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”, 39130-39132 [E9-18668]

Download as PDF 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 VerDate Nov<24>2008 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). PO 00000 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 Federal Register / Vol. 74, No. 149 / Wednesday, August 5, 2009 / Notices I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend 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.’’ 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 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.’’ srobinson on DSKHWCL6B1PROD with NOTICES Background As described more fully in a related rule filing,4 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, a subsidiary of AMC, became a subsidiary of NYSE Euronext called NYSE Alternext US LLC,5 and continues to operate as a national securities exchange registered under Section 6 of the Act.6 3 New York Stock Exchange LLC (‘‘NYSE’’) has submitted a companion rule filing proposing corresponding amendments to NYSE Rule 476A. See SR–NYSE–2009–72 (formally submitted on July 22, 2009). 4 See Securities Exchange Act Release No. 58673 (September 29, 2008), 73 FR 57707 (October 3, 2008) (SR–NYSE–2008–60 and SR–Amex 2008–62). 5 The Exchange changed its name to NYSE Amex in March 2009. See Securities Exchange Act Release No. 59575 (March 13, 2009), 74 FR 11803 (March 19, 2009) (SR–NYSEALTR–2009–24). 6 15 U.S.C. 78f. VerDate Nov<24>2008 18:54 Aug 04, 2009 Jkt 217001 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.7 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 Amex Trading Systems.8 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. Current Rules 104– and 103B– NYSE Amex Equities Current Rule 104–NYSE Amex Equities 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.9 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 Rule 104(a)(1)(A)–NYSE Amex Equities. Section (a)(1)(A) of Rule 104 requires 7 See Securities Exchange Act Release No. 58705 (October 1, 2008), 73 FR 58995 (October 8, 2008) (SR–Amex 2008–63). 8 See Securities Exchange Act Release No. 58705 (October 1, 2008), 73 FR 58995 (October 8, 2008) (SR–Amex 2008–63); Securities Exchange Act Release No. 58833 (October 22, 2008), 73 FR 64642 (October 30, 2008) (SR–NYSE–2008–106); Securities Exchange Act Release No. 58839 (October 23, 2008), 73 FR 64645 (October 30, 2008) (SR– NYSEALTR–2008–03); Securities Exchange Act Release No. 59022 (November 26, 2008), 73 FR 73683 (December 3, 2008) (SR–NYSEALTR–2008– 10); and Securities Exchange Act Release No. 59027 (November 28, 2008), 73 FR 73681 (December 3, 2008) (SR–NYSEALTR–2008–11). 9 See Rule 104(f)(ii)–NYSE Amex Equities. PO 00000 Frm 00092 Fmt 4703 Sfmt 4703 39131 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 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.10 DMM Reserve or other hidden orders are not included in the inside quote calculations. Proposed Rule Change As noted above, the Exchange proposes to add Rule 104(a)(1)(A)– NYSE Amex Equities to its ‘‘List of Exchange Rule Violations and Fines Applicable Thereto.’’ Under the Exchange’s Minor Rule Violation Plan, NYSE Amex Disciplinary 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 Disciplinary 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.11 10 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 Rule 104–NYSE Amex Equities 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. 11 The Exchange’s current Minor Rule Violation Plan, NYSE Amex Disciplinary Rule 476A, is based on both NYSE Rule 476A, which was originally adopted by the NYSE and approved by the Commission in 1985, as well as legacy American Stock Exchange Rule 590, which was adopted by the Exchange’s predecessor and approved by the Commission in 1989. See Securities Exchange Act Release No. 34-[sic]21688 (January 25, 1985), 50 FR 5025–01 (February 5, 1985) (approving NYSE Rule 476A) and Securities Exchange Act Release No. 34– 27543 (December 15, 1989), 54 FR 53223 (December 27, 1989) (approving American Stock Exchange Rule 590). E:\FR\FM\05AUN1.SGM 05AUN1 39132 Federal Register / Vol. 74, No. 149 / Wednesday, August 5, 2009 / Notices Currently, when a DMM fails to meet the affirmative quote obligations set forth in Rule 104(a)(1)(A)–NYSE Amex Equities, the Exchange’s only remedy is to bring a formal disciplinary proceeding pursuant to NYSE Amex Disciplinary 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 under Rule 104(a)(1)(A)–NYSE Amex Equities. In some circumstances, formal disciplinary measures in accordance with NYSE Amex Disciplinary 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 Rule 104(a)(1)(A)–NYSE Amex Equities to the list of rule violations and fines under Disciplinary 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 the Rule, while preserving the Exchange’s discretion to seek formal discipline under the appropriate circumstances. srobinson on DSKHWCL6B1PROD with NOTICES 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,12 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 Rule 104(a)(1)(A)–NYSE Amex Equities 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 13 and Rule 19b–4(f)(6) thereunder.14 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 U.S.C. 78f(b)(5). VerDate Nov<24>2008 18:54 Aug 04, 2009 14 17 Jkt 217001 PO 00000 U.S.C. 78s(b)(3)(A)(iii). CFR 240.19b–4(f)(6). Frm 00093 Fmt 4703 • 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 NYSEAmex–2009–47. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s Internet Web site (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission’s Public Reference Room, 100 F Street, NE., Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. Copies of 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 NYSEAmex–2009–47 and should be submitted on or before August 26, 2009. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.15 Florence E. Harmon, Deputy Secretary. [FR Doc. E9–18668 Filed 8–4–09; 8:45 am] BILLING CODE 8010–01–P DEPARTMENT OF STATE [Public Notice 6720] • 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 NYSEAmex-2009–47 on the subject line. 13 15 12 15 Paper Comments Sfmt 4703 Waiver of Restriction on Assistance to the Central Government of Tajikistan Pursuant to section 7088(c)(2) of the Department of State, Foreign Operations, and Related Programs Appropriations Act, 2009 (Division H, Pub. L. 111–8) (‘‘the Act’’), and 15 17 E:\FR\FM\05AUN1.SGM CFR 200.30–3(a)(12). 05AUN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 74, Number 149 (Wednesday, August 5, 2009)]
[Notices]
[Pages 39130-39132]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-18668]

-----------------------------------------------------------------------

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
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.

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[[Page 39131]]

I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

The Exchange proposes to amend 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.'' \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\ New York Stock Exchange LLC (``NYSE'') has submitted a
companion rule filing proposing corresponding amendments to NYSE
Rule 476A. See SR-NYSE-2009-72 (formally submitted on 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 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.''

Background

As described more fully in a related rule filing,\4\ 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, a subsidiary of AMC, became a subsidiary of NYSE
Euronext called NYSE Alternext US LLC,\5\ and continues to operate as a
national securities exchange registered under Section 6 of the Act.\6\
The effective date of the Merger was October 1, 2008.
---------------------------------------------------------------------------

\4\ See Securities Exchange Act Release No. 58673 (September 29,
2008), 73 FR 57707 (October 3, 2008) (SR-NYSE-2008-60 and SR-Amex
2008-62).
\5\ The Exchange changed its name to NYSE Amex in March 2009.
See Securities Exchange Act Release No. 59575 (March 13, 2009), 74
FR 11803 (March 19, 2009) (SR-NYSEALTR-2009-24).
\6\ 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.\7\
---------------------------------------------------------------------------

\7\ See Securities Exchange Act Release No. 58705 (October 1,
2008), 73 FR 58995 (October 8, 2008) (SR-Amex 2008-63).
---------------------------------------------------------------------------

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
Amex Trading Systems.\8\ 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.
---------------------------------------------------------------------------

\8\ See Securities Exchange Act Release No. 58705 (October 1,
2008), 73 FR 58995 (October 8, 2008) (SR-Amex 2008-63); Securities
Exchange Act Release No. 58833 (October 22, 2008), 73 FR 64642
(October 30, 2008) (SR-NYSE-2008-106); Securities Exchange Act
Release No. 58839 (October 23, 2008), 73 FR 64645 (October 30, 2008)
(SR-NYSEALTR-2008-03); Securities Exchange Act Release No. 59022
(November 26, 2008), 73 FR 73683 (December 3, 2008) (SR-NYSEALTR-
2008-10); and Securities Exchange Act Release No. 59027 (November
28, 2008), 73 FR 73681 (December 3, 2008) (SR-NYSEALTR-2008-11).
---------------------------------------------------------------------------

Current Rules 104- and 103B- NYSE Amex Equities

Current Rule 104-NYSE Amex Equities 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.\9\ 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'').
---------------------------------------------------------------------------

\9\ See Rule 104(f)(ii)-NYSE Amex Equities.
---------------------------------------------------------------------------

The DMMs' Affirmative Quote Obligation is set forth in Rule
104(a)(1)(A)-NYSE Amex Equities. 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 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.\10\ DMM Reserve or other hidden orders
are not included in the inside quote calculations.
---------------------------------------------------------------------------

\10\ 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 Rule 104-NYSE Amex Equities 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 Rule 104(a)(1)(A)-NYSE
Amex Equities to its ``List of Exchange Rule Violations and Fines
Applicable Thereto.''
Under the Exchange's Minor Rule Violation Plan, NYSE Amex
Disciplinary 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 Disciplinary 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.\11\
---------------------------------------------------------------------------

\11\ The Exchange's current Minor Rule Violation Plan, NYSE Amex
Disciplinary Rule 476A, is based on both NYSE Rule 476A, which was
originally adopted by the NYSE and approved by the Commission in
1985, as well as legacy American Stock Exchange Rule 590, which was
adopted by the Exchange's predecessor and approved by the Commission
in 1989. See Securities Exchange Act Release No. 34-[sic]21688
(January 25, 1985), 50 FR 5025-01 (February 5, 1985) (approving NYSE
Rule 476A) and Securities Exchange Act Release No. 34-27543
(December 15, 1989), 54 FR 53223 (December 27, 1989) (approving
American Stock Exchange Rule 590).

---------------------------------------------------------------------------

[[Page 39132]]

Currently, when a DMM fails to meet the affirmative quote
obligations set forth in Rule 104(a)(1)(A)-NYSE Amex Equities, the
Exchange's only remedy is to bring a formal disciplinary proceeding
pursuant to NYSE Amex Disciplinary 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 under Rule 104(a)(1)(A)-NYSE Amex
Equities. In some circumstances, formal disciplinary measures in
accordance with NYSE Amex Disciplinary 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 Rule 104(a)(1)(A)-NYSE
Amex Equities to the list of rule violations and fines under
Disciplinary 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 the Rule, 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,\12\ 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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\12\ 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 Rule 104(a)(1)(A)-NYSE Amex Equities
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 \13\ and Rule 19b-4(f)(6) thereunder.\14\
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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\13\ 15 U.S.C. 78s(b)(3)(A)(iii).
\14\ 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 NYSEAmex-2009-47 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 NYSEAmex-2009-47. This file
number should be included on the subject line if e-mail is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for inspection and
copying in the Commission's Public Reference Room, 100 F Street, NE.,
Washington, DC 20549, on official business days between the hours of 10
a.m. and 3 p.m. Copies of 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
NYSEAmex-2009-47 and should be submitted on or before August 26, 2009.

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-18668 Filed 8-4-09; 8:45 am]
BILLING CODE 8010-01-P

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