Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Modifying the Wireless Data Communications Initiatives and Codifying the Wireless Policy, 14831-14834 [E9-7214]
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Federal Register / Vol. 74, No. 61 / Wednesday, April 1, 2009 / Notices
including whether the proposed rule
change, as amended, 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–NASDAQ–2009–030 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–NASDAQ–2009–030. 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
Section, 100 F Street, NE., Washington,
DC 20549–1090 on official business
days between the hours of 10 a.m. and
3 p.m. Copies of the filing will also be
available for inspection and copying at
Nasdaq’s principal office and on its
Internet Web site at www.nyse.com. 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–NASDAQ–2009–030 and
should be submitted on or before
April 22, 2009.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.12
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–7291 Filed 3–31–09; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–59626; File No. SR–NYSE–
2009–33]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change Modifying the
Wireless Data Communications
Initiatives and Codifying the Wireless
Policy
March 25, 2009.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2
notice is hereby given that on March 20,
2009, the New York Stock Exchange,
LLC (‘‘NYSE’’ or the ‘‘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 NYSE. NYSE has
submitted the proposed rule change
pursuant to Rule 19b-4(f)(6) under the
Act,3 which renders the proposal
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: (1) Modify
its Wireless Data Communications
Initiatives (referred to herein as the
‘‘Wireless Policy’’) to eliminate the
requirement that all orders or messages
transmitted electronically from off the
Floor must first be recorded in a Floor
broker’s booth location on the Floor
(‘‘Floor booth’’) before being transmitted
to the Floor broker’s wireless hand-held
device for representation and execution;
(2) modify the Wireless Policy to
eliminate the requirement that Floor
booth locations print paper records of
all orders; (3) modify the interpretation
of NYSE Rule 117 as it applies to what
constitutes a ‘‘written order’’; and (4)
codify the Wireless Policy as amended
herein.
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 17 CFR 240.19b–4(f)(6).
2 17
12 17
CFR 200.30–3(a)(12).
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14831
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 these statements may be examined at
the places specified in Item IV below.
The self-regulatory organization has
prepared summaries, set forth in
sections (A), (B) and (C) below, of the
most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to: (1) Modify
its Wireless Data Communications
Initiatives (referred to herein as the
‘‘Wireless Policy’’) 4 to eliminate the
requirement that all orders or messages
transmitted electronically from off the
Floor must first be recorded in a Floor
broker’s booth location on the Floor
(‘‘Floor booth’’) before being transmitted
to the Floor broker’s wireless hand-held
device for representation and execution;
(2) modify the Wireless Policy to
eliminate the requirement that Floor
booth locations print paper records of
all orders; (3) modify the interpretation
of NYSE Rule 117 as it applies to what
constitutes a ‘‘written order’’; and (4)
codify the Wireless Policy as amended
herein.
The Exchange notes that parallel
changes are proposed to be made to the
rules of the NYSE Amex Exchange
(formerly the American Stock
Exchange).5
Background
On August 25, 1995, the Commission
approved the Exchange’s introduction of
wireless data communications
technology to the Floor. One feature of
the wireless technology was the use of
wireless hand-held data
communications devices on the Floor. A
wireless hand-held device (‘‘hand4 See Securities Exchange Act Release No. 36156
(August 25, 1995), 60 FR 45756 (September 1, 1995)
(SR–NYSE–95–22). The approval order of the initial
filing and subsequent amendment by the
Commission to changes to the Wireless Data
Communications Initiatives has historically been
referred to by the NYSE as the ‘‘Wireless Policy.’’
See also Securities Exchange Act Release No. 39379
(December 1, 1997), 62 FR 64615 (December 8,
1997) (SR–NYSE–97–17).
5 See SR–NYSEAmex–2009–02 (to be filed on
March 23, 2009).
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Federal Register / Vol. 74, No. 61 / Wednesday, April 1, 2009 / Notices
held’’) is a tool used by NYSE Floor
brokers as part of an integrated Floor
order management system to trade and
to send and receive messages. Such
messages can consist of the price, size
and time of the orders as well as
cancellations and modification of orders
from the hand-held to the Floor booth
and thereafter to locations off the Floor.
The Exchange developed and installed a
wireless data communications
infrastructure on its Floor and provided
its Floor brokers with hand-helds. The
Exchange also allowed private vendors
to offer hand-helds, with any needed
support infrastructure, to be used by
Floor brokers.
The Wireless Policy was implemented
in four phases in order to adequately
install and test the viability of the
wireless data communication
infrastructure and connections to
private vendor hand-helds.
By December 1997, the Exchange had
completed the second phase of the
implementation of the Wireless Policy,
namely the supervision of additional
pilot testing of independent wireless
data communication services, including
the services offered by the Exchange.
After entering the next phase, the
Exchange amended the Wireless Policy
to, inter alia, modify the types of
wireless data communications that the
Exchange would permit over the
infrastructure by allowing
communications between two handhelds on the Floor.6
The purpose of the 1997 amendments
was to permit communication between
two hand-helds on the Floor, thereby
eliminating the first step of routing all
such communications to the Floor
booth. These amendments expedited the
transmittal and receipt of orders and to
allow for more efficient processing of
orders and dissemination of
information.
NYSE Rule 117 and the Wireless Policy
NYSE Rule 117 (‘‘Orders of Members
to be in Writing’’) states that no member
on the Floor shall make any bid, offer
or transaction for or on behalf of another
member except pursuant to a written or
electronically recorded order.
Pursuant to the Wireless Policy, the
Exchange interpreted NYSE Rule 117 to
6 See Securities Exchange Act Release No. 39379
(December 1, 1997), 62 FR 64615 (December 8,
1997) (SR–NYSE–97–17). The 1997 amendments
also clarified that a vendor cannot provide wireless
data communications services to Floor members
unless such member is a member organization of
the Exchange; and announced the forms of
agreement and provisions pursuant to which the
Exchange would allow vendors and member
organizations to provide wireless data
communications services to members on the Floor
of the Exchange in the production roll-out
environment.
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mean that an order sent to an Exchange
Floor member by an authorized handheld constituted a ‘‘written order’’ for
the purposes of NYSE Rule 117 if the
member could show that the
transmission of the order: (1) Provided
adequate information relating to the
price, size and time of the order, the
cancellation of the order and any other
relevant order information; (2) satisfied
the Exchange’s audit trail requirements;
and (3) satisfied all other Exchange
reporting and record-keeping
requirements.
Furthermore, the Wireless Policy
provided that all orders entered from off
the Floor were required to be
transmitted to a Floor broker’s booth
terminal prior to transmission to the
Floor broker’s hand-held.7 In addition,
the Wireless Policy required Floor
brokers to create and maintain a paper
record at the booth to supplement the
electronic record of an order transmitted
from an off-Floor location to a booth
terminal and, from the booth to a Floor
broker’s hand-held.8
Since the implementation of the
Wireless Policy in 1995 and its
subsequent amendment, the Exchange
has made significant technological
developments to the operation of its
market. The Exchange has evolved into
a more electronic market and the
NYSE’s trading systems have been
continuously upgraded to provide for
greater speed and efficiency in
processing orders and reports through
the hand-held.
The current electronic trading
environment on the Floor has obviated
the necessity for paper orders, as well as
the need to electronically route all
messages through the booth as an
intermediate step between the Floor
broker’s hand-held and the message’s
points of origin and destination. In
particular, the NYSE’s systems have
evolved significantly since the Wireless
Policy was first approved, and are now
capable of capturing all order
information, including price, size and
time, electronically, thereby rendering
paper records unnecessary. In
recognition of this, subsequent to the
implementation of the Wireless policy,
the Exchange amended NYSE Rule 123
(Record of Orders) to add sections (e)
(System Entry Required) and (f) (Reports
of Order Executions).9 These
amendments required the entry of order
information and execution reports into
7 See Securities Exchange Act Release No. 36156
(August 25, 1995), 60 FR 45756 (September 1, 1995)
(SR–NYSE–95–22) at Footnote 8.
8 Id. at Footnote 9.
9 See Securities Exchange Act Release No. 43689
(December 7, 2000), 65 FR 79145 (December 18,
2000) (SR–NYSE–98–25).
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an electronic system on the Floor. All
NYSE broker trading systems operate to
create an electronic order trail, making
the creation of a supplemental paper
audit trail obsolete.10
Proposed Modifications to the Wireless
Policy and Interpretation of NYSE Rule
117
The Exchange now proposes to amend
the Wireless Policy and the
interpretation of NYSE Rule 117, to
provide that wireless communications
can be sent and received directly to and
from the hand-held. For example, orders
entered from off the Floor may be
transmitted directly to a hand-held,
bypassing the booth.11 Likewise, Floor
brokers may send order-related
messages (e.g., cancellations and
administrative messages) and
information (e.g., Market Look data)
back to the customer directly through
the hand-held. The Exchange seeks to
modify its Wireless Policy to eliminate
the requirement that orders be routed to
the booth terminal before being received
by the hand-held. Order-related
messages or information sent from the
hand-held would also not be routed to
the booth terminal before being
transmitted off-Floor. Pursuant to the
instant proposal, orders and orderrelated messages or information may be
sent directly to and received by the
hand-held. These proposed
amendments to the Wireless Policy do
not change the content of what is sent
currently to and from the hand-helds
but simply amends the procedure for
transmitting such information to and
from the hand-held.
Pursuant to the proposed new
Wireless Policy, where: (1) Orders are
transmitted electronically from a
member’s off-Floor location to a booth
10 Additionally, the NYSE has adopted NYSE
Rule 132A (Synchronization of Member Business
Clocks) and NYSE 132B (Order Tracking
Requirements). These rules require that members
and member organizations create and maintain
electronic records of orders originated, received,
and transmitted to a market center for execution.
These Rules, in conjunction with the amendments
to NYSE Rule 123 which requires system entry on
the Floor, create an electronic record of orders,
transmittals, and executions.
11 In 2007, the NYSE amended NYSE Rule 54 and
other rules to permit appropriately registered and
supervised employees working in Exchange
Regulation-approved booths to process orders sent
to the booth in the same manner that sales traders
in an ‘‘upstairs’’ office are allowed to process
orders. See Securities Exchange Act Release No.
55908 (June 14, 2007), 72 FR 34056 (June 20, 2007)
(SR–NYSE–07–51). See also Exchange Information
Memo 07–77. This amendment to the Wireless
Policy would not impact those rules because the
direct transmittal of an order from off the Floor to
the handheld would constitute a determination to
have the order represented and executed on the
NYSE Floor, and not processed in the booth in the
same manner as an ‘‘upstairs’’ trading desk.
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Federal Register / Vol. 74, No. 61 / Wednesday, April 1, 2009 / Notices
terminal and then the order is
retransmitted from the booth terminal to
a member’s hand-held; or (2) orderrelated messages or information are
transmitted directly to the hand-held,
bypassing the booth, a record must be
established and maintained which
reflects the time the order or orderrelated message or information was
received by the booth terminal or the
hand-held. The time of receipt will be
captured by the Booth or the hand-held,
depending upon where the order was
routed. The record of time of receipt by
a hand-held and [sic] will be established
and maintained by such device or the
Booth and by the server which receives
a message acknowledgment from the
hand-held or the Booth. The Booth will
not be required to print records.
Orders sent from off-Floor to the
booth or the hand-held are first sent
through a secured network and routed
to an NYSE wired database that captures
and records the orders. Likewise, order
related messages or information
generated from the Floor broker’s booth
or hand-helds are transmitted back to
the Exchange-wired databases via the
secured wireless network, where the
information is captured and recorded,
and then sent off-Floor to the customer
via the Exchanges secured network. In
short, Exchange wired databases capture
and record all of the information sent to
and transmitted from the hand-held.
The Exchange notes that the
transmission of orders from off-Floor
locations directly to the hand-helds and
order-related messages or information
sent from hand-helds to off-Floor
locations will not result in an increased
risk of loss of order information. As is
the case today, all orders and orderrelated messages or information will be
recorded in an Exchange database upon
receipt and prior to delivery to the
hand-held. In the event that a hand-held
loses connectivity with the database, all
incoming and outgoing transactions will
continue to be captured and stored in
said database and will be re-transmitted
to the hand-held once connectivity is
restored. To further mitigate the risk of
any loss of data, the NYSE infrastructure
offers a fully redundant, dual-sited
back-up database. This same
infrastructure is currently in place today
for orders received into NYSE systems
destined for a booth. Therefore, all the
information captured by the database is
the identical information that would be
captured had the order been sent to the
Floor booth before being sent to the
hand-held or the order-related message
or information had been sent from the
hand-held to the Floor booth. The
informational content transmitted to
and from the hand-held remains the
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same and is not affected by these
proposed amendments.
Furthermore, this change will not
impact the requirements for the system
entry of orders and execution reports
under NYSE Rules 123(e) and (f). All
order, order messages and report
information captured by the database
will be provided electronically in the
same manner as orders transmitted
directly to a booth today for audit trail
purposes. The wireless infrastructure
captures the same information that was
previously captured in the Floor booth.
The hand-held will operate as the
functional equivalent as the Floor booth
premise for order receipt and retention
purposes.
Removing the requirement that orders
be transmitted to the Floor booth will
not affect the adequacy of information
that is required to be provided through
the hand-held. In fact, the hand-held
will continue to provide the requisite
information as to price, size and time of
the order, and information if the order
is cancelled. Audit trail information will
be captured electronically by the handheld, thereby obviating the need for the
transmission to the booth terminal
which historically recorded this
information.
NYSE Rule 117 will now be
interpreted to recognize any order
transmitted directly to the hand-held to
constitute a written order since the
requisite information as to price, size
and time of the order, and information
if the order is cancelled will be captured
by the hand-held. Furthermore, the
information directly sent to the handheld satisfies the Exchange’s audit trail
requirements and all other Exchange
reporting and record-keeping
requirements.
The Exchange believes that this
proposal will provide for a more
efficient and expeditious mechanism for
order execution. The Exchange further
believes that its customers and market
participants will benefit from faster
order execution, enhanced market
quality and a reduction in latency of
order executions as a result of this
proposal.
2. Statutory Basis
The basis under the Act for the
proposed rule change is the requirement
under Section 6(b)(5),12 which requires
that an exchange have rules that are
designed to foster cooperation and
coordination with persons engaged in
regulating, clearing, settling, processing
information with respect to, and
facilitating transactions in securities, to
remove impediments to and perfect the
12 15
PO 00000
U.S.C. 78f (b)(5).
Frm 00067
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14833
mechanism of a free and open market
and a national market system and, in
general, to protect investors and the
public interest. The proposed rule
change is consistent with these
objectives in that it enables the
Exchange to further facilitate
transactions on the NYSE Trading Floor
by eliminating the requirements that
orders entered from off the Floor require
transmission to a Floor booth before
being transmitted to the hand-held for
representation and execution or that
order-related messages or information
from the hand-held be transmitted to a
Floor booth before being transmitted offFloor. The elimination of this routing
through the Floor booth terminal
removes an impediment to the order
execution system and provides for a
faster, more efficient method of order
execution.
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
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 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 from the date on
which it was filed, or such shorter time
as the Commission may designate, it has
become effective pursuant to Section
19(b)(3)(A) of the Act 13 and Rule 19b4(f)(6) thereunder.14
A proposed rule change filed
pursuant to Rule 19b–4(f)(6) under the
Act 15 normally does not become
operative for 30 days after the date of its
filing. However, Rule 19b–4(f)(6) 16
permits the Commission to designate a
shorter time if such action is consistent
13 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6) requires a self-regulatory organization to give
the Commission written notice of its intent to file
the proposed rule change at least five business days
prior to the date of filing of the proposed rule
change, or such shorter time as designated by the
Commission. NYSE has satisfied this requirement.
15 17 CFR 240.19b–4(f)(6).
16 17 CFR 240.19b–4(f)(6).
14 17
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Federal Register / Vol. 74, No. 61 / Wednesday, April 1, 2009 / Notices
with the protection of investors and the
public interest. NYSE requests that the
Commission waive the 30-day operative
delay in order to immediately remove
an impediment to the efficient
execution of customer orders and
transmission of order-related messages
or information. The Exchange believes
that it promotes the protection of
investors and serves the public interest
to have its systems allow for the
delivery of customer orders to the point
of sale and order-related messages or
information back to the customer
immediately now that hand-held
technology is capable of meeting all
audit trail requirements. The
Commission notes the Exchange’s
representation that the proposed
changes to the Wireless Policy do not
change the content of what is sent to
and from the hand-helds, but simply
amends the procedure for transmitting
such information. In addition, the
Commission notes the Exchange’s
representation with regard to the ability
of Exchange systems to capture and
record all information sent to and
transmitted from the handhelds. For
these reasons, the Commission believes
that waiving the 30-day operative
delay 17 is consistent with the protection
of investors and the public interest.
Therefore, the Commission designates
the proposal operative upon filing.
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
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–2009–33. 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 publicly available. All
submissions should refer to File
Number SR–NYSE–2009–33 and should
be submitted on or before April 22,
2009.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.18
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–7214 Filed 3–31–09; 8:45 am]
BILLING CODE 8011–01–P
• 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–2009–33 on the
subject line.
17 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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SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–59627; File No. SR–
NYSEAmex–2009–02]
Self-Regulatory Organizations; Notice
of Filing and Immediate Effectiveness
of Proposed Rule Change by NYSE
Amex LLC Formally Adopting and
Codifying Its Wireless Data
Communications Initiatives
March 25, 2009.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2
notice is hereby given that on March 23,
2009, NYSE Amex US LLC (the
‘‘Exchange’’ or ‘‘NYSE Amex’’) 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 NYSE Amex. NYSE
Amex has submitted the proposed rule
change pursuant to Rule 19b–4(f)(6)
under the Act,3 which renders the
proposal 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 formally
adopt and codify its Wireless Data
Communications Initiatives (referred to
herein as the ‘‘Wireless Policy’’).
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 these statements may be examined at
the places specified in Item IV below.
The self-regulatory organization has
prepared summaries, set forth in
sections (A), (B) and (C) below, of the
most significant aspects of such
statements.
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 17 CFR 240.19b–4(f)(6).
2 17
18 17
PO 00000
CFR 200.30–3(a)(12).
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]]>Agencies
[Federal Register Volume 74, Number 61 (Wednesday, April 1, 2009)]
[Notices]
[Pages 14831-14834]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-7214]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-59626; File No. SR-NYSE-2009-33]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Modifying the Wireless Data Communications Initiatives and Codifying
the Wireless Policy
March 25, 2009.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on March 20, 2009, the New York Stock Exchange, LLC (``NYSE'' or the
``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 NYSE. NYSE has submitted
the proposed rule change pursuant to Rule 19b-4(f)(6) under the Act,\3\
which renders the proposal 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\ 17 CFR 240.19b-4.
\3\ 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: (1) Modify its Wireless Data
Communications Initiatives (referred to herein as the ``Wireless
Policy'') to eliminate the requirement that all orders or messages
transmitted electronically from off the Floor must first be recorded in
a Floor broker's booth location on the Floor (``Floor booth'') before
being transmitted to the Floor broker's wireless hand-held device for
representation and execution; (2) modify the Wireless Policy to
eliminate the requirement that Floor booth locations print paper
records of all orders; (3) modify the interpretation of NYSE Rule 117
as it applies to what constitutes a ``written order''; and (4) codify
the Wireless Policy as amended herein.
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 these statements may be examined at
the places specified in Item IV below. The self-regulatory organization
has prepared summaries, set forth in sections (A), (B) and (C) below,
of the most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to: (1) Modify its Wireless Data
Communications Initiatives (referred to herein as the ``Wireless
Policy'') \4\ to eliminate the requirement that all orders or messages
transmitted electronically from off the Floor must first be recorded in
a Floor broker's booth location on the Floor (``Floor booth'') before
being transmitted to the Floor broker's wireless hand-held device for
representation and execution; (2) modify the Wireless Policy to
eliminate the requirement that Floor booth locations print paper
records of all orders; (3) modify the interpretation of NYSE Rule 117
as it applies to what constitutes a ``written order''; and (4) codify
the Wireless Policy as amended herein.
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\4\ See Securities Exchange Act Release No. 36156 (August 25,
1995), 60 FR 45756 (September 1, 1995) (SR-NYSE-95-22). The approval
order of the initial filing and subsequent amendment by the
Commission to changes to the Wireless Data Communications
Initiatives has historically been referred to by the NYSE as the
``Wireless Policy.'' See also Securities Exchange Act Release No.
39379 (December 1, 1997), 62 FR 64615 (December 8, 1997) (SR-NYSE-
97-17).
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The Exchange notes that parallel changes are proposed to be made to
the rules of the NYSE Amex Exchange (formerly the American Stock
Exchange).\5\
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\5\ See SR-NYSEAmex-2009-02 (to be filed on March 23, 2009).
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Background
On August 25, 1995, the Commission approved the Exchange's
introduction of wireless data communications technology to the Floor.
One feature of the wireless technology was the use of wireless hand-
held data communications devices on the Floor. A wireless hand-held
device (``hand-
[[Page 14832]]
held'') is a tool used by NYSE Floor brokers as part of an integrated
Floor order management system to trade and to send and receive
messages. Such messages can consist of the price, size and time of the
orders as well as cancellations and modification of orders from the
hand-held to the Floor booth and thereafter to locations off the Floor.
The Exchange developed and installed a wireless data communications
infrastructure on its Floor and provided its Floor brokers with hand-
helds. The Exchange also allowed private vendors to offer hand-helds,
with any needed support infrastructure, to be used by Floor brokers.
The Wireless Policy was implemented in four phases in order to
adequately install and test the viability of the wireless data
communication infrastructure and connections to private vendor hand-
helds.
By December 1997, the Exchange had completed the second phase of
the implementation of the Wireless Policy, namely the supervision of
additional pilot testing of independent wireless data communication
services, including the services offered by the Exchange. After
entering the next phase, the Exchange amended the Wireless Policy to,
inter alia, modify the types of wireless data communications that the
Exchange would permit over the infrastructure by allowing
communications between two hand-helds on the Floor.\6\
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\6\ See Securities Exchange Act Release No. 39379 (December 1,
1997), 62 FR 64615 (December 8, 1997) (SR-NYSE-97-17). The 1997
amendments also clarified that a vendor cannot provide wireless data
communications services to Floor members unless such member is a
member organization of the Exchange; and announced the forms of
agreement and provisions pursuant to which the Exchange would allow
vendors and member organizations to provide wireless data
communications services to members on the Floor of the Exchange in
the production roll-out environment.
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The purpose of the 1997 amendments was to permit communication
between two hand-helds on the Floor, thereby eliminating the first step
of routing all such communications to the Floor booth. These amendments
expedited the transmittal and receipt of orders and to allow for more
efficient processing of orders and dissemination of information.
NYSE Rule 117 and the Wireless Policy
NYSE Rule 117 (``Orders of Members to be in Writing'') states that
no member on the Floor shall make any bid, offer or transaction for or
on behalf of another member except pursuant to a written or
electronically recorded order.
Pursuant to the Wireless Policy, the Exchange interpreted NYSE Rule
117 to mean that an order sent to an Exchange Floor member by an
authorized hand-held constituted a ``written order'' for the purposes
of NYSE Rule 117 if the member could show that the transmission of the
order: (1) Provided adequate information relating to the price, size
and time of the order, the cancellation of the order and any other
relevant order information; (2) satisfied the Exchange's audit trail
requirements; and (3) satisfied all other Exchange reporting and
record-keeping requirements.
Furthermore, the Wireless Policy provided that all orders entered
from off the Floor were required to be transmitted to a Floor broker's
booth terminal prior to transmission to the Floor broker's hand-
held.\7\ In addition, the Wireless Policy required Floor brokers to
create and maintain a paper record at the booth to supplement the
electronic record of an order transmitted from an off-Floor location to
a booth terminal and, from the booth to a Floor broker's hand-held.\8\
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\7\ See Securities Exchange Act Release No. 36156 (August 25,
1995), 60 FR 45756 (September 1, 1995) (SR-NYSE-95-22) at Footnote
8.
\8\ Id. at Footnote 9.
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Since the implementation of the Wireless Policy in 1995 and its
subsequent amendment, the Exchange has made significant technological
developments to the operation of its market. The Exchange has evolved
into a more electronic market and the NYSE's trading systems have been
continuously upgraded to provide for greater speed and efficiency in
processing orders and reports through the hand-held.
The current electronic trading environment on the Floor has
obviated the necessity for paper orders, as well as the need to
electronically route all messages through the booth as an intermediate
step between the Floor broker's hand-held and the message's points of
origin and destination. In particular, the NYSE's systems have evolved
significantly since the Wireless Policy was first approved, and are now
capable of capturing all order information, including price, size and
time, electronically, thereby rendering paper records unnecessary. In
recognition of this, subsequent to the implementation of the Wireless
policy, the Exchange amended NYSE Rule 123 (Record of Orders) to add
sections (e) (System Entry Required) and (f) (Reports of Order
Executions).\9\ These amendments required the entry of order
information and execution reports into an electronic system on the
Floor. All NYSE broker trading systems operate to create an electronic
order trail, making the creation of a supplemental paper audit trail
obsolete.\10\
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\9\ See Securities Exchange Act Release No. 43689 (December 7,
2000), 65 FR 79145 (December 18, 2000) (SR-NYSE-98-25).
\10\ Additionally, the NYSE has adopted NYSE Rule 132A
(Synchronization of Member Business Clocks) and NYSE 132B (Order
Tracking Requirements). These rules require that members and member
organizations create and maintain electronic records of orders
originated, received, and transmitted to a market center for
execution. These Rules, in conjunction with the amendments to NYSE
Rule 123 which requires system entry on the Floor, create an
electronic record of orders, transmittals, and executions.
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Proposed Modifications to the Wireless Policy and Interpretation of
NYSE Rule 117
The Exchange now proposes to amend the Wireless Policy and the
interpretation of NYSE Rule 117, to provide that wireless
communications can be sent and received directly to and from the hand-
held. For example, orders entered from off the Floor may be transmitted
directly to a hand-held, bypassing the booth.\11\ Likewise, Floor
brokers may send order-related messages (e.g., cancellations and
administrative messages) and information (e.g., Market Look data) back
to the customer directly through the hand-held. The Exchange seeks to
modify its Wireless Policy to eliminate the requirement that orders be
routed to the booth terminal before being received by the hand-held.
Order-related messages or information sent from the hand-held would
also not be routed to the booth terminal before being transmitted off-
Floor. Pursuant to the instant proposal, orders and order-related
messages or information may be sent directly to and received by the
hand-held. These proposed amendments to the Wireless Policy do not
change the content of what is sent currently to and from the hand-helds
but simply amends the procedure for transmitting such information to
and from the hand-held.
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\11\ In 2007, the NYSE amended NYSE Rule 54 and other rules to
permit appropriately registered and supervised employees working in
Exchange Regulation-approved booths to process orders sent to the
booth in the same manner that sales traders in an ``upstairs''
office are allowed to process orders. See Securities Exchange Act
Release No. 55908 (June 14, 2007), 72 FR 34056 (June 20, 2007) (SR-
NYSE-07-51). See also Exchange Information Memo 07-77. This
amendment to the Wireless Policy would not impact those rules
because the direct transmittal of an order from off the Floor to the
handheld would constitute a determination to have the order
represented and executed on the NYSE Floor, and not processed in the
booth in the same manner as an ``upstairs'' trading desk.
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Pursuant to the proposed new Wireless Policy, where: (1) Orders are
transmitted electronically from a member's off-Floor location to a
booth
[[Page 14833]]
terminal and then the order is retransmitted from the booth terminal to
a member's hand-held; or (2) order-related messages or information are
transmitted directly to the hand-held, bypassing the booth, a record
must be established and maintained which reflects the time the order or
order-related message or information was received by the booth terminal
or the hand-held. The time of receipt will be captured by the Booth or
the hand-held, depending upon where the order was routed. The record of
time of receipt by a hand-held and [sic] will be established and
maintained by such device or the Booth and by the server which receives
a message acknowledgment from the hand-held or the Booth. The Booth
will not be required to print records.
Orders sent from off-Floor to the booth or the hand-held are first
sent through a secured network and routed to an NYSE wired database
that captures and records the orders. Likewise, order related messages
or information generated from the Floor broker's booth or hand-helds
are transmitted back to the Exchange-wired databases via the secured
wireless network, where the information is captured and recorded, and
then sent off-Floor to the customer via the Exchanges secured network.
In short, Exchange wired databases capture and record all of the
information sent to and transmitted from the hand-held.
The Exchange notes that the transmission of orders from off-Floor
locations directly to the hand-helds and order-related messages or
information sent from hand-helds to off-Floor locations will not result
in an increased risk of loss of order information. As is the case
today, all orders and order-related messages or information will be
recorded in an Exchange database upon receipt and prior to delivery to
the hand-held. In the event that a hand-held loses connectivity with
the database, all incoming and outgoing transactions will continue to
be captured and stored in said database and will be re-transmitted to
the hand-held once connectivity is restored. To further mitigate the
risk of any loss of data, the NYSE infrastructure offers a fully
redundant, dual-sited back-up database. This same infrastructure is
currently in place today for orders received into NYSE systems destined
for a booth. Therefore, all the information captured by the database is
the identical information that would be captured had the order been
sent to the Floor booth before being sent to the hand-held or the
order-related message or information had been sent from the hand-held
to the Floor booth. The informational content transmitted to and from
the hand-held remains the same and is not affected by these proposed
amendments.
Furthermore, this change will not impact the requirements for the
system entry of orders and execution reports under NYSE Rules 123(e)
and (f). All order, order messages and report information captured by
the database will be provided electronically in the same manner as
orders transmitted directly to a booth today for audit trail purposes.
The wireless infrastructure captures the same information that was
previously captured in the Floor booth. The hand-held will operate as
the functional equivalent as the Floor booth premise for order receipt
and retention purposes.
Removing the requirement that orders be transmitted to the Floor
booth will not affect the adequacy of information that is required to
be provided through the hand-held. In fact, the hand-held will continue
to provide the requisite information as to price, size and time of the
order, and information if the order is cancelled. Audit trail
information will be captured electronically by the hand-held, thereby
obviating the need for the transmission to the booth terminal which
historically recorded this information.
NYSE Rule 117 will now be interpreted to recognize any order
transmitted directly to the hand-held to constitute a written order
since the requisite information as to price, size and time of the
order, and information if the order is cancelled will be captured by
the hand-held. Furthermore, the information directly sent to the hand-
held satisfies the Exchange's audit trail requirements and all other
Exchange reporting and record-keeping requirements.
The Exchange believes that this proposal will provide for a more
efficient and expeditious mechanism for order execution. The Exchange
further believes that its customers and market participants will
benefit from faster order execution, enhanced market quality and a
reduction in latency of order executions as a result of this proposal.
2. Statutory Basis
The basis under the Act for the proposed rule change is the
requirement under Section 6(b)(5),\12\ which requires that an exchange
have rules that are designed to foster cooperation and coordination
with persons engaged in regulating, clearing, settling, processing
information with respect to, and facilitating transactions in
securities, to remove impediments to and perfect the mechanism of a
free and open market and a national market system and, in general, to
protect investors and the public interest. The proposed rule change is
consistent with these objectives in that it enables the Exchange to
further facilitate transactions on the NYSE Trading Floor by
eliminating the requirements that orders entered from off the Floor
require transmission to a Floor booth before being transmitted to the
hand-held for representation and execution or that order-related
messages or information from the hand-held be transmitted to a Floor
booth before being transmitted off-Floor. The elimination of this
routing through the Floor booth terminal removes an impediment to the
order execution system and provides for a faster, more efficient method
of order execution.
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\12\ 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
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
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 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 from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \13\ and Rule 19b-
4(f)(6) thereunder.\14\
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\13\ 15 U.S.C. 78s(b)(3)(A).
\14\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
NYSE has satisfied this requirement.
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A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act \15\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6) \16\ permits the Commission to
designate a shorter time if such action is consistent
[[Page 14834]]
with the protection of investors and the public interest. NYSE requests
that the Commission waive the 30-day operative delay in order to
immediately remove an impediment to the efficient execution of customer
orders and transmission of order-related messages or information. The
Exchange believes that it promotes the protection of investors and
serves the public interest to have its systems allow for the delivery
of customer orders to the point of sale and order-related messages or
information back to the customer immediately now that hand-held
technology is capable of meeting all audit trail requirements. The
Commission notes the Exchange's representation that the proposed
changes to the Wireless Policy do not change the content of what is
sent to and from the hand-helds, but simply amends the procedure for
transmitting such information. In addition, the Commission notes the
Exchange's representation with regard to the ability of Exchange
systems to capture and record all information sent to and transmitted
from the handhelds. For these reasons, the Commission believes that
waiving the 30-day operative delay \17\ is consistent with the
protection of investors and the public interest. Therefore, the
Commission designates the proposal operative upon filing.
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\15\ 17 CFR 240.19b-4(f)(6).
\16\ 17 CFR 240.19b-4(f)(6).
\17\ 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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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-2009-33 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-2009-33. 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 publicly available. All
submissions should refer to File Number SR-NYSE-2009-33 and should be
submitted on or before April 22, 2009.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
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\18\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-7214 Filed 3-31-09; 8:45 am]
BILLING CODE 8011-01-P
