Organization has established for the 
Sponsored Participant. Additional risk filters may also be selected by 
the Sponsoring Member Organization relating to specific symbols or end 
users.
    If the order is consistent with the parameters set by the 
Sponsoring Member Organization, then RMG allows the order to continue 
along its path to the Exchange's trading systems. If the order falls 
outside of those parameters, then RMG returns the order to the 
Sponsored Participant. RMG will only return an order to the Sponsored 
Participant when the order fails to comply with the criteria set by the 
Sponsoring Member Organization.
    RMG software interacts with orders only prior to the orders' entry 
into the Exchange's trading system for execution. RMG does not have 
order execution or trade reporting capabilities (though it will allow a 
Sponsoring Member Organization to monitor the orders of its Sponsored 
Participants). RMG maintains a record of all messages relating to 
Sponsored Participants' transactions and supplies a copy of such 
messages to the applicable Sponsoring Member Organization.
    The Sponsoring Member Organization, and not RMG, will have full 
responsibility for ensuring that Sponsored Participants' sponsored 
access to the Exchange complies with the Exchange's sponsored access 
rules. The use of RMG by a Member Organization does not automatically 
constitute compliance with Exchange rules.
    NYXATS will host RMG software on NYXATS' infrastructure. After 
passing through RMG software, each order will enter the NYSE Common 
Customer Gateway (CCG) \9\ for connectivity to the Exchange's matching 
engine. In the future NYXATS may integrate RMG into the NYSE CCG for 
more direct access to the Exchange's matching engine.
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    \9\ The NYSE CCG is a part of the NYSE Alternext Trading 
Systems, operated on behalf of the Exchange by NYSE.
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    The Exchange does not require Sponsoring Member Organizations to 
use RMG (even when it is integrated into NYSE CCG in the future). 
Sponsoring Member Organizations are free to use a competing risk-
management service or to use none at all. The Exchange will not provide 
preferential treatment to Sponsoring Member Organizations using RMG.
    The Exchange proposes to make RMG available to its members and 
member organizations pursuant to contractual arrangements. The Exchange 
believes that RMG will offer its members and member organizations 
another option in the efficient risk management of its Sponsored 
Participant's access to the NYSE Alternext Trading Systems.
2. Statutory Basis
    The basis under the Act for this proposed rule change is the 
requirement under section 6(b)(5) \10\ that an Exchange have rules that 
are designed to promote just and equitable principles of trade, to 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system and, in general, to protect 
investors and the public interest. The proposed rule change also is 
designed to support the principles of section 11A(a)(1) \11\ in that it 
seeks to assure economically efficient execution of securities 
transactions, make it practicable for brokers to execute investors' 
orders in the best market and provide an opportunity for investors' 
orders to be executed without the participation of a dealer. The 
Exchange believes that RMG is consistent with all the aforementioned 
principles because it fosters competition by providing another option 
in the efficient risk management of trading on the Exchange without the 
participation of a dealer.
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    \10\ 15 U.S.C. 78f(b)(5).
    \11\ 15 U.S.C. 78k-1(a)(1).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    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 Exchange 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 (http://
www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File No. SR-NYSEALTR-2008-12 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, Station Place, 100 F Street, NE., Washington, 
DC 20549-1090.

All submissions should refer to File Number SR-NYSEALTR-2008-12. This 
file number should be included on the subject line if e-mail is used. 
To help the Commission process and review your comments more 
efficiently, please use only one method. The Commission will post all 
comments on the Commission's Internet Web site (http://www.sec.gov/
rules/sro.shtml). Copies of the submission, all subsequent amendments, 
all written statements with respect to the proposed rule change that 
are filed with the Commission, and all written communications relating 
to the proposed rule change between the Commission and any person, 
other than those that may be withheld from the public in accordance 
with the provisions of 5 U.S.C. 552, will be available for 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

[[Page 80504]]

available publicly. All submissions should refer to File Number SR-
NYSEALTR-2008-12 and should be submitted on or before January 21, 2009.
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    \12\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-31101 Filed 12-30-08; 8:45 am]
BILLING CODE 8011-01-P