Self-Regulatory Organizations; NYSE Amex LLC; Notice of Filing of Proposed Rule Change To Adopt Rules To Implement the Options Order Protection and Locked/Crossed Market Plan, 27375-27379 [E9-13394]
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Federal Register / Vol. 74, No. 109 / Tuesday, June 9, 2009 / Notices
references to series and replace them
with class. Specifically, a Market Maker
will be required to submit valid
quotations on a daily basis for at least
eighty percent (80%) of the time that a
class is open for trading in at least
ninety percent (90%) of its appointed
classes. Further, on a daily basis, a
Market Maker will be required to post
valid quotations at least sixty percent
(60%) of the time in each of its
appointed classes during the time that
the class is open for trading. The
Exchange states that this proposed
change should allow Market Makers to
focus their strategy on the entire class to
which it is appointed, rather than
implementing a strategy utilizing each
series within a class. At the same time,
the proposal allows a Market Maker, if
it chooses, to bring more liquidity to the
more actively traded series, rather than
focusing on series with less activity.
After careful review, the Commission
finds that the proposed rule change is
consistent with the requirements of the
Act and the rules and regulations
thereunder applicable to a national
securities exchange.4 In particular, the
Commission finds that the proposal is
consistent with Section 6(b)(5) of the
Act,5 which requires that an exchange
have rules designed to prevent
fraudulent and manipulative acts and
practices, to promote just and equitable
principles of trade, to foster cooperation
and coordination with persons engaged
in facilitating transactions in securities,
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 Commission
notes that under the proposal, Market
Maker quoting obligations will be based
on a daily time measurement, as
opposed to a requirement to
continuously provide quotations in a
specified percentage of appointed
options. Market Makers will, however,
still be subject to requirements on how
often they must quote. Specifically,
Market Makers will be required to
submit valid quotations on a daily basis
for at least 80% of the time that a class
is open in 90% of their appointed
classes and be required to post valid
quotations at least 60% of the time in
each of its appointed classes during the
time that the class is open for trading.
The Commission also notes that the
proposal helps to clarify Market Maker
quoting obligations in response to an
4 In approving this proposed rule change, the
Commission has considered the proposed rule’s
impact on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f).
5 15 U.S.C. 78f(b)(5).
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RFQ or a request by an Options Official
to quote in the interest of a fair and
orderly market. The Commission
believes these changes are consistent
with the Act.
Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,6 that the
proposed rule change (SR–BX–2009–
020) be, and it hereby is, approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.7
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–13396 Filed 6–8–09; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–60015; File No. SR–
NYSEAmex–2009–19]
Self-Regulatory Organizations; NYSE
Amex LLC; Notice of Filing of
Proposed Rule Change To Adopt Rules
To Implement the Options Order
Protection and Locked/Crossed Market
Plan
June 1, 2009.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 1 and Rule 19b–4 thereunder,2
notice is hereby given that on May 11,
2009, the NYSE Amex LLC (‘‘NYSE
Amex’’ or ‘‘Exchange’’), filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to adopt rules
to implement the Options Order
Protection and Locked/Crossed Market
Plan. The text of the proposed rule
change is available on the Exchange’s
Web site at https://www.nyse.com, at the
Exchange’s principal office and at the
Commission’s Public Reference Room.
6 15
U.S.C. 78s(b)(2).
CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
Frm 00100
Fmt 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.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to adopt rules
to implement the Plan. These rules will
replace Rules 990NY through 993NY of
the Exchange’s rules in their entirety.
The proposed rules also will amend or
remove various other rules to
accommodate the Plan.
Background to the Plan and the
Implementing Rules
NYSE Amex filed the current version
of the Plan on November 25, 2008.3 The
Plan would replace the current Plan for
the Purpose of Creating and Operating
an Intermarket Option Linkage (‘‘Old
Plan’’). The Old Plan requires its
participant exchanges to operate a
stand-alone system or ‘‘Linkage’’ for
sending order-flow between exchanges
to limit trade-throughs. The Options
Clearing Corporation (‘‘OCC’’) operates
the Linkage system. The Linkage rules
provide for unique types of Linkage
orders, with a complicated set of
requirements as to who may send such
orders and under what conditions.
While the Linkage largely has
operated satisfactorily, it is under
significant strain. When the
Commission approved the Old Plan in
2000, average daily volume (‘‘ADV’’) in
the options market was approximately
2.6 million contracts across all
exchanges. Now the ADV has increased
to more than 10 million contracts,
putting added strain on the ability of
market makers to comply with the
complex Linkage rules. At the same
time, the options markets have been
moving towards quoting in pennies, and
are quoting in pennies options
representing over half the total industry
3 The November 25, 2008 filing was Amendment
No. 1 to the Plan. The American Stock Exchange
LLC (the predecessor to NYSE Amex LLC) initially
filed the Plan on June 17, 2008.
7 17
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Federal Register / Vol. 74, No. 109 / Tuesday, June 9, 2009 / Notices
volume. This greatly increases the
number of price changes in an option,
giving rise to greater chances of tradethroughs and missing markets as market
makers send Linkage orders and have to
wait for a response.
Experience in the equities markets
shows that there is a more efficient way
to provide price protection in options.
When first implemented, the Linkage
represented a vast improvement over
the then-current equities priceprotection system, which depended on
the operation of the Intermarket Trading
System (‘‘ITS’’). The plan governing ITS
imposed long waiting times for filling
ITS commitments and a cumbersome
method for satisfying trade-throughs.
Learning from the shortcomings of ITS,
the options Linkage has shorter waiting
periods and more efficient trade-through
protections.
The equity price-protection
mechanisms have now leapfrogged the
options Linkage. By adopting Regulation
NMS in 2005 the Commission
effectively terminated ITS, replacing it
with a rules-based price-protection
system.4 The key to Regulation NMS’s
price-protection provisions is the
Intermarket Sweep Order, or ISO. Each
equity exchange must adopt rules
‘‘reasonably designed to prevent tradethroughs.’’ 5 Exempted from tradethrough liability is an ISO, which is an
order a member sends to an exchange
displaying a price inferior to the
national best bid and offer (‘‘NBBO’’),
while simultaneously sending orders to
trade against the full size of any other
exchange that is displaying the NBBO.6
The Regulation NMS rules-based
price-protection system is working well.
It requires neither a central linkage
mechanism nor a complex set of
operating rules. It also has eliminated
the need for achieving unanimity to
change even the most minor aspects of
a linkage mechanism. A simple
prohibition against most trade-throughs,
coupled with the ISO mechanism, has
given the equities markets a straightforward system to provide customers
with price protection in a fast-moving,
high-volume market that is quoted in
pennies. NYSE Amex and the other
options exchange participants in the
Plan intend for the Plan, and the
implementing rules, to bring the
efficiencies of Regulation NMS to the
options market.
4 Release
No. 34–51808 (June 9, 2005), 70 FR
37496 (June 29, 2005).
5 Regulation NMS Rule 611(a).
6 Regulation NMS Rule 600(b)(30).
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Operation of the Plan
The Plan effectively would apply the
Regulation NMS price-protection
provisions to the options markets.
Similar to Regulation NMS, the Plan
would require participants to adopt
rules ‘‘reasonably designed to prevent
Trade-Throughs,’’ while exempting ISOs
from that prohibition.7 The definition of
an ISO is essentially the same as under
Regulation NMS,8 and there are a
number of additional exceptions to the
trade-through prohibition. Like
Regulation NMS,9 the Plan requires
participating exchanges to take
reasonable steps to establish that ISOs
meet the requirements of the Plan.
With respect to locked and crossed
markets, similar to Regulation NMS the
Plan requires its participants to adopt,
maintain and enforce rules requiring
members: to avoid displaying locked
and crossed markets; to reconcile such
markets; and to prohibit members from
engaging in a pattern or practice of
displaying locked and crossed
markets.10 With respect to locked
markets, the Plan differs from
Regulation NMS in that it specifically
permits exceptions to the locked market
prohibitions ‘‘as contained in the rules
of a Participant approved by the
Commission.’’ 11
Description of the Implementing Rules
The Exchange proposes to define
‘‘Intermarket Sweep Order’’ as a new
order type in proposed Rule 900.3NY(t).
Other proposed rule changes would
amend and replace NYSE Amex’s
current Linkage rules in Rules 940 and
990NY–993NY as described below:
Rule 990NY—Definitions
This proposed rule incorporates all
the operative definitions from the Plan
into the NYSE Amex rulebook. With one
exception, the parties to the Plan
derived all such definitions either from
the Old Plan 12 or Regulation NMS.13
The one exception is the definition of
‘‘complex trade’’ in Rule 990NY(4). A
‘‘complex trade’’ is exempt from tradethrough liability. The exemption in the
Old Plan simply refers to complex
7 Sections
5(a)(i) and 5(b)(iv) of the Plan.
2(9) of the Plan.
9 Regulation NMS Rule 611(c) and Section 5(c) of
the Plan.
10 Section 6 of the Plan.
11 Id.
12 See, e.g., the definitions of ‘‘Broker-Dealer’’ in
Rule 990NY(3), NBBO in Rule 990NY(10), NonFirm in Rule 990NY(11), OPRA Plan in Rule
990NY(12), and Participant in Rule 990NY(13).
13 See, e.g., the definitions of ‘‘Best Bid’’/‘‘Best
Offer’’ in Rule 990NY(1), ‘‘Bid’’/‘‘Offer’’ in Rule
990NY(2), ‘‘Intermarket Sweep Order (‘‘ISO’’)’’ in
Rule 900.3NY(t), and ‘‘Quotation’’ in Rule
990NY(16).
8 Section
PO 00000
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trades ‘‘as that term may be defined by
the Operating Committee from time to
time.’’ Based on that provision, the
Exchange had previously adopted
current Rule 940(b)(3), which is
substantially identical among all the
options exchanges. We propose to carry
that definition into the revised Rule
990NY unchanged.
Rule 991NY—Order Protection
Paragraph (a) of Rule 991NY provides
that, subject to specified exceptions,
NYSE Amex ATP Holders shall not
effect trade-throughs. Paragraph (b)
provides for the following trade-through
exceptions:
• System Issues: Rule 991NY(b)(1)
implements Section 5(b)(i) of the Plan
by establishing an exception for tradethroughs due to system-failures. This is
akin to the exception in Regulation
NMS for equity securities and permits
trading through an Eligible Exchange
that is experiencing system problems.14
The Exchange is proposing ‘‘self-help’’
rules similar to its NYSE Amex Equities
Rule 126A–AEMI, adopted pursuant to
Regulation NMS.
• Trading Rotations: Rule
991NY(b)(2) implements Section 5(b)(ii)
of the Plan and carries forward the
current trade-through exception in the
Old Plan 15 and current Rule 991NY
(b)(5) related to the opening of markets.
It is the options equivalent to the single
price opening exception in Regulation
NMS for equity securities.16 NYSE
Amex uses a trading auction to open an
option for trading, or to reopen an
option after a trading halt. The opening
is effectively a single price auction to
price the option and there are no
practical means to include prices on
other exchanges in that auction.
• Crossed Markets: Rule 991NY(b)(3)
implements Section 5(b)(iii) of the Plan
and is the functional equivalent to
NYSE Alternext Equities Rule 128C–
AEMI for equity securities. If the best
intermarket bid is higher than the best
intermarket offer, it indicates that there
is some form of market dislocation or
inaccurate quoting. Permitting
transactions to be executed without
regard to trade-throughs in a Crossed
Market will allow the market quickly
return to equilibrium.
• Intermarket Sweep Orders (‘‘ISOs’’):
Rule 991NY(b)(4) is the ISO exemption
and implements Sections 5(b)(iv) and
(v) of the Plan. Section 5(b)(iv) of the
Plan permits a Participant to execute
14 See
Regulation NMS Rule 611(b)(1).
Old Plan Section 8(c)(iii)(E).
16 See Regulation NMS Rule 611(b)(3) under the
Securities Exchange Act of 1934, as amended
(‘‘Exchange Act’’).
15 See
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orders it receives from other
Participants or members that are marked
as ISO even when it is not at the NBBO.
Section 5(b)(v) of the Plan allows a
Participant to execute inbound orders
when it is not at the NBBO, provided it
simultaneously ‘‘sweeps’’ all betterpriced interest displayed by Eligible
Exchanges. These provisions are the
options equivalents of the
corresponding Regulation NMS equity
rules.17
• Quote Flickering: Rule 991NY(b)(5)
implements Section 5(b)(vi) of the Plan
and corresponds to the flickering quote
exception in Regulation NMS for equity
securities.18 Options quotations change
as rapidly, if not more rapidly, than
equity quotations. Indeed, they track the
price of the underlying security and
thus change when the price of the
underlying security changes. This
exception provides a form of ‘‘safe
harbor’’ to market participants to allow
them to trade through prices that have
changed within a second of the
transaction causing a nominal tradethrough.
• Non-Firm Quotes: Rule 991NY(b)(6)
implements Section 5(b)(vii) of the Plan
and carries forward the current non-firm
quote trade-through exception in the
Old Plan.19 By definition, an exchange’s
quotations may not be firm for
automatic execution during this trading
state and thus should not be protected
from trade-throughs. In effect, these
quotations are akin to ‘‘manual
quotations’’ under Regulation NMS.
• Complex Trades: Rule 991NY(b)(7)
implements Section 5(b)(viii) of the Plan
and carries forward the current complex
trade exception in the Old Plan.20
Complex trades consist of multiple
transactions (‘‘legs’’) effected at a net
price, and it is not practical to price
each leg at a price that does not
constitute a trade-through.
• Customer Stopped Orders: Rule
991NY(b)(8) implements Section 5(b)(ix)
of the Plan and corresponds to the
customer stopped order exception in
Regulation NMS for equity securities.21
It permits broker-dealers to execute
large orders over time at a price agreed
upon by a customer, even though the
price of the option may change before
the order is executed in its entirety.
• Stopped Orders and Price
Improvement: Rule 991NY(b)(9)
implements Section 5(b)(x) of the Plan
and would apply if an order is stopped
at price that did not constitute a trade17 See
Regulation NMS Rules 611(b)(5) and (6).
Regulation NMS Rule 611(b)(8).
19 See Old Plan Section 8(c)(iii)(C).
20 See Old Plan Section 8(c)(iii)(G).
21 See Regulation NMS Rule 611(b)(9).
18 See
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through at the time of the stop. This
exception applies to those exchanges
that offer a ‘‘Price Improvement
Mechanism’’ by which members could
seek price improvement for that order,
even if the market moves in the interim,
and the transaction ultimately is
effected at a price that would trade
through the then currently-displayed
market.22 NYSE Amex does not
currently permit these types of options
trades, and any transaction-type relying
on this exemption would require the
Exchange to adopt implementing rules,
subject to Commission review and
approval.
• Benchmark Trades: Rule
991NY(b)(10) implements Section
5(b)(xi) of the Plan and would cover
trades executed at a price not tied to the
price of an option at the time of
execution, and for which the material
terms were not reasonably determinable
at the time of the commitment to make
the trade. An example would be a
volume-weighted average price trade, or
‘‘VWAP.’’ This corresponds to a tradethrough exemption in Regulation NMS
for equity trades.23 NYSE Amex does
not currently permit these types of
options trades, and any transaction-type
relying on this exemption would require
the Exchange to adopt implementing
rules, subject to Commission review and
approval.
Rule 992NY—Locked and Crossed
Markets
Proposed Rule 992NY implements
Section 6 of the Plan, which requires
Plan participants to establish, maintain
and enforce rules that: require their
members reasonably to avoid displaying
locked and crossed markets; are
reasonably designed to assure
reconciliation of locked and crossed
markets; and prohibit their members
from engaging in a pattern or practice of
displaying locked and crossed markets.
Section 6 of the Plan further allows an
exchange to provide exceptions to these
limitations as ‘‘contained in the rules of
a Participant approved by the
Commission.’’
Proposed Rule 992NY(a) contains the
general prohibition that NYSE Amex
ATP Holders shall reasonably avoid
displaying, and shall not engage in a
pattern or practice of displaying, any
quotations that lock or cross the best bid
or offer of another exchange. We
propose four exceptions to this general
prohibition.24
for instance, ISE Rule 723.
Regulation NMS Rule 611(b)(7).
24 See e-mail from Andrew Stevens, Chief
Counsel—U.S. Equities & Derivatives, NYSE
Euronext, to David Liu, Assistant Director, Division
27377
The first exception would apply when
we are experiencing system issues, and
is similar to the systems issues
exception to the trade-through rule. The
second exception applies when there is
a crossed market, and also is similar to
the corresponding trade-through
exception. The third exception would
apply when an ATP Holder has
simultaneously routed an ISO to execute
against the full displayed size of any
locked or crossed Protected Bid or
Protected Offer. The fourth proposed
exception applies to locked markets in
the following circumstances: 25
• Neither the locking or locked quote
represents, in whole or in part, a
customer order; or
• A customer enters a bid or offer that
locks a non-customer quotation on
another market, and the customer, on a
case-by-case basis, authorizes the
locking of the other market’s quotation.
This fourth 26 exemption recognizes
an important distinction between the
equities and options markets. Options
market makers compete for order flow
by disseminating quotations in multiple
series with respect to each underlying
security, distributing liquidity over a
much greater universe of products than
in the equity markets. As a result, the
options markets are more reliant on
market maker quotations to provide
liquidity, with fewer customer orders in
each series than in each underlying
security, where liquidity is concentrated
in one product.
With market makers on multiple
exchanges constantly updating their
quotations in all these series based on
mathematical formulae there is a greater
likelihood of market maker quotations
locking. We believe that in most cases
locked market maker quotations are
good for the investing public. Effectively
locked markets provide a ‘‘zero spread,’’
allowing market participants to buy and
sell an option at the same price. On
NYSE Amex these quotations are firm,
and are fully executable on an
automated basis.
We recognize that locked markets are
more complicated where one or both of
the locking quotations represents a
customer order. Where there is contraside market interest willing to trade
with a customer, the customer order
should be filled. Thus, we would not
exempt from the locked market
prohibition situations involving
customer orders unless the customer
entering the locking order specifically
22 See,
23 See
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of Trading and Markets, Commission, dated May
29, 2009.
25 See id.
26 See id.
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authorizes the lock on a case-by-case
basis.27
The Exchange will not implement this
proposed exception to the locked
market prohibition unless the Exchange
can identify that an order on another
exchange is for the account of a
customer. The options exchanges
currently are working on a method to so
identify customer quotations through
the Options Price Reporting Authority.
Absent the ability to identify a customer
quote as part of an exchange’s BBO,
NYSE Amex will assume that the quote
represents, in whole or in part, a
customer order. That is, NYSE Amex
will not permit its members to avail
themselves of this exemption unless
another exchange has informed the
Exchange that it will designate all
customer orders as such at OPRA, and
such exchange’s quotation does not
contain such designation. If an exchange
opts not to identify its customer
quotations, the Exchange will treat all of
that exchange’s quotations as customer
orders and, absent application of
another exception, will not permit locks
of such quotations.
The Exchange also proposes that the
exemption is only operative for as long
as the Exchange is willing to identify
Customer orders in its own quote.
Temporary Rule 993NY—Temporary
Rule Governing P and P/A Orders
When the Plan and implementing
rules become operative it is possible
that not all the options exchanges will
be functionally able to operate pursuant
to the Plan. Thus, in order to ensure
there is full intermarket trade-through
protection during this interim period,
we propose to retain certain minimum
trade-through rules based on the Old
Plan until all the options exchanges are
operating pursuant to the Plan. When
that occurs we will file a rule change
with the Commission to delete
Temporary Rule 993NY.
Temporary Rule 993NY provides that
NYSE Amex will continue to accept
Principal Acting as Agent (‘‘P/A’’) and
Principal Orders from options
exchanges which have not fully
discontinued use of the OCC managed
routing hub. The handling of these
orders will be subject to Temporary
Rule 993NY.
Amendment of Other NYSE Amex Rules
To Accommodate the Plan
We propose to amend four NYSE
Amex rules in addition to those
described above. First, Rule 921NY,
27 We can envision a customer authorizing a lock
when the fees associating with trading against the
locked market make the execution price
uneconomical to the customer.
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Registration of Market Makers, allows
certain Market Makers to act in an
agency capacity for the purpose of
sending Principal Acting as Agent (‘‘P/
A’’) Orders through the Linkage. With
the termination of the Linkage such
provision no longer will be necessary
and we thus propose to delete this
provision.
Second, Rule 923NY, Appointment of
Market Makers, Commentaries .01–.03
describes Intermarket Linkage Market
Makers (‘‘IMM’’) and described when
and how IMMs would be appointed,
and the procedures that governed their
appointment. With the termination of
the Linkage such provisions will no
longer be necessary and we thus
propose to delete them.
Rule 964NY, Display, Priority and
Order Allocation—Trading Systems,
will be amended to remove references to
the Intermarket Linkage.
Finally, Rule 476A, Minor Rule Plan,
describes certain violations which are
part of an expedited disciplinary
process, and their attendant fines. The
Exchange proposes to modify those
violations which are related to the
Linkage and make them applicable to
the Plan and the proposed Rules.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Securities Exchange Act of 1934
(the ‘‘Act’’).28 The basis under the Act
for this proposed rule change is found
in Section 6(b)(5) of the Act,29 in that
the proposed rule change is designed to
promote just and equitable principles of
trade, remove impediments to and
perfect the mechanisms of a free and
open market and a national market
system and, in general, to protect
investors and the public interest. In
particular, the Exchange believes that
adopting rules that implement the Plan
will facilitate the trading of options in
a national market system by establishing
more efficient protection against tradethroughs and locked and crossed
markets.
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.
28 15
29 15
PO 00000
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
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C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 35 days of the date of
publication of this notice in the Federal
Register or within such longer period (i)
as the Commission may designate up to
90 days of such date if it finds such
longer period to be appropriate and
publishes its reasons for so finding or
(ii) as to which the Exchange consents,
the Commission will:
(A) by order approve the proposed
rule change, or
(B) institute proceedings to determine
whether the proposed rule change
should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
No. SR–NYSEAmex–2009–19 on the
subject line.
Paper Comments
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
Station Place, 100 F Street, NE.,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–NYSEAmex–2009–19. 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
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Federal Register / Vol. 74, No. 109 / Tuesday, June 9, 2009 / Notices
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for inspection and copying in
the Commission’s Public Reference
Room, on official business days between
the hours of 10 a.m. and 3 p.m. Copies
of such filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–
NYSEAmex–2009–19 and should be
submitted on or before June 30, 2009.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.30
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–13394 Filed 6–8–09; 8:45 am]
BILLING CODE 8010–01–P
SOCIAL SECURITY ADMINISTRATION
Agency Information Collection
Activities: Proposed Request and
Comment Request
The Social Security Administration
(SSA) publishes a list of information
collection packages requiring clearance
by the Office of Management and
Budget (OMB) in compliance with
Public Law (Pub. L.) 104–13, the
Paperwork Reduction Act of 1995,
effective October 1, 1995. This notice
includes revisions and extensions of
OMB-approved information collections
and a new collection.
SSA is soliciting comments on the
accuracy of the agency’s burden
estimate; the need for the information;
its practical utility; ways to enhance its
quality, utility, and clarity; and ways to
minimize the burden on respondents,
including the use of automated
collection techniques or other forms of
information technology. Mail, e-mail, or
fax your comments and
recommendations on the information
collection(s) to the OMB Desk Officer
and the SSA Reports Clearance Officer
to the addresses or fax numbers shown
below.
(OMB) Office of Management and
Budget, Attn: Desk Officer for SSA,
Fax: 202–395–6974, E-mail address:
OIRA_Submission@omb.eop.gov.
(SSA) Social Security Administration,
DCBFM, Attn: Reports Clearance
30 17
CFR 200.30–3(a)(12).
VerDate Nov<24>2008
14:45 Jun 08, 2009
Jkt 217001
Officer, 1332 Annex Building, 6401
Security Blvd., Baltimore, MD 21235,
Fax: 410–965–6400, E-mail address:
OPLM.RCO@ssa.gov.
I. The information collection below is
pending at SSA. SSA will submit it to
OMB within 60 days from the date of
this notice. To be sure we consider your
comments, we must receive them no
later than August 10, 2009. Individuals
can obtain copies of the collection
instrument by calling the SSA Reports
Clearance Officer at 410–965–3758 or by
writing to the e-mail address we list
above.
1. Psychiatric Review Technique—20
CFR 404.1520a, 416.920a—0960–0413.
The SSA–2506–BK assists the Disability
Determination Services (DDS) offices in
evaluating mental impairments by
helping to organize and present the
mental findings in a clear, concise, and
consistent manner; consider and
evaluate all aspects of the mental
impairment relevant to the individual’s
ability to perform work-related mental
functions; and identify additional
evidence needed to determine
impairment severity.
The respondents are the State DDSs
and Federal DDSs administering the
Title II and Title XVI programs.
Type of Request: Extension of an
OMB-approved information collection.
Number of Respondents: 54.
Frequency of Response: 27,553.
Average Burden per Response: 15
minutes.
Estimated Annual Burden: 371,966
hours.
2. Certificate of Election for Reduced
Spouse’s Benefits—20 CFR 404.421—
0960–0398. Reduced benefits are not
payable to an already entitled spouse, at
least age 62 but under full retirement
age, who no longer has a child in care
unless the spouse elects to receive
reduced benefits. If a spouse decides to
elect reduced benefits, they must
complete Form SSA–25. SSA uses the
information collected on Form SSA–25
to pay a qualified spouse who elects to
receive a reduced benefit. Respondents
are entitled spouses seeking reduced
benefits.
Type of Request: Revision of an OMBapproved information collection.
Number of Respondents: 30,000.
Frequency of Response: 1.
Average Burden per Response: 2
minutes.
Estimated Annual Burden: 1,000
hours.
II. SSA has submitted the information
collections we list below to OMB for
clearance. Your comments on the
information collections would be most
useful if OMB and SSA receive them
PO 00000
Frm 00104
Fmt 4703
Sfmt 4703
27379
within 30 days from the date of this
publication. To be sure we consider
your comments, we must receive them
no later than July 9, 2009. You can
obtain a copy of the OMB clearance
packages by calling the SSA Reports
Clearance Officer at 410–965–3758 or by
writing to the above e-mail address.
1. Statement of Employer—20 CFR
404.801–404.803—0960–0030. SSA uses
Form SSA–7011–F4 to substantiate
allegations of wages paid to workers
when those wages do not appear in
SSA’s records of earnings and the
worker does not have proof of those
earnings. SSA uses the information from
this form to process claims for Social
Security benefits and to resolve
discrepancies in the individual’s Social
Security earnings record. We only send
Form SSA–7011–F4 to employers if we
deem it necessary. We make every effort
to locate the earnings information
within our records before we contact the
employer. The respondents are
employers who can verify wage
allegations made by wage earners.
Note: This is a correction notice. SSA
published this information collection as an
extension on April 07, 2009 at 74 FR 15808.
Since we are revising the Privacy Act
Statement, this is now a revision of an OMBapproved information collection.
Type of Request: Revision of an OMBapproved information collection.
Number of Respondents: 925,000.
Frequency of Response: 1.
Average Burden per Response: 20
minutes.
Estimated Annual Burden: 308,333
hours.
2. Statement of Claimant or Other
Person—20 CFR 404.702 & 416.570—
0960–0045. SSA uses the SSA–795 to
obtain information from claimants or
other persons having knowledge of facts
in connection with claims for
Supplemental Security Income (SSI) or
Social Security benefits when there is
no standard form to collect the needed
information. SSA uses the information
to process claims for benefits or for
ongoing issues related to the above
programs. The respondents are
applicants/recipients of SSI or Social
Security benefits, or others who are in
a position to provide information
pertinent to the claim(s).
Type of Request: Revision of an OMBapproved information collection.
Number of Respondents: 305,500.
Frequency of Response: 1.
Average Burden per Response: 15
minutes.
Estimated Annual Burden: 76,375
hours.
3. Statement of Self-Employment
Income—20 CFR 404.101, 404.110,
E:\FR\FM\09JNN1.SGM
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]]>Agencies
[Federal Register Volume 74, Number 109 (Tuesday, June 9, 2009)]
[Notices]
[Pages 27375-27379]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-13394]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-60015; File No. SR-NYSEAmex-2009-19]
Self-Regulatory Organizations; NYSE Amex LLC; Notice of Filing of
Proposed Rule Change To Adopt Rules To Implement the Options Order
Protection and Locked/Crossed Market Plan
June 1, 2009.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on May 11, 2009, the NYSE Amex LLC (``NYSE Amex'' or
``Exchange''), filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to adopt rules to implement the Options Order
Protection and Locked/Crossed Market Plan. The text of the proposed
rule change is available on the Exchange's Web site at https://www.nyse.com, at the Exchange's principal office and at the
Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to adopt rules to implement the Plan. These
rules will replace Rules 990NY through 993NY of the Exchange's rules in
their entirety. The proposed rules also will amend or remove various
other rules to accommodate the Plan.
Background to the Plan and the Implementing Rules
NYSE Amex filed the current version of the Plan on November 25,
2008.\3\ The Plan would replace the current Plan for the Purpose of
Creating and Operating an Intermarket Option Linkage (``Old Plan'').
The Old Plan requires its participant exchanges to operate a stand-
alone system or ``Linkage'' for sending order-flow between exchanges to
limit trade-throughs. The Options Clearing Corporation (``OCC'')
operates the Linkage system. The Linkage rules provide for unique types
of Linkage orders, with a complicated set of requirements as to who may
send such orders and under what conditions.
---------------------------------------------------------------------------
\3\ The November 25, 2008 filing was Amendment No. 1 to the
Plan. The American Stock Exchange LLC (the predecessor to NYSE Amex
LLC) initially filed the Plan on June 17, 2008.
---------------------------------------------------------------------------
While the Linkage largely has operated satisfactorily, it is under
significant strain. When the Commission approved the Old Plan in 2000,
average daily volume (``ADV'') in the options market was approximately
2.6 million contracts across all exchanges. Now the ADV has increased
to more than 10 million contracts, putting added strain on the ability
of market makers to comply with the complex Linkage rules. At the same
time, the options markets have been moving towards quoting in pennies,
and are quoting in pennies options representing over half the total
industry
[[Page 27376]]
volume. This greatly increases the number of price changes in an
option, giving rise to greater chances of trade-throughs and missing
markets as market makers send Linkage orders and have to wait for a
response.
Experience in the equities markets shows that there is a more
efficient way to provide price protection in options. When first
implemented, the Linkage represented a vast improvement over the then-
current equities price-protection system, which depended on the
operation of the Intermarket Trading System (``ITS''). The plan
governing ITS imposed long waiting times for filling ITS commitments
and a cumbersome method for satisfying trade-throughs. Learning from
the shortcomings of ITS, the options Linkage has shorter waiting
periods and more efficient trade-through protections.
The equity price-protection mechanisms have now leapfrogged the
options Linkage. By adopting Regulation NMS in 2005 the Commission
effectively terminated ITS, replacing it with a rules-based price-
protection system.\4\ The key to Regulation NMS's price-protection
provisions is the Intermarket Sweep Order, or ISO. Each equity exchange
must adopt rules ``reasonably designed to prevent trade-throughs.'' \5\
Exempted from trade-through liability is an ISO, which is an order a
member sends to an exchange displaying a price inferior to the national
best bid and offer (``NBBO''), while simultaneously sending orders to
trade against the full size of any other exchange that is displaying
the NBBO.\6\
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\4\ Release No. 34-51808 (June 9, 2005), 70 FR 37496 (June 29,
2005).
\5\ Regulation NMS Rule 611(a).
\6\ Regulation NMS Rule 600(b)(30).
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The Regulation NMS rules-based price-protection system is working
well. It requires neither a central linkage mechanism nor a complex set
of operating rules. It also has eliminated the need for achieving
unanimity to change even the most minor aspects of a linkage mechanism.
A simple prohibition against most trade-throughs, coupled with the ISO
mechanism, has given the equities markets a straight-forward system to
provide customers with price protection in a fast-moving, high-volume
market that is quoted in pennies. NYSE Amex and the other options
exchange participants in the Plan intend for the Plan, and the
implementing rules, to bring the efficiencies of Regulation NMS to the
options market.
Operation of the Plan
The Plan effectively would apply the Regulation NMS price-
protection provisions to the options markets. Similar to Regulation
NMS, the Plan would require participants to adopt rules ``reasonably
designed to prevent Trade-Throughs,'' while exempting ISOs from that
prohibition.\7\ The definition of an ISO is essentially the same as
under Regulation NMS,\8\ and there are a number of additional
exceptions to the trade-through prohibition. Like Regulation NMS,\9\
the Plan requires participating exchanges to take reasonable steps to
establish that ISOs meet the requirements of the Plan.
---------------------------------------------------------------------------
\7\ Sections 5(a)(i) and 5(b)(iv) of the Plan.
\8\ Section 2(9) of the Plan.
\9\ Regulation NMS Rule 611(c) and Section 5(c) of the Plan.
---------------------------------------------------------------------------
With respect to locked and crossed markets, similar to Regulation
NMS the Plan requires its participants to adopt, maintain and enforce
rules requiring members: to avoid displaying locked and crossed
markets; to reconcile such markets; and to prohibit members from
engaging in a pattern or practice of displaying locked and crossed
markets.\10\ With respect to locked markets, the Plan differs from
Regulation NMS in that it specifically permits exceptions to the locked
market prohibitions ``as contained in the rules of a Participant
approved by the Commission.'' \11\
---------------------------------------------------------------------------
\10\ Section 6 of the Plan.
\11\ Id.
---------------------------------------------------------------------------
Description of the Implementing Rules
The Exchange proposes to define ``Intermarket Sweep Order'' as a
new order type in proposed Rule 900.3NY(t).
Other proposed rule changes would amend and replace NYSE Amex's
current Linkage rules in Rules 940 and 990NY-993NY as described below:
Rule 990NY--Definitions
This proposed rule incorporates all the operative definitions from
the Plan into the NYSE Amex rulebook. With one exception, the parties
to the Plan derived all such definitions either from the Old Plan \12\
or Regulation NMS.\13\ The one exception is the definition of ``complex
trade'' in Rule 990NY(4). A ``complex trade'' is exempt from trade-
through liability. The exemption in the Old Plan simply refers to
complex trades ``as that term may be defined by the Operating Committee
from time to time.'' Based on that provision, the Exchange had
previously adopted current Rule 940(b)(3), which is substantially
identical among all the options exchanges. We propose to carry that
definition into the revised Rule 990NY unchanged.
---------------------------------------------------------------------------
\12\ See, e.g., the definitions of ``Broker-Dealer'' in Rule
990NY(3), NBBO in Rule 990NY(10), Non-Firm in Rule 990NY(11), OPRA
Plan in Rule 990NY(12), and Participant in Rule 990NY(13).
\13\ See, e.g., the definitions of ``Best Bid''/``Best Offer''
in Rule 990NY(1), ``Bid''/``Offer'' in Rule 990NY(2), ``Intermarket
Sweep Order (``ISO'')'' in Rule 900.3NY(t), and ``Quotation'' in
Rule 990NY(16).
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Rule 991NY--Order Protection
Paragraph (a) of Rule 991NY provides that, subject to specified
exceptions, NYSE Amex ATP Holders shall not effect trade-throughs.
Paragraph (b) provides for the following trade-through exceptions:
System Issues: Rule 991NY(b)(1) implements Section 5(b)(i)
of the Plan by establishing an exception for trade-throughs due to
system-failures. This is akin to the exception in Regulation NMS for
equity securities and permits trading through an Eligible Exchange that
is experiencing system problems.\14\ The Exchange is proposing ``self-
help'' rules similar to its NYSE Amex Equities Rule 126A-AEMI, adopted
pursuant to Regulation NMS.
---------------------------------------------------------------------------
\14\ See Regulation NMS Rule 611(b)(1).
---------------------------------------------------------------------------
Trading Rotations: Rule 991NY(b)(2) implements Section
5(b)(ii) of the Plan and carries forward the current trade-through
exception in the Old Plan \15\ and current Rule 991NY (b)(5) related to
the opening of markets. It is the options equivalent to the single
price opening exception in Regulation NMS for equity securities.\16\
NYSE Amex uses a trading auction to open an option for trading, or to
reopen an option after a trading halt. The opening is effectively a
single price auction to price the option and there are no practical
means to include prices on other exchanges in that auction.
---------------------------------------------------------------------------
\15\ See Old Plan Section 8(c)(iii)(E).
\16\ See Regulation NMS Rule 611(b)(3) under the Securities
Exchange Act of 1934, as amended (``Exchange Act'').
---------------------------------------------------------------------------
Crossed Markets: Rule 991NY(b)(3) implements Section
5(b)(iii) of the Plan and is the functional equivalent to NYSE
Alternext Equities Rule 128C-AEMI for equity securities. If the best
intermarket bid is higher than the best intermarket offer, it indicates
that there is some form of market dislocation or inaccurate quoting.
Permitting transactions to be executed without regard to trade-throughs
in a Crossed Market will allow the market quickly return to
equilibrium.
Intermarket Sweep Orders (``ISOs''): Rule 991NY(b)(4) is
the ISO exemption and implements Sections 5(b)(iv) and (v) of the Plan.
Section 5(b)(iv) of the Plan permits a Participant to execute
[[Page 27377]]
orders it receives from other Participants or members that are marked
as ISO even when it is not at the NBBO. Section 5(b)(v) of the Plan
allows a Participant to execute inbound orders when it is not at the
NBBO, provided it simultaneously ``sweeps'' all better-priced interest
displayed by Eligible Exchanges. These provisions are the options
equivalents of the corresponding Regulation NMS equity rules.\17\
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\17\ See Regulation NMS Rules 611(b)(5) and (6).
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Quote Flickering: Rule 991NY(b)(5) implements Section
5(b)(vi) of the Plan and corresponds to the flickering quote exception
in Regulation NMS for equity securities.\18\ Options quotations change
as rapidly, if not more rapidly, than equity quotations. Indeed, they
track the price of the underlying security and thus change when the
price of the underlying security changes. This exception provides a
form of ``safe harbor'' to market participants to allow them to trade
through prices that have changed within a second of the transaction
causing a nominal trade-through.
---------------------------------------------------------------------------
\18\ See Regulation NMS Rule 611(b)(8).
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Non-Firm Quotes: Rule 991NY(b)(6) implements Section
5(b)(vii) of the Plan and carries forward the current non-firm quote
trade-through exception in the Old Plan.\19\ By definition, an
exchange's quotations may not be firm for automatic execution during
this trading state and thus should not be protected from trade-
throughs. In effect, these quotations are akin to ``manual quotations''
under Regulation NMS.
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\19\ See Old Plan Section 8(c)(iii)(C).
---------------------------------------------------------------------------
Complex Trades: Rule 991NY(b)(7) implements Section
5(b)(viii) of the Plan and carries forward the current complex trade
exception in the Old Plan.\20\ Complex trades consist of multiple
transactions (``legs'') effected at a net price, and it is not
practical to price each leg at a price that does not constitute a
trade-through.
---------------------------------------------------------------------------
\20\ See Old Plan Section 8(c)(iii)(G).
---------------------------------------------------------------------------
Customer Stopped Orders: Rule 991NY(b)(8) implements
Section 5(b)(ix) of the Plan and corresponds to the customer stopped
order exception in Regulation NMS for equity securities.\21\ It permits
broker-dealers to execute large orders over time at a price agreed upon
by a customer, even though the price of the option may change before
the order is executed in its entirety.
---------------------------------------------------------------------------
\21\ See Regulation NMS Rule 611(b)(9).
---------------------------------------------------------------------------
Stopped Orders and Price Improvement: Rule 991NY(b)(9)
implements Section 5(b)(x) of the Plan and would apply if an order is
stopped at price that did not constitute a trade-through at the time of
the stop. This exception applies to those exchanges that offer a
``Price Improvement Mechanism'' by which members could seek price
improvement for that order, even if the market moves in the interim,
and the transaction ultimately is effected at a price that would trade
through the then currently-displayed market.\22\ NYSE Amex does not
currently permit these types of options trades, and any transaction-
type relying on this exemption would require the Exchange to adopt
implementing rules, subject to Commission review and approval.
---------------------------------------------------------------------------
\22\ See, for instance, ISE Rule 723.
---------------------------------------------------------------------------
Benchmark Trades: Rule 991NY(b)(10) implements Section
5(b)(xi) of the Plan and would cover trades executed at a price not
tied to the price of an option at the time of execution, and for which
the material terms were not reasonably determinable at the time of the
commitment to make the trade. An example would be a volume-weighted
average price trade, or ``VWAP.'' This corresponds to a trade-through
exemption in Regulation NMS for equity trades.\23\ NYSE Amex does not
currently permit these types of options trades, and any transaction-
type relying on this exemption would require the Exchange to adopt
implementing rules, subject to Commission review and approval.
---------------------------------------------------------------------------
\23\ See Regulation NMS Rule 611(b)(7).
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Rule 992NY--Locked and Crossed Markets
Proposed Rule 992NY implements Section 6 of the Plan, which
requires Plan participants to establish, maintain and enforce rules
that: require their members reasonably to avoid displaying locked and
crossed markets; are reasonably designed to assure reconciliation of
locked and crossed markets; and prohibit their members from engaging in
a pattern or practice of displaying locked and crossed markets. Section
6 of the Plan further allows an exchange to provide exceptions to these
limitations as ``contained in the rules of a Participant approved by
the Commission.''
Proposed Rule 992NY(a) contains the general prohibition that NYSE
Amex ATP Holders shall reasonably avoid displaying, and shall not
engage in a pattern or practice of displaying, any quotations that lock
or cross the best bid or offer of another exchange. We propose four
exceptions to this general prohibition.\24\
---------------------------------------------------------------------------
\24\ See e-mail from Andrew Stevens, Chief Counsel--U.S.
Equities & Derivatives, NYSE Euronext, to David Liu, Assistant
Director, Division of Trading and Markets, Commission, dated May 29,
2009.
---------------------------------------------------------------------------
The first exception would apply when we are experiencing system
issues, and is similar to the systems issues exception to the trade-
through rule. The second exception applies when there is a crossed
market, and also is similar to the corresponding trade-through
exception. The third exception would apply when an ATP Holder has
simultaneously routed an ISO to execute against the full displayed size
of any locked or crossed Protected Bid or Protected Offer. The fourth
proposed exception applies to locked markets in the following
circumstances: \25\
---------------------------------------------------------------------------
\25\ See id.
---------------------------------------------------------------------------
Neither the locking or locked quote represents, in whole
or in part, a customer order; or
A customer enters a bid or offer that locks a non-customer
quotation on another market, and the customer, on a case-by-case basis,
authorizes the locking of the other market's quotation.
This fourth \26\ exemption recognizes an important distinction
between the equities and options markets. Options market makers compete
for order flow by disseminating quotations in multiple series with
respect to each underlying security, distributing liquidity over a much
greater universe of products than in the equity markets. As a result,
the options markets are more reliant on market maker quotations to
provide liquidity, with fewer customer orders in each series than in
each underlying security, where liquidity is concentrated in one
product.
---------------------------------------------------------------------------
\26\ See id.
---------------------------------------------------------------------------
With market makers on multiple exchanges constantly updating their
quotations in all these series based on mathematical formulae there is
a greater likelihood of market maker quotations locking. We believe
that in most cases locked market maker quotations are good for the
investing public. Effectively locked markets provide a ``zero spread,''
allowing market participants to buy and sell an option at the same
price. On NYSE Amex these quotations are firm, and are fully executable
on an automated basis.
We recognize that locked markets are more complicated where one or
both of the locking quotations represents a customer order. Where there
is contra-side market interest willing to trade with a customer, the
customer order should be filled. Thus, we would not exempt from the
locked market prohibition situations involving customer orders unless
the customer entering the locking order specifically
[[Page 27378]]
authorizes the lock on a case-by-case basis.\27\
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\27\ We can envision a customer authorizing a lock when the fees
associating with trading against the locked market make the
execution price uneconomical to the customer.
---------------------------------------------------------------------------
The Exchange will not implement this proposed exception to the
locked market prohibition unless the Exchange can identify that an
order on another exchange is for the account of a customer. The options
exchanges currently are working on a method to so identify customer
quotations through the Options Price Reporting Authority. Absent the
ability to identify a customer quote as part of an exchange's BBO, NYSE
Amex will assume that the quote represents, in whole or in part, a
customer order. That is, NYSE Amex will not permit its members to avail
themselves of this exemption unless another exchange has informed the
Exchange that it will designate all customer orders as such at OPRA,
and such exchange's quotation does not contain such designation. If an
exchange opts not to identify its customer quotations, the Exchange
will treat all of that exchange's quotations as customer orders and,
absent application of another exception, will not permit locks of such
quotations.
The Exchange also proposes that the exemption is only operative for
as long as the Exchange is willing to identify Customer orders in its
own quote.
Temporary Rule 993NY--Temporary Rule Governing P and P/A Orders
When the Plan and implementing rules become operative it is
possible that not all the options exchanges will be functionally able
to operate pursuant to the Plan. Thus, in order to ensure there is full
intermarket trade-through protection during this interim period, we
propose to retain certain minimum trade-through rules based on the Old
Plan until all the options exchanges are operating pursuant to the
Plan. When that occurs we will file a rule change with the Commission
to delete Temporary Rule 993NY.
Temporary Rule 993NY provides that NYSE Amex will continue to
accept Principal Acting as Agent (``P/A'') and Principal Orders from
options exchanges which have not fully discontinued use of the OCC
managed routing hub. The handling of these orders will be subject to
Temporary Rule 993NY.
Amendment of Other NYSE Amex Rules To Accommodate the Plan
We propose to amend four NYSE Amex rules in addition to those
described above. First, Rule 921NY, Registration of Market Makers,
allows certain Market Makers to act in an agency capacity for the
purpose of sending Principal Acting as Agent (``P/A'') Orders through
the Linkage. With the termination of the Linkage such provision no
longer will be necessary and we thus propose to delete this provision.
Second, Rule 923NY, Appointment of Market Makers, Commentaries
.01-.03 describes Intermarket Linkage Market Makers (``IMM'') and
described when and how IMMs would be appointed, and the procedures that
governed their appointment. With the termination of the Linkage such
provisions will no longer be necessary and we thus propose to delete
them.
Rule 964NY, Display, Priority and Order Allocation--Trading
Systems, will be amended to remove references to the Intermarket
Linkage.
Finally, Rule 476A, Minor Rule Plan, describes certain violations
which are part of an expedited disciplinary process, and their
attendant fines. The Exchange proposes to modify those violations which
are related to the Linkage and make them applicable to the Plan and the
proposed Rules.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Securities Exchange Act of 1934 (the ``Act'').\28\ The
basis under the Act for this proposed rule change is found in Section
6(b)(5) of the Act,\29\ in that the proposed rule change is designed to
promote just and equitable principles of trade, remove impediments to
and perfect the mechanisms of a free and open market and a national
market system and, in general, to protect investors and the public
interest. In particular, the Exchange believes that adopting rules that
implement the Plan will facilitate the trading of options in a national
market system by establishing more efficient protection against trade-
throughs and locked and crossed markets.
---------------------------------------------------------------------------
\28\ 15 U.S.C. 78f(b).
\29\ 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
Within 35 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the Exchange consents, the Commission will:
(A) by order approve the proposed rule change, or
(B) institute proceedings to determine whether the proposed rule
change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File No. SR-NYSEAmex-2009-19 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, Station Place, 100 F
Street, NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSEAmex-2009-19. 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
[[Page 27379]]
those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for inspection and
copying in the Commission's Public Reference Room, on official business
days between the hours of 10 a.m. and 3 p.m. Copies of such filing also
will be available for inspection and copying at the principal office of
the Exchange. All comments received will be posted without change; the
Commission does not edit personal identifying information from
submissions. You should submit only information that you wish to make
available publicly. All submissions should refer to File Number SR-
NYSEAmex-2009-19 and should be submitted on or before June 30, 2009.
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\30\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\30\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-13394 Filed 6-8-09; 8:45 am]
BILLING CODE 8010-01-P
