Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending NYSE Rule 476A To Add Rule 104(a)(1)(A) to Its “List of Exchange Rule Violations and Fines Applicable Thereto Pursuant to Rule 476A”, 39124-39126 [E9-18665]
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39124
Federal Register / Vol. 74, No. 149 / Wednesday, August 5, 2009 / Notices
by market dominant products as a result
of this contract. Id.
Related contract. A redacted version
of the specific Priority Mail Contract 17
is included with the Request. The
contract will become effective on the
day that the Commission provides all
necessary regulatory approvals. It is
terminable upon 30 days’ notice by
either party, but could continue for 3
years without modification. See id.,
Attachment A. The Postal Service
represents that the contract is consistent
with 39 U.S.C. 3633(a)(1). See id.,
Attachment D.
The Postal Service will provide the
shipper with customized pricing for
eligible Priority Mail items shipped by
the shipper, as well as Priority Mail
packaging. The shipper will manifest
pieces eligible for customized pricing,
using a separate permit number to ship
such pieces, and will begin using the
Electronic Verification System (eVS) for
shipments of such pieces. Annual price
adjustments will be applied to shipper’s
eligible mailpieces. A party may not
assign the agreement without the other
party’s consent, which may not be
unreasonably withheld.
The Postal Service filed much of the
supporting materials, including the
specific Priority Mail Contract 17, under
seal. In its Request, the Postal Service
maintains that the contract and related
financial information, including the
customer’s name and the accompanying
analyses that provide prices, terms,
conditions, and financial projections
should remain under seal. Id. at 2–3.
III. Ordering Paragraphs
It is ordered:
1. The Commission establishes Docket
Nos. MC2009–37 and CP2009–56 for
consideration of the matter raised in
each docket.
2. Pursuant to 39 U.S.C. 505, Paul L.
Harrington is appointed to serve as
officer of the Commission (Public
Representative) to represent the
interests of the general public in these
proceedings.
3. Comments by interested persons in
these proceedings are due no later than
August 6, 2009.
4. The Secretary shall arrange for
publication of this order in the Federal
Register.
Issued: July 29, 2009.
By the Commission.
Judith M. Grady,
Acting Secretary.
[FR Doc. E9–18769 Filed 8–4–09; 8:45 am]
BILLING CODE 7710–FW–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–60399; File No. SR–NYSE–
2009–72]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change Amending
NYSE Rule 476A To Add Rule
104(a)(1)(A) to Its ‘‘List of Exchange
Rule Violations and Fines Applicable
Thereto Pursuant to Rule 476A’’
srobinson on DSKHWCL6B1PROD with NOTICES
II. Notice of Filings
July 30, 2009.
The Commission establishes Docket
Nos. MC2009–37 and CP2009–56 for
consideration of the Request pertaining
to the proposed Priority Mail Contract
17 product and the related contract,
respectively. In keeping with practice,
these dockets are addressed on a
consolidated basis for purposes of this
Order; however, future filings should be
made in the specific docket in which
issues being addressed pertain.
Interested persons may submit
comments on whether the Postal
Service’s filings in the captioned
dockets are consistent with the policies
of 39 U.S.C. 3632, 3633, or 3642 and 39
CFR part 3015 and 39 CFR 3020 subpart
B. Comments are due no later than
August 6, 2009. The public portions of
these filings can be accessed via the
Commission’s Web site (https://
www.prc.gov).
The Commission appoints Paul L.
Harrington to serve as Public
Representative in these dockets.
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 July 22,
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, II, and III below, which Items
have been substantially prepared by the
self-regulatory organization. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
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18:54 Aug 04, 2009
Jkt 217001
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend
NYSE Rule 476A to add Rule
104(a)(1)(A) to its ‘‘List of Exchange
Rule Violations and Fines Applicable
1 15
2 17
PO 00000
U.S.C.78s(b)(1).
CFR 240.19b–4.
Frm 00085
Fmt 4703
Sfmt 4703
Thereto Pursuant to Rule 476A.’’ 3 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
The Exchange proposes to amend
NYSE Rule 476A to add Rule
104(a)(1)(A) to its ‘‘List of Exchange
Rule Violations and Fines Applicable
Thereto Pursuant to Rule 476A.’’
Current NYSE Rule 104
Current NYSE Rule 104 requires, inter
alia, Designated Market Makers
(‘‘DMMs’’) registered in one or more
securities traded on the Exchange to
engage in a course of dealings for their
own account to assist in the
maintenance of a fair and orderly
market, insofar as reasonably
practicable, by contributing liquidity
when lack of price continuity and
depth, or disparity between supply and
demand, exists or is reasonably to be
anticipated.4 This includes an
affirmative obligation to provide quotes
at the National Best Bid or Offer a
minimum percentage of the trading day
(‘‘Affirmative Quote Obligation’’).
The DMMs’ Affirmative Quote
Obligation is set forth in NYSE Rule
104(a)(1)(A). Section (a)(1)(A) of Rule
104 requires DMMs to maintain a bid or
an offer at the National Best Bid and
National Best Offer (‘‘inside’’) at least
10% of the trading day for securities in
which the DMM unit is registered with
an average daily volume on the
Exchange of less than one million
3 NYSE Amex LLC has submitted a companion
rule filing proposing corresponding amendments to
NYSE Amex Disciplinary Rule 476A. See SR–
NYSE–Amex–2009–47, formally submitted July 22,
2009).
4 See NYSE Rule 104(f)(ii).
E:\FR\FM\05AUN1.SGM
05AUN1
Federal Register / Vol. 74, No. 149 / Wednesday, August 5, 2009 / Notices
shares, and at least 5% for securities in
which the DMM unit is registered with
an average daily volume equal to or
greater than one million shares. Time at
the inside is calculated as the average
percentage of time the DMM unit has a
bid or offer at the inside. In calculating
whether the DMM is meeting the 10%
and 5% requirement, credit may be
given for executions for the liquidity
provided by the DMM.5 DMM Reserve
or other hidden orders are not included
in the inside quote calculations.
srobinson on DSKHWCL6B1PROD with NOTICES
Proposed Rule Change
As noted above, the Exchange
proposes to add NYSE Rule 104(a)(1)(A)
to its ‘‘List of Exchange Rule Violations
and Fines Applicable Thereto Pursuant
to Rule 476A.’’
Under the Exchange’s Minor Rule
Violation Plan, NYSE Rule 476A, the
Exchange may impose a fine, not to
exceed $5,000, on any member, member
organization, allied member, approved
person or registered or non-registered
employee of a member or member
organization for a minor violation of
certain specified Exchange rules. Fines
provide a meaningful sanction for rule
violations when the initiation of a
disciplinary procedure under Rule 476
is unwarranted given the facts and
circumstances of the violation, or when
the violation calls for a stronger
response informal discipline than an
admonition letter.6
Currently, when a DMM fails to meet
the affirmative quote obligations set
forth in Rule 104(a)(1)(A), the
Exchange’s only remedy is to bring a
formal disciplinary proceeding pursuant
to Rule 476. This is the case whether or
not the DMM has failed to meet its
obligations once or many times and
regardless of whether the DMM made a
technical error or an intentional one.
The Exchange believes that the
current regulatory approach for dealing
with DMM quoting obligations is too
inflexible. The Exchange recognizes that
DMMs may, for many reasons, fail to
5 When a DMM sends an s-quote to establish a
new best bid or best offer, the DMM’s s-quote may
end up executing immediately against dark
liquidity inside the spread rather than being quoted.
Absent rule relief, the s-quote would not be counted
toward the DMM Unit’s quoting requirement, even
though the DMM’s intent was to add liquidity to the
market, and even though the s-quote in fact resulted
in an execution. To address this, the Exchange
added a provision to NYSE Rule 104 that allows the
Exchange to give credit to a DMM unit that did not
meet its quoting requirement as a result of the
continuous immediate execution of its s-quotes.
6 The Exchange’s Minor Rule Violation Plan, Rule
476A, was originally adopted by the Exchange and
approved by the Commission in 1985. See
Securities Exchange Act Release No. 34–[sic]21688
(January 25, 1985), 50 FR 5025–01 (February 5,
1985). It has been amended numerous times since
its adoption.
VerDate Nov<24>2008
18:54 Aug 04, 2009
Jkt 217001
meet their affirmative quote obligations
as prescribed under Rule 104(a)(1)(A).
In some circumstances, formal
disciplinary measures in accordance
with Rule 476 are warranted. However,
in other instances such a proceeding
may be unwarranted, and the Exchange
is of the view that the addition of this
Rule to the list of rule violations and
fines under Rule 476A will provide a
more flexible and appropriate tool to
enforce potential failure by DMMs to
adhere to the quoting requirements set
forth in Rule 104(a)(1)(A), while
preserving the Exchange’s discretion to
seek formal discipline under the
appropriate circumstances.
2. Statutory Basis
The Exchange believes that the
proposed rule changes are consistent
with, and further the objectives of,
Section 6(b)(5) of the Act,7 in that they
are designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, to remove impediments to and
perfect the mechanism of a free and
open market and a national market
system and, in general, to protect
investors and the public interest. The
proposed rule changes also further the
objectives of Section 6(b)(6), in that they
provide for appropriate discipline for
violations of principles of the Act, the
rules and regulations thereunder, and
Exchange rules and regulations.
The Exchange believes that the
proposed rule changes will provide the
Exchange with greater regulatory
flexibility to enforce the DMM quoting
requirements set forth in NYSE Rule
104(a)(1)(A) in a more informal manner
while also preserving the Exchange’s
discretion to seek formal discipline for
more serious transgressions as
warranted.
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 8 and Rule
19b–4(f)(6) thereunder.9 Because the
proposed rule change does not: (i)
Significantly affect the protection of
investors or the public interest; (ii)
impose any significant burden on
competition; and (iii) become operative
prior to 30 days from the date on which
it was filed, or such shorter time as the
Commission may designate, if
consistent with the protection of
investors and the public interest, the
proposed rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act and Rule 19b–4(f)(6)(iii)
thereunder.
At any time within 60 days of the
filing of the proposed rule change, the
Commission may summarily abrogate
such rule change if it appears to the
Commission that such action is
necessary or appropriate in the public
interest, for the protection of investors,
or otherwise in furtherance of the
purposes of the Act.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–NYSE–2009–72 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–2009–72. 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
8 15
7 15
PO 00000
U.S.C. 78f(b)(5).
Frm 00086
Fmt 4703
9 17
Sfmt 4703
39125
E:\FR\FM\05AUN1.SGM
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6).
05AUN1
39126
Federal Register / Vol. 74, No. 149 / Wednesday, August 5, 2009 / Notices
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for inspection and copying in
the Commission’s Public Reference
Room, 100 F Street, NE., Washington,
DC 20549, on official business days
between the hours of 10 a.m. and 3 p.m.
Copies of the filing will also be available
for inspection and copying at the
principal office of the self-regulatory
organization. All comments received
will be posted without change; the
Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–NYSE–
2009–72 and should be submitted on or
before August 26, 2009.
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 extend the
operative date of NYSE Rule 92(c)(3)
from July 31, 2009 to December 31,
2009. 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
BILLING CODE 8010–01–P
In its filing with the Commission, the
Exchange 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.
SECURITIES AND EXCHANGE
COMMISSION
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
[Release No. 34–60396; File No. SR–NYSE–
2009–73]
1. Purpose
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.10
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–18665 Filed 8–4–09; 8:45 am]
Self-Regulatory Organizations; Notice
of Filing and Immediate Effectiveness
of Proposed Rule Change by New York
Stock Exchange LLC Extending the
Operative Date of NYSE Rule 92(c)(3)
From July 31, 2009 to December 31,
2009
srobinson on DSKHWCL6B1PROD with NOTICES
July 30, 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 July 24,
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. The Exchange filed the
proposed rule change pursuant to
The Exchange is proposing to extend
the delayed operative date of NYSE Rule
92(c)(3) from July 31, 2009 to December
31, 2009. The Exchange believes that
this extension will provide the time
necessary for the Exchange and the
Financial Industry Regulatory
Authority, Inc. (‘‘FINRA’’) to harmonize
their respective rules concerning
customer order protection to achieve a
standardized industry practice.
Background
On July 5, 2007, the Commission
approved amendments to NYSE Rule 92
to permit riskless principal trading at
the Exchange.6 These amendments were
filed in part to begin the harmonization
process between Rule 92 and FINRA’s
Manning Rule.7 In connection with
those amendments, the Exchange
4 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6).
6 See Securities Exchange Act Release No. 34–
56017 (July 5, 2007), 72 FR 38110 (July 12, 2007),
SR–NYSE–2007–21.
7 See NASD Rule 2111 and IM–2110–2.
5 17
10 17
CFR 200.30–3(a)(12).
U.S.C.78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
1 15
VerDate Nov<24>2008
18:54 Aug 04, 2009
Jkt 217001
PO 00000
Frm 00087
Fmt 4703
Sfmt 4703
implemented for an operative date of
January 16, 2008, NYSE Rule 92(c)(3),
which permits Exchange member
organizations to submit riskless
principal orders to the Exchange, but
requires them to submit to a designated
Exchange database a report of the
execution of the facilitated order. That
rule also requires members to submit to
that same database sufficient
information to provide an electronic
link of the execution of the facilitated
order to all of the underlying orders.
For purposes of NYSE Rule 92(c)(3),
the Exchange informed member
organizations that when executing
riskless principal transactions, firms
must submit order execution reports to
the Exchange’s Front End Systemic
Capture (‘‘FESC’’) database linking the
execution of the riskless principal order
on the Exchange to the specific
underlying orders. The information
provided must be sufficient for both
member firms and the Exchange to
reconstruct in a time-sequenced manner
all orders, including allocations to the
underlying orders, with respect to
which a member organization is
claiming the riskless principal
exception.
Because the rule change required both
the Exchange and member organizations
to make certain changes to their trading
and order management systems, the
NYSE filed for immediate effectiveness
to delay to May 14, 2008 the operative
date of the NYSE Rule 92(c)(3)
requirements, including submitting endof-day allocation reports for riskless
principal transactions and using the
riskless principal account type
indicator.8 The Exchange filed for
additional extensions of the operative
date of Rule 92(c)(3), the most recent of
which was an extension to July 31,
2009.9
Request for Extension 10
FINRA and the Exchange have been
working diligently on fully harmonizing
their respective rules, including
reviewing the possibilities for a uniform
reporting standard for riskless principal
transactions. However, because of the
complexity of the existing customer
order protection rules, including the
need for input from industry
participants as well as Commission
8 See Securities Exchange Act Release No. 56968
(Dec. 14, 2007), 72 FR 72432 (Dec. 20, 2007), SR–
NYSE–2007–114.
9 See Securities Exchange Act Release Nos. 57682
(Apr. 17, 2008), 73 FR 22193 (Apr. 24, 2008) (SR–
NYSE–2008–29) and 59621 (Mar. 23, 2009), 74 FR
14179 (Mar. 30, 2009) (SR–NYSE–2009–30).
10 NYSE Amex LLC has filed a companion rule
filing to conform its Equities Rules to the changes
proposed in this filing. See SR–NYSEAmex–2009–
48, formally submitted July 24, 2009.
E:\FR\FM\05AUN1.SGM
05AUN1
]]>Agencies
[Federal Register Volume 74, Number 149 (Wednesday, August 5, 2009)]
[Notices]
[Pages 39124-39126]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-18665]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-60399; File No. SR-NYSE-2009-72]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Amending NYSE Rule 476A To Add Rule 104(a)(1)(A) to Its ``List of
Exchange Rule Violations and Fines Applicable Thereto Pursuant to Rule
476A''
July 30, 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 July 22, 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, II,
and III below, which Items have been substantially prepared by the
self-regulatory organization. The Commission is publishing this notice
to solicit comments on the proposed rule change from interested
persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C.78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend NYSE Rule 476A to add Rule
104(a)(1)(A) to its ``List of Exchange Rule Violations and Fines
Applicable Thereto Pursuant to Rule 476A.'' \3\ The text of the
proposed rule change is available at the Exchange, the Commission's
Public Reference Room, and https://www.nyse.com.
---------------------------------------------------------------------------
\3\ NYSE Amex LLC has submitted a companion rule filing
proposing corresponding amendments to NYSE Amex Disciplinary Rule
476A. See SR-NYSE-Amex-2009-47, formally submitted July 22, 2009).
---------------------------------------------------------------------------
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 amend NYSE Rule 476A to add Rule
104(a)(1)(A) to its ``List of Exchange Rule Violations and Fines
Applicable Thereto Pursuant to Rule 476A.''
Current NYSE Rule 104
Current NYSE Rule 104 requires, inter alia, Designated Market
Makers (``DMMs'') registered in one or more securities traded on the
Exchange to engage in a course of dealings for their own account to
assist in the maintenance of a fair and orderly market, insofar as
reasonably practicable, by contributing liquidity when lack of price
continuity and depth, or disparity between supply and demand, exists or
is reasonably to be anticipated.\4\ This includes an affirmative
obligation to provide quotes at the National Best Bid or Offer a
minimum percentage of the trading day (``Affirmative Quote
Obligation'').
---------------------------------------------------------------------------
\4\ See NYSE Rule 104(f)(ii).
---------------------------------------------------------------------------
The DMMs' Affirmative Quote Obligation is set forth in NYSE Rule
104(a)(1)(A). Section (a)(1)(A) of Rule 104 requires DMMs to maintain a
bid or an offer at the National Best Bid and National Best Offer
(``inside'') at least 10% of the trading day for securities in which
the DMM unit is registered with an average daily volume on the Exchange
of less than one million
[[Page 39125]]
shares, and at least 5% for securities in which the DMM unit is
registered with an average daily volume equal to or greater than one
million shares. Time at the inside is calculated as the average
percentage of time the DMM unit has a bid or offer at the inside. In
calculating whether the DMM is meeting the 10% and 5% requirement,
credit may be given for executions for the liquidity provided by the
DMM.\5\ DMM Reserve or other hidden orders are not included in the
inside quote calculations.
---------------------------------------------------------------------------
\5\ When a DMM sends an s-quote to establish a new best bid or
best offer, the DMM's s-quote may end up executing immediately
against dark liquidity inside the spread rather than being quoted.
Absent rule relief, the s-quote would not be counted toward the DMM
Unit's quoting requirement, even though the DMM's intent was to add
liquidity to the market, and even though the s-quote in fact
resulted in an execution. To address this, the Exchange added a
provision to NYSE Rule 104 that allows the Exchange to give credit
to a DMM unit that did not meet its quoting requirement as a result
of the continuous immediate execution of its s-quotes.
---------------------------------------------------------------------------
Proposed Rule Change
As noted above, the Exchange proposes to add NYSE Rule 104(a)(1)(A)
to its ``List of Exchange Rule Violations and Fines Applicable Thereto
Pursuant to Rule 476A.''
Under the Exchange's Minor Rule Violation Plan, NYSE Rule 476A, the
Exchange may impose a fine, not to exceed $5,000, on any member, member
organization, allied member, approved person or registered or non-
registered employee of a member or member organization for a minor
violation of certain specified Exchange rules. Fines provide a
meaningful sanction for rule violations when the initiation of a
disciplinary procedure under Rule 476 is unwarranted given the facts
and circumstances of the violation, or when the violation calls for a
stronger response informal discipline than an admonition letter.\6\
---------------------------------------------------------------------------
\6\ The Exchange's Minor Rule Violation Plan, Rule 476A, was
originally adopted by the Exchange and approved by the Commission in
1985. See Securities Exchange Act Release No. 34-[sic]21688 (January
25, 1985), 50 FR 5025-01 (February 5, 1985). It has been amended
numerous times since its adoption.
---------------------------------------------------------------------------
Currently, when a DMM fails to meet the affirmative quote
obligations set forth in Rule 104(a)(1)(A), the Exchange's only remedy
is to bring a formal disciplinary proceeding pursuant to Rule 476. This
is the case whether or not the DMM has failed to meet its obligations
once or many times and regardless of whether the DMM made a technical
error or an intentional one.
The Exchange believes that the current regulatory approach for
dealing with DMM quoting obligations is too inflexible. The Exchange
recognizes that DMMs may, for many reasons, fail to meet their
affirmative quote obligations as prescribed under Rule 104(a)(1)(A). In
some circumstances, formal disciplinary measures in accordance with
Rule 476 are warranted. However, in other instances such a proceeding
may be unwarranted, and the Exchange is of the view that the addition
of this Rule to the list of rule violations and fines under Rule 476A
will provide a more flexible and appropriate tool to enforce potential
failure by DMMs to adhere to the quoting requirements set forth in Rule
104(a)(1)(A), while preserving the Exchange's discretion to seek formal
discipline under the appropriate circumstances.
2. Statutory Basis
The Exchange believes that the proposed rule changes are consistent
with, and further the objectives of, Section 6(b)(5) of the Act,\7\ in
that they are designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, to remove
impediments to and perfect the mechanism of a free and open market and
a national market system and, in general, to protect investors and the
public interest. The proposed rule changes also further the objectives
of Section 6(b)(6), in that they provide for appropriate discipline for
violations of principles of the Act, the rules and regulations
thereunder, and Exchange rules and regulations.
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\7\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that the proposed rule changes will provide
the Exchange with greater regulatory flexibility to enforce the DMM
quoting requirements set forth in NYSE Rule 104(a)(1)(A) in a more
informal manner while also preserving the Exchange's discretion to seek
formal discipline for more serious transgressions as warranted.
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 \8\ and Rule 19b-4(f)(6) thereunder.\9\
Because the proposed rule change does not: (i) Significantly affect the
protection of investors or the public interest; (ii) impose any
significant burden on competition; and (iii) become operative prior to
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, if consistent with the protection of
investors and the public interest, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.
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\8\ 15 U.S.C. 78s(b)(3)(A)(iii).
\9\ 17 CFR 240.19b-4(f)(6).
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At any time within 60 days of the filing of the proposed rule
change, the Commission may summarily abrogate such rule change if it
appears to the Commission that such action is necessary or appropriate
in the public interest, for the protection of investors, or otherwise
in furtherance of the purposes of the Act.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-NYSE-2009-72 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-2009-72. 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
[[Page 39126]]
amendments, all written statements with respect to the proposed rule
change that are filed with the Commission, and all written
communications relating to the proposed rule change between the
Commission and any person, other than those that may be withheld from
the public in accordance with the provisions of 5 U.S.C. 552, will be
available for inspection and copying in the Commission's Public
Reference Room, 100 F Street, NE., Washington, DC 20549, on official
business days between the hours of 10 a.m. and 3 p.m. Copies of the
filing will also be available for inspection and copying at the
principal office of the self-regulatory organization. All comments
received will be posted without change; the Commission does not edit
personal identifying information from submissions. You should submit
only information that you wish to make available publicly. All
submissions should refer to File Number SR-NYSE-2009-72 and should be
submitted on or before August 26, 2009.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-18665 Filed 8-4-09; 8:45 am]
BILLING CODE 8010-01-P
