Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by New York Stock Exchange LLC Amending NYSE Rule 124 To Clarify the Pricing Methodology for the Odd-Lot Portion of a Part of a Round-Lot Order; Clarify the Systems Capable of Accepting PRL Orders; and Clarify the Systems Capable of Accepting a Good 'Til Cancelled Order During the Implementation of Exchange System Enhancements, 30337-30340 [E9-14956]
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Federal Register / Vol. 74, No. 121 / Thursday, June 25, 2009 / Notices
period of 180 days, effective
immediately.
By the Commission.
Elizabeth M. Murphy,
Secretary.
[FR Doc. E9–14967 Filed 6–24–09; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–60138; File No. SR–NYSE–
2009–45]
Self-Regulatory Organizations; Notice
of Filing and Immediate Effectiveness
of Proposed Rule Change by New York
Stock Exchange LLC Amending NYSE
Rule 124 To Clarify the Pricing
Methodology for the Odd-Lot Portion
of a Part of a Round-Lot Order; Clarify
the Systems Capable of Accepting PRL
Orders; and Clarify the Systems
Capable of Accepting a Good ’Til
Cancelled Order During the
Implementation of Exchange System
Enhancements
June 18, 2009.
sroberts on PROD1PC70 with NOTICES
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on June 8,
2009, New York Stock Exchange LLC
(‘‘NYSE’’ or the ‘‘Exchange’’) filed with
the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been prepared by the self-regulatory
organization. NYSE filed the proposed
rule change pursuant to Section
19(b)(3)(A) of the Act 4 and Rule 19b–
4(f)(6) thereunder,5 which renders it
effective upon filing with the
Commission. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to: (i) Amend
NYSE Rule 124 (Odd-Lot Orders) to
clarify the pricing methodology for the
odd-lot portion of a part of a round-lot
(‘‘PRL’’) order; (ii) clarify the systems
capable of accepting PRL orders; and
(iii) clarify the systems capable of
accepting a Good ’Til Cancelled Order
(‘‘GTC’’) during the implementation of
Exchange system enhancements. The
1 15
U.S.C. 78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
4 15 U.S.C. 78s(b)(3)(A).
5 17 CFR 240.19b–4(f)(6).
2 15
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text of the proposed rule change is
available at the Exchange, the
Commission’s Public Reference Room,
and https://www.nyse.com.
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
New York Stock Exchange LLC
(‘‘NYSE’’ or the ‘‘Exchange’’) proposes
to amend Exchange Rule 124 (Odd-Lot
Orders) to clarify the: (i) Pricing
methodology for the odd-lot portion of
a part of a round-lot (‘‘PRL’’) 6 order;
and (ii) systems capable of accepting
PRL orders during the implementation
of Exchange system enhancements.
Background
Currently, odd-lot orders on the
Exchange are processed and executed
systemically by an Exchange system
designated solely for odd-lot orders (the
‘‘Odd-lot System’’).7 The Odd-lot
System executes all odd-lot orders
against the Designated Marker Maker
(‘‘DMM’’) as the contra party.8
Pursuant to NYSE Rule 124(c), after
odd-lot market orders and marketable
odd-lot limit orders are received by the
Odd-lot System, they are automatically
executed at the price of the next roundlot transaction in the subject security on
the Exchange. Specifically, marketable
odd-lot orders and marketable odd-lot
6 PRL orders are for a size within the standard
unit (round-lot) of trading, which is 100 shares for
most stocks, but contains a portion that is smaller
than the standard unit of trading, e.g. 199 shares.
It should be noted that for certain securities trading
on the NYSE the standard unit of trading is 10
shares.
7 See NYSE Rule 124(a).
8 Id. Odd-lot orders are in effect netted against
one another and executed; however, since the DMM
is buying the same amount that he or she is selling,
there is no economic consequence to the DMM in
this type of pairing-off of orders. Any imbalance of
buy or sell odd-lot market orders are executed
against the DMM, up to the size of the round-lot
transaction or the bid/offer size which ever is less.
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30337
limit orders are executed in time
priority of receipt at the price of the
next round-lot transaction, pursuant to
the netting provision described in
footnote 8. The imbalance of marketable
odd-lot orders that do not receive an
execution as a result of the netting
provision are executed in time priority
of receipt at the price of the National
Best Bid or Offer (‘‘NBBO’’), subject to
a volume limitation.9 Any imbalances of
odd-lot limit orders that were nonmarketable upon receipt that
subsequently become marketable
receive an execution at their limit
price.10 Marketable odd-lot orders,
which would otherwise receive a partial
execution pursuant to the volume
limitation, are executed in full.11
Any marketable odd-lot orders that do
not receive an execution because of the
volume limitation are executed, in time
priority of receipt at the price of the
next round-lot transaction, following
pricing and execution procedures
described above. Marketable odd-lot
orders (including odd-lot limit orders
that were non-marketable upon receipt
and subsequently become marketable)
that remain unexecuted within 30
seconds of receipt will be executed, in
time priority of receipt, at the price of
the NBBO (or at its limit price if the
order is a non-marketable odd-lot limit
order upon receipt that has become
marketable). These orders are also
subject to the volume limitation.
Marketable odd-lot orders and nonmarketable odd-lot limit orders that
have become marketable and remain
unexecuted prior to the close of trading
shall be executed, in time priority of
receipt at the price of the closing
transaction, subject to the netting
provision and a volume restriction
which is not to exceed the size of the
closing transaction.
9 The volume limitation in section (c) of the rule
is defined as the lesser of either the number of
shares in the last round-lot transaction or the
number of shares available at the national best bid
(in the case of an odd-lot order to sell), or the
national best offer (in the case of an odd-lot order
to buy).
10 Pursuant to NYSE Rule 124(d) odd-lot limit
orders that are non-marketable upon receipt that
become marketable are eligible to be netted and
executed at the price of the next round-lot
transaction. If an odd-lot limit order does not
receive an execution pursuant to the netting
provision, then the order is eligible to be executed,
at its limit price, subject to the volume limitation
of section (c) of the rule.
11 As with marketable odd-lot orders, nonmarketable odd-lot limit orders which would
otherwise receive a partial execution will be
executed in full. A non-marketable odd-lot limit
order that becomes marketable, that remains
unexecuted within 30 seconds of receipt will be
executed, in time priority of receipt, except that the
order will be executed at its limit price.
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Federal Register / Vol. 74, No. 121 / Thursday, June 25, 2009 / Notices
PRL Pricing
The Exchange believes that the most
appropriate way to execute odd-lot
orders is to represent them in the roundlot auction market where they would
interact with all other market interest
and be priced in accordance with
supply and demand dynamics. The
Exchange is committed to the goal of
integrating odd-lots into the round-lot
market and eliminating the separate
handling of odd-lot and PRL
transactions. However, until the
requisite technology changes can be
completed, the Exchange is proposing
these modifications in order to further
streamline the handling performed by
its current systems.
The Exchange amended the pricing
methodology of NYSE Rule 124 as
interim measures to accommodate the
pricing and execution of odd-lot orders
in a manner based on the prevailing
market.12 Most recently, significant
upgrades to the Exchange’s
technology 13 made it possible for the
Exchange systems that process orders
sent to Display Book, the Exchange
matching engine, to price odd-lot orders
sent to the post that were consistent
with the provisions NYSE Rule 124(c)
and (d).
On March 11, 2009, the Exchange
filed with the Commission to amend
NYSE Rule 124.40 to allow the odd-lot
portion of PRLs to be executed in the
Odd-lot System pursuant to the pricing
Number of
shares
Time of execution
Price of
execution
12:00:01 .................................................................................................
100
$30.22
12:01:00 .................................................................................................
100
$30.21
12:01:47 .................................................................................................
100
$30.22
12:01:48 .................................................................................................
99
15 $30.23
In the filing to amend the execution
of PRL orders, the Exchange explained
that the system enhancements to
Display Book would be progressively
implemented on a security by security
basis. On March 16, 2009, the Exchange
commenced migration of symbols to the
enhanced systems. This migration is
ongoing and PRL orders submitted to
the Display Book in those migrated
symbols are executed as described
above. The list of securities that are
operating on the enhanced systems are
available on the Exchange’s Web site at:
https://www.nyse.com/attachment/
SDBK_SecurityRolloutList.xls.
Systems that process orders sent to
the Exchange to be executed by a Floor
broker, collectively called Exchange
Floor broker systems, are also being
upgraded to provide improved
functionality. The Exchange Floor
broker systems can be divided into two
categories—booth systems (Broker
Booth Support Systems or ‘‘BBSS’’) and
hand-held devices. As of yet, neither
system has been provided with the
newer PRL pricing functionality. As a
result, PRLs sent to BBSS are processed
Number of
shares
Time of execution
provisions of NYSE Rule 124.14 As
modified, the odd-lot portion of the PRL
retains the time stamp of its original
entry as a PRL and is sequenced for
execution based on the initial entry time
of the PRL. Once all round lot
components of the PRL are fully
executed, the odd-lot portion of the
order is executed at a price consistent
with other odd-lot orders subject to the
provisions of NYSE Rule 124(c) and (d).
Example: A marketable order to sell
399 shares of security XYZ is received
by Exchange systems at 12:00:00. The 99
share portion of the order is eligible for
execution only after the 300 share
portion of the PRL order is sold. See
table below.
Customer receives
Report of
$30.22.
Report of
$30.21.
Report of
$30.22.
Report of
$30.23.
Execution 100 shares at a price of
Execution 100 shares at a price of
Execution 100 shares at a price of
Execution 99 shares at a price of
pursuant to the prior provisions of
NYSE Rule 124, Supplemental Material
.40, which requires the odd-lot portion
of a PRL to be executed only where no
round lot portion thereof is cancelled
and at the same price of the last round
lot execution that would complete the
round lot portion of the PRL.
Example: An order to sell 399 shares
of security XYZ is received by Exchange
Floor broker systems at 12:00:00. The 99
share portion of the order is eligible for
execution only after the 300 share
portion of the PRL order is sold. See
table below.
Price of
execution
12:00:01 .................................................................................................
100
$30.22
12:01:00 .................................................................................................
100
$30.21
12:01:47 .................................................................................................
12:01:47 .................................................................................................
100
99
$30.22
$30.22
Customer receives
Report of Execution 100 shares at a price of
$30.22.
Report of Execution 100 shares at a price of
$30.22.
Report of Execution 199 shares at a price of
$30.22.
sroberts on PROD1PC70 with NOTICES
Until such time as the Exchange Floor
broker systems can be enhanced to
execute PRL orders pursuant NYSE Rule
124(c) and (d), the Exchange proposes to
amend the provisions of NYSE Rule
124.40 to provide that the odd-lot
portion of PRL orders transmitted to a
Floor broker via the Floor broker booth
system for execution will be executed at
12 See Securities Exchange Act Release No. 56551
(September 27, 2007), 72 FR 56415 (October 3,
2007) (SR–NYSE–2007–82); See also Securities
Exchange Act Release No. 49536 (April 7, 2004), 69
FR 19890, 19893 (April 14, 2004) (SR–NYSE–2003–
37); Securities Exchange Act Release No. 49745
(May 20, 2004), 69 FR 29998 (May, 26, 2004) (SR–
NYSE–2003–37).
13 See Securities Exchange Act Release No. 58184
(July 17, 2008), 73 FR 42853 (July 23, 2008)(SR–
NYSE–2008–46) (Key changes in this filing served
to enhance the Exchange technology).
14 See Securities Exchange Act Release No. 59613
(March 20, 2009), 74 FR 13486 (March 27, 2009)
(SR–NYSE–2009–27).
15 This example assumes that the odd-lot portion
of the PRL had priority of execution in the Odd-lot
system because its original order entry time was
12:00:00.
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Federal Register / Vol. 74, No. 121 / Thursday, June 25, 2009 / Notices
the same price of the last round lot
execution that would complete the
round lot portion of the PRL
The Exchange anticipates that the
enhancements to the Exchange Floor
broker systems will be completed no
later than the end of the fourth quarter
of 2009.
Systems Capable of Accepting PRL and
GTC Orders
During the implementation of the
Exchange Floor broker system
enhancements, any PRL orders and GTC
orders sent to a Floor broker’s hand-held
device will be rejected. Furthermore,
GTC orders in symbols that have been
migrated to the enhanced systems noted
above will not be accepted in any broker
system. PRL and GTC orders (in nonmigrated symbols) must be transmitted
to BBSS where the customer seeks to
utilize a Floor broker’s business
expertise in the execution of such
orders. Once the full migration has been
completed, GTC orders will not be
accepted by broker systems or broker
hand-held devices and PRL orders will
not be accepted by broker hand-held
devices. Therefore, the Exchange
proposes to amend NYSE Rule 13
(Definitions of Orders) to state that GTC
orders will not be accepted by broker
hand-held devices or broker systems.
Similarly, the Exchange proposes to
amend NYSE Rule 124.40 to state that
PRL orders will not be accepted by
broker hand-held devices.
2. Statutory Basis
The basis under the Act for this
proposed rule change is the requirement
under Section 6(b)(5) 16 that an
Exchange have rules that are designed to
promote just and equitable principles of
trade, to remove impediments to and
perfect the mechanism of a free and
open market and a national market
system and, in general, to protect
investors and the public interest. The
instant proposal is in keeping with these
principles in that it seeks to clarify and
temporarily modify the Exchange’s
pricing methodology for PRL orders to
provide customers the benefit of the
Floor broker’s business expertise while
the Exchange completes required system
enhancements.
sroberts on PROD1PC70 with NOTICES
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.
16 15
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
The Exchange has filed the proposed
rule change pursuant to Section
19(b)(3)(A)(iii) of the Act 17 and Rule
19b–4(f)(6) thereunder.18 Because the
foregoing proposed rule change: (1)
Does not significantly affect the
protection of investors or the public
interest; (2) impose any significant
burden on competition; and (3) by its
terms does not become operative for 30
days of this filing, or such shorter time
as the Commission may designate if
consistent with the protection of
investors and the public interest, the
proposed rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 19 and subparagraph (f)(6) of
Rule 19b–4 thereunder.20
A proposed rule change filed under
Rule 19b–4(f)(6) does not normally
become operative prior to 30 days after
the date of filing.21 However, Rule 19b–
4(f)(6)(iii) permits the Commission to
designate a shorter time if such action
is consistent with the protection of
investors and the public interest. The
Exchange has requested that the
Commission waive the 30-day operative
delay so that the proposal may become
operative immediately upon filing.
The Commission believes that
waiving the 30-day operative delay is
consistent with the protection of
investors and the public interest
because the proposed rule change seeks
to avoid investor confusion by clarifying
the systems capable of executing PRL
and GTC orders and the pricing
methodology for such orders. Therefore,
the Commission designates the
proposed rule change operative upon
filing.22
17 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6).
19 15 U.S.C. 78s(b)(3)(A).
20 17 CFR 240.19b–4(f)(6).
21 See id. In addition, Rule 19b–4(f)(6)(iii)
requires a self-regulatory organization to provide
the Commission with written notice of its intent to
file the proposed rule change, along with a brief
description and text of the proposed rule change,
at least five business days prior to the date of filing
of the proposed rule change, or such shorter time
as designated by the Commission. The Exchange
has satisfied this requirement.
22 For purposes only of waiving the 30-day
operative delay of this proposal, the Commission
has considered the proposed rule’s impact on
efficiency, competition and capital formation. 15
U.S.C. 78c(f).
18 17
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30339
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 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 rulecomments@sec.gov . Please include File
Number SR–NYSE–2009–45 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–2009–45. 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 1 a.m. and 3 p.m.
Copies of the filing also will be available
for inspection and copying at the
principal office of the Exchange. All
comments received will be posted
without change; the Commission does
not edit personal identifying
information from submissions. You
should submit only information that
you wish to make available publicly. All
submissions should refer to File
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Federal Register / Vol. 74, No. 121 / Thursday, June 25, 2009 / Notices
Number SR–NYSE–2009–45 and should
be submitted on or before July 16, 2009.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.23
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–14956 Filed 6–24–09; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–60137; File No. SR–
NYSEArca–2009–54]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change Relating to the Listing
and Trading of Shares of the iShares®
MSCI All Peru Capped Index Fund
June 18, 2009.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934
(‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that on June 17,
2009, NYSE Arca, Inc. (‘‘NYSE Arca’’ or
‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the Exchange. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
sroberts on PROD1PC70 with NOTICES
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to list and
trade shares (‘‘Shares’’) of the following
fund of the iShares® Trust (‘‘Trust’’):
iShares® MSCI All Peru Capped Index
Fund (‘‘Fund’’). 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 Public
Reference Room of the Commission.
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
23 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
1 15
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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 list and
trade the Shares of the following fund
under NYSE Arca Equities Rule 5.2(j)(3),
the Exchange’s listing standards for
Investment Company Units (‘‘ICUs’’):4
iShares® MSCI All Peru Capped Index
Fund.5
According to the Registration
Statement, the Fund seeks investment
results that correspond generally to the
price and yield performance, before fees
and expenses, of the MSCI All Peru
Capped Index (the ‘‘Index’’).
The Index is sponsored by MSCI, Inc.,
the Index Provider, that is independent
of the Fund and Barclays Global Fund
Advisors, the investment adviser to the
Fund. The Index Provider determines
the composition and relative weightings
of the securities in the Index and
publishes information regarding the
market value of the Index.
The Index is a free float-adjusted
market capitalization index with
approximately 25 components. Any
single security with a free float-adjusted
market capitalization weight greater
than 22.5% will have its weight capped
in the Index at 22.5%. All single
securities with a weight greater than
4.5% will have their weights capped
such that, in the aggregate, these
securities do not have a weight greater
than 45% of the Index. The Index is
designed to measure the performance of
the ‘‘Broad Peru Equity Universe.’’
MSCI defines the Broad Peru Equity
Universe by identifying Peruvian equity
securities that are classified in Peru
according to the MSCI Global Investable
Market Indices Methodology (a
methodology employed by MSCI to
construct its Global Investable Market
Indices, which classifies eligible
securities according to their country of
listing) as well as securities of
4 An Investment Company Unit is a security that
represents an interest in a registered investment
company that holds securities comprising, or
otherwise based on or representing an interest in,
an index or portfolio of securities (or holds
securities in another registered investment
company that holds securities comprising, or
otherwise based on or representing an interest in,
an index or portfolio of securities). See NYSE Arca
Equities Rule 5.2(j)(3)(A).
5 See the Trust’s Registration Statement for the
Fund on Form N–1A, dated June 17, 2009 (File Nos.
333–92935 and 811–09729).
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companies that are headquartered in
Peru and have the majority of their
operations based in Peru. As of May 31,
2009, the Index’s three largest
constituents were Compania de Minas
Buenaventura S.A., Southern Copper
Corporation, and Credicorp Ltd.
The Exchange is submitting this
proposed rule change because the Index
for the Fund does not meet all of the
‘‘generic’’ listing requirements of
Commentary .01(a)(B) to NYSE Arca
Equities Rule 5.2(j)(3) applicable to
listing of ICUs based on international or
global indexes. The Index meets all such
requirements except for those set forth
in Commentary .01(a)(B)(2).6 The
Exchange represents that: (1) Except for
the requirement under Commentary
.01(a)(B)(2) to NYSE Arca Equities Rule
5.2(j)(3) that component stocks that in
the aggregate account for at least 90% of
the weight of the index each shall have
a minimum monthly trading volume
during each of the last six months of at
least 250,000 shares, the Shares of the
Fund currently satisfy all of the generic
listing standards under NYSE Arca
Equities Rule 5.2(j)(3); (2) the continued
listing standards under NYSE Arca
Equities Rules 5.2(j)(3) and 5.5(g)(2)
applicable to ICUs shall apply to the
Shares; and (3) the Trust is required to
comply with Rule 10A–3 7 under the
Securities Exchange Act of 1934
(‘‘Act’’) 8 for the initial and continued
listing of the Shares. In addition, the
Exchange represents that the Shares will
comply with all other requirements
applicable to ICUs including, but not
limited to, requirements relating to the
dissemination of key information such
as the Index value and Intraday
Indicative Value, rules governing the
trading of equity securities, trading
hours, trading halts, surveillance,9 and
Information Bulletin to ETP Holders, as
set forth in Exchange rules applicable to
ICUs and in prior Commission orders
6 The Exchange states that the Index fails to meet
the requirement of Commentary .01(a)(B)(2) to
NYSE Arca Equities Rule 5.2(j)(3) that component
stocks that in the aggregate account for at least 90%
of the weight of the index each shall have a
minimum monthly trading volume of at least
250,000 shares. The Exchange states that, as of May
31, 2009, component stocks that in the aggregate
account for 86.23% of the Index weight had a
minimum monthly trading volume of at least
250,000 shares.
7 17 CFR 240.10A–3.
8 15 U.S.C. 78a.
9 The Exchange may obtain information for
surveillance purposes via the Intermarket
Surveillance Group (‘‘ISG’’) from other exchanges
who are members of ISG. The Exchange notes that
the Index component stocks do not trade on
markets that are ISG members and the Exchange
does not have a comprehensive surveillance
agreement with such markets. For a list of the
current members of ISG, see https://
www.isgportal.org.
E:\FR\FM\25JNN1.SGM
25JNN1
]]>Agencies
[Federal Register Volume 74, Number 121 (Thursday, June 25, 2009)]
[Notices]
[Pages 30337-30340]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-14956]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-60138; File No. SR-NYSE-2009-45]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by New York Stock Exchange LLC
Amending NYSE Rule 124 To Clarify the Pricing Methodology for the Odd-
Lot Portion of a Part of a Round-Lot Order; Clarify the Systems Capable
of Accepting PRL Orders; and Clarify the Systems Capable of Accepting a
Good 'Til Cancelled Order During the Implementation of Exchange System
Enhancements
June 18, 2009.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that, on June 8, 2009, New York Stock Exchange LLC (``NYSE'' or
the ``Exchange'') filed with the Securities and Exchange Commission
(the ``Commission'') the proposed rule change as described in Items I
and II below, which Items have been prepared by the self-regulatory
organization. NYSE filed the proposed rule change pursuant to Section
19(b)(3)(A) of the Act \4\ and Rule 19b-4(f)(6) thereunder,\5\ which
renders it effective upon filing with the Commission. The Commission is
publishing this notice to solicit comments on the proposed rule change
from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
\4\ 15 U.S.C. 78s(b)(3)(A).
\5\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to: (i) Amend NYSE Rule 124 (Odd-Lot Orders)
to clarify the pricing methodology for the odd-lot portion of a part of
a round-lot (``PRL'') order; (ii) clarify the systems capable of
accepting PRL orders; and (iii) clarify the systems capable of
accepting a Good 'Til Cancelled Order (``GTC'') during the
implementation of Exchange system enhancements. The text of the
proposed rule change is available at the Exchange, the Commission's
Public Reference Room, and https://www.nyse.com.
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
New York Stock Exchange LLC (``NYSE'' or the ``Exchange'') proposes
to amend Exchange Rule 124 (Odd-Lot Orders) to clarify the: (i) Pricing
methodology for the odd-lot portion of a part of a round-lot (``PRL'')
\6\ order; and (ii) systems capable of accepting PRL orders during the
implementation of Exchange system enhancements.
---------------------------------------------------------------------------
\6\ PRL orders are for a size within the standard unit (round-
lot) of trading, which is 100 shares for most stocks, but contains a
portion that is smaller than the standard unit of trading, e.g. 199
shares. It should be noted that for certain securities trading on
the NYSE the standard unit of trading is 10 shares.
---------------------------------------------------------------------------
Background
Currently, odd-lot orders on the Exchange are processed and
executed systemically by an Exchange system designated solely for odd-
lot orders (the ``Odd-lot System'').\7\ The Odd-lot System executes all
odd-lot orders against the Designated Marker Maker (``DMM'') as the
contra party.\8\
---------------------------------------------------------------------------
\7\ See NYSE Rule 124(a).
\8\ Id. Odd-lot orders are in effect netted against one another
and executed; however, since the DMM is buying the same amount that
he or she is selling, there is no economic consequence to the DMM in
this type of pairing-off of orders. Any imbalance of buy or sell
odd-lot market orders are executed against the DMM, up to the size
of the round-lot transaction or the bid/offer size which ever is
less.
---------------------------------------------------------------------------
Pursuant to NYSE Rule 124(c), after odd-lot market orders and
marketable odd-lot limit orders are received by the Odd-lot System,
they are automatically executed at the price of the next round-lot
transaction in the subject security on the Exchange. Specifically,
marketable odd-lot orders and marketable odd-lot limit orders are
executed in time priority of receipt at the price of the next round-lot
transaction, pursuant to the netting provision described in footnote 8.
The imbalance of marketable odd-lot orders that do not receive an
execution as a result of the netting provision are executed in time
priority of receipt at the price of the National Best Bid or Offer
(``NBBO''), subject to a volume limitation.\9\ Any imbalances of odd-
lot limit orders that were non-marketable upon receipt that
subsequently become marketable receive an execution at their limit
price.\10\ Marketable odd-lot orders, which would otherwise receive a
partial execution pursuant to the volume limitation, are executed in
full.\11\
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\9\ The volume limitation in section (c) of the rule is defined
as the lesser of either the number of shares in the last round-lot
transaction or the number of shares available at the national best
bid (in the case of an odd-lot order to sell), or the national best
offer (in the case of an odd-lot order to buy).
\10\ Pursuant to NYSE Rule 124(d) odd-lot limit orders that are
non-marketable upon receipt that become marketable are eligible to
be netted and executed at the price of the next round-lot
transaction. If an odd-lot limit order does not receive an execution
pursuant to the netting provision, then the order is eligible to be
executed, at its limit price, subject to the volume limitation of
section (c) of the rule.
\11\ As with marketable odd-lot orders, non-marketable odd-lot
limit orders which would otherwise receive a partial execution will
be executed in full. A non-marketable odd-lot limit order that
becomes marketable, that remains unexecuted within 30 seconds of
receipt will be executed, in time priority of receipt, except that
the order will be executed at its limit price.
---------------------------------------------------------------------------
Any marketable odd-lot orders that do not receive an execution
because of the volume limitation are executed, in time priority of
receipt at the price of the next round-lot transaction, following
pricing and execution procedures described above. Marketable odd-lot
orders (including odd-lot limit orders that were non-marketable upon
receipt and subsequently become marketable) that remain unexecuted
within 30 seconds of receipt will be executed, in time priority of
receipt, at the price of the NBBO (or at its limit price if the order
is a non-marketable odd-lot limit order upon receipt that has become
marketable). These orders are also subject to the volume limitation.
Marketable odd-lot orders and non-marketable odd-lot limit orders
that have become marketable and remain unexecuted prior to the close of
trading shall be executed, in time priority of receipt at the price of
the closing transaction, subject to the netting provision and a volume
restriction which is not to exceed the size of the closing transaction.
[[Page 30338]]
PRL Pricing
The Exchange believes that the most appropriate way to execute odd-
lot orders is to represent them in the round-lot auction market where
they would interact with all other market interest and be priced in
accordance with supply and demand dynamics. The Exchange is committed
to the goal of integrating odd-lots into the round-lot market and
eliminating the separate handling of odd-lot and PRL transactions.
However, until the requisite technology changes can be completed, the
Exchange is proposing these modifications in order to further
streamline the handling performed by its current systems.
The Exchange amended the pricing methodology of NYSE Rule 124 as
interim measures to accommodate the pricing and execution of odd-lot
orders in a manner based on the prevailing market.\12\ Most recently,
significant upgrades to the Exchange's technology \13\ made it possible
for the Exchange systems that process orders sent to Display Book, the
Exchange matching engine, to price odd-lot orders sent to the post that
were consistent with the provisions NYSE Rule 124(c) and (d).
---------------------------------------------------------------------------
\12\ See Securities Exchange Act Release No. 56551 (September
27, 2007), 72 FR 56415 (October 3, 2007) (SR-NYSE-2007-82); See also
Securities Exchange Act Release No. 49536 (April 7, 2004), 69 FR
19890, 19893 (April 14, 2004) (SR-NYSE-2003-37); Securities Exchange
Act Release No. 49745 (May 20, 2004), 69 FR 29998 (May, 26, 2004)
(SR-NYSE-2003-37).
\13\ See Securities Exchange Act Release No. 58184 (July 17,
2008), 73 FR 42853 (July 23, 2008)(SR-NYSE-2008-46) (Key changes in
this filing served to enhance the Exchange technology).
---------------------------------------------------------------------------
On March 11, 2009, the Exchange filed with the Commission to amend
NYSE Rule 124.40 to allow the odd-lot portion of PRLs to be executed in
the Odd-lot System pursuant to the pricing provisions of NYSE Rule
124.\14\ As modified, the odd-lot portion of the PRL retains the time
stamp of its original entry as a PRL and is sequenced for execution
based on the initial entry time of the PRL. Once all round lot
components of the PRL are fully executed, the odd-lot portion of the
order is executed at a price consistent with other odd-lot orders
subject to the provisions of NYSE Rule 124(c) and (d).
---------------------------------------------------------------------------
\14\ See Securities Exchange Act Release No. 59613 (March 20,
2009), 74 FR 13486 (March 27, 2009) (SR-NYSE-2009-27).
---------------------------------------------------------------------------
Example: A marketable order to sell 399 shares of security XYZ is
received by Exchange systems at 12:00:00. The 99 share portion of the
order is eligible for execution only after the 300 share portion of the
PRL order is sold. See table below.
----------------------------------------------------------------------------------------------------------------
Number of Price of
Time of execution shares execution Customer receives
----------------------------------------------------------------------------------------------------------------
12:00:01...................... 100 $30.22 Report of Execution 100 shares at a price of $30.22.
12:01:00...................... 100 $30.21 Report of Execution 100 shares at a price of $30.21.
12:01:47...................... 100 $30.22 Report of Execution 100 shares at a price of $30.22.
12:01:48...................... 99 \15\ Report of Execution 99 shares at a price of $30.23.
$30.23
----------------------------------------------------------------------------------------------------------------
In the filing to amend the execution of PRL orders, the Exchange
explained that the system enhancements to Display Book would be
progressively implemented on a security by security basis. On March 16,
2009, the Exchange commenced migration of symbols to the enhanced
systems. This migration is ongoing and PRL orders submitted to the
Display Book in those migrated symbols are executed as described above.
The list of securities that are operating on the enhanced systems are
available on the Exchange's Web site at: https://www.nyse.com/attachment/SDBK_SecurityRolloutList.xls.
---------------------------------------------------------------------------
\15\ This example assumes that the odd-lot portion of the PRL
had priority of execution in the Odd-lot system because its original
order entry time was 12:00:00.
---------------------------------------------------------------------------
Systems that process orders sent to the Exchange to be executed by
a Floor broker, collectively called Exchange Floor broker systems, are
also being upgraded to provide improved functionality. The Exchange
Floor broker systems can be divided into two categories--booth systems
(Broker Booth Support Systems or ``BBSS'') and hand-held devices. As of
yet, neither system has been provided with the newer PRL pricing
functionality. As a result, PRLs sent to BBSS are processed pursuant to
the prior provisions of NYSE Rule 124, Supplemental Material .40, which
requires the odd-lot portion of a PRL to be executed only where no
round lot portion thereof is cancelled and at the same price of the
last round lot execution that would complete the round lot portion of
the PRL.
Example: An order to sell 399 shares of security XYZ is received by
Exchange Floor broker systems at 12:00:00. The 99 share portion of the
order is eligible for execution only after the 300 share portion of the
PRL order is sold. See table below.
----------------------------------------------------------------------------------------------------------------
Number of Price of
Time of execution shares execution Customer receives
----------------------------------------------------------------------------------------------------------------
12:00:01...................... 100 $30.22 Report of Execution 100 shares at a price of $30.22.
12:01:00...................... 100 $30.21 Report of Execution 100 shares at a price of $30.22.
12:01:47...................... 100 $30.22 Report of Execution 199 shares at a price of $30.22.
12:01:47...................... 99 $30.22
----------------------------------------------------------------------------------------------------------------
Until such time as the Exchange Floor broker systems can be
enhanced to execute PRL orders pursuant NYSE Rule 124(c) and (d), the
Exchange proposes to amend the provisions of NYSE Rule 124.40 to
provide that the odd-lot portion of PRL orders transmitted to a Floor
broker via the Floor broker booth system for execution will be executed
at
[[Page 30339]]
the same price of the last round lot execution that would complete the
round lot portion of the PRL
The Exchange anticipates that the enhancements to the Exchange
Floor broker systems will be completed no later than the end of the
fourth quarter of 2009.
Systems Capable of Accepting PRL and GTC Orders
During the implementation of the Exchange Floor broker system
enhancements, any PRL orders and GTC orders sent to a Floor broker's
hand-held device will be rejected. Furthermore, GTC orders in symbols
that have been migrated to the enhanced systems noted above will not be
accepted in any broker system. PRL and GTC orders (in non-migrated
symbols) must be transmitted to BBSS where the customer seeks to
utilize a Floor broker's business expertise in the execution of such
orders. Once the full migration has been completed, GTC orders will not
be accepted by broker systems or broker hand-held devices and PRL
orders will not be accepted by broker hand-held devices. Therefore, the
Exchange proposes to amend NYSE Rule 13 (Definitions of Orders) to
state that GTC orders will not be accepted by broker hand-held devices
or broker systems. Similarly, the Exchange proposes to amend NYSE Rule
124.40 to state that PRL orders will not be accepted by broker hand-
held devices.
2. Statutory Basis
The basis under the Act for this proposed rule change is the
requirement under Section 6(b)(5) \16\ that an Exchange have rules that
are designed to promote just and equitable principles of trade, to
remove impediments to and perfect the mechanism of a free and open
market and a national market system and, in general, to protect
investors and the public interest. The instant proposal is in keeping
with these principles in that it seeks to clarify and temporarily
modify the Exchange's pricing methodology for PRL orders to provide
customers the benefit of the Floor broker's business expertise while
the Exchange completes required system enhancements.
---------------------------------------------------------------------------
\16\ 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
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \17\ and Rule 19b-4(f)(6) thereunder.\18\
Because the foregoing proposed rule change: (1) Does not significantly
affect the protection of investors or the public interest; (2) impose
any significant burden on competition; and (3) by its terms does not
become operative for 30 days of this filing, or such shorter time as
the Commission may designate if consistent with the protection of
investors and the public interest, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act \19\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\20\
---------------------------------------------------------------------------
\17\ 15 U.S.C. 78s(b)(3)(A).
\18\ 17 CFR 240.19b-4(f)(6).
\19\ 15 U.S.C. 78s(b)(3)(A).
\20\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
A proposed rule change filed under Rule 19b-4(f)(6) does not
normally become operative prior to 30 days after the date of
filing.\21\ However, Rule 19b-4(f)(6)(iii) permits the Commission to
designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has
requested that the Commission waive the 30-day operative delay so that
the proposal may become operative immediately upon filing.
---------------------------------------------------------------------------
\21\ See id. In addition, Rule 19b-4(f)(6)(iii) requires a self-
regulatory organization to provide the Commission with written
notice of its intent to file the proposed rule change, along with a
brief description and text of the proposed rule change, at least
five business days prior to the date of filing of the proposed rule
change, or such shorter time as designated by the Commission. The
Exchange has satisfied this requirement.
---------------------------------------------------------------------------
The Commission believes that waiving the 30-day operative delay is
consistent with the protection of investors and the public interest
because the proposed rule change seeks to avoid investor confusion by
clarifying the systems capable of executing PRL and GTC orders and the
pricing methodology for such orders. Therefore, the Commission
designates the proposed rule change operative upon filing.\22\
---------------------------------------------------------------------------
\22\ For purposes only of waiving the 30-day operative delay of
this proposal, the Commission has considered the proposed rule's
impact on efficiency, competition and capital formation. 15 U.S.C.
78c(f).
---------------------------------------------------------------------------
At any time within 60 days of the filing of the proposed rule
change, the Commission may summarily abrogate such rule change if it
appears to the Commission that such action is necessary or appropriate
in the public interest, for the protection of investors, or otherwise
in furtherance of the 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-2009-45 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-2009-45. 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 1
a.m. and 3 p.m. Copies of the filing also will be available for
inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File
[[Page 30340]]
Number SR-NYSE-2009-45 and should be submitted on or before July 16,
2009.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\23\
---------------------------------------------------------------------------
\23\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-14956 Filed 6-24-09; 8:45 am]
BILLING CODE 8010-01-P
