Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by NYSE Amex LLC Extending the Operative Date of NYSE Amex Equities Rule 92(c)(3) from July 31, 2009 to December 31, 2009, 39128-39130 [E9-18667]
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39128
Federal Register / Vol. 74, No. 149 / Wednesday, August 5, 2009 / Notices
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–2009–73 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.
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–60397; File No. SR–
NYSEAmex–2009–48]
Self-Regulatory Organizations; Notice
of Filing and Immediate Effectiveness
of Proposed Rule Change by NYSE
Amex LLC Extending the Operative
Date of NYSE Amex Equities Rule
92(c)(3) from July 31, 2009 to
December 31, 2009
July 30, 2009.
srobinson on DSKHWCL6B1PROD 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 July 24,
2009, NYSE Amex LLC (the ‘‘Exchange’’
or ‘‘NYSE Amex’’) filed with the
All submissions should refer to File
Securities and Exchange Commission
Number SR–NYSE–2009–73. This file
(the ‘‘Commission’’) the proposed rule
number should be included on the
subject line if e-mail is used. To help the change as described in Items I and II
below, which Items have been prepared
Commission process and review your
by the self-regulatory organization. The
comments more efficiently, please use
only one method. The Commission will Exchange filed the proposed rule change
post all comments on the Commission’s pursuant to Section 19(b)(3)(A) of the 5
Act 4 and Rule 19b–4(f)(6) thereunder,
Internet Web site (https://www.sec.gov/
which renders it effective upon filing
rules/sro.shtml). Copies of the
with the Commission. The Commission
submission, all subsequent
is publishing this notice to solicit
amendments, all written statements
comments on the proposed rule change
with respect to the proposed rule
from interested persons.
change that are filed with the
I. Self-Regulatory Organization’s
Commission, and all written
Statement of the Terms of Substance of
communications relating to the
the Proposed Rule Change
proposed rule change between the
Commission and any person, other than
The Exchange proposes to extend the
those that may be withheld from the
operative date of NYSE Amex Equities
Rule 92(c)(3) from July 31, 2009 to
public in accordance with the
December 31, 2009. The text of the
provisions of 5 U.S.C. 552, will be
proposed rule change is available at the
available for inspection and copying in
Exchange, the Commission’s Public
the Commission’s Public Reference
Room on official business days between Reference Room, and https://
www.nyse.com.
the hours of 10 a.m. and 3 p.m. Copies
of such filing also will be available for
II. Self-Regulatory Organization’s
inspection and copying at the principal
Statement of the Purpose of, and
office of the Exchange. All comments
Statutory Basis for, the Proposed Rule
received will be posted without change; Change
the Commission does not edit personal
In its filing with the Commission, the
identifying information from
Exchange included statements
submissions. You should submit only
concerning the purpose of, and basis for,
information that you wish to make
the proposed rule change and discussed
available publicly. All submissions
any comments it received on the
should refer to File Number SR–NYSE–
proposed rule change. The text of those
2009–73 and should be submitted on or statements may be examined at the
before August 26, 2009.
places specified in Item IV below. The
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.18
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–18666 Filed 8–4–09; 8:45 am]
BILLING CODE 8010–01–P
18 17
CFR 200.30–3(a)(12).
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18:54 Aug 04, 2009
Jkt 217001
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant parts of such
statements.
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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Sfmt 4703
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange is proposing to extend
the delayed operative date of NYSE
Amex Equities 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, the New York Stock
Exchange LLC (‘‘NYSE’’), and the
Financial Industry Regulatory
Authority, Inc. (‘‘FINRA’’) to harmonize
their respective rules concerning
customer order protection to achieve a
standardized industry practice.6
Merger Background
As described more fully in a related
rule filing,7 NYSE Euronext acquired
The Amex Membership Corporation
(‘‘AMC’’) pursuant to an Agreement and
Plan of Merger, dated January 17, 2008
(the ‘‘Merger’’). In connection with the
Merger, the Exchange’s predecessor, the
American Stock Exchange LLC
(‘‘Amex’’), a subsidiary of AMC, became
a subsidiary of NYSE Euronext and was
renamed NYSE Amex LLC (‘‘NYSE
Amex’’ or the ‘‘Exchange’’), and
continues to operate as a national
securities exchange registered under
Section 6 of the Securities Exchange Act
of 1934, as amended (the ‘‘Act’’).8 The
effective date of the Merger was October
1, 2008.
In connection with the Merger, on
December 1, 2008, the Exchange
relocated all equities trading conducted
on the Exchange legacy trading systems
and facilities located at 86 Trinity Place,
New York, New York, to trading systems
and facilities located at 11 Wall Street,
New York, New York (the ‘‘Equities
Relocation’’). The Exchange’s equity
trading systems and facilities at 11 Wall
Street (the ‘‘NYSE Amex Trading
Systems’’) are operated by the NYSE on
behalf of the Exchange.9
As part of the Equities Relocation,
NYSE Amex adopted NYSE Rules 1–
1004, subject to such changes as
necessary to apply the Rules to the
Exchange, as the NYSE Amex Equities
Rules to govern trading on the NYSE
6 See SR–NYSE–2009–73, formally submitted on
July 24, 2009.
7 See Securities Exchange Act Release No. 58673
(Sept. 29, 2008), 73 FR 57707 (Oct. 3, 2008) (SR–
NYSE–2008–60 and SR–Amex 2008–62) (approving
the Merger).
8 15 U.S.C. 78f.
9 See Securities Exchange Act Release No. 58705
(Oct. 1, 2008), 73 FR 58995 (Oct. 8, 2008) (SR–
Amex-2008–63) (approving the Equities
Relocation).
E:\FR\FM\05AUN1.SGM
05AUN1
Federal Register / Vol. 74, No. 149 / Wednesday, August 5, 2009 / Notices
Amex Trading Systems.10 The NYSE
Amex Equities Rules, which became
operative on December 1, 2008, are
substantially identical to the current
NYSE Rules 1–1004 and the Exchange
continues to update the NYSE Amex
Equities Rules as necessary to conform
with rule changes to corresponding
NYSE Rules filed by the NYSE.
srobinson on DSKHWCL6B1PROD with NOTICES
Rule 92 Background
On July 5, 2007, the Commission
approved amendments to NYSE Rule 92
to permit riskless principal trading at
the NYSE.11 These amendments were
filed in part to begin the harmonization
process between NYSE Rule 92 and
FINRA’s Manning Rule.12 In connection
with those amendments, the NYSE
implemented for an operative date of
January 16, 2008, NYSE Rule 92(c)(3),
which permits NYSE member
organizations to submit riskless
principal orders to the NYSE, but
requires them to submit to a designated
NYSE 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 NYSE informed member
organizations that when executing
riskless principal transactions, firms
must submit order execution reports to
the NYSE’s Front End Systemic Capture
(‘‘FESC’’) database linking the execution
of the riskless principal order on the
NYSE to the specific underlying orders.
The information provided must be
sufficient for both member firms and the
NYSE to reconstruct in a timesequenced 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 NYSE 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)
10 See Securities Exchange Act Release Nos.
58705 (Oct. 1, 2008), 73 FR 58995 (Oct. 8, 2008)
(SR–Amex-2008–63); No. 58833 (Oct. 22, 2008), 73
FR 64642 (Oct. 30, 2008) (SR–NYSE–2008–106); No.
58839 (Oct. 23, 2008), 73 FR 64645 (October 30,
2008) (SR–NYSEALTR–2008–03); No. 59022 (Nov.
26, 2008), 73 FR 73683 (Dec. 3, 2008) (SR–
NYSEALTR–2008–10); and No. 59027 (Nov. 28,
2008), 73 FR 73681 (Dec. 3, 2008) (SR–NYSEALTR–
2008–11).
11 See Securities Exchange Act Release No. 56017
(Jul. 5, 2007), 72 FR 38110 (Jul. 12, 2007) (SR–
NYSE–2007–21).
12 See NASD Rule 2111 and IM–2110–2.
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18:54 Aug 04, 2009
Jkt 217001
requirements, including submitting endof-day allocation reports for riskless
principal transactions and using the
riskless principal account type
indicator.13 The NYSE filed for
additional extensions of the operative
date of NYSE Rule 92(c)(3) to March 31,
2009 and July 31, 2009.14 Because NYSE
Amex adopted NYSE Rule 92 in its then
current form, the delayed operative date
of March 31, 2009 for the NYSE Rule
92(c)(3) reporting requirements also
applied for NYSE Amex Equities Rule
92(c)(3) reporting requirements and
NYSE Amex filed for an extension of the
operative date of Rule 92(c)(3) from
March 31, 2009 to July 31, 2009.15
Request for Extension
FINRA, NYSE, 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 approval, the Exchange,
NYSE, and FINRA will not have
harmonized their respective customer
order protection rules by the current
July 31, 2009 date for the
implementation of the FESC riskless
principal reporting.
The Exchange notes that it has agreed
with NYSE and FINRA to pursue efforts
to harmonize customer order protection
rules. As authorized by their respective
Boards, FINRA and NYSE Regulation,
Inc. (‘‘NYSE Regulation’’) have each
published a Regulatory Notice/
Information Memo that solicit
comments from their respective member
participants on the proposed
harmonized approach to customer order
protection.16 Because industry
participants need to code their trading
systems to comply with customer order
protection rules, the Exchange believes
that industry input is vital to ensuring
that the approach to customer order
protection both meets regulatory needs
of protecting customer orders, but is
also feasible technologically.
13 See Securities Exchange Act Release No. 56968
(Dec. 14, 2007), 72 FR 72432 (Dec. 20, 2007) (SR–
NYSE–2007–114).
14 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).
15 See Securities Exchange Act Release No. 59620
(Mar. 23, 2009), 74 FR 14176 (Mar. 30, 2009) (SR–
NYSEALTR–2009–29).
16 See NYSE Regulation Information Memo 09–13
(March 12, 2009); FINRA Regulatory Notice 09–15
(March 12, 2009).
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39129
Both FINRA and NYSE Regulation
have received comments from the
public on the Regulatory Notice and
Information Memo, including comments
from industry forums such as SIFMA
and FIF. The comments have generally
supported efforts to harmonize the
FINRA and NYSE rules. Among issues
raised in the comment letters, however,
is the concern that FINRA and NYSE
have a harmonized approach for
reporting riskless principal transactions.
In addition, commenters note the need
for an implementation period to develop
any technology that would be needed to
comply with the proposed reporting
standard. FINRA and NYSE Regulation
continue to work together to develop
such a harmonized approach to
reporting riskless principal trades.
The Exchange continues to believe
that pending full harmonization of the
respective customer order protection
rules, it would be premature to require
firms to meet the current NYSE Amex
Equities Rule 92(c)(3) FESC reporting
requirements.17 Indeed, having differing
reporting standards for riskless
principal orders would be inconsistent
with the overall goal of the
harmonization process.
Accordingly, to provide the Exchange,
NYSE, and FINRA the time necessary to
review their respective rules and
develop a harmonized rule set that
would apply across their respective
marketplaces, including a harmonized
approach to riskless principal trade
reporting, the Exchange is proposing to
delay the operative date for NYSE Amex
Equities Rule 92(c)(3) from July 31, 2009
to December 31, 2009.
Pending the harmonization of the
three rules, the Exchange will continue
to require that, as of the date each
member organization implements
riskless principal routing, the member
organization have in place systems and
controls that allow them to easily match
and tie riskless principal execution on
the Exchange to the underlying orders
and that they be able to provide this
information to the Exchange upon
request. To make clear that this
requirement continues, the Exchange
proposes to amend supplementary
material .95 to Rule 92 to specifically
provide that the NYSE Amex Equities
Rule 92(c)(3) reporting requirements are
suspended until December 31, 2009 and
that member organizations are required
to have in place such systems and
controls relating to their riskless
principal executions on the Exchange.
Moreover, the Exchange will coordinate
17 The Exchange notes that it would also need to
make technological changes to implement the
proposed FESC reporting solution for Rule 92(c)(3).
E:\FR\FM\05AUN1.SGM
05AUN1
39130
Federal Register / Vol. 74, No. 149 / Wednesday, August 5, 2009 / Notices
with NYSE and FINRA to examine for
compliance with the rule requirements
for those firms that engage in riskless
principal trading under Rule 92(c).
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Securities Exchange Act of 1934
(the ‘‘Act’’),18 in general, and furthers
the objectives of Section 6(b)(5) of the
Act,19 in particular, in that it is 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 Exchange believes
the proposed extension provides the
Exchange, NYSE, and FINRA the time
necessary to develop a harmonized rule
concerning customer order protection
that will enable member organizations
to participate in the national market
system without unnecessary
impediments.
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.
srobinson on DSKHWCL6B1PROD with NOTICES
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change does not:
(i) Significantly affect the protection
of investors or the public interest;
(ii) Impose any significant burden on
competition; and
(iii) Become operative for 30 days
from the date on which it was filed, or
such shorter time as the Commission
may designate, if consistent with the
protection of investors and the public
interest, it has become effective
pursuant to Section 19(b)(3)(A) of the
Act 20 and Rule 19b–4(f)(6)
thereunder.21
18 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
20 15 U.S.C. 78s(b)(3)(A).
21 17 CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6)(iii) requires the self-regulatory organization
to submit to the Commission written notice of its
19 15
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18:54 Aug 04, 2009
Jkt 217001
The Exchange has requested the
Commission to waive the 30-day
operative delay so that the Exchange can
extend the operative date of NYSE
Equities Rule 92(c)(3) without
interruption. The Commission hereby
grants the Exchange’s request and
believes such waiver is consistent with
the protection of investors and the
public interest.22 Accordingly, the
Commission designates the proposed
rule change operative upon filing with
the Commission.
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–NYSEAmex–2009–48 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–NYSEAmex–2009–48. 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
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. See
15 U.S.C. 78c(f).
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Frm 00091
Fmt 4703
Sfmt 4703
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 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–2009–48 and should be
submitted on or before August 26, 2009.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.23
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–18667 Filed 8–4–09; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–60398; File No.
NYSEAmex–2009–47]
Self-Regulatory Organizations; NYSE
Amex LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change Amending NYSE Amex
Disciplinary Rule 476A To Add Rule
104(a)(1)(A)—NYSE Amex Equities To
Its ‘‘List of Exchange Rule Violations
and Fines Applicable Thereto’’
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, NYSE Amex LLC (the ‘‘Exchange’’
or ‘‘NYSE Amex’’) 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 selfregulatory organization. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
23 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
E:\FR\FM\05AUN1.SGM
05AUN1
Agencies
[Federal Register Volume 74, Number 149 (Wednesday, August 5, 2009)]
[Notices]
[Pages 39128-39130]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-18667]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-60397; File No. SR-NYSEAmex-2009-48]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by NYSE Amex LLC Extending the
Operative Date of NYSE Amex Equities Rule 92(c)(3) from July 31, 2009
to December 31, 2009
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, NYSE Amex LLC (the ``Exchange'' or ``NYSE
Amex'') 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
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).
---------------------------------------------------------------------------
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 Amex
Equities 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
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.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange is proposing to extend the delayed operative date of
NYSE Amex Equities 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, the New York Stock Exchange LLC (``NYSE''),
and the Financial Industry Regulatory Authority, Inc. (``FINRA'') to
harmonize their respective rules concerning customer order protection
to achieve a standardized industry practice.\6\
---------------------------------------------------------------------------
\6\ See SR-NYSE-2009-73, formally submitted on July 24, 2009.
---------------------------------------------------------------------------
Merger Background
As described more fully in a related rule filing,\7\ NYSE Euronext
acquired The Amex Membership Corporation (``AMC'') pursuant to an
Agreement and Plan of Merger, dated January 17, 2008 (the ``Merger'').
In connection with the Merger, the Exchange's predecessor, the American
Stock Exchange LLC (``Amex''), a subsidiary of AMC, became a subsidiary
of NYSE Euronext and was renamed NYSE Amex LLC (``NYSE Amex'' or the
``Exchange''), and continues to operate as a national securities
exchange registered under Section 6 of the Securities Exchange Act of
1934, as amended (the ``Act'').\8\ The effective date of the Merger was
October 1, 2008.
---------------------------------------------------------------------------
\7\ See Securities Exchange Act Release No. 58673 (Sept. 29,
2008), 73 FR 57707 (Oct. 3, 2008) (SR-NYSE-2008-60 and SR-Amex 2008-
62) (approving the Merger).
\8\ 15 U.S.C. 78f.
---------------------------------------------------------------------------
In connection with the Merger, on December 1, 2008, the Exchange
relocated all equities trading conducted on the Exchange legacy trading
systems and facilities located at 86 Trinity Place, New York, New York,
to trading systems and facilities located at 11 Wall Street, New York,
New York (the ``Equities Relocation''). The Exchange's equity trading
systems and facilities at 11 Wall Street (the ``NYSE Amex Trading
Systems'') are operated by the NYSE on behalf of the Exchange.\9\
---------------------------------------------------------------------------
\9\ See Securities Exchange Act Release No. 58705 (Oct. 1,
2008), 73 FR 58995 (Oct. 8, 2008) (SR-Amex-2008-63) (approving the
Equities Relocation).
---------------------------------------------------------------------------
As part of the Equities Relocation, NYSE Amex adopted NYSE Rules 1-
1004, subject to such changes as necessary to apply the Rules to the
Exchange, as the NYSE Amex Equities Rules to govern trading on the NYSE
[[Page 39129]]
Amex Trading Systems.\10\ The NYSE Amex Equities Rules, which became
operative on December 1, 2008, are substantially identical to the
current NYSE Rules 1-1004 and the Exchange continues to update the NYSE
Amex Equities Rules as necessary to conform with rule changes to
corresponding NYSE Rules filed by the NYSE.
---------------------------------------------------------------------------
\10\ See Securities Exchange Act Release Nos. 58705 (Oct. 1,
2008), 73 FR 58995 (Oct. 8, 2008) (SR-Amex-2008-63); No. 58833 (Oct.
22, 2008), 73 FR 64642 (Oct. 30, 2008) (SR-NYSE-2008-106); No. 58839
(Oct. 23, 2008), 73 FR 64645 (October 30, 2008) (SR-NYSEALTR-2008-
03); No. 59022 (Nov. 26, 2008), 73 FR 73683 (Dec. 3, 2008) (SR-
NYSEALTR-2008-10); and No. 59027 (Nov. 28, 2008), 73 FR 73681 (Dec.
3, 2008) (SR-NYSEALTR-2008-11).
---------------------------------------------------------------------------
Rule 92 Background
On July 5, 2007, the Commission approved amendments to NYSE Rule 92
to permit riskless principal trading at the NYSE.\11\ These amendments
were filed in part to begin the harmonization process between NYSE Rule
92 and FINRA's Manning Rule.\12\ In connection with those amendments,
the NYSE implemented for an operative date of January 16, 2008, NYSE
Rule 92(c)(3), which permits NYSE member organizations to submit
riskless principal orders to the NYSE, but requires them to submit to a
designated NYSE 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.
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\11\ See Securities Exchange Act Release No. 56017 (Jul. 5,
2007), 72 FR 38110 (Jul. 12, 2007) (SR-NYSE-2007-21).
\12\ See NASD Rule 2111 and IM-2110-2.
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For purposes of NYSE Rule 92(c)(3), the NYSE informed member
organizations that when executing riskless principal transactions,
firms must submit order execution reports to the NYSE's Front End
Systemic Capture (``FESC'') database linking the execution of the
riskless principal order on the NYSE to the specific underlying orders.
The information provided must be sufficient for both member firms and
the NYSE 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 NYSE 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 end-of-day allocation reports for
riskless principal transactions and using the riskless principal
account type indicator.\13\ The NYSE filed for additional extensions of
the operative date of NYSE Rule 92(c)(3) to March 31, 2009 and July 31,
2009.\14\ Because NYSE Amex adopted NYSE Rule 92 in its then current
form, the delayed operative date of March 31, 2009 for the NYSE Rule
92(c)(3) reporting requirements also applied for NYSE Amex Equities
Rule 92(c)(3) reporting requirements and NYSE Amex filed for an
extension of the operative date of Rule 92(c)(3) from March 31, 2009 to
July 31, 2009.\15\
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\13\ See Securities Exchange Act Release No. 56968 (Dec. 14,
2007), 72 FR 72432 (Dec. 20, 2007) (SR-NYSE-2007-114).
\14\ 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).
\15\ See Securities Exchange Act Release No. 59620 (Mar. 23,
2009), 74 FR 14176 (Mar. 30, 2009) (SR-NYSEALTR-2009-29).
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Request for Extension
FINRA, NYSE, 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 approval, the Exchange,
NYSE, and FINRA will not have harmonized their respective customer
order protection rules by the current July 31, 2009 date for the
implementation of the FESC riskless principal reporting.
The Exchange notes that it has agreed with NYSE and FINRA to pursue
efforts to harmonize customer order protection rules. As authorized by
their respective Boards, FINRA and NYSE Regulation, Inc. (``NYSE
Regulation'') have each published a Regulatory Notice/Information Memo
that solicit comments from their respective member participants on the
proposed harmonized approach to customer order protection.\16\ Because
industry participants need to code their trading systems to comply with
customer order protection rules, the Exchange believes that industry
input is vital to ensuring that the approach to customer order
protection both meets regulatory needs of protecting customer orders,
but is also feasible technologically.
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\16\ See NYSE Regulation Information Memo 09-13 (March 12,
2009); FINRA Regulatory Notice 09-15 (March 12, 2009).
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Both FINRA and NYSE Regulation have received comments from the
public on the Regulatory Notice and Information Memo, including
comments from industry forums such as SIFMA and FIF. The comments have
generally supported efforts to harmonize the FINRA and NYSE rules.
Among issues raised in the comment letters, however, is the concern
that FINRA and NYSE have a harmonized approach for reporting riskless
principal transactions. In addition, commenters note the need for an
implementation period to develop any technology that would be needed to
comply with the proposed reporting standard. FINRA and NYSE Regulation
continue to work together to develop such a harmonized approach to
reporting riskless principal trades.
The Exchange continues to believe that pending full harmonization
of the respective customer order protection rules, it would be
premature to require firms to meet the current NYSE Amex Equities Rule
92(c)(3) FESC reporting requirements.\17\ Indeed, having differing
reporting standards for riskless principal orders would be inconsistent
with the overall goal of the harmonization process.
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\17\ The Exchange notes that it would also need to make
technological changes to implement the proposed FESC reporting
solution for Rule 92(c)(3).
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Accordingly, to provide the Exchange, NYSE, and FINRA the time
necessary to review their respective rules and develop a harmonized
rule set that would apply across their respective marketplaces,
including a harmonized approach to riskless principal trade reporting,
the Exchange is proposing to delay the operative date for NYSE Amex
Equities Rule 92(c)(3) from July 31, 2009 to December 31, 2009.
Pending the harmonization of the three rules, the Exchange will
continue to require that, as of the date each member organization
implements riskless principal routing, the member organization have in
place systems and controls that allow them to easily match and tie
riskless principal execution on the Exchange to the underlying orders
and that they be able to provide this information to the Exchange upon
request. To make clear that this requirement continues, the Exchange
proposes to amend supplementary material .95 to Rule 92 to specifically
provide that the NYSE Amex Equities Rule 92(c)(3) reporting
requirements are suspended until December 31, 2009 and that member
organizations are required to have in place such systems and controls
relating to their riskless principal executions on the Exchange.
Moreover, the Exchange will coordinate
[[Page 39130]]
with NYSE and FINRA to examine for compliance with the rule
requirements for those firms that engage in riskless principal trading
under Rule 92(c).
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Securities Exchange Act of 1934 (the ``Act''),\18\ in
general, and furthers the objectives of Section 6(b)(5) of the Act,\19\
in particular, in that it is 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 Exchange
believes the proposed extension provides the Exchange, NYSE, and FINRA
the time necessary to develop a harmonized rule concerning customer
order protection that will enable member organizations to participate
in the national market system without unnecessary impediments.
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\18\ 15 U.S.C. 78f(b).
\19\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not:
(i) Significantly affect the protection of investors or the public
interest;
(ii) Impose any significant burden on competition; and
(iii) Become operative for 30 days from the date on which it was
filed, or such shorter time as the Commission may designate, if
consistent with the protection of investors and the public interest, it
has become effective pursuant to Section 19(b)(3)(A) of the Act \20\
and Rule 19b-4(f)(6) thereunder.\21\
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\20\ 15 U.S.C. 78s(b)(3)(A).
\21\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires the self-regulatory organization to submit to the
Commission 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.
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The Exchange has requested the Commission to waive the 30-day
operative delay so that the Exchange can extend the operative date of
NYSE Equities Rule 92(c)(3) without interruption. The Commission hereby
grants the Exchange's request and believes such waiver is consistent
with the protection of investors and the public interest.\22\
Accordingly, the Commission designates the proposed rule change
operative upon filing with the Commission.
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\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. See 15
U.S.C. 78c(f).
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At any time within 60 days of the filing of the proposed rule
change, the Commission may summarily abrogate such rule change if it
appears to the Commission that such action is necessary or appropriate
in the public interest, for the protection of investors, or otherwise
in furtherance of the purposes of the Act.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-NYSEAmex-2009-48 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-NYSEAmex-2009-48. 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 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-2009-48 and should be submitted on or before
August 26, 2009.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\23\
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\23\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-18667 Filed 8-4-09; 8:45 am]
BILLING CODE 8010-01-P