Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by New York Stock Exchange LLC Eliminating the Ability To Enter Orders on the Exchange With the Settlement Instructions of “Cash”, “Next Day” and “Seller's Option”, 9323-9325 [E9-4427]

Download as PDF Federal Register / Vol. 74, No. 40 / Tuesday, March 3, 2009 / Notices 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/other.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to C2’s Form 1 filed with the Commission, and all written communications relating to the application 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. 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 10–191 and should be submitted on or before April 17, 2009. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.2 Florence E. Harmon, Deputy Secretary. [FR Doc. E9–4426 Filed 3–2–09; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–59446; File No. SR–NYSE– 2009–17] Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by New York Stock Exchange LLC Eliminating the Ability To Enter Orders on the Exchange With the Settlement Instructions of ‘‘Cash’’, ‘‘Next Day’’ and ‘‘Seller’s Option’’ mstockstill on PROD1PC66 with NOTICES February 25, 2009. Pursuant to Section 19(b)(1) 1 of the Securities Exchange Act of 1934 (‘‘Act’’) 2 and Rule 19b–4 thereunder,3 notice is hereby given that on February 18, 2009, New York Stock Exchange LLC (‘‘NYSE’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the 2 17 CFR 200.30–3(a)(71)(i). U.S.C. 78s(b)(1). 2 15 U.S.C. 78a. 3 17 CFR 240.19b–4. 16:42 Mar 02, 2009 I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to eliminate the ability to enter orders on the Exchange with the settlement instructions of ‘‘cash’’, ‘‘next day’’ and ‘‘seller’s option’’. 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 several Exchange rules to remove references to certain settlement instructions that are no longer compatible with the Exchange’s more electronic market. These include instructions to settle on ‘‘cash’’, ‘‘next day’’ or ‘‘seller’s option’’ basis. The Exchange notes that parallel changes are proposed to be made to the rules of the NYSE Alternext Exchange (formerly the American Stock Exchange).4 Background Currently, in addition to regular way settlement (i.e., settlement on the third business day following trade date), a customer may submit an order with settlement instructions for cash, next day or seller’s option. An order with cash settlement instructions requires delivery of the securities the same day as the transaction in contrast to a regular way transaction, where the seller is 4 See SR–NYSE Alternext–2009–14 (to be filed February 18, 2009). The Commission notes that the referenced filing was rejected because of a deficiency in the proposed rule text. 1 15 VerDate Nov<24>2008 proposed rule change as described in Items I and II below, which Items have been prepared by the self-regulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. Jkt 217001 PO 00000 Frm 00113 Fmt 4703 Sfmt 4703 9323 required to deliver the securities on the third business day. Next day settlement instructions require delivery of the securities on the first business day following the transaction. Orders that have settlement instructions of seller’s option affords the seller the right to deliver the security or bond at any time within a specified period, ranging from not less than two business days to not more than 180 days for stocks and not less than two business days and no more than sixty days for U.S. government securities. Cash, next day and seller’s option settlement instructions are remnants of a time when the Exchange functioned completely as a manual auction market. While each of these settlement instructions may be included on order types that are submitted electronically to the Exchange, orders containing any of those settlement instructions cannot be immediately and automatically executed but must bypass the Exchange matching/execution engine, Display Book, and are literally printed on paper at the trading post for manual processing on the Floor. Proposed Elimination of Cash, Next Day, Seller’s Option Settlement Instructions In the Exchange’s current more electronic market, orders received by Exchange systems that are marketable upon entry are eligible to be immediately and automatically executed. Order types and settlement instructions that require manual intervention pose significant impediments to the efficient functioning of the Exchange’s market. To this end the Exchange filed with the Commission to remove legacy orders that require manual processing. Specifically, on January 31, 2008, the Exchange filed with the Commission to amend NYSE Rule 13 to invalidate the use of the manual order types ‘‘Alternative Order—Either/Or Order’’, ‘‘Orders Good Until a Specified Time’’, ‘‘Scale Order’’ and ‘‘Switch Order—Contingent Order’’ and Rule 124’s order types ‘‘Limited Order, With or Without Sale’’ and ‘‘Basis Price Order’’ as being incompatible with the more electronic Exchange market environment.5 The Exchange’s commitment to provide its market participants with the ability to have their orders executed in the most efficient manner necessitates the elimination of cash, next day and seller’s option as valid settlement instructions for orders submitted to the 5 See Securities and Exchange Act Release No. 57295 (February 8, 2008), 73 FR 8731 (February 14, 2008) (SR–NYSE–2008–11). E:\FR\FM\03MRN1.SGM 03MRN1 9324 Federal Register / Vol. 74, No. 40 / Tuesday, March 3, 2009 / Notices mstockstill on PROD1PC66 with NOTICES Exchange. These instructions result in these orders printing to paper at the trading Post 6 when they are submitted electronically in Exchange systems. The DMM and the trading assistant must realize that the document printed was in fact an order thus causing delay in the execution of the order. The DMM is then responsible for the manual execution of the order. The manual intervention required of the DMM and trading assistant at the Post in the processing of these orders puts the orders at the very real risk of ‘‘missing the market’’ as a result of the current speed of order execution in the Exchange market. In addition, the inefficiency of these order types is made obvious by the fact that they are infrequently used by market participants. A review of the different types of orders received by the Exchange during the week of May 12, 2008 through May 16, 2008 shows that there were on average 28 cash orders (with an average of 1,653 shares per day), 48 next day orders (average of 763 shares per day) and 2 seller’s option orders (average of 2,839 shares per day) utilized by market participants each day. By comparison, for May 2008, the Exchange received an average of 92.2 million orders a day. Even during the last five trading days of 2007, when the most cash, next day and seller’s option orders are received, the average per day submissions were 123 for cash (average of 896 shares per day), 199 for next day (average of 1,848 shares per day) and 10 for seller’s option (average of 11,679 shares per day).7 The Exchange now seeks to eliminate cash, next day and seller’s option as valid settlement instructions for orders submitted to the NYSE. The Exchange therefore proposes to delete the references to those settlement instructions from NYSE Rules 12 (‘‘Business Day’’), 64 (Bonds, Rights and 100-Share-Unit Stocks), 66 (U.S. Government Securities),8 123 (Records 6 Trading Posts are the horseshoe shaped counters manned by DMMS and trading assistants on the Trading Floor of the NYSE where individual stocks are bought and sold. 7 The Exchange notes that on December 30th and 31st of 2008 it executed an atypical amount of shares for orders submitted with cash, next day and seller’s option settlement instructions. Specifically, on December 30, 2008, 126,504 shares were executed on a cash settlement basis, 10,284,879 shares for next day settlement and 10,000,000 shares for seller’s option settlement. In addition, there were 8,110,228 shares executed for cash settlement on December 31, 2008. The Exchange believes that this level of activity is reflective of the economic events of 2008 and is unrelated to usual trading patterns for these settlement types. 8 The Exchange does not have the capability to accept these order types for U.S. Government securities. VerDate Nov<24>2008 16:42 Mar 02, 2009 Jkt 217001 of Orders), 124 (Odd-Lot Orders), 130 (Overnight Comparison of Exchange Transactions), 137 (Written Contracts), 137A (Samples of Written Contracts), 189 (Unit of Delivery), 235 (ExDividends, Ex-Rights), 236 (ExWarrants), 241 (Interest—Added to Contract Price), 257 (Deliveries After ‘‘Ex’’ Date), 282 (Buy-In Procedures) and 440G (Transactions in Stocks and Warrants for the Accounts of Members, Principal Executives and Member Organizations). In addition, the Exchange seeks to eliminate entirely Rules 73 (‘‘Seller’s Option’’), 177 (Delivery Time—‘‘Cash’’ Contracts) and 179 (‘‘Seller’s Option’’). In addition, the Exchange proposes to remove language in Rules 64 and 66 that provide for the possibility of using multiple settlement periods for bids and offers entered on the Exchange since, for all practical purposes, the Exchange will now only accept orders for regular way settlement. The Exchange also proposes to amend Rule 66 to add the provision that exists in Rule 64 to allow the Exchange, in its discretion, to provide for additional settlement periods. The Exchange is proposing this addition to bring the provisions of the two rules into harmony as they address similar procedures with respect to different types of securities admitted to dealings on the Exchange. The Exchange, however, recognizes that any additional settlement periods it proposes to add will be subject to the rule filing process under Section 19(b) of the Securities Exchange Act of 1934 (the ‘‘Act’’) [sic].9 The Exchange will commence implementation of the proposed elimination of the settlement instructions discussed herein on March 13, 2009. The Exchange intends to progressively implement this elimination on a security by security basis as it gains experience with the implementation until it is operative in all securities traded on the Floor. During the implementation, the Exchange will identify on its Web site which securities will no longer be eligible for these settlement instructions. 2. Statutory Basis The basis under the Securities Exchange Act of 1934 (the ‘‘Act’’) [sic] 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 9 15 U.S.C. 78s(b). U.S.C. 78f(b)(5). 10 15 PO 00000 Frm 00114 Fmt 4703 Sfmt 4703 general, to protect investors and the public interest. The instant filing accomplishes these goals by rescinding legacy settlement instructions that place customers at risk of missing the market and possibly receiving inferior priced executions. 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 Because the proposed rule change does not: (i) Significantly affect the protection of investors or the public interest, (ii) impose any significant burden on competition, and (iii) become operative for 30 days after the date of the filing, or such shorter time as the Commission may designate, if consistent with the protection of investors and the public interest, it has become effective pursuant to Section 19(b)(3)(A) 11 of the Act and Rule 19b– 4(f)(6) thereunder.12 A proposed rule change filed under Rule 19b–4(f)(6) normally does not become operative until 30 days after the date of filing.13 However, Rule 19b– 4(f)(6)(iii) 14 permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange has requested that the Commission waive the 30-day operative delay so that the proposed rule change may become operative on March 13, 2009. Specifically, the Exchange states that the proposal will rescind legacy settlement instructions that are not compatible with the Exchange’s electronic market. The Commission believes that allowing the proposed rule change to become operative on March 13, 2009 is consistent with the 11 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(6). 13 17 CFR 240.19b–4(f)(6)(iii). 14 Id. In addition, Rule 19b–4(f)(6)(iii) requires a self-regulatory organization to give the Commission written notice of its intent to file the proposed rule change at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has satisfied this requirement. 12 17 E:\FR\FM\03MRN1.SGM 03MRN1 Federal Register / Vol. 74, No. 40 / Tuesday, March 3, 2009 / Notices 9325 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 the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–NYSE–2009–17 and should be submitted on or before March 24, 2009. attached as Exhibit 5.4 A copy of this filing 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. 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.16 Florence E. Harmon, Deputy Secretary. [FR Doc. E9–4427 Filed 3–2–09; 8:45 am] A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 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–2009–17 on the subject line. mstockstill on PROD1PC66 with NOTICES protection of investors and the public interest, because it will enable the Exchange to implement pending technological enhancements that require the rescission of these settlement instructions. The Exchange expects these enhancements to make its order processing operations more efficient and thereby strengthen and advance the quality of the Exchange’s market. Accordingly, the Commission designates the proposed rule change to be operative on March 13, 2009.15 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. 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–NYSE–2009–17. 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 15 For purposes only of waiving the 30-day operative delay of the proposal, the Commission has considered the proposed rule’s impact on efficiency, competition and capital formation. 15 U.S.C. 78c(f). VerDate Nov<24>2008 16:42 Mar 02, 2009 Jkt 217001 BILLING CODE 8011–01–P [Release No. 34–59440; File No. SR– NYSEArca–2009–11] Self-Regulatory Organizations; Notice of Filing of Proposed Rule Change by NYSE Arca, Inc. Amending Rule 6.69— Reporting Duties February 24, 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 February 13, 2009, NYSE Arca, Inc. (‘‘NYSE Arca’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the self-regulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend Exchange Rule 6.69—Reporting Duties. The text of the proposed rule change is 16 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 PO 00000 Frm 00115 Fmt 4703 Sfmt 4703 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. 1. Purpose The purpose of the proposed rule change is to revise the procedures for reporting open outcry trades that occur on the options trading floor. All option transactions that occur on the options trading floor must be immediately reported to the Exchange, in a form and manner prescribed by the Exchange, for dissemination to the Options Price Reporting Authority (‘‘OPRA’’).5 This requirement applies to all OTP Holders who are required to report trades either directly to OPRA or to another party who is responsible for reporting trades to OPRA. All option transactions have two parties to a trade, a buyer and a seller. Pursuant to Rule 6.69(b), the responsible party for reporting a transaction is the party that participates on the transaction as the seller. The Exchange now proposes to revise this rule so that whenever a Floor Broker is participating on one side of a transaction, they become the responsible party for reporting the trade, regardless of whether they are the buyer or seller. The Exchange is proposing this change in order to provide a more efficient mechanism for reporting transactions. All orders on the Exchange are required to be in an electronic format prior to representation on the trading 4 The Commission notes that while provided in Exhibit 5 to the filing, the text of the proposed rule change is not attached to this notice but is available at the Exchange, the Commission’s Public Reference Room, and at https://www.nyse.com. 5 For transactions executed on the Exchange’s electronic trading platform, NYSE Arca will report the trade directly to OPRA. E:\FR\FM\03MRN1.SGM 03MRN1

Agencies

[Federal Register Volume 74, Number 40 (Tuesday, March 3, 2009)]
[Notices]
[Pages 9323-9325]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-4427]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59446; File No. SR-NYSE-2009-17]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by New York Stock Exchange LLC 
Eliminating the Ability To Enter Orders on the Exchange With the 
Settlement Instructions of ``Cash'', ``Next Day'' and ``Seller's 
Option''

February 25, 2009.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given 
that on February 18, 2009, New York Stock Exchange LLC (``NYSE'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been prepared by the self-regulatory 
organization. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 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 eliminate the ability to enter orders on 
the Exchange with the settlement instructions of ``cash'', ``next day'' 
and ``seller's option''.

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 several Exchange 
rules to remove references to certain settlement instructions that are 
no longer compatible with the Exchange's more electronic market. These 
include instructions to settle on ``cash'', ``next day'' or ``seller's 
option'' basis.
    The Exchange notes that parallel changes are proposed to be made to 
the rules of the NYSE Alternext Exchange (formerly the American Stock 
Exchange).\4\
---------------------------------------------------------------------------

    \4\ See SR-NYSE Alternext-2009-14 (to be filed February 18, 
2009). The Commission notes that the referenced filing was rejected 
because of a deficiency in the proposed rule text.
---------------------------------------------------------------------------

Background
    Currently, in addition to regular way settlement (i.e., settlement 
on the third business day following trade date), a customer may submit 
an order with settlement instructions for cash, next day or seller's 
option. An order with cash settlement instructions requires delivery of 
the securities the same day as the transaction in contrast to a regular 
way transaction, where the seller is required to deliver the securities 
on the third business day. Next day settlement instructions require 
delivery of the securities on the first business day following the 
transaction. Orders that have settlement instructions of seller's 
option affords the seller the right to deliver the security or bond at 
any time within a specified period, ranging from not less than two 
business days to not more than 180 days for stocks and not less than 
two business days and no more than sixty days for U.S. government 
securities.
    Cash, next day and seller's option settlement instructions are 
remnants of a time when the Exchange functioned completely as a manual 
auction market. While each of these settlement instructions may be 
included on order types that are submitted electronically to the 
Exchange, orders containing any of those settlement instructions cannot 
be immediately and automatically executed but must bypass the Exchange 
matching/execution engine, Display Book, and are literally printed on 
paper at the trading post for manual processing on the Floor.
Proposed Elimination of Cash, Next Day, Seller's Option Settlement 
Instructions
    In the Exchange's current more electronic market, orders received 
by Exchange systems that are marketable upon entry are eligible to be 
immediately and automatically executed. Order types and settlement 
instructions that require manual intervention pose significant 
impediments to the efficient functioning of the Exchange's market. To 
this end the Exchange filed with the Commission to remove legacy orders 
that require manual processing. Specifically, on January 31, 2008, the 
Exchange filed with the Commission to amend NYSE Rule 13 to invalidate 
the use of the manual order types ``Alternative Order--Either/Or 
Order'', ``Orders Good Until a Specified Time'', ``Scale Order'' and 
``Switch Order--Contingent Order'' and Rule 124's order types ``Limited 
Order, With or Without Sale'' and ``Basis Price Order'' as being 
incompatible with the more electronic Exchange market environment.\5\
---------------------------------------------------------------------------

    \5\ See Securities and Exchange Act Release No. 57295 (February 
8, 2008), 73 FR 8731 (February 14, 2008) (SR-NYSE-2008-11).
---------------------------------------------------------------------------

    The Exchange's commitment to provide its market participants with 
the ability to have their orders executed in the most efficient manner 
necessitates the elimination of cash, next day and seller's option as 
valid settlement instructions for orders submitted to the

[[Page 9324]]

Exchange. These instructions result in these orders printing to paper 
at the trading Post \6\ when they are submitted electronically in 
Exchange systems. The DMM and the trading assistant must realize that 
the document printed was in fact an order thus causing delay in the 
execution of the order. The DMM is then responsible for the manual 
execution of the order. The manual intervention required of the DMM and 
trading assistant at the Post in the processing of these orders puts 
the orders at the very real risk of ``missing the market'' as a result 
of the current speed of order execution in the Exchange market.
---------------------------------------------------------------------------

    \6\ Trading Posts are the horseshoe shaped counters manned by 
DMMS and trading assistants on the Trading Floor of the NYSE where 
individual stocks are bought and sold.
---------------------------------------------------------------------------

    In addition, the inefficiency of these order types is made obvious 
by the fact that they are infrequently used by market participants. A 
review of the different types of orders received by the Exchange during 
the week of May 12, 2008 through May 16, 2008 shows that there were on 
average 28 cash orders (with an average of 1,653 shares per day), 48 
next day orders (average of 763 shares per day) and 2 seller's option 
orders (average of 2,839 shares per day) utilized by market 
participants each day. By comparison, for May 2008, the Exchange 
received an average of 92.2 million orders a day. Even during the last 
five trading days of 2007, when the most cash, next day and seller's 
option orders are received, the average per day submissions were 123 
for cash (average of 896 shares per day), 199 for next day (average of 
1,848 shares per day) and 10 for seller's option (average of 11,679 
shares per day).\7\
---------------------------------------------------------------------------

    \7\ The Exchange notes that on December 30th and 31st of 2008 it 
executed an atypical amount of shares for orders submitted with 
cash, next day and seller's option settlement instructions. 
Specifically, on December 30, 2008, 126,504 shares were executed on 
a cash settlement basis, 10,284,879 shares for next day settlement 
and 10,000,000 shares for seller's option settlement. In addition, 
there were 8,110,228 shares executed for cash settlement on December 
31, 2008. The Exchange believes that this level of activity is 
reflective of the economic events of 2008 and is unrelated to usual 
trading patterns for these settlement types.
---------------------------------------------------------------------------

    The Exchange now seeks to eliminate cash, next day and seller's 
option as valid settlement instructions for orders submitted to the 
NYSE. The Exchange therefore proposes to delete the references to those 
settlement instructions from NYSE Rules 12 (``Business Day''), 64 
(Bonds, Rights and 100-Share-Unit Stocks), 66 (U.S. Government 
Securities),\8\ 123 (Records of Orders), 124 (Odd-Lot Orders), 130 
(Overnight Comparison of Exchange Transactions), 137 (Written 
Contracts), 137A (Samples of Written Contracts), 189 (Unit of 
Delivery), 235 (Ex-Dividends, Ex-Rights), 236 (Ex-Warrants), 241 
(Interest--Added to Contract Price), 257 (Deliveries After ``Ex'' 
Date), 282 (Buy-In Procedures) and 440G (Transactions in Stocks and 
Warrants for the Accounts of Members, Principal Executives and Member 
Organizations). In addition, the Exchange seeks to eliminate entirely 
Rules 73 (``Seller's Option''), 177 (Delivery Time--``Cash'' Contracts) 
and 179 (``Seller's Option''). In addition, the Exchange proposes to 
remove language in Rules 64 and 66 that provide for the possibility of 
using multiple settlement periods for bids and offers entered on the 
Exchange since, for all practical purposes, the Exchange will now only 
accept orders for regular way settlement.
---------------------------------------------------------------------------

    \8\ The Exchange does not have the capability to accept these 
order types for U.S. Government securities.
---------------------------------------------------------------------------

    The Exchange also proposes to amend Rule 66 to add the provision 
that exists in Rule 64 to allow the Exchange, in its discretion, to 
provide for additional settlement periods. The Exchange is proposing 
this addition to bring the provisions of the two rules into harmony as 
they address similar procedures with respect to different types of 
securities admitted to dealings on the Exchange. The Exchange, however, 
recognizes that any additional settlement periods it proposes to add 
will be subject to the rule filing process under Section 19(b) of the 
Securities Exchange Act of 1934 (the ``Act'') [sic].\9\
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78s(b).
---------------------------------------------------------------------------

    The Exchange will commence implementation of the proposed 
elimination of the settlement instructions discussed herein on March 
13, 2009. The Exchange intends to progressively implement this 
elimination on a security by security basis as it gains experience with 
the implementation until it is operative in all securities traded on 
the Floor. During the implementation, the Exchange will identify on its 
Web site which securities will no longer be eligible for these 
settlement instructions.
2. Statutory Basis
    The basis under the Securities Exchange Act of 1934 (the ``Act'') 
[sic] 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 instant filing accomplishes these goals by rescinding legacy 
settlement instructions that place customers at risk of missing the 
market and possibly receiving inferior priced executions.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

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

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 proposed rule change does not: (i) Significantly affect 
the protection of investors or the public interest, (ii) impose any 
significant burden on competition, and (iii) become operative for 30 
days after the date of the filing, or such shorter time as the 
Commission may designate, if consistent with the protection of 
investors and the public interest, it has become effective pursuant to 
Section 19(b)(3)(A) \11\ of the Act and Rule 19b-4(f)(6) 
thereunder.\12\
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) normally does 
not become operative until 30 days after the date of filing.\13\ 
However, Rule 19b-4(f)(6)(iii) \14\ permits the Commission to designate 
a shorter time if such action is consistent with the protection of 
investors and the public interest. The Exchange has requested that the 
Commission waive the 30-day operative delay so that the proposed rule 
change may become operative on March 13, 2009. Specifically, the 
Exchange states that the proposal will rescind legacy settlement 
instructions that are not compatible with the Exchange's electronic 
market. The Commission believes that allowing the proposed rule change 
to become operative on March 13, 2009 is consistent with the

[[Page 9325]]

protection of investors and the public interest, because it will enable 
the Exchange to implement pending technological enhancements that 
require the rescission of these settlement instructions. The Exchange 
expects these enhancements to make its order processing operations more 
efficient and thereby strengthen and advance the quality of the 
Exchange's market. Accordingly, the Commission designates the proposed 
rule change to be operative on March 13, 2009.\15\
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    \13\ 17 CFR 240.19b-4(f)(6)(iii).
    \14\ Id. In addition, Rule 19b-4(f)(6)(iii) requires a self-
regulatory organization to give the Commission written notice of its 
intent to file the proposed rule change at least five business days 
prior to the date of filing of the proposed rule change, or such 
shorter time as designated by the Commission. The Exchange has 
satisfied this requirement.
    \15\ For purposes only of waiving the 30-day operative delay of 
the proposal, the Commission has considered the proposed rule's 
impact on efficiency, competition and capital formation. 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission may summarily abrogate such rule change if it 
appears to the Commission that such action is necessary or appropriate 
in the public interest, for the protection of investors, or otherwise 
in furtherance of the purposes of the Act.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic 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-2009-17 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-2009-17. 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 the filing also will be available for 
inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-NYSE-2009-17 and should be 
submitted on or before March 24, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-4427 Filed 3-2-09; 8:45 am]
BILLING CODE 8011-01-P
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