Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by New York Stock Exchange LLC Extending Until August 31, 2009, the Operation of Interim NYSE Rule 128 Which Permits the Exchange To Cancel or Adjust Clearly Erroneous Executions If They Arise Out of the Use or Operation of Any Quotation, Execution or Communication System Owned or Operated by the Exchange, Including Those Executions That Occur in the Event of a System Disruption or System Malfunction, 44423-44425 [E9-20821]
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Federal Register / Vol. 74, No. 166 / Friday, August 28, 2009 / Notices
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–NYSEAmex–2009–56 on
the subject line.
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–60563; File No. SR–NYSE–
2009–87]
Paper Comments
Self-Regulatory Organizations; Notice
of Filing and Immediate Effectiveness
of Proposed Rule Change by New York
Stock Exchange LLC Extending Until
August 31, 2009, the Operation of
Interim NYSE Rule 128 Which Permits
the Exchange To Cancel or Adjust
All submissions should refer to File
Clearly Erroneous Executions If They
Number SR–NYSEAmex–2009–56. This Arise Out of the Use or Operation of
file number should be included on the
Any Quotation, Execution or
subject line if e-mail is used. To help the Communication System Owned or
Operated by the Exchange, Including
Commission process and review your
Those Executions That Occur in the
comments more efficiently, please use
only one method. The Commission will Event of a System Disruption or
post all comments on the Commission’s System Malfunction
Internet Web site (https://www.sec.gov/
August 24, 2009.
rules/sro.shtml). Copies of the
Pursuant to Section 19(b)(1) 1 of the
submission, all subsequent
Securities Exchange Act of 1934 (the
amendments, all written statements
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
with respect to the proposed rule
notice is hereby given that, on August
change that are filed with the
21, 2009, New York Stock Exchange
Commission, and all written
LLC (‘‘NYSE’’ or the ‘‘Exchange’’) filed
communications relating to the
with the Securities and Exchange
proposed rule change between the
Commission (the ‘‘Commission’’) the
Commission and any person, other than proposed rule change as described in
those that may be withheld from the
Items I and II below, which Items have
been prepared by the self-regulatory
public in accordance with the
organization. The Commission is
provisions of 5 U.S.C. 552, will be
publishing this notice to solicit
available for inspection and copying in
comments on the proposed rule change
the Commission’s Public Reference
from interested persons.
Room, 100 F Street, NE., Washington,
DC 20549, on official business days
I. Self-Regulatory Organization’s
between the hours of 10 a.m. and 3 p.m. Statement of the Terms of Substance of
Copies of such filing also will be
the Proposed Rule Change
available for inspection and copying at
The Exchange proposes to extend
the principal office of the Exchange. All until August 31, 2009, the operation of
comments received will be posted
interim NYSE Rule 128 (‘‘Clearly
without change; the Commission does
Erroneous Executions for NYSE
not edit personal identifying
Equities’’) which permits the Exchange
information from submissions. You
to cancel or adjust clearly erroneous
should submit only information that
executions if they arise out of the use or
you wish to make publicly available. All operation of any quotation, execution or
submissions should refer to File
communication system owned or
Number SR–NYSEAmex–2009–56 and
operated by the Exchange, including
should be submitted on or before
those executions that occur in the event
September 18, 2009.
of a system disruption or system
malfunction. The text of the proposed
For the Commission, by the Division of
rule change is available at the Exchange,
Trading and Markets, pursuant to delegated
the Commission’s Public Reference
6
authority.
Room, and https://www.nyse.com.
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
Station Place, 100 F Street, NE.,
Washington, DC 20549–1090.
hsrobinson on DSK69SOYB1PROD with NOTICES
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–20820 Filed 8–27–09; 8:45 am]
BILLING CODE 8010–01–P
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,
1 15
U.S.C. 78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
2 15
6 17
CFR 200.30–3(a)(12).
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44423
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 extend
until August 31, 2009, the operation of
interim NYSE Rule 128 (‘‘Clearly
Erroneous Executions for NYSE
Equities’’) which permits the Exchange
to cancel or adjust clearly erroneous
executions if they arise out of the use or
operation of any quotation, execution or
communication system owned or
operated by the Exchange, including
those executions that occur in the event
of a system disruption or system
malfunction.
Prior to the implementation of NYSE
Rule 128 on January 28, 2008,4 the
NYSE did not have a rule providing the
Exchange with the authority to cancel or
adjust clearly erroneous trades of
securities executed on or through the
systems and facilities of the NYSE.
In order for the NYSE to be consistent
with other national securities exchanges
which have some version of a clearly
erroneous execution rule, the Exchange
is drafting an amended clearly
erroneous rule which will accommodate
such other exchanges but will be
appropriate for the NYSE market model.
The NYSE notes that the Commission
approved an amended clearly erroneous
execution rule for Nasdaq in May 2008.5
On July 28, 2008, the Exchange filed
with the SEC a request to extend the
operation of interim Rule 128 until
October 1, 2008 6 in order to review the
provisions of Nasdaq’s clearly erroneous
rule and to consider integrating similar
standards into its own amendment to
Rule 128. On October 1, 2008,7 the
Exchange filed with the SEC a further
request to extend the operation of
interim Rule 128 until January 9, 2009
4 See Securities Exchange Act Release No. 57323
(February 13, 2008), 73 FR 9371 (February 20, 2008)
(SR–NYSE–2008–09).
5 See Securities Exchange Act Release No. 57826
(May 15, 2008), 73 FR 29802 (May 22, 2008) (SR–
NASDAQ–2007–001).
6 See Securities Exchange Act Release No. 58328
(August 8, 2008), 73 FR 47247 (August 13, 2008)
(SR–NYSE–2008–63).
7 See Securities Exchange Act Release No. 58732
(October 3, 2008), 73 FR 61183 (October 15, 2008)
(SR–NYSE–2008–99).
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Federal Register / Vol. 74, No. 166 / Friday, August 28, 2009 / Notices
hsrobinson on DSK69SOYB1PROD with NOTICES
in order to consider integrating similar
standards into the amendment to Rule
128. On January 9, 2009,8 the Exchange
filed with the SEC a request to extend
the operation of interim Rule 128 until
March 9, 2009, indicating that the
Exchange was still in the process of
reviewing the Nasdaq rule with a view
towards incorporating certain
provisions into the amendment of
interim Rule 128.
On February 10, 2009, NYSE Arca
submitted a proposal to the SEC to
amend its clearly erroneous rule. The
NYSE Arca proposed rule differed in
certain respects from the Nasdaq clearly
erroneous rule. On March 9, 2009, the
Exchange filed with the SEC a request
to extend the operation of interim Rule
128 until June 9, 2009 9 to finalize
review of NYSE Arca’s proposed
amended CEE rule, which included
marketwide CEE initiatives, to
determine if it was appropriate to
incorporate such provisions into the
Rule 128 amendment.
Thereafter, on April 24, 2009, NYSE
Arca filed a revised rule change with the
Commission to amend its clearly
erroneous rule (NYSE Arca Rule 7.10).10
The Exchange was in the process of
finalizing its review of NYSE Arca’s
revised CEE rule change, which also
included marketwide CEE initiatives, to
determine if it was appropriate to
incorporate all such provisions into
NYSE’s interim Rule 128 amendment.
On June 9, 2009, the Exchange filed
with the SEC a request to extend the
operation of interim Rule 128 until July
15, 2009 11 to finalize review of NYSE
Arca’s proposed amended CEE rule. On
July 15, 2009 12 the Exchange filed with
the SEC a request to extend the
operation of interim Rule 128 until
August 1, 2009 to finalize review of
NYSE Arca’s proposed amended CEE
rule. On July 31, 2009 the Exchange
filed with the SEC a request to extend
the operation of interim Rule 128 until
August 10, 2009 13 to finalize review of
NYSE Arca’s proposed amended CEE
rule. On August 11, 2009 the Exchange
8 See Securities Exchange Act Release No. 59255
(January 15, 2009), 74 FR 4496 (January 26, 2009)
(SR–NYSE–2009–02).
9 See Securities Exchange Act Release No. 59581
(March 9, 2009), 74 FR 12431 (March 24, 2009) (SR–
NYSE–2009–26).
10 See Securities Exchange Act Release No. 59838
(April 28, 2009), 74 FR 20767 (May 5, 2009) (SR–
NYSEArca–2009–36) (See NYSE Arca Rule 7.10).
11 See Securities Exchange Act Release No. 60131
(June 17, 2009), 74 FR 30196 (June 24, 2009) (SR–
NYSE–2009–57).
12 See Securities Exchange Act Release No. 60312
(July 15, 2009), 74 FR 36298 (July 22, 2009) (SR–
NYSE–2009–70).
13 See Securities Exchange Act Release No. 60419
(August 7, 2009), 74 FR 39987 (August 10, 2009)
(SR–NYSE–2009–79).
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21:38 Aug 27, 2009
Jkt 217001
filed with the SEC a request to extend
the operation of interim Rule 128 until
August 21, 2009 14 to finalize review of
NYSE Arca’s proposed amended CEE
rule.
The Exchange anticipates finalizing
proposed rule text of its clearly
erroneous execution rule shortly, and is,
therefore, requesting to extend the
operation of interim Rule 128 until
August 31, 2009. Prior to August 31,
2009, the Exchange intends to formally
file a 19b–4 rule change amending
interim Rule 128.
2. Statutory Basis
The basis under the Securities
Exchange Act of 1934 (the ‘‘Act’’) 15 for
this proposed rule change is the
requirement under Section 6(b)(5) 16
that an Exchange have rules that are
designed to promote just and equitable
principles of trade, to remove
impediments to and perfect the
mechanism of a free and open market
and a national market system and, in
general, to protect investors and the
public interest.
As articulated more fully in the
‘‘Purpose’’ Section above, the proposed
rule would place the NYSE on equal
footing with other national securities
exchanges. This will promote the
integrity of the market and protect the
public interest, since it would permit all
exchanges to cancel or adjust clearly
erroneous trades when such trades
occur, rather than canceling them on all
other markets, but leaving them
standing on only one market.
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
14 See Securities Exchange Act Release No. 60478
(August 11, 2009), 74 FR 41769 (August 18, 2009)
(SR–NYSE–2009–81).
15 15 U.S.C. 78f(a). [sic]
16 15 U.S.C. 78f(b)(5).
PO 00000
Frm 00080
Fmt 4703
Sfmt 4703
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, it has
become effective pursuant to Section
19(b)(3)(A) of the Act 17 and Rule 19b–
4(f)(6) thereunder.18
A proposed rule change filed
pursuant to Rule 19b–4(f)(6) under the
Act 19 normally does not become
operative for 30 days after the date of its
filing. However, Rule 19b–4(f)(6) 20
permits the Commission to designate a
shorter time if such action is consistent
with the protection of investors and the
public interest. NYSE requests that the
Commission waive the 30-day operative
delay because the Exchange believes
that the absence of such a rule in an
automated and fast-paced trading
environment poses a danger to the
integrity of the markets and the public
interest. NYSE notes that immediate
effectiveness of the proposed rule
change will immediately and timely
enable NYSE to cancel or adjust clearly
erroneous trades that may present a risk
to the integrity of the equities markets
and all related markets. The
Commission believes that waiving the
30-day operative delay 21 is consistent
with the protection of investors and the
public interest because such waiver will
permit the Exchange to continue
operation of interim NYSE Rule 128 on
an uninterrupted basis, and therefore
designates the proposal operative upon
filing.
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.
17 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6) requires a self-regulatory organization to give
the Commission written notice of its intent to file
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 Commission has determined to
waive the five-day pre-filing period in this case.
19 17 CFR 240.19b–4(f)(6).
20 17 CFR 240.19b–4(f)(6).
21 For purposes only of waiving the 30-day
operative delay, the Commission has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
18 17
E:\FR\FM\28AUN1.SGM
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Federal Register / Vol. 74, No. 166 / Friday, August 28, 2009 / Notices
Comments may be submitted by any of
the following methods:
SECURITIES AND EXCHANGE
COMMISSION
Electronic Comments
[Release No. 34–60559; File No. SR–ISE–
2009–27]
• 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–2009–87 on the
subject line.
Paper Comments
Self-Regulatory Organizations;
International Securities Exchange,
LLC; Order Granting Approval of a
Proposed Rule Change as Modified by
Amendment No. 1 Thereto To Adopt
Rules Implementing the Options Order
Protection and Locked/Crossed Market
Plan
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–1090.
hsrobinson on DSK69SOYB1PROD with NOTICES
I. Introduction
On May 11, 2009, the International
Securities Exchange, LLC (‘‘ISE’’ or
‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’), pursuant to Section
All submissions should refer to File
19(b)(1) of the Securities Exchange Act
Number SR–NYSE–2009–87. This file
of 1934 (‘‘Act’’) 1 and Rule 19b–4
number should be included on the
subject line if e-mail is used. To help the thereunder,2 a proposed rule change to
amend and adopt rules to implement
Commission process and review your
the Options Order Protection and
comments more efficiently, please use
only one method. The Commission will Locked/Crossed Market Plan. The
post all comments on the Commission’s proposed rule change was published for
comment in the Federal Register on
Internet Web site (https://www.sec.gov/
June 8, 2009.3 On June 10, 2009, the
rules/sro.shtml). Copies of the
Exchange filed Amendment No. 1 to the
submission, all subsequent
proposed rule change.4 The Commission
amendments, all written statements
received no comments on the proposal.
with respect to the proposed rule
This order approves the proposed rule
change that are filed with the
change, as modified by Amendment No.
Commission, and all written
1.
communications relating to the
proposed rule change between the
II. Description of the Proposal
Commission and any person, other than
The Exchange proposes to amend and
those that may be withheld from the
adopt new ISE rules to implement the
public in accordance with the
Options Order Protection and Locked/
provisions of 5 U.S.C. 552, will be
Crossed Market Plan (‘‘Plan’’).5
available for inspection and copying in
Specifically, the Exchange proposes to
the Commission’s Public Reference
completely replace Chapter 19 of its
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 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 publicly available. All
submissions should refer to File
Number SR–NYSE–2009–87 and should
be submitted on or before September 18,
2009.
For the Commission, by the Division
of Trading and Markets, pursuant to
delegated authority.22
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–20821 Filed 8–27–09; 8:45 am]
BILLING CODE 8010–01–P
22 17
CFR 200.30–3(a)(12).
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21:38 Aug 27, 2009
Jkt 217001
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 60014
(June 1, 2009), 74 FR 27224 (‘‘Notice’’).
4 Amendment No. 1 clarified that this proposed
rule change will become effective upon the
Exchange’s withdrawal from the Plan for the
Purpose of Creating and Operating an Intermarket
Option Linkage and the effectiveness of the Options
Order Protection and Locked/Crossed Market Plan.
Because the amendment only provided clarification
and did not affect the substance of the rule filing,
the amendment did not require notice and
comment.
5 The Plan is a national market system plan
proposed by the seven existing options exchanges
and approved by the Commission. See Securities
Exchange Act Release No. 59647 (March 30, 2009),
74 FR 15010 (April 2, 2009) (File No. 4–546) (‘‘Plan
Notice’’) and 60405 (July 30, 2009), 74 FR 39362
(August 6, 2009) (File No. 4–546) (‘‘Plan
Approval’’). The seven options exchanges are:
Chicago Board Options Exchange, Incorporated
(‘‘CBOE’’); The NASDAQ Stock Market LLC
(‘‘Nasdaq’’); NASDAQ OMX BX, Inc. (‘‘BOX’’);
NASDAQ OMX PHLX, Inc. (‘‘Phlx’’); NYSE Amex
LLC (‘‘NYSE Amex’’); NYSE Arca, Inc. (‘‘NYSE
Arca’’); and ISE (each exchange individually a
‘‘Participant’’ and, together, the ‘‘Participating
Options Exchanges’’).
2 17
PO 00000
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Fmt 4703
Sfmt 4703
44425
rules with new rules implementing the
Plan, amend other Exchange rules to
reflect the Plan, and delete rules
rendered unnecessary by the Plan.
The Old Plan
Each of the Participating Options
Exchanges are signatories to the Plan for
the Purpose of Creating and Operating
an Intermarket Option Linkage (‘‘Old
Plan’’).6 In pertinent part, the Old Plan
generally requires its participants to
avoid trading at a price inferior to the
national best bid or offer (‘‘tradethrough’’), although it provides for a
number of exceptions to trade-through
liability.7 The Participating Options
Exchanges comply with this
requirement of the Old Plan by utilizing
a stand alone system (‘‘Linkage Hub’’) to
send and receive specific order types,8
namely Principal Acting as Agent
Orders (‘‘P/A Orders’’), Principal
Orders, and Satisfaction Orders.9 The
Old Plan also provided that
dissemination of ‘‘locked’’ or ‘‘crossed’’
markets should be avoided, and
remedial actions that should be taken to
unlock or uncross such market.10 Each
of the Participating Options Exchanges,
including the Exchange, has submitted
an amendment to the Old Plan to
withdraw from such Plan.11 The
withdrawals will be effective upon
approval by the Commission of such
amendments pursuant to Rule 608 of
Regulation NMS under the Act
(‘‘Regulation NMS’’).12
The Plan
The Plan does not require a central
linkage mechanism akin to the Old
Plan’s Linkage Hub. Instead, the Plan
includes the framework for routing
6 On July 28, 2000, the Commission approved the
Old Plan as a national market system plan for the
purpose of creating and operating an intermarket
options market linkage proposed by the American
Stock Exchange LLC (n/k/a NYSE Amex), CBOE,
and ISE. See Securities Exchange Act Release No.
43086 (July 28, 2000), 65 FR 48023 (August 4,
2000). Subsequently, Philadelphia Stock Exchange,
Inc. (n/k/a Phlx), Pacific Exchange, Inc. (n/k/a
NYSE Arca), Boston Stock Exchange, Inc. (n/k/a
BOX), and Nasdaq joined the Linkage Plan. See
Securities Exchange Act Release Nos. 43573
(November 16, 2000), 65 FR 70851 (November 28,
2000); 43574 (November 16, 2000), 65 FR 70850
(November 28, 2000); 49198 (February 5, 2004), 69
FR 7029 (February 12, 2004); and 57545 (March 21,
2008), 73 FR 16394 (March 27, 2008).
7 Section 8(c) of the Old Plan.
8 The Linkage Hub is a centralized data
communications network that electronically links
the Participating Options Exchanges to one another.
The Options Clearing Corporation (‘‘OCC’’) operates
the Linkage Hub.
9 Section 2(16) of the Old Plan.
10 Section 7(a)(i)(C) of the Old Plan.
11 See Securities Exchange Act Release No. 60360
(July 21, 2009) 74 FR 37265 (July 28, 2009) (File No.
4–429).
12 17 CFR 242.608.
E:\FR\FM\28AUN1.SGM
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]]>Agencies
[Federal Register Volume 74, Number 166 (Friday, August 28, 2009)]
[Notices]
[Pages 44423-44425]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-20821]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-60563; File No. SR-NYSE-2009-87]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by New York Stock Exchange LLC
Extending Until August 31, 2009, the Operation of Interim NYSE Rule 128
Which Permits the Exchange To Cancel or Adjust Clearly Erroneous
Executions If They Arise Out of the Use or Operation of Any Quotation,
Execution or Communication System Owned or Operated by the Exchange,
Including Those Executions That Occur in the Event of a System
Disruption or System Malfunction
August 24, 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 August 21, 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 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.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to extend until August 31, 2009, the
operation of interim NYSE Rule 128 (``Clearly Erroneous Executions for
NYSE Equities'') which permits the Exchange to cancel or adjust clearly
erroneous executions if they arise out of the use or operation of any
quotation, execution or communication system owned or operated by the
Exchange, including those executions that occur in the event of a
system disruption or system malfunction. 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 extend until August 31, 2009, the
operation of interim NYSE Rule 128 (``Clearly Erroneous Executions for
NYSE Equities'') which permits the Exchange to cancel or adjust clearly
erroneous executions if they arise out of the use or operation of any
quotation, execution or communication system owned or operated by the
Exchange, including those executions that occur in the event of a
system disruption or system malfunction.
Prior to the implementation of NYSE Rule 128 on January 28,
2008,\4\ the NYSE did not have a rule providing the Exchange with the
authority to cancel or adjust clearly erroneous trades of securities
executed on or through the systems and facilities of the NYSE.
---------------------------------------------------------------------------
\4\ See Securities Exchange Act Release No. 57323 (February 13,
2008), 73 FR 9371 (February 20, 2008) (SR-NYSE-2008-09).
---------------------------------------------------------------------------
In order for the NYSE to be consistent with other national
securities exchanges which have some version of a clearly erroneous
execution rule, the Exchange is drafting an amended clearly erroneous
rule which will accommodate such other exchanges but will be
appropriate for the NYSE market model.
The NYSE notes that the Commission approved an amended clearly
erroneous execution rule for Nasdaq in May 2008.\5\ On July 28, 2008,
the Exchange filed with the SEC a request to extend the operation of
interim Rule 128 until October 1, 2008 \6\ in order to review the
provisions of Nasdaq's clearly erroneous rule and to consider
integrating similar standards into its own amendment to Rule 128. On
October 1, 2008,\7\ the Exchange filed with the SEC a further request
to extend the operation of interim Rule 128 until January 9, 2009
[[Page 44424]]
in order to consider integrating similar standards into the amendment
to Rule 128. On January 9, 2009,\8\ the Exchange filed with the SEC a
request to extend the operation of interim Rule 128 until March 9,
2009, indicating that the Exchange was still in the process of
reviewing the Nasdaq rule with a view towards incorporating certain
provisions into the amendment of interim Rule 128.
---------------------------------------------------------------------------
\5\ See Securities Exchange Act Release No. 57826 (May 15,
2008), 73 FR 29802 (May 22, 2008) (SR-NASDAQ-2007-001).
\6\ See Securities Exchange Act Release No. 58328 (August 8,
2008), 73 FR 47247 (August 13, 2008) (SR-NYSE-2008-63).
\7\ See Securities Exchange Act Release No. 58732 (October 3,
2008), 73 FR 61183 (October 15, 2008) (SR-NYSE-2008-99).
\8\ See Securities Exchange Act Release No. 59255 (January 15,
2009), 74 FR 4496 (January 26, 2009) (SR-NYSE-2009-02).
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On February 10, 2009, NYSE Arca submitted a proposal to the SEC to
amend its clearly erroneous rule. The NYSE Arca proposed rule differed
in certain respects from the Nasdaq clearly erroneous rule. On March 9,
2009, the Exchange filed with the SEC a request to extend the operation
of interim Rule 128 until June 9, 2009 \9\ to finalize review of NYSE
Arca's proposed amended CEE rule, which included marketwide CEE
initiatives, to determine if it was appropriate to incorporate such
provisions into the Rule 128 amendment.
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\9\ See Securities Exchange Act Release No. 59581 (March 9,
2009), 74 FR 12431 (March 24, 2009) (SR-NYSE-2009-26).
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Thereafter, on April 24, 2009, NYSE Arca filed a revised rule
change with the Commission to amend its clearly erroneous rule (NYSE
Arca Rule 7.10).\10\ The Exchange was in the process of finalizing its
review of NYSE Arca's revised CEE rule change, which also included
marketwide CEE initiatives, to determine if it was appropriate to
incorporate all such provisions into NYSE's interim Rule 128 amendment.
On June 9, 2009, the Exchange filed with the SEC a request to extend
the operation of interim Rule 128 until July 15, 2009 \11\ to finalize
review of NYSE Arca's proposed amended CEE rule. On July 15, 2009 \12\
the Exchange filed with the SEC a request to extend the operation of
interim Rule 128 until August 1, 2009 to finalize review of NYSE Arca's
proposed amended CEE rule. On July 31, 2009 the Exchange filed with the
SEC a request to extend the operation of interim Rule 128 until August
10, 2009 \13\ to finalize review of NYSE Arca's proposed amended CEE
rule. On August 11, 2009 the Exchange filed with the SEC a request to
extend the operation of interim Rule 128 until August 21, 2009 \14\ to
finalize review of NYSE Arca's proposed amended CEE rule.
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\10\ See Securities Exchange Act Release No. 59838 (April 28,
2009), 74 FR 20767 (May 5, 2009) (SR-NYSEArca-2009-36) (See NYSE
Arca Rule 7.10).
\11\ See Securities Exchange Act Release No. 60131 (June 17,
2009), 74 FR 30196 (June 24, 2009) (SR-NYSE-2009-57).
\12\ See Securities Exchange Act Release No. 60312 (July 15,
2009), 74 FR 36298 (July 22, 2009) (SR-NYSE-2009-70).
\13\ See Securities Exchange Act Release No. 60419 (August 7,
2009), 74 FR 39987 (August 10, 2009) (SR-NYSE-2009-79).
\14\ See Securities Exchange Act Release No. 60478 (August 11,
2009), 74 FR 41769 (August 18, 2009) (SR-NYSE-2009-81).
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The Exchange anticipates finalizing proposed rule text of its
clearly erroneous execution rule shortly, and is, therefore, requesting
to extend the operation of interim Rule 128 until August 31, 2009.
Prior to August 31, 2009, the Exchange intends to formally file a 19b-4
rule change amending interim Rule 128.
2. Statutory Basis
The basis under the Securities Exchange Act of 1934 (the ``Act'')
\15\ for this proposed rule change is the requirement under Section
6(b)(5) \16\ that an Exchange have rules that are designed to promote
just and equitable principles of trade, to remove impediments to and
perfect the mechanism of a free and open market and a national market
system and, in general, to protect investors and the public interest.
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\15\ 15 U.S.C. 78f(a). [sic]
\16\ 15 U.S.C. 78f(b)(5).
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As articulated more fully in the ``Purpose'' Section above, the
proposed rule would place the NYSE on equal footing with other national
securities exchanges. This will promote the integrity of the market and
protect the public interest, since it would permit all exchanges to
cancel or adjust clearly erroneous trades when such trades occur,
rather than canceling them on all other markets, but leaving them
standing on only one market.
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, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \17\ and Rule 19b-
4(f)(6) thereunder.\18\
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\17\ 15 U.S.C. 78s(b)(3)(A).
\18\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file 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 Commission has determined to waive the five-day pre-filing
period in this case.
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A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act \19\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6) \20\ permits the Commission to
designate a shorter time if such action is consistent with the
protection of investors and the public interest. NYSE requests that the
Commission waive the 30-day operative delay because the Exchange
believes that the absence of such a rule in an automated and fast-paced
trading environment poses a danger to the integrity of the markets and
the public interest. NYSE notes that immediate effectiveness of the
proposed rule change will immediately and timely enable NYSE to cancel
or adjust clearly erroneous trades that may present a risk to the
integrity of the equities markets and all related markets. The
Commission believes that waiving the 30-day operative delay \21\ is
consistent with the protection of investors and the public interest
because such waiver will permit the Exchange to continue operation of
interim NYSE Rule 128 on an uninterrupted basis, and therefore
designates the proposal operative upon filing.
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\19\ 17 CFR 240.19b-4(f)(6).
\20\ 17 CFR 240.19b-4(f)(6).
\21\ For purposes only of waiving the 30-day operative delay,
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.
[[Page 44425]]
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-2009-87 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-2009-87. 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 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 publicly available. All
submissions should refer to File Number SR-NYSE-2009-87 and should be
submitted on or before September 18, 2009.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\22\
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\22\ 17 CFR 200.30-3(a)(12).
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-20821 Filed 8-27-09; 8:45 am]
BILLING CODE 8010-01-P
