Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by New York Stock Exchange LLC Amending NYSE Rules 116 and 123C To Create a Single Closing Print To Be Reported to the Consolidated Tape for Each Security, 6444-6447 [E9-2650]
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Federal Register / Vol. 74, No. 25 / Monday, February 9, 2009 / Notices
available in the System, orders entered
prior to 9:30 a.m. will all be eligible for
execution during the Exchange’s premarket trading session, from 8 a.m. to
9:30 a.m. Market participants that seek
to limit their trading activity to regular
market hours may do so by limiting the
times of their order entry to those hours.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
the provisions of Section 6 of the Act,5
in general and with Section 6(b)(5) of
the Act,6 in particular, in that it would
promote just and equitable principles of
trade, remove impediments to, and
perfect the mechanism of, a free and
open market and a national market
system, and, in general, protect
investors and the public interest by
prevent [sic] orders from queuing in the
System prior to 9:30 a.m. The Exchange
believes that this will provide for more
orderly executions in the Exchange at
that time.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will result in
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
Written comments on the proposed
rule change were neither solicited nor
received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing rule does not:
(i) Significantly affect the protection of
investors or the public interest; (ii)
impose any significant burden on
competition; or (iii) become operative
for 30 days from the date on which it
was filed, or such shorter time as the
Commission may designate if consistent
with the protection of investors and the
public interest, the proposed rule
change has become effective pursuant to
Section 19(b)(3)(A) of the Act 7 and Rule
19b–4(f)(6) thereunder.8
5 15
U.S.C. 78f.
U.S.C. 78f(b)(5).
7 15 U.S.C. 78s(b)(3)(A).
8 17 CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6)(iii) requires a self-regulatory organization to
provide the Commission with written notice of its
intent to file the proposed rule change, along with
a brief description and text of the proposed rule
change, at least five business days prior to the date
of filing of the proposed rule change, or such
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The Exchange has asked the
Commission to waive the operative
delay to permit the proposed rule
change to become operative prior to the
30th day after filing. The Commission
has determined that waiving the 30-day
operative delay of the Exchange’s
proposal is consistent with the
protection of investors and the public
interest because such waiver will enable
the Exchange to promote more orderly
executions at the beginning of its regular
trading hours, without delay.9
Therefore, the Commission designates
the proposal operative upon filing.
At any time within 60 days of the
filing of such proposed rule change, the
Commission may summarily abrogate
such rule change if it appears to the
Commission that such action is
necessary or appropriate in the public
interest, for the protection of investors,
or otherwise in furtherance of the
purposes of the Act.
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.
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 No.
SR–BX–2009–006 and should be
submitted on or before March 2, 2009.
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:
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.10
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–2579 Filed 2–6–09; 8:45 am]
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
No. SR–BX–2009–006 on the subject
line.
SECURITIES AND EXCHANGE
COMMISSION
Paper Comments
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–1090.
All submissions should refer to File
Number SR–BX–2009–006. 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
shorter time as designated by the Commission. The
Exchange has satisfied this requirement.
9 For purposes only of waiving the 30-day
operative delay, the Commission has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
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BILLING CODE 8011–01–P
[Release No. 34–59345; File No. SR–NYSE–
2009–10]
Self-Regulatory Organizations; Notice
of Filing and Immediate Effectiveness
of Proposed Rule Change by New York
Stock Exchange LLC Amending NYSE
Rules 116 and 123C To Create a Single
Closing Print To Be Reported to the
Consolidated Tape for Each Security
February 3, 2009.
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 January
30, 2009, New York Stock Exchange
LLC (‘‘NYSE’’ or the ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been prepared by the self-regulatory
organization. NYSE filed the proposed
rule change pursuant to Section
19(b)(3)(A) of the Act 4 and Rule 19b–
4(f)(6) thereunder,5 which renders it
10 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.
4 15 U.S.C. 78s(b)(3)(A).
5 17 CFR 240.19b–4(f)(6).
1 15
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Federal Register / Vol. 74, No. 25 / Monday, February 9, 2009 / Notices
effective upon filing with the
Commission. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend
NYSE Rules 116 (‘‘Stop’’ Constitutes
Guarantee) and 123C (Market On The
Close Policy And Expiration
Procedures) to create a single closing
print to be reported to the Consolidated
Tape for each security.
The text of the proposed rule change
is available at https://www.nyse.com, the
Exchange, and the Commission’s Public
Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
sroberts on PROD1PC70 with NOTICES
1. Purpose
Through this filing the Exchange
seeks to amend NYSE Rules 116 and
123C to create a single closing print to
be reported to the Consolidated Tape for
each security.
Current Reporting of Closing
Transactions
NYSE Rules 116.40 and 123C
prescribe, inter alia, the procedures for
the execution of the entry of market atthe-close (‘‘MOC’’) and limit at-the-close
(‘‘LOC’’) orders 6 and the determination
of the closing print(s) to be reported to
the Consolidated Tape for each security
at the close of trading.
Pursuant to NYSE Rule 123C market
participants may enter an MOC order to
have that order executed as part of the
closing transaction at the price of the
close.7 Similar to a market order, an
6 In the NYSE Rules and for the purposes of this
discussion, the terms ‘‘market-on-close’’ and ‘‘limiton-close’’ are used interchangeably with ‘‘market-atthe-close’’ and ‘‘limit-at-the-close’’.
7 See NYSE Rule 123C(1).
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MOC order is to be executed in its
entirety at the closing price; however, if
the order is not executed as a result of
a trading halt or because of its terms
(e.g., buy minus or sell plus), the MOC
order is cancelled.8
Market participants that seek to have
their orders executed on the close but
are sensitive to price may, pursuant to
NYSE Rule 123C, enter LOC orders that
will be eligible for execution in the
closing transaction, provided that the
closing price is at or within the limit
specified.9 An LOC order is not
guaranteed an execution in the closing
transaction; rather, only an LOC order
with a limit price that is better 10 than
the closing price in the subject security
is guaranteed an execution.11 An LOC
order limited at the closing price is
sequenced with other LOC orders on the
NYSE Display Book® 12 (‘‘Display
Book’’) in time priority and will be
available for execution after all other
orders on the Display Book at the
closing price are executed regardless of
when such other orders are received.13
Pursuant to NYSE Rule 123C(5), at
3:40 p.m. if a security has a disparity
between MOC and marketable LOC
interest to buy and MOC and marketable
LOC interest to sell of 50,000 shares or
more the assigned DMM is required to
send a message from Display Book that
is published to the Consolidated Tape
informing the investing public of the
disparity (‘‘Mandatory Indication’’). The
Mandatory Indication includes the
symbol, the amount and the side of the
imbalance. In addition, to the
Mandatory Indication, a DMM may,
with Floor Official approval,
disseminate an imbalance publication
that is for a disparity of less than 50,000
shares when the imbalance in the
security is significant in relation to the
average daily trading volume in the
security. At 3:50 p.m. the DMM is
required to provide an update of the
previous imbalance publications.
8 See
Id.
NYSE Rule 123C(2).
10 As used herein, better than the closing price
means an order that is lower than the bid in the case
of an order to sell or higher than the offer in the
case of an order to buy.
11 It should be noted that orders are cancelled if
there is a trading halt in the security that is not
lifted prior to the close of trading.
12 The Display Book system is an order
management and execution facility. The Display
Book system receives and displays orders to the
DMM, contains the Book, and provides a
mechanism to execute and report transactions and
publish results to the Consolidated Tape. The
Display Book system is connected to a number of
other Exchange systems for the purposes of
comparison, surveillance, and reporting
information to customers and other market data and
national market systems.
13 See NYSE Rule 123C(2).
9 See
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At the close of trading, any closing
imbalance of MOC and marketable LOC
orders are calculated by netting (i.e.,
pairing off) the aggregate amount of
MOC and marketable LOC buy orders
against the aggregate amount of MOC
and marketable LOC sell orders.14
Exchange systems calculate the number
of MOC and marketable LOC orders on
each side of the market and pair them
off. Where there is an imbalance (i.e.
more orders to buy than sell or vice
versa), the shares constituting the
imbalance are executed against the offer
(in case of a buy imbalance) or the bid
(in the case of a sell imbalance).15 This
transaction is reflected on the first
closing print from the NYSE to the
Consolidated Tape for the particular
security.16 The DMM then pairs off the
remaining MOC and marketable LOC
buy and sell orders against each other at
the price at which the imbalanced
shares were executed.17 This ‘‘pair off’’
transaction is reported as a second
closing print from the NYSE to the
Consolidated Tape as ‘‘stopped
stock.’’ 18
If there is no imbalance, the aggregate
buy and sell MOC and marketable LOC
orders are paired off at the price of the
last sale of the subject security on the
Exchange prior to the close of trading in
the security.19 This transaction is
reported to the Consolidated Tape in a
single closing print as ‘‘stopped
stock.’’ 20
Proposed Single Closing Print
The closing transaction on the
Exchange continues to be a manual
auction in order to facilitate greater
price discovery and allow for the
maximum interaction between market
participants. Currently, increased
volatility in the market has given rise to
the need to simplify procedures. In
order to continue to provide timely
closing of securities, the Exchange
believes that it is necessary to reduce
the manual processing required of the
DMM to promote an even more efficient
close. As such, the Exchange seeks to
create a single closing print to be
reported to the Consolidated Tape for
each security. The Exchange believes
that this will work to optimize the
efficient operation of the closing
process.
The Exchange therefore proposes to
amend NYSE Rules 116 and 123C(3) to
14 See
NYSE Rules 116.40 and 123C(3).
NYSE Rules 116.40(B) and 123C(3)(A).
16 See Id.
17 See NYSE Rule 123C(3)(A).
18 See NYSE Rules 116.40(C) and 123C(3)(A).
19 See NYSE Rules 116.40(C) and 123C(3)(B).
20 See Id.
15 See
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Federal Register / Vol. 74, No. 25 / Monday, February 9, 2009 / Notices
sroberts on PROD1PC70 with NOTICES
provide for a single closing print to be
reported to the Consolidated Tape
system for each listed security.
Currently, the DMM is required to
manually enter the imbalance and the
paired prints to Exchange systems for
reporting to the Consolidated Tape.
Requiring two prints impedes DMMs’
efficiency in reporting the closing
transaction.
Multiple closing prints were used to
provide information about the share
imbalances that impacted the closing
price of a security on the Exchange. In
May 2008, the Exchange amended NYSE
Rule 123C to allow Exchange systems to
disseminate a data feed of real-time
order imbalances that accumulate prior
to the close of trading on the Exchange
(‘‘Order Imbalance Information’’).21
Order Imbalance Information is
supplemental information disseminated
by the Exchange prior to a closing
transaction.22 Specifically, Order
Imbalance Information is disseminated
every fifteen seconds between 3:40 p.m.
and 3:50 p.m.; thereafter, it is
disseminated every five seconds
between 3:50 p.m. and 4 p.m. On any
day that the scheduled close of trading
on the Exchange is earlier than 4 p.m.,
the dissemination of Order Imbalance
Information commences 20 minutes
before the scheduled closing time. On
those days, Order Imbalance
Information is disseminated every
fifteen seconds for approximately 10
minutes; thereafter, the Order Imbalance
Information is disseminated ever [sic]
five seconds until the scheduled closing
time.
The Exchange believes that the Order
Imbalance Information achieves the goal
of providing real-time detail and
transparency for market participants
about the factors that impact the closing
price of a security. The Exchange further
notes that the current imbalance
publications pursuant to NYSE Rule
123C(5) will continue to be
disseminated in accordance with the
provisions of the rule. As such, the
Exchange believes that there no longer
exists a need for the dissemination of
two separate prints at the close.
The Exchange therefore proposes that
the imbalance, if any, paired off closing
transactions and stop orders elected for
21 See Securities Exchange Act Release Nos.
57862 (May 23, 2008), 73 FR 31174 (May 30, 2008)
(SR–NYSE–2008–41) and 57861 (May 23, 2008), 73
FR 31905 (June 4, 2008) (SR–NYSE–2008–42). On
December 19, 2008, the Exchange filed with the
Securities and Exchange Commission to offer, for a
separate fee, the Order Imbalance Information
datafeed as a stand alone market data product. See
Securities Exchange Act Release No. 59202 (January
6, 2009) 74 FR 1744 (January 13, 2009) (SR–NYSE–
2008–132).
22 See NYSE Rule 123C(6).
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execution on the close be reported to the
Consolidated Tape System as a single
transaction and print.23 The Exchange
proposes to amend the text of NYSE
Rule 116.40(C) to remove language that
states that ‘‘pair off’’ transactions should
be printed to the Consolidated Tape as
stopped stock. Similarly, the Exchange
proposes to amend NYSE Rule 123C(3)
(Closing Prints) to state that the
imbalance and the pair off amounts
shall be printed to the Consolidated
Tape as a single transaction.
Pursuant to the above proposed
changes, a single print close in a
security would occur as described in the
example below.
Proposed Technical Amendment to
NYSE Rule 123C(3)
The DMM for stock XYZ has determined
that the closing price in the stock will be
$30.25. The last sale price on the Exchange
was $30.00. The DMM has 6,000,000 shares
of MOC and marketable LOC buy orders up
to a price of $30.25. On the sell side, there
are 5,000,000 MOC and marketable LOC sell
orders down to a price of $30.24. The DMM
pairs 5,000,000 shares of MOC and
marketable LOC buy orders against the
5,000,000 shares of MOC and marketable
LOC sell orders at a price of $30.25, leaving
an imbalance of 1,000,000 shares on the buy
side. On the Display Book, the DMM has
700,000 shares of limit sell orders at various
prices marketable up to a price of $30.25, and
there is also Crowd interest of 300,000 shares
at that price. The DMM will use the 700,000
shares of limit sell orders on the Display
Book and 300,000 shares of Crowd interest to
offset the remaining 1,000,000 shares of MOC
and marketable buy LOC imbalance.
Proposed Changes to NYSE Alternext
Rules
In the above example, the DMM
would continue to arrange the closing
transaction as set forth in 123C(3) and
NYSE Rule 116.40; however, rather than
reporting two separate closing prints to
the Consolidated Tape, a single closing
print reflecting the execution of
6,000,000 shares at $30.25 would be
reported. The 6,000,000 share volume in
the single print close includes: (1) The
1,000,000 share buy order imbalance;
and (2) the 5,000,000 shares of MOC and
marketable LOC buy and sell orders that
were paired off.
The Exchange believes that the
consolidation of the separate closing
transactions and prints will reduce the
amount of manual information to be
reported by the DMM thus increasing
the speed and efficiency of the closing
process ultimately improving the
quality of the Exchange market with
timelier reporting of closing
transactions.
23 The Exchange formally eliminated the
percentage orders (referred to as a ‘‘CAP’’ order) as
a valid order type on the NYSE. See Securities
Exchange Act Release No. 58013 (June 24, 2008), 73
FR 37521 (July 1, 2008) (SR–NYSE–2008–46) [sic].
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On October 24, 2008, the Commission
approved the operation of a pilot for the
Exchange’s New Market Model.24 As
part of its new model, the Exchange
rescinded percentage orders as a valid
order type on the Exchange. As part of
the New Market Model filing, the
Exchange inadvertently failed to
eliminate a reference to percentage
orders in NYSE Rule 123C(3). The
Exchange therefore seeks to correct this
oversight by deleting that reference
through this filing given that percentage
orders are no longer valid order types on
the Exchange.
The Exchange notes that parallel
changes are proposed to be made to the
rules of the NYSE Alternext Exchange
(formerly the American Stock Exchange)
through a separate filing to be submitted
on a later date.
Operative Date
The Exchange proposes that the
amendments herein will be operative as
of February 6, 2009.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Securities Exchange Act of 1934
(the ‘‘Act’’),25 in general, and furthers
the objectives of Section 6(b)(5) of the
Act,26 in particular, in that it is designed
to prevent fraudulent and manipulative
acts and practices, to promote just and
equitable principles of trade, to remove
impediments to and perfect the
mechanism of a free and open market
and a national market system, and, in
general, to protect investors and the
public interest. The Exchange believes
the proposed rule change will facilitate
the timely and efficient closing of
securities on the Exchange and thus
ultimately serve to protect investors and
the public interest.
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.
24 See Securities Exchange Act Release No. 58845
(October 24, 2008), 73 FR 64379 (October 29, 2008)
(SR–NYSE–2008–46) (approving certain rules to
operate as a pilot scheduled to end October 1,
2009).
25 15 U.S.C. 78f(b).
26 15 U.S.C. 78f(b)(5).
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Federal Register / Vol. 74, No. 25 / Monday, February 9, 2009 / Notices
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
Because the foregoing proposed rule
change: (1) Does not significantly affect
the protection of investors or the public
interest; (2) does not impose any
significant burden on competition; and
(3) by its terms, does not become
operative for 30 days after the date of
filing, or such shorter time as the
Commission may designate if consistent
with the protection of investors and the
public interest, the proposed rule
change has become effective pursuant to
Section 19(b)(3)(A) of the Act 27 and
Rule 19b–4(f)(6) thereunder.28
A proposed rule change filed under
Rule 19b–4(f)(6) normally does not
become operative for 30 days after the
date of filing.29 However, Rule 19b–
4(f)(6)(iii) permits the Commission to
designate a shorter time if such action
is consistent with the protection of
investors and the public interest. The
Exchange requested that the
Commission waive the 30-day operative
delay, as specified in Rule 19b–
4(f)(6)(iii),30 and has proposed to make
the rule change operative as of February
6, 2009.
The Commission believes that
waiving the 30-day operative delay is
consistent with the protection of
investors and the public interest
because doing so will enable the
Exchange to immediately implement a
more efficient closing process, thereby
providing for timelier reporting of the
closing transaction. Additionally, the
Commission notes that the Exchange
will continue to publish the Mandatory
Indication when there is a significant
imbalance before the close, as required
under Rule 123C(5). Accordingly, the
Commission designates the proposed
rule change as operative as of February
6, 2009.31
sroberts on PROD1PC70 with NOTICES
27 15
U.S.C. 78s(b)(3)(A).
28 17 CFR 240.19b–4(f)(6).
29 17 CFR 240.19b–4(f)(6)(iii). In addition, Rule
19b–4(f)(6)(iii) requires the self-regulatory
organization to give the Commission notice of its
intent to file the proposed rule change, along with
a brief description and text of the proposed rule
change, at least five business days prior to the date
of filing of the proposed rule change, or such
shorter time as designated by the Commission.
NYSE has satisfied this requirement.
30 17 CFR 240.19b–4(f)(6)(iii).
31 For purposes only of waiving the operative
delay for this proposal, the Commission has
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6447
At any time within 60 days of the
filing of the proposed rule change, the
Commission may summarily abrogate
such rule change if it appears to the
Commission that such action is
necessary or appropriate in the public
interest, for the protection of investors,
or otherwise in furtherance of the
purposes of the Act.32
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–2009–10 and should
be submitted on or before March 2,
2009.
IV. Solicitation of Comments
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.33
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–2650 Filed 2–6–09; 8:45 am]
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–NYSE–2009–10 on the
subject line.
Paper Comments
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–1090.
All submissions should refer to File
Number SR–NYSE–2009–10. This file
number should be included on the
subject line if e-mail is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for inspection and copying in
the Commission’s Public Reference
Room, 100 F Street, NE., Washington,
DC 20549, 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
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–59344; File No. SR–
NYSEALTR–2009–03]
Self-Regulatory Organizations; Notice
of Filing and Immediate Effectiveness
of Proposed Rule Change by NYSE
Alternext U.S. LLC Making Changes to
Certain NYSE Alternext Equities Rules
to Conform With Amendments to
Corresponding Rules Recently Filed
for Immediate Effectiveness by the
New York Stock Exchange LLC and To
Make Other Technical Changes
February 2, 2009.
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 January
23, 2009, NYSE Alternext U.S. LLC (the
‘‘Exchange’’ or ‘‘NYSE Alternext’’) filed
with the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been prepared by the self-regulatory
organization. NYSE Alternext filed the
proposed rule change pursuant to
Section 19(b)(3)(A) of the Act 4 and Rule
19b–4(f)(6) thereunder,5 which renders
it effective upon filing with the
Commission. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to (i) make
changes to certain NYSE Alternext
Equities Rules to conform with
33 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.
4 15 U.S.C. 78s(b)(3)(A).
5 17 CFR 240.19b–4(f)(6).
1 15
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
32 15 U.S.C. 78s(b)(3)(C).
PO 00000
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]]>Agencies
[Federal Register Volume 74, Number 25 (Monday, February 9, 2009)]
[Notices]
[Pages 6444-6447]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-2650]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-59345; File No. SR-NYSE-2009-10]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by New York Stock Exchange LLC
Amending NYSE Rules 116 and 123C To Create a Single Closing Print To Be
Reported to the Consolidated Tape for Each Security
February 3, 2009.
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 January 30, 2009, New York Stock Exchange LLC (``NYSE''
or the ``Exchange'') filed with the Securities and Exchange Commission
(the ``Commission'') the proposed rule change as described in Items I
and II below, which Items have been prepared by the self-regulatory
organization. NYSE filed the proposed rule change pursuant to Section
19(b)(3)(A) of the Act \4\ and Rule 19b-4(f)(6) thereunder,\5\ which
renders it
[[Page 6445]]
effective upon filing with the Commission. 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\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
\4\ 15 U.S.C. 78s(b)(3)(A).
\5\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend NYSE Rules 116 (``Stop'' Constitutes
Guarantee) and 123C (Market On The Close Policy And Expiration
Procedures) to create a single closing print to be reported to the
Consolidated Tape for each security.
The text of the proposed rule change is available at https://
www.nyse.com, the Exchange, and the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
Through this filing the Exchange seeks to amend NYSE Rules 116 and
123C to create a single closing print to be reported to the
Consolidated Tape for each security.
Current Reporting of Closing Transactions
NYSE Rules 116.40 and 123C prescribe, inter alia, the procedures
for the execution of the entry of market at-the-close (``MOC'') and
limit at-the-close (``LOC'') orders \6\ and the determination of the
closing print(s) to be reported to the Consolidated Tape for each
security at the close of trading.
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\6\ In the NYSE Rules and for the purposes of this discussion,
the terms ``market-on-close'' and ``limit-on-close'' are used
interchangeably with ``market-at-the-close'' and ``limit-at-the-
close''.
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Pursuant to NYSE Rule 123C market participants may enter an MOC
order to have that order executed as part of the closing transaction at
the price of the close.\7\ Similar to a market order, an MOC order is
to be executed in its entirety at the closing price; however, if the
order is not executed as a result of a trading halt or because of its
terms (e.g., buy minus or sell plus), the MOC order is cancelled.\8\
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\7\ See NYSE Rule 123C(1).
\8\ See Id.
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Market participants that seek to have their orders executed on the
close but are sensitive to price may, pursuant to NYSE Rule 123C, enter
LOC orders that will be eligible for execution in the closing
transaction, provided that the closing price is at or within the limit
specified.\9\ An LOC order is not guaranteed an execution in the
closing transaction; rather, only an LOC order with a limit price that
is better \10\ than the closing price in the subject security is
guaranteed an execution.\11\ An LOC order limited at the closing price
is sequenced with other LOC orders on the NYSE Display Book[supreg]
\12\ (``Display Book'') in time priority and will be available for
execution after all other orders on the Display Book at the closing
price are executed regardless of when such other orders are
received.\13\
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\9\ See NYSE Rule 123C(2).
\10\ As used herein, better than the closing price means an
order that is lower than the bid in the case of an order to sell or
higher than the offer in the case of an order to buy.
\11\ It should be noted that orders are cancelled if there is a
trading halt in the security that is not lifted prior to the close
of trading.
\12\ The Display Book system is an order management and
execution facility. The Display Book system receives and displays
orders to the DMM, contains the Book, and provides a mechanism to
execute and report transactions and publish results to the
Consolidated Tape. The Display Book system is connected to a number
of other Exchange systems for the purposes of comparison,
surveillance, and reporting information to customers and other
market data and national market systems.
\13\ See NYSE Rule 123C(2).
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Pursuant to NYSE Rule 123C(5), at 3:40 p.m. if a security has a
disparity between MOC and marketable LOC interest to buy and MOC and
marketable LOC interest to sell of 50,000 shares or more the assigned
DMM is required to send a message from Display Book that is published
to the Consolidated Tape informing the investing public of the
disparity (``Mandatory Indication''). The Mandatory Indication includes
the symbol, the amount and the side of the imbalance. In addition, to
the Mandatory Indication, a DMM may, with Floor Official approval,
disseminate an imbalance publication that is for a disparity of less
than 50,000 shares when the imbalance in the security is significant in
relation to the average daily trading volume in the security. At 3:50
p.m. the DMM is required to provide an update of the previous imbalance
publications.
At the close of trading, any closing imbalance of MOC and
marketable LOC orders are calculated by netting (i.e., pairing off) the
aggregate amount of MOC and marketable LOC buy orders against the
aggregate amount of MOC and marketable LOC sell orders.\14\ Exchange
systems calculate the number of MOC and marketable LOC orders on each
side of the market and pair them off. Where there is an imbalance (i.e.
more orders to buy than sell or vice versa), the shares constituting
the imbalance are executed against the offer (in case of a buy
imbalance) or the bid (in the case of a sell imbalance).\15\ This
transaction is reflected on the first closing print from the NYSE to
the Consolidated Tape for the particular security.\16\ The DMM then
pairs off the remaining MOC and marketable LOC buy and sell orders
against each other at the price at which the imbalanced shares were
executed.\17\ This ``pair off'' transaction is reported as a second
closing print from the NYSE to the Consolidated Tape as ``stopped
stock.'' \18\
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\14\ See NYSE Rules 116.40 and 123C(3).
\15\ See NYSE Rules 116.40(B) and 123C(3)(A).
\16\ See Id.
\17\ See NYSE Rule 123C(3)(A).
\18\ See NYSE Rules 116.40(C) and 123C(3)(A).
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If there is no imbalance, the aggregate buy and sell MOC and
marketable LOC orders are paired off at the price of the last sale of
the subject security on the Exchange prior to the close of trading in
the security.\19\ This transaction is reported to the Consolidated Tape
in a single closing print as ``stopped stock.'' \20\
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\19\ See NYSE Rules 116.40(C) and 123C(3)(B).
\20\ See Id.
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Proposed Single Closing Print
The closing transaction on the Exchange continues to be a manual
auction in order to facilitate greater price discovery and allow for
the maximum interaction between market participants. Currently,
increased volatility in the market has given rise to the need to
simplify procedures. In order to continue to provide timely closing of
securities, the Exchange believes that it is necessary to reduce the
manual processing required of the DMM to promote an even more efficient
close. As such, the Exchange seeks to create a single closing print to
be reported to the Consolidated Tape for each security. The Exchange
believes that this will work to optimize the efficient operation of the
closing process.
The Exchange therefore proposes to amend NYSE Rules 116 and 123C(3)
to
[[Page 6446]]
provide for a single closing print to be reported to the Consolidated
Tape system for each listed security. Currently, the DMM is required to
manually enter the imbalance and the paired prints to Exchange systems
for reporting to the Consolidated Tape. Requiring two prints impedes
DMMs' efficiency in reporting the closing transaction.
Multiple closing prints were used to provide information about the
share imbalances that impacted the closing price of a security on the
Exchange. In May 2008, the Exchange amended NYSE Rule 123C to allow
Exchange systems to disseminate a data feed of real-time order
imbalances that accumulate prior to the close of trading on the
Exchange (``Order Imbalance Information'').\21\ Order Imbalance
Information is supplemental information disseminated by the Exchange
prior to a closing transaction.\22\ Specifically, Order Imbalance
Information is disseminated every fifteen seconds between 3:40 p.m. and
3:50 p.m.; thereafter, it is disseminated every five seconds between
3:50 p.m. and 4 p.m. On any day that the scheduled close of trading on
the Exchange is earlier than 4 p.m., the dissemination of Order
Imbalance Information commences 20 minutes before the scheduled closing
time. On those days, Order Imbalance Information is disseminated every
fifteen seconds for approximately 10 minutes; thereafter, the Order
Imbalance Information is disseminated ever [sic] five seconds until the
scheduled closing time.
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\21\ See Securities Exchange Act Release Nos. 57862 (May 23,
2008), 73 FR 31174 (May 30, 2008) (SR-NYSE-2008-41) and 57861 (May
23, 2008), 73 FR 31905 (June 4, 2008) (SR-NYSE-2008-42). On December
19, 2008, the Exchange filed with the Securities and Exchange
Commission to offer, for a separate fee, the Order Imbalance
Information datafeed as a stand alone market data product. See
Securities Exchange Act Release No. 59202 (January 6, 2009) 74 FR
1744 (January 13, 2009) (SR-NYSE-2008-132).
\22\ See NYSE Rule 123C(6).
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The Exchange believes that the Order Imbalance Information achieves
the goal of providing real-time detail and transparency for market
participants about the factors that impact the closing price of a
security. The Exchange further notes that the current imbalance
publications pursuant to NYSE Rule 123C(5) will continue to be
disseminated in accordance with the provisions of the rule. As such,
the Exchange believes that there no longer exists a need for the
dissemination of two separate prints at the close.
The Exchange therefore proposes that the imbalance, if any, paired
off closing transactions and stop orders elected for execution on the
close be reported to the Consolidated Tape System as a single
transaction and print.\23\ The Exchange proposes to amend the text of
NYSE Rule 116.40(C) to remove language that states that ``pair off''
transactions should be printed to the Consolidated Tape as stopped
stock. Similarly, the Exchange proposes to amend NYSE Rule 123C(3)
(Closing Prints) to state that the imbalance and the pair off amounts
shall be printed to the Consolidated Tape as a single transaction.
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\23\ The Exchange formally eliminated the percentage orders
(referred to as a ``CAP'' order) as a valid order type on the NYSE.
See Securities Exchange Act Release No. 58013 (June 24, 2008), 73 FR
37521 (July 1, 2008) (SR-NYSE-2008-46) [sic].
---------------------------------------------------------------------------
Pursuant to the above proposed changes, a single print close in a
security would occur as described in the example below.
The DMM for stock XYZ has determined that the closing price in
the stock will be $30.25. The last sale price on the Exchange was
$30.00. The DMM has 6,000,000 shares of MOC and marketable LOC buy
orders up to a price of $30.25. On the sell side, there are
5,000,000 MOC and marketable LOC sell orders down to a price of
$30.24. The DMM pairs 5,000,000 shares of MOC and marketable LOC buy
orders against the 5,000,000 shares of MOC and marketable LOC sell
orders at a price of $30.25, leaving an imbalance of 1,000,000
shares on the buy side. On the Display Book, the DMM has 700,000
shares of limit sell orders at various prices marketable up to a
price of $30.25, and there is also Crowd interest of 300,000 shares
at that price. The DMM will use the 700,000 shares of limit sell
orders on the Display Book and 300,000 shares of Crowd interest to
offset the remaining 1,000,000 shares of MOC and marketable buy LOC
imbalance.
In the above example, the DMM would continue to arrange the closing
transaction as set forth in 123C(3) and NYSE Rule 116.40; however,
rather than reporting two separate closing prints to the Consolidated
Tape, a single closing print reflecting the execution of 6,000,000
shares at $30.25 would be reported. The 6,000,000 share volume in the
single print close includes: (1) The 1,000,000 share buy order
imbalance; and (2) the 5,000,000 shares of MOC and marketable LOC buy
and sell orders that were paired off.
The Exchange believes that the consolidation of the separate
closing transactions and prints will reduce the amount of manual
information to be reported by the DMM thus increasing the speed and
efficiency of the closing process ultimately improving the quality of
the Exchange market with timelier reporting of closing transactions.
Proposed Technical Amendment to NYSE Rule 123C(3)
On October 24, 2008, the Commission approved the operation of a
pilot for the Exchange's New Market Model.\24\ As part of its new
model, the Exchange rescinded percentage orders as a valid order type
on the Exchange. As part of the New Market Model filing, the Exchange
inadvertently failed to eliminate a reference to percentage orders in
NYSE Rule 123C(3). The Exchange therefore seeks to correct this
oversight by deleting that reference through this filing given that
percentage orders are no longer valid order types on the Exchange.
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\24\ See Securities Exchange Act Release No. 58845 (October 24,
2008), 73 FR 64379 (October 29, 2008) (SR-NYSE-2008-46) (approving
certain rules to operate as a pilot scheduled to end October 1,
2009).
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Proposed Changes to NYSE Alternext Rules
The Exchange notes that parallel changes are proposed to be made to
the rules of the NYSE Alternext Exchange (formerly the American Stock
Exchange) through a separate filing to be submitted on a later date.
Operative Date
The Exchange proposes that the amendments herein will be operative
as of February 6, 2009.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Securities Exchange Act of 1934 (the ``Act''),\25\ in
general, and furthers the objectives of Section 6(b)(5) of the Act,\26\
in particular, in that it is designed to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade, to remove impediments to and perfect the mechanism
of a free and open market and a national market system, and, in
general, to protect investors and the public interest. The Exchange
believes the proposed rule change will facilitate the timely and
efficient closing of securities on the Exchange and thus ultimately
serve to protect investors and the public interest.
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\25\ 15 U.S.C. 78f(b).
\26\ 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.
[[Page 6447]]
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
Because the foregoing proposed rule change: (1) Does not
significantly affect the protection of investors or the public
interest; (2) does not impose any significant burden on competition;
and (3) by its terms, does not become operative for 30 days after the
date of filing, or such shorter time as the Commission may designate if
consistent with the protection of investors and the public interest,
the proposed rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \27\ and Rule 19b-4(f)(6) thereunder.\28\
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\27\ 15 U.S.C. 78s(b)(3)(A).
\28\ 17 CFR 240.19b-4(f)(6).
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A proposed rule change filed under Rule 19b-4(f)(6) normally does
not become operative for 30 days after the date of filing.\29\ However,
Rule 19b-4(f)(6)(iii) permits the Commission to designate a shorter
time if such action is consistent with the protection of investors and
the public interest. The Exchange requested that the Commission waive
the 30-day operative delay, as specified in Rule 19b-4(f)(6)(iii),\30\
and has proposed to make the rule change operative as of February 6,
2009.
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\29\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-
4(f)(6)(iii) requires the self-regulatory organization to give the
Commission notice of its intent to file the proposed rule change,
along with a brief description and text of the proposed rule change,
at least five business days prior to the date of filing of the
proposed rule change, or such shorter time as designated by the
Commission. NYSE has satisfied this requirement.
\30\ 17 CFR 240.19b-4(f)(6)(iii).
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The Commission believes that waiving the 30-day operative delay is
consistent with the protection of investors and the public interest
because doing so will enable the Exchange to immediately implement a
more efficient closing process, thereby providing for timelier
reporting of the closing transaction. Additionally, the Commission
notes that the Exchange will continue to publish the Mandatory
Indication when there is a significant imbalance before the close, as
required under Rule 123C(5). Accordingly, the Commission designates the
proposed rule change as operative as of February 6, 2009.\31\
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\31\ For purposes only of waiving the operative delay for this
proposal, the Commission has considered the proposed rule's impact
on efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
---------------------------------------------------------------------------
At any time within 60 days of the filing of the proposed rule
change, the Commission may summarily abrogate such rule change if it
appears to the Commission that such action is necessary or appropriate
in the public interest, for the protection of investors, or otherwise
in furtherance of the purposes of the Act.\32\
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\32\ 15 U.S.C. 78s(b)(3)(C).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://
www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-NYSE-2009-10 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSE-2009-10. This file
number should be included on the subject line if e-mail is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (https://www.sec.gov/rules/
sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for inspection and
copying in the Commission's Public Reference Room, 100 F Street, NE.,
Washington, DC 20549, 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-2009-10 and should be
submitted on or before March 2, 2009.
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\33\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\33\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-2650 Filed 2-6-09; 8:45 am]
BILLING CODE 8011-01-P
