Justia Agencies And Commissions Securities And Exchange Commission Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing of Proposed Rule Change Adopting NYSE Rule 49 To Provide the Exchange With the Authority To Declare an Emergency Condition With Respect to Trading on or Through the Systems and Facilities of the Exchange and To Transfer Trading of Exchange-Listed Securities to Its Corporate Affiliate, NYSE Arca, Inc., 58341-58345 [E9-27128]

Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing of Proposed Rule Change Adopting NYSE Rule 49 To Provide the Exchange With the Authority To Declare an Emergency Condition With Respect to Trading on or Through the Systems and Facilities of the Exchange and To Transfer Trading of Exchange-Listed Securities to Its Corporate Affiliate, NYSE Arca, Inc., 58341-58345 [E9-27128]

Download as PDF Federal Register / Vol. 74, No. 217 / Thursday, November 12, 2009 / Notices the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The CBOE has prepared summaries, set forth in sections (A), (B), and (C) below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change (a) Purpose Currently, CBOE’s marketing fee is assessed only on transactions of MarketMakers, e-DPMs, and DPMs, resulting from (i) customer orders for less than 1,000 contracts from payment accepting firms, or (ii) customer orders for less than 1,000 contracts that have designated a ‘‘Preferred Market-Maker’’ under CBOE Rule 8.13. CBOE proposes to amend its marketing fee program and delete the 1,000 contract limit.5 As a result, the fee will be assessed on transactions of Market-Makers, e-DPMs, and DPMs resulting from customer orders contracts from payment accepting firms, and customer orders that have designated a ‘‘Preferred Market-Maker’’ under CBOE Rule 8.13. CBOE believes that deleting the 1,000 contract cap is appropriate and will allow its DPMs and Preferred MarketMakers to compete for order flow. CBOE also believes that this change will make CBOE’s marketing fee program competitive with other exchanges’ plans, as no other exchange currently maintains a cap on the size of orders on which a marketing fee is assessed. CBOE proposes to implement this change to the marketing fee program beginning on November 1, 2009. CBOE is not amending its marketing fee program in any other respects. (b) Statutory Basis jlentini on DSKJ8SOYB1PROD with NOTICES The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act 6 in general, and furthers the objectives of Section 6(b)(4) of the Act 7 in particular, in that it is designed to provide for the equitable allocation of reasonable dues, fees, and other charges among persons using its facilities. 5 CBOE believes that the 1,000 contract cap was initially adopted as part of the Marketing Fee Plan in December 2005. See Securities Exchange Act Release No. 53016 (12/22/05), 70 FR 77209 (/12/29/ 05) [sic], granting immediate effectiveness to SR–CBOE–2005–107. 6 15 U.S.C. 78f(b). 7 15 U.S.C. 78f(b)(4). VerDate Nov<24>2008 16:12 Nov 10, 2009 Jkt 220001 B. Self-Regulatory Organization’s Statement on Burden on Competition CBOE does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of [sic] 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 rule change establishes or changes a due, fee, or other charge imposed by the Exchange, it has become effective pursuant to Section 19(b)(3)(A) of the Act 8 and subparagraph (f)(2) of Rule 19b–4 9 thereunder. At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–CBOE–2009–081 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–CBOE–2009–081. 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 CBOE. 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–CBOE– 2009–081 and should be submitted on or before December 3, 2009. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.10 Florence E. Harmon, Deputy Secretary. [FR Doc. E9–27129 Filed 11–10–09; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–60922; File No. SR–NYSE– 2009–105] Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing of Proposed Rule Change Adopting NYSE Rule 49 To Provide the Exchange With the Authority To Declare an Emergency Condition With Respect to Trading on or Through the Systems and Facilities of the Exchange and To Transfer Trading of Exchange-Listed Securities to Its Corporate Affiliate, NYSE Arca, Inc. November 3, 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 October 13, 2009, New York Stock Exchange LLC (‘‘NYSE’’ or the ‘‘Exchange’’) filed with the Securities and Exchange 10 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 15 U.S.C. 78a. 3 17 CFR 240.19b–4. 1 15 8 15 9 17 PO 00000 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(2). Frm 00103 Fmt 4703 Sfmt 4703 58341 E:\FR\FM\12NON1.SGM 12NON1 58342 Federal Register / Vol. 74, No. 217 / Thursday, November 12, 2009 / Notices Commission (the ‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the selfregulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to adopt NYSE Rule 49 to provide the Exchange with the authority to declare an Emergency Condition (defined below) with respect to trading on or through the systems and facilities of the Exchange and to transfer trading of Exchangelisted securities to its corporate affiliate, NYSE Arca, Inc. (‘‘NYSE Arca’’) as necessary in the public interest and for the protection of investors. 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. jlentini on DSKJ8SOYB1PROD with NOTICES 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 adopt NYSE Rule 49 to provide the Exchange with the authority to declare an Emergency Condition with respect to trading on or through the systems and facilities of the Exchange (for the purposes of this filing, an ‘‘Emergency Condition’’) and to act as necessary in the public interest and for the protection of investors.4 This rule filing responds to an initiative of the Commission to ensure that regulatory agencies and selfregulatory organizations have rules and procedures in place to effectively 4 NYSE Arca has submitted a companion filing to provide for the same emergency authority proposed herein. See SR–NYSEArca–2009–90. VerDate Nov<24>2008 16:12 Nov 10, 2009 Jkt 220001 address an Emergency Condition. The Exchange has been participating as a member of the inter-regulatory ‘‘Pandemic Planning and Regulatory Coordination Working Group,’’ which is working on developing effective strategies and coordination among regulators to prepare for an Emergency Condition. As described more fully below, the authority contemplated in the proposed rule could be exercised when, due to an Emergency Condition, the NYSE Euronext facilities located at 11 Wall Street, New York, New York, including the NYSE Trading Floor, are inoperable. In this situation, the Exchange has made arrangements for trading to be conducted using the systems and facilities of corporate affiliate NYSE Arca. Proposed NYSE Rule 49 is intended to be invoked only in the event of emergencies as defined in Section 12(k)(7) of the Act.5 As proposed, the rule would provide the Exchange with regulatory flexibility to mitigate the effects of an Emergency Condition so that the securities markets in general, and, as a primary market, the Exchange’s systems and facilities in particular, may continue to perform in a manner consistent with the protection of investors and in pursuit of the public interest. Proposed NYSE Rule 49 Under current Exchange rules, in the event of an Emergency Condition that would impact the Exchange’s ability to operate normally, the Exchange does not currently have authority to transfer trading to the systems and facilities of NYSE Arca. The Exchange proposes to add NYSE Rule 49 to provide such authority to the Exchange, working in conjunction with NYSE Arca. As defined in the proposed rule, such authority would be available only in the rare event of exigent circumstances that would prevent the Exchange from operating normally, such as a pandemic or similar occurrence that affects its facilities in New York City. The proposed rule would provide the Exchange with emergency powers so that in the event of an Emergency Condition, the Exchange can act as necessary in the public interest and for the protection of investors. As noted above, to ensure consistency among the Commission and other exchanges, the Exchange proposes adopting the definition of ‘‘emergency’’ set forth in Section 12(k)(7) of the Act. Such definition is broad enough to ensure that the Exchange will have the 5 15 PO 00000 U.S.C. 78l(k)(7). [sic] Frm 00104 Fmt 4703 Sfmt 4703 authority to invoke its emergency powers as necessary to respond to both regional and national emergencies, such as a pandemic crisis, or other situations where trading on the Exchange’s Trading Floor is substantially impaired, such as by government action or environmental causes. Under the proposed rule, when an Emergency Condition exists that would prevent the Exchange from operating normally, a ‘‘qualified Exchange officer’’ would have the authority to declare an Emergency Condition with respect to trading on or through the systems and facilities of the Exchange and as necessary in the public interest and for the protection of investors. A ‘‘qualified Exchange officer’’ is defined as the NYSE Euronext Chief Executive Officer or his or her designee, or the NYSE Regulation Inc. (‘‘NYSER’’) Chief Executive Officer or his or her designee. In the event that none of these individuals is able to assume this responsibility due to incapacitation, the next most senior officer of NYSE Euronext or NYSER would be a ‘‘qualified Exchange officer’’ for purposes of the proposed rule. Emergencies During Which the Trading Floor Is Inoperable To address emergencies that are so disruptive as to render the Trading Floor effectively inoperable, the Exchange has developed a contingency plan that would allow for the receipt, processing and execution of Exchange orders on or through the systems and facilities of NYSE Arca.6 This designation of NYSE Arca as a back-up facility of the NYSE requires several accommodations that are addressed either in this rule filing or in the companion rule filing by NYSE Arca regarding its own business continuity planning.7 1. Use of NYSE Arca Trading Systems and Facilities Under the proposed arrangement between the two exchanges, the systems and facilities of NYSE Arca would effectively become the systems and facilities of the NYSE, such that NYSE members, member organizations and Sponsored Participants 8 would be able 6 NYSE Arca trades equity securities on the systems and facilities of its wholly owned subsidiary, NYSE Arca Equities, Inc., referred to as the ‘‘NYSE Arca Marketplace’’. For the purposes of this filing and in the text of proposed NYSE Rule 49, these shall be referred to collectively as the systems and facilities of NYSE Arca. 7 See SR–NYSEArca–2009–90. 8 A ‘‘Sponsored Participant’’ is a person (as defined in NYSE Rule 2(e)) who has entered into a sponsorship arrangement with a Sponsoring Member Organization to obtain authorized access to E:\FR\FM\12NON1.SGM 12NON1 Federal Register / Vol. 74, No. 217 / Thursday, November 12, 2009 / Notices jlentini on DSKJ8SOYB1PROD with NOTICES to submit bids and offers and execute trades in NYSE-listed securities on or through the systems and facilities of NYSE Arca, regardless of whether such members, member organizations or Sponsored Participants are members or sponsored participants of NYSE Arca at the time the Emergency Condition is declared (see part 2 below). During these times, quotes or orders of NYSElisted securities entered or executed on or through the systems and facilities of NYSE Arca would be published as quotes and executions of the NYSE (see part 3 below).9 Under such circumstances, the Exchange would broadcast to the market using any and all methods available that it has declared an Emergency Condition and would then halt all trading conducted on the Exchange’s Trading Floor. All unexecuted orders would remain on the Exchange’s systems unless cancelled by the entering member or member organization. The Exchange would open trading on the systems and facilities of NYSE Arca as soon thereafter as possible, but not earlier than at least the next trading day. As soon as practicable following the commencement of trading on the systems and facilities of NYSE Arca, any unexecuted orders shall be purged from the Exchange’s own systems and facilities. It is important to note that, in the event that the Exchange’s Trading Floor is rendered inoperable, it is not technically feasible for the Exchange to route unexecuted orders from the Trading Floor to the systems and facilities of NYSE Arca. As a result, NYSE members and member organizations are required to have corresponding contingency plans for changing the routing instructions for their order entry systems such that orders for NYSE-listed securities are sent to the systems and facilities of NYSE Arca. Those members and member organizations that have open the Exchange pursuant to this rule. See NYSE Rule 123B.30(a)(ii)(B). A ‘‘Sponsoring Member Organization’’ is a NYSE member or member organization that enters into a written sponsorship agreement to provide a Sponsored Participant with authorized access to the Exchange. See NYSE Rule 123B.30(a)(ii)(A). 9 Currently, NYSE Arca trades NYSE-listed securities on a UTP basis. However, in the event of the declaration of an Emergency Condition under proposed NYSE Rule 49 such that the Exchange’s Trading Floor is inoperable and trading is conducted on or through the systems and facilities of NYSE Arca, NYSE-listed securities traded on NYSE Arca’s trading platform would be NYSE trades rather than NYSE Arca trades. Under such circumstances, the Exchange would use NYSE Arca as the execution engine for NYSE trades and would ensure that these trades are executed in compliance with Regulation NMS. VerDate Nov<24>2008 16:12 Nov 10, 2009 Jkt 220001 orders on the Exchange’s Trading Floor at the time an Emergency Condition is declared should cancel those orders and re-enter them on the systems and facilities of NYSE Arca as soon as possible thereafter.10 NYSE members, member organizations and Sponsored Participants that are not members or sponsored participants of NYSE Arca at the time of an Emergency Condition would be provided temporary membership and/or access to NYSE Arca so that they could execute trades on that exchange (see part 2 below). It is important to note in this regard that the Exchange would not provide any connectivity to NYSE Arca on behalf of its members, member organizations or Sponsored Participants; in order to continue trading in NYSE-listed securities, NYSE members, member organizations and Sponsored Participants would need separately to establish connectivity to NYSE Arca. 2. Member and Member Organization Obligations During an Emergency Condition In the event of an Emergency Condition, NYSE Arca would provide temporary membership and/or access to those NYSE members, member organizations and Sponsored Participants that are not already members or sponsored participants of NYSE Arca. NYSE Arca will establish inactive equity trading permits and connectivity for such members, and member organizations that would become active in the event that NYSE Arca is designated as an alternative facility of the NYSE. These trading permits would have the same trading rights and obligations as current ETP Holders on NYSE Arca. Sponsored Participants of the Exchange that are not set up with sponsored access to NYSE Arca at the time of an Emergency Condition would be permitted to obtain such access through either an existing NYSE Arca member or through an NYSE member or member organization that is granted temporary access in accordance with proposed NYSE Arca Equities Rule 2.100, provided the Sponsored Participants could establish connectivity and complete the required documentation incident to such sponsored access. Such temporary membership or access would be valid only for the duration of the Emergency Condition until regular trading resumes on the Trading Floor.11 NYSE members, member organizations and Sponsored Participants that quote or trade NYSElisted securities on or through the systems and facilities of NYSE Arca following an Emergency Condition declaration by the NYSE would be bound by the rules and procedures of NYSE Arca and would be required to comply with the NYSE Arca Equities Rules governing trading. Such rules would be considered the rules of the Exchange for the duration of the Emergency Condition.12 Because of differences between the systems of the NYSE and NYSE Arca, NYSE Arca is not able to support the NYSE’s Designated Market Makers (‘‘DMMs’’) operating in the same manner that they operate on the NYSE. In particular, DMMs would not have access to orders on the NYSE Arca system any different than other market participants. Thus, NYSE DMMs would not be able to fulfill their DMM obligations, including the affirmative obligation to make a market in a reasonable depth and with reasonable price continuity, and would be severely hampered in their ability to stabilize the market. As a result, in the event that the NYSE is unable to operate its Trading Floor and instead designates NYSE Arca to receive and process quotes and trades, NYSE DMMs would not be considered DMMs under the NYSE Rules for the duration of the designation. In order to ensure that there continues to be a market for NYSE-listed securities, DMM member firms would be designated as ‘‘Market Makers’’ in accordance with NYSE Arca Equities Rules and would be required to meet the requirements of those Rules for the duration of an Emergency Condition.13 Once trading resumed on the Exchange’s Trading Floor, DMM member firms would resume their roles as DMMs and would be subject to their obligations under the Exchange’s rules. 11 See SR–NYSEArca–2009–90. though the Exchange would apply the applicable NYSE Arca Equities Rules governing trading for the duration of an emergency, the Exchange’s rules governing member firm conduct would continue to apply to its members, member organizations and Sponsored Participants, including membership requirements and net capital requirements. In addition, the Exchange’s listing requirements for its listed securities would continue to apply. 13 DMMs will be required to meet the same margin requirements as NYSE Arca Market Makers. 12 Even 10 Upon the invocation of the proposed Rule, orders in NYSE-listed securities entered on the NYSE Arca systems and facilities on a UTP basis that are unexecuted prior to the declaration of an Emergency Condition would remain available for execution on the NYSE Arca systems (that is they will not be cancelled). Once trading on the Exchange resumes on the NYSE Arca systems executions of such orders would be printed with an ‘‘N’’ modifier on the Consolidated Tape (see part 3 below). See also SR–NYSEArca–2009–90. PO 00000 Frm 00105 Fmt 4703 Sfmt 4703 58343 E:\FR\FM\12NON1.SGM 12NON1 58344 Federal Register / Vol. 74, No. 217 / Thursday, November 12, 2009 / Notices jlentini on DSKJ8SOYB1PROD with NOTICES Similarly, in the event of an Emergency Condition, the Exchange would provide temporary membership and/or authorized access to those NYSE Arca members or sponsored participants that are not already members, member organizations or Sponsored Participants of the Exchange. The temporary designation of NYSE Arca-only members as members of the Exchange is necessary because, in the event of an Emergency Condition when Exchangelisted securities are trading on NYSE Arca systems and facilities and are being printed as NYSE trades, the system would not be able to prevent NYSE Arca-only members from trading Exchange-listed securities. By granting NYSE Arca-only members temporary NYSE membership, the Exchange seeks to avoid any issue as to the legitimacy of such trades. NYSE Arca-only members that are granted a temporary membership will not be required to meet any of the Exchange’s membership requirements, including the requirement that all Exchange member organizations also be members of the Financial Industry Regulatory Authority. NYSE Arca sponsored participants that are not set up with sponsored access to the Exchange would be authorized to obtain such access through either an existing Exchange member or member organization or an NYSE Arca member that is granted temporary membership in accordance with proposed NYSE Rule 49. Such temporary membership or authorized access would be valid only for the duration of the Emergency Condition until regular trading resumes. 3. Processing NYSE Trades Executed on or Through NYSE Arca Systems and Facilities As noted above, for the duration of the Emergency Condition, trades in NYSE-listed securities would print as ‘‘N’’ trades on the Consolidated Tape and quotes would be designated as NYSE quotes in the Consolidated Quote Stream, notwithstanding the fact that they were processed on or through the NYSE Arca systems and facilities. Because the NYSE would, as a practical and legal matter, continue to operate— albeit using a different system for processing trades and quotes—the Exchange submits that no modifications would be necessary to either the Consolidated Quote Plan or the Consolidated Tape Association Plan.14 14 The Exchange notes that there is precedent for this type of arrangement: after the collapse of the World Trade Centers on September 11, 2001, the American Stock Exchange (‘‘Amex’’) was unable to open its trading floor because of its proximity to the collapse site. To ensure that the Amex could VerDate Nov<24>2008 16:12 Nov 10, 2009 Jkt 220001 The surveillance of the trading of NYSE-listed securities on or through the systems and facilities of NYSE Arca would be conducted by NYSE Arca on behalf of the Exchange.15 In the event that an NYSE member or member organization failed to comply with NYSE Arca’s rules while trading NYSElisted securities, they would—for jurisdictional reasons—be referred to the Exchange and be investigated by, and if warranted, prosecuted by, NYSE Regulation, Inc. on behalf of the Exchange rather than on behalf of NYSE Arca. The Exchange recognizes that, by cross-designating NYSE-only and NYSE Arca-only members and member organizations and requiring that all trades of NYSE-listed securities executed on the systems of NYSE Arca be printed as NYSE trades, its business continuity plan effectively combines the two markets for those securities. The Exchange believes, however, that its business continuity plan is appropriate and consistent with the provisions of the Act. To begin with, such consolidation would only be on a temporary basis. In addition, the Exchange notes that this arrangement would not harm customers or unfairly advantage the Exchange by distorting the allocation of market data revenue or quoting revenue to the various exchanges; because NYSE and NYSE Arca share a common corporate parent, NYSE Euronext, and revenues are reported on a consolidated basis, there is no net economic benefit to NYSE Euronext. The Exchange believes that any confusion caused by designating all prints of NYSE-listed securities executed on NYSE Arca as NYSE trades is far outweighed by the benefits of maintaining the ability for the Exchange to provide primary market prints to market participants during an Emergency Condition. Among other things, the Exchange notes that certain indices, funds and derivative products require primary market prints for pricing and valuation, and that, similarly, private corporate transactional contracts involving stock continue to operate, the Amex utilized the systems and facilities of the Exchange (and a portion of the Exchange’s Trading Floor) to process and trade Amex-listed securities. Indeed, for the duration of that emergency, Amex quotes and trades were considered to have originated from the Amex, notwithstanding that they were processed on the systems and facilities of the Exchange. 15 The Exchange’s mnemonic identification system for its members and member organizations is different than that used by NYSE Arca for its ETP holders. Thus, trades executed by Exchange-only members or member organizations can be readily identified if necessary. PO 00000 Frm 00106 Fmt 4703 Sfmt 4703 purchase or valuation frequently make reference to the primary market print rather than to the Consolidated Tape print. The Exchange believes that without a primary market print, there could be unnecessary disruption to other areas of an already fragile marketplace that is likely facing significant challenges in dealing with other consequences of the Emergency Condition. Limitations on Invocation of Authority Under Proposed NYSE Rule 49 Before invoking the proposed emergency powers, the Exchange will make concerted efforts to alert and consult with the Commission via electronic, telephonic and in-person communications, and to continue to maintain an open dialogue with the Commission regarding the responses being taken. In the event that Exchange staff is unable to communicate with Commission staff, the proposed rule permits the Exchange to take appropriate action and to subsequently advise the Commission of such action at the earliest available time. The Exchange’s authority under this rule would be available for up to 10 calendar days from the date that the Exchange invoked such authority. At any time after invoking such emergency powers, the Exchange, with Commission approval, may cease or alter such emergency powers. If conditions are warranted, and subject to Commission approval of a rule filing pursuant to Section 19(b)(2) of the Act, the Exchange could extend this emergency authority for a specific amount of time longer than the initial 10 calendar day period. Before seeking Commission approval for such an extension, the Exchange will re-evaluate the specific regulatory actions taken and determine whether to extend such actions. The Commission may also unilaterally direct that the Exchange cease or alter such emergency powers. Once such authority has been invoked, the Exchange will use its available communications resources, including its Web site and other public channels, as well as regulatory channels such as Information Memos or the Exchange’s Electronic Filing Platform (‘‘EFP’’),16 to provide members and member organizations with advance notice of when such actions will expire. The Exchange shall provide adequate prior notice to members, member organizations, Sponsored Participants 16 EFP is an extranet built by the Exchange to support authenticated, encrypted, two-way communications between the Exchange and its membership. It is used to communicate information to certain key personnel of member organizations. E:\FR\FM\12NON1.SGM 12NON1 Federal Register / Vol. 74, No. 217 / Thursday, November 12, 2009 / Notices and investors regarding its intention to terminate the actions taken. Conclusion Because the purpose of the proposed rule is to grant authority to the Exchange to act in the event of an Emergency Condition, the terms of the rule are necessarily inclusive and flexible. At all times, the Exchange will continue to act in a manner consistent with the public interest and for the protection of investors, and it intends to be bound by and guided by these underlying precepts should there be a need to invoke proposed NYSE Rule 49 and exercise such proposed emergency powers. 2. Statutory Basis The basis for this proposed rule change is the requirement under Section 6(b)(5) 17 of the Act 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. Proposed NYSE Rule 49 would provide the Exchange with the regulatory flexibility to take action, as necessary, in the event of an Emergency Condition, as defined. 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. jlentini on DSKJ8SOYB1PROD 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 Within 35 days of the date of publication of this notice in the Federal Register or within such longer period (i) as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the Exchange consents, the Commission will: (A) By order approve such proposed rule change, or (B) Institute proceedings to determine whether the proposed rule change should be disapproved. 17 15 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: 16:12 Nov 10, 2009 Jkt 220001 • 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–2009–105 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–2009–105. 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 NYSE. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–NYSE–2009–105 and should be submitted on or before December 3, 2009. PO 00000 Frm 00107 Fmt 4703 For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.18 Florence E. Harmon, Deputy Secretary. [FR Doc. E9–27128 Filed 11–10–09; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION Electronic Comments U.S.C. 78f(b)(5). VerDate Nov<24>2008 58345 Sfmt 4703 [Release No. 34–60921; File No. SR– NYSEArca–2009–90] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Proposed Rule Change Amending NYSE Arca Equities Rule 2.100 To Provide the NYSE Arca With the Authority to Declare an Emergency Condition With Respect to Trading on or Through the Systems and Facilities of the NYSE Arca and Enable the NYSE Arca to Act as a Back-Up Trading Facility for Affiliated Exchanges Owned and Operated by NYSE Euronext November 3, 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 October 13, 2009, NYSE Arca Inc. (the ‘‘Corporation’’ or ‘‘NYSE Arca’’) 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 prepared by the selfregulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change NYSE Arca proposes to amend NYSE Arca Equities Rule 2.100 governing the Corporation’s equities trading systems and facilities (also referred to as the ‘‘NYSE Arca Marketplace’’). The proposed rule change would (i) provide the Corporation with the authority to declare an Emergency Condition (defined below) with respect to trading on or through the systems and facilities of the Corporation as necessary in the public interest and for the protection of investors, and (ii) under such circumstances, enable the Corporation to act as a back-up trading facility for affiliated exchanges owned and operated by NYSE Arca’s corporate 18 17 CFR 200.30–3(a)(12). U.S.C.78s(b)(1). 2 15 U.S.C. 78a. 3 17 CFR 240.19b–4. 1 15 E:\FR\FM\12NON1.SGM 12NON1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 74, Number 217 (Thursday, November 12, 2009)]
[Notices]
[Pages 58341-58345]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-27128]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60922; File No. SR-NYSE-2009-105]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing of Proposed Rule Change Adopting NYSE Rule 49 To 
Provide the Exchange With the Authority To Declare an Emergency 
Condition With Respect to Trading on or Through the Systems and 
Facilities of the Exchange and To Transfer Trading of Exchange-Listed 
Securities to Its Corporate Affiliate, NYSE Arca, Inc.

November 3, 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 October 13, 2009, New York Stock Exchange LLC (``NYSE'' 
or the ``Exchange'') filed with the Securities and Exchange

[[Page 58342]]

Commission (the ``Commission'') the proposed rule change as described 
in Items I, II, and III 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to adopt NYSE Rule 49 to provide the Exchange 
with the authority to declare an Emergency Condition (defined below) 
with respect to trading on or through the systems and facilities of the 
Exchange and to transfer trading of Exchange-listed securities to its 
corporate affiliate, NYSE Arca, Inc. (``NYSE Arca'') as necessary in 
the public interest and for the protection of investors. 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 is proposing to adopt NYSE Rule 49 to provide the 
Exchange with the authority to declare an Emergency Condition with 
respect to trading on or through the systems and facilities of the 
Exchange (for the purposes of this filing, an ``Emergency Condition'') 
and to act as necessary in the public interest and for the protection 
of investors.\4\
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    \4\ NYSE Arca has submitted a companion filing to provide for 
the same emergency authority proposed herein. See SR-NYSEArca-2009-
90.
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    This rule filing responds to an initiative of the Commission to 
ensure that regulatory agencies and self-regulatory organizations have 
rules and procedures in place to effectively address an Emergency 
Condition. The Exchange has been participating as a member of the 
inter-regulatory ``Pandemic Planning and Regulatory Coordination 
Working Group,'' which is working on developing effective strategies 
and coordination among regulators to prepare for an Emergency 
Condition.
    As described more fully below, the authority contemplated in the 
proposed rule could be exercised when, due to an Emergency Condition, 
the NYSE Euronext facilities located at 11 Wall Street, New York, New 
York, including the NYSE Trading Floor, are inoperable. In this 
situation, the Exchange has made arrangements for trading to be 
conducted using the systems and facilities of corporate affiliate NYSE 
Arca.
    Proposed NYSE Rule 49 is intended to be invoked only in the event 
of emergencies as defined in Section 12(k)(7) of the Act.\5\ As 
proposed, the rule would provide the Exchange with regulatory 
flexibility to mitigate the effects of an Emergency Condition so that 
the securities markets in general, and, as a primary market, the 
Exchange's systems and facilities in particular, may continue to 
perform in a manner consistent with the protection of investors and in 
pursuit of the public interest.
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    \5\ 15 U.S.C. 78l(k)(7). [sic]
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Proposed NYSE Rule 49
    Under current Exchange rules, in the event of an Emergency 
Condition that would impact the Exchange's ability to operate normally, 
the Exchange does not currently have authority to transfer trading to 
the systems and facilities of NYSE Arca. The Exchange proposes to add 
NYSE Rule 49 to provide such authority to the Exchange, working in 
conjunction with NYSE Arca. As defined in the proposed rule, such 
authority would be available only in the rare event of exigent 
circumstances that would prevent the Exchange from operating normally, 
such as a pandemic or similar occurrence that affects its facilities in 
New York City.
    The proposed rule would provide the Exchange with emergency powers 
so that in the event of an Emergency Condition, the Exchange can act as 
necessary in the public interest and for the protection of investors. 
As noted above, to ensure consistency among the Commission and other 
exchanges, the Exchange proposes adopting the definition of 
``emergency'' set forth in Section 12(k)(7) of the Act. Such definition 
is broad enough to ensure that the Exchange will have the authority to 
invoke its emergency powers as necessary to respond to both regional 
and national emergencies, such as a pandemic crisis, or other 
situations where trading on the Exchange's Trading Floor is 
substantially impaired, such as by government action or environmental 
causes.
    Under the proposed rule, when an Emergency Condition exists that 
would prevent the Exchange from operating normally, a ``qualified 
Exchange officer'' would have the authority to declare an Emergency 
Condition with respect to trading on or through the systems and 
facilities of the Exchange and as necessary in the public interest and 
for the protection of investors. A ``qualified Exchange officer'' is 
defined as the NYSE Euronext Chief Executive Officer or his or her 
designee, or the NYSE Regulation Inc. (``NYSER'') Chief Executive 
Officer or his or her designee. In the event that none of these 
individuals is able to assume this responsibility due to 
incapacitation, the next most senior officer of NYSE Euronext or NYSER 
would be a ``qualified Exchange officer'' for purposes of the proposed 
rule.
Emergencies During Which the Trading Floor Is Inoperable
    To address emergencies that are so disruptive as to render the 
Trading Floor effectively inoperable, the Exchange has developed a 
contingency plan that would allow for the receipt, processing and 
execution of Exchange orders on or through the systems and facilities 
of NYSE Arca.\6\ This designation of NYSE Arca as a back-up facility of 
the NYSE requires several accommodations that are addressed either in 
this rule filing or in the companion rule filing by NYSE Arca regarding 
its own business continuity planning.\7\
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    \6\ NYSE Arca trades equity securities on the systems and 
facilities of its wholly owned subsidiary, NYSE Arca Equities, Inc., 
referred to as the ``NYSE Arca Marketplace''. For the purposes of 
this filing and in the text of proposed NYSE Rule 49, these shall be 
referred to collectively as the systems and facilities of NYSE Arca.
    \7\ See SR-NYSEArca-2009-90.
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1. Use of NYSE Arca Trading Systems and Facilities
    Under the proposed arrangement between the two exchanges, the 
systems and facilities of NYSE Arca would effectively become the 
systems and facilities of the NYSE, such that NYSE members, member 
organizations and Sponsored Participants \8\ would be able

[[Page 58343]]

to submit bids and offers and execute trades in NYSE-listed securities 
on or through the systems and facilities of NYSE Arca, regardless of 
whether such members, member organizations or Sponsored Participants 
are members or sponsored participants of NYSE Arca at the time the 
Emergency Condition is declared (see part 2 below). During these times, 
quotes or orders of NYSE-listed securities entered or executed on or 
through the systems and facilities of NYSE Arca would be published as 
quotes and executions of the NYSE (see part 3 below).\9\
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    \8\ A ``Sponsored Participant'' is a person (as defined in NYSE 
Rule 2(e)) who has entered into a sponsorship arrangement with a 
Sponsoring Member Organization to obtain authorized access to the 
Exchange pursuant to this rule. See NYSE Rule 123B.30(a)(ii)(B). A 
``Sponsoring Member Organization'' is a NYSE member or member 
organization that enters into a written sponsorship agreement to 
provide a Sponsored Participant with authorized access to the 
Exchange. See NYSE Rule 123B.30(a)(ii)(A).
    \9\ Currently, NYSE Arca trades NYSE-listed securities on a UTP 
basis. However, in the event of the declaration of an Emergency 
Condition under proposed NYSE Rule 49 such that the Exchange's 
Trading Floor is inoperable and trading is conducted on or through 
the systems and facilities of NYSE Arca, NYSE-listed securities 
traded on NYSE Arca's trading platform would be NYSE trades rather 
than NYSE Arca trades. Under such circumstances, the Exchange would 
use NYSE Arca as the execution engine for NYSE trades and would 
ensure that these trades are executed in compliance with Regulation 
NMS.
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    Under such circumstances, the Exchange would broadcast to the 
market using any and all methods available that it has declared an 
Emergency Condition and would then halt all trading conducted on the 
Exchange's Trading Floor. All unexecuted orders would remain on the 
Exchange's systems unless cancelled by the entering member or member 
organization. The Exchange would open trading on the systems and 
facilities of NYSE Arca as soon thereafter as possible, but not earlier 
than at least the next trading day. As soon as practicable following 
the commencement of trading on the systems and facilities of NYSE Arca, 
any unexecuted orders shall be purged from the Exchange's own systems 
and facilities.
    It is important to note that, in the event that the Exchange's 
Trading Floor is rendered inoperable, it is not technically feasible 
for the Exchange to route unexecuted orders from the Trading Floor to 
the systems and facilities of NYSE Arca. As a result, NYSE members and 
member organizations are required to have corresponding contingency 
plans for changing the routing instructions for their order entry 
systems such that orders for NYSE-listed securities are sent to the 
systems and facilities of NYSE Arca. Those members and member 
organizations that have open orders on the Exchange's Trading Floor at 
the time an Emergency Condition is declared should cancel those orders 
and re-enter them on the systems and facilities of NYSE Arca as soon as 
possible thereafter.\10\
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    \10\ Upon the invocation of the proposed Rule, orders in NYSE-
listed securities entered on the NYSE Arca systems and facilities on 
a UTP basis that are unexecuted prior to the declaration of an 
Emergency Condition would remain available for execution on the NYSE 
Arca systems (that is they will not be cancelled). Once trading on 
the Exchange resumes on the NYSE Arca systems executions of such 
orders would be printed with an ``N'' modifier on the Consolidated 
Tape (see part 3 below). See also SR-NYSEArca-2009-90.
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    NYSE members, member organizations and Sponsored Participants that 
are not members or sponsored participants of NYSE Arca at the time of 
an Emergency Condition would be provided temporary membership and/or 
access to NYSE Arca so that they could execute trades on that exchange 
(see part 2 below). It is important to note in this regard that the 
Exchange would not provide any connectivity to NYSE Arca on behalf of 
its members, member organizations or Sponsored Participants; in order 
to continue trading in NYSE-listed securities, NYSE members, member 
organizations and Sponsored Participants would need separately to 
establish connectivity to NYSE Arca.
2. Member and Member Organization Obligations During an Emergency 
Condition
    In the event of an Emergency Condition, NYSE Arca would provide 
temporary membership and/or access to those NYSE members, member 
organizations and Sponsored Participants that are not already members 
or sponsored participants of NYSE Arca.
    NYSE Arca will establish inactive equity trading permits and 
connectivity for such members, and member organizations that would 
become active in the event that NYSE Arca is designated as an 
alternative facility of the NYSE. These trading permits would have the 
same trading rights and obligations as current ETP Holders on NYSE 
Arca. Sponsored Participants of the Exchange that are not set up with 
sponsored access to NYSE Arca at the time of an Emergency Condition 
would be permitted to obtain such access through either an existing 
NYSE Arca member or through an NYSE member or member organization that 
is granted temporary access in accordance with proposed NYSE Arca 
Equities Rule 2.100, provided the Sponsored Participants could 
establish connectivity and complete the required documentation incident 
to such sponsored access. Such temporary membership or access would be 
valid only for the duration of the Emergency Condition until regular 
trading resumes on the Trading Floor.\11\
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    \11\ See SR-NYSEArca-2009-90.
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    NYSE members, member organizations and Sponsored Participants that 
quote or trade NYSE-listed securities on or through the systems and 
facilities of NYSE Arca following an Emergency Condition declaration by 
the NYSE would be bound by the rules and procedures of NYSE Arca and 
would be required to comply with the NYSE Arca Equities Rules governing 
trading. Such rules would be considered the rules of the Exchange for 
the duration of the Emergency Condition.\12\
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    \12\ Even though the Exchange would apply the applicable NYSE 
Arca Equities Rules governing trading for the duration of an 
emergency, the Exchange's rules governing member firm conduct would 
continue to apply to its members, member organizations and Sponsored 
Participants, including membership requirements and net capital 
requirements. In addition, the Exchange's listing requirements for 
its listed securities would continue to apply.
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    Because of differences between the systems of the NYSE and NYSE 
Arca, NYSE Arca is not able to support the NYSE's Designated Market 
Makers (``DMMs'') operating in the same manner that they operate on the 
NYSE. In particular, DMMs would not have access to orders on the NYSE 
Arca system any different than other market participants. Thus, NYSE 
DMMs would not be able to fulfill their DMM obligations, including the 
affirmative obligation to make a market in a reasonable depth and with 
reasonable price continuity, and would be severely hampered in their 
ability to stabilize the market. As a result, in the event that the 
NYSE is unable to operate its Trading Floor and instead designates NYSE 
Arca to receive and process quotes and trades, NYSE DMMs would not be 
considered DMMs under the NYSE Rules for the duration of the 
designation. In order to ensure that there continues to be a market for 
NYSE-listed securities, DMM member firms would be designated as 
``Market Makers'' in accordance with NYSE Arca Equities Rules and would 
be required to meet the requirements of those Rules for the duration of 
an Emergency Condition.\13\ Once trading resumed on the Exchange's 
Trading Floor, DMM member firms would resume their roles as DMMs and 
would be subject to their obligations under the Exchange's rules.
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    \13\ DMMs will be required to meet the same margin requirements 
as NYSE Arca Market Makers.

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[[Page 58344]]

    Similarly, in the event of an Emergency Condition, the Exchange 
would provide temporary membership and/or authorized access to those 
NYSE Arca members or sponsored participants that are not already 
members, member organizations or Sponsored Participants of the 
Exchange. The temporary designation of NYSE Arca-only members as 
members of the Exchange is necessary because, in the event of an 
Emergency Condition when Exchange-listed securities are trading on NYSE 
Arca systems and facilities and are being printed as NYSE trades, the 
system would not be able to prevent NYSE Arca-only members from trading 
Exchange-listed securities. By granting NYSE Arca-only members 
temporary NYSE membership, the Exchange seeks to avoid any issue as to 
the legitimacy of such trades.
    NYSE Arca-only members that are granted a temporary membership will 
not be required to meet any of the Exchange's membership requirements, 
including the requirement that all Exchange member organizations also 
be members of the Financial Industry Regulatory Authority. NYSE Arca 
sponsored participants that are not set up with sponsored access to the 
Exchange would be authorized to obtain such access through either an 
existing Exchange member or member organization or an NYSE Arca member 
that is granted temporary membership in accordance with proposed NYSE 
Rule 49. Such temporary membership or authorized access would be valid 
only for the duration of the Emergency Condition until regular trading 
resumes.
3. Processing NYSE Trades Executed on or Through NYSE Arca Systems and 
Facilities
    As noted above, for the duration of the Emergency Condition, trades 
in NYSE-listed securities would print as ``N'' trades on the 
Consolidated Tape and quotes would be designated as NYSE quotes in the 
Consolidated Quote Stream, notwithstanding the fact that they were 
processed on or through the NYSE Arca systems and facilities. Because 
the NYSE would, as a practical and legal matter, continue to operate--
albeit using a different system for processing trades and quotes--the 
Exchange submits that no modifications would be necessary to either the 
Consolidated Quote Plan or the Consolidated Tape Association Plan.\14\
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    \14\ The Exchange notes that there is precedent for this type of 
arrangement: after the collapse of the World Trade Centers on 
September 11, 2001, the American Stock Exchange (``Amex'') was 
unable to open its trading floor because of its proximity to the 
collapse site. To ensure that the Amex could continue to operate, 
the Amex utilized the systems and facilities of the Exchange (and a 
portion of the Exchange's Trading Floor) to process and trade Amex-
listed securities. Indeed, for the duration of that emergency, Amex 
quotes and trades were considered to have originated from the Amex, 
notwithstanding that they were processed on the systems and 
facilities of the Exchange.
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    The surveillance of the trading of NYSE-listed securities on or 
through the systems and facilities of NYSE Arca would be conducted by 
NYSE Arca on behalf of the Exchange.\15\ In the event that an NYSE 
member or member organization failed to comply with NYSE Arca's rules 
while trading NYSE-listed securities, they would--for jurisdictional 
reasons--be referred to the Exchange and be investigated by, and if 
warranted, prosecuted by, NYSE Regulation, Inc. on behalf of the 
Exchange rather than on behalf of NYSE Arca.
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    \15\ The Exchange's mnemonic identification system for its 
members and member organizations is different than that used by NYSE 
Arca for its ETP holders. Thus, trades executed by Exchange-only 
members or member organizations can be readily identified if 
necessary.
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    The Exchange recognizes that, by cross-designating NYSE-only and 
NYSE Arca-only members and member organizations and requiring that all 
trades of NYSE-listed securities executed on the systems of NYSE Arca 
be printed as NYSE trades, its business continuity plan effectively 
combines the two markets for those securities. The Exchange believes, 
however, that its business continuity plan is appropriate and 
consistent with the provisions of the Act. To begin with, such 
consolidation would only be on a temporary basis. In addition, the 
Exchange notes that this arrangement would not harm customers or 
unfairly advantage the Exchange by distorting the allocation of market 
data revenue or quoting revenue to the various exchanges; because NYSE 
and NYSE Arca share a common corporate parent, NYSE Euronext, and 
revenues are reported on a consolidated basis, there is no net economic 
benefit to NYSE Euronext.
    The Exchange believes that any confusion caused by designating all 
prints of NYSE-listed securities executed on NYSE Arca as NYSE trades 
is far outweighed by the benefits of maintaining the ability for the 
Exchange to provide primary market prints to market participants during 
an Emergency Condition. Among other things, the Exchange notes that 
certain indices, funds and derivative products require primary market 
prints for pricing and valuation, and that, similarly, private 
corporate transactional contracts involving stock purchase or valuation 
frequently make reference to the primary market print rather than to 
the Consolidated Tape print. The Exchange believes that without a 
primary market print, there could be unnecessary disruption to other 
areas of an already fragile marketplace that is likely facing 
significant challenges in dealing with other consequences of the 
Emergency Condition.
Limitations on Invocation of Authority Under Proposed NYSE Rule 49
    Before invoking the proposed emergency powers, the Exchange will 
make concerted efforts to alert and consult with the Commission via 
electronic, telephonic and in-person communications, and to continue to 
maintain an open dialogue with the Commission regarding the responses 
being taken. In the event that Exchange staff is unable to communicate 
with Commission staff, the proposed rule permits the Exchange to take 
appropriate action and to subsequently advise the Commission of such 
action at the earliest available time.
    The Exchange's authority under this rule would be available for up 
to 10 calendar days from the date that the Exchange invoked such 
authority. At any time after invoking such emergency powers, the 
Exchange, with Commission approval, may cease or alter such emergency 
powers. If conditions are warranted, and subject to Commission approval 
of a rule filing pursuant to Section 19(b)(2) of the Act, the Exchange 
could extend this emergency authority for a specific amount of time 
longer than the initial 10 calendar day period.
    Before seeking Commission approval for such an extension, the 
Exchange will re-evaluate the specific regulatory actions taken and 
determine whether to extend such actions. The Commission may also 
unilaterally direct that the Exchange cease or alter such emergency 
powers. Once such authority has been invoked, the Exchange will use its 
available communications resources, including its Web site and other 
public channels, as well as regulatory channels such as Information 
Memos or the Exchange's Electronic Filing Platform (``EFP''),\16\ to 
provide members and member organizations with advance notice of when 
such actions will expire. The Exchange shall provide adequate prior 
notice to members, member organizations, Sponsored Participants

[[Page 58345]]

and investors regarding its intention to terminate the actions taken.
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    \16\ EFP is an extranet built by the Exchange to support 
authenticated, encrypted, two-way communications between the 
Exchange and its membership. It is used to communicate information 
to certain key personnel of member organizations.
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Conclusion
    Because the purpose of the proposed rule is to grant authority to 
the Exchange to act in the event of an Emergency Condition, the terms 
of the rule are necessarily inclusive and flexible. At all times, the 
Exchange will continue to act in a manner consistent with the public 
interest and for the protection of investors, and it intends to be 
bound by and guided by these underlying precepts should there be a need 
to invoke proposed NYSE Rule 49 and exercise such proposed emergency 
powers.
2. Statutory Basis
    The basis for this proposed rule change is the requirement under 
Section 6(b)(5) \17\ of the Act 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. Proposed NYSE Rule 49 would provide the Exchange with 
the regulatory flexibility to take action, as necessary, in the event 
of an Emergency Condition, as defined.
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    \17\ 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

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the Exchange consents, the Commission will:
    (A) By order approve such proposed rule change, or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-NYSE-2009-105 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-2009-105. 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 NYSE. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-NYSE-2009-105 and should be 
submitted on or before December 3, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-27128 Filed 11-10-09; 8:45 am]
BILLING CODE 8011-01-P

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