Self-Regulatory Organizations; NYSE Amex LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Extending the Operation of Its New Market Model Pilot Until the Earlier of Securities and Exchange Commission Approval To Make Such Pilot Permanent or March 30, 2010, 62365-62367 [E9-28348]
Download as PDF
Federal Register / Vol. 74, No. 227 / Friday, November 27, 2009 / Notices
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–61030; File No. SR–
NYSEAmex–2009–83]
1. Purpose
Self-Regulatory Organizations; NYSE
Amex LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change Extending the Operation
of Its New Market Model Pilot Until the
Earlier of Securities and Exchange
Commission Approval To Make Such
Pilot Permanent or March 30, 2010
November 19, 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
November 16, 2009, NYSE Amex LLC
(‘‘NYSE Amex’’ 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.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to extend the
operation of its New Market Model Pilot
currently scheduled to expire on
November 30, 2009, until the earlier of
Securities and Exchange Commission
approval to make such pilot permanent
on March 30, 2010. The text of the
proposed rule change is available at the
Exchange, the Commission’s Public
Reference Room, and https://
www.nyse.com.
sroberts on DSKD5P82C1PROD with NOTICES
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.
1 15
U.S.C. 78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
2 15
VerDate Nov<24>2008
18:08 Nov 25, 2009
Jkt 220001
The Exchange proposes to extend the
operation of its New Market Model Pilot
(‘‘NMM Pilot’’) that was adopted
pursuant to its merger with the New
York Stock Exchange LLC.4 The NMM
Pilot was approved by the Securities
and Exchange Commission (‘‘SEC’’ or
‘‘Commission’’) to operate until October
1, 2009. The Exchange filed to extend
the operation of the Pilot to November
30, 2009.5 The Exchange now seeks to
extend the operation of the NMM Pilot
from November 30, 2009, until the
earlier of Securities and Exchange
Commission approval to make such
pilot permanent on March 30, 2010.
The Exchange notes that parallel
changes are proposed to be made to the
rules of New York Stock Exchange
LLC.6
Background 7
In December 2008, NYSE Amex
implemented significant changes to its
market rules, execution technology and
the rights and obligations of its market
participants all of which were designed
to improve execution quality on the
Exchange. These changes are all
elements of the Exchange’s enhanced
market model that it implemented
through the NMM Pilot.
As part of the NMM Pilot, NYSE
Amex eliminated the function of
specialists on the Exchange creating a
new category of market participant, the
Designated Market Maker or DMM.8 The
4 NYSE Euronext acquired The Amex
Membership Corporation (‘‘AMC’’) pursuant to an
Agreement and Plan of Merger, dated January 17,
2008 (the ‘‘Merger’’). In connection with the Merger,
the Exchange’s predecessor, the American Stock
Exchange LLC (‘‘Amex’’), a subsidiary of AMC,
became a subsidiary of NYSE Euronext called NYSE
Alternext US LLC. Securities Exchange Act Release
No. 58673 (September 29, 2008), 73 FR 57707
(October 3, 2008) (SR–NYSE–2008–60 and SR–
Amex–2008–62) (approving the Merger).
Subsequently NYSE Alternext US LLC was renamed
NYSE Amex LLC and continues to operate as a
national securities exchange registered under
Section 6 of the Securities Exchange Act of 1934,
as amended (the ‘‘Act’’). NYSE Alternext US LLC
was subsequently renamed NYSE Amex LLC. See
Securities Exchange Act Release No. 59575 (March
13, 2009), 74 FR 11803 (March 19, 2009) (SR–
NYSEALTR–2009–24).
5 See Securities Exchange Act Release No. 60758
(October 1, 2009), 74 FR [sic] (October 7, 2009) (SR–
NYSEAmex–2009–65).
6 See SR–NYSE–2009–83 [sic].
7 The information contained herein is a summary
of the NMM Pilot. For a fuller description of the
pilot see Securities Exchange Act Release No. 58845
(October 24, 2008), 73 FR 64379 (October 29, 2008)
(SR–NYSE–2008–46).
8 See NYSE Amex Equities Rule 103.
PO 00000
Frm 00084
Fmt 4703
Sfmt 4703
62365
DMMs, like specialists, have affirmative
obligations to make an orderly market,
including continuous quoting
requirements and obligations to re-enter
the market when reaching across to
execute against trading interest. Unlike
specialists, DMMs have a minimum
quoting requirement 9 in their assigned
securities and no longer have a negative
obligation. DMMs are also no longer
agents for public customer orders.10
In addition, the Exchange
implemented a system change that
allowed DMMs to create a schedule of
additional non-displayed liquidity at
various price points where the DMM is
willing to interact with interest and
provide price improvement to orders in
the Exchange’s system. This schedule is
known as the DMM Capital
Commitment Schedule (‘‘CCS’’).11 CCS
provides the Display Book® 12 with the
amount of shares that the DMM is
willing to trade at price points outside,
at and inside the Exchange BBO. CCS
interest is separate and distinct from
other DMM interest in that it serves as
the interest of last resort.
The NMM Pilot further modified the
logic for allocating executed shares
among market participants having
trading interest at a price point upon
execution of incoming orders. The
modified logic rewards displayed orders
that establish the Exchange’s best bid or
Exchange’s best offer. During the
operation of the NMM Pilot orders or
portions thereof that establish priority 13
retain that priority until the portion of
the order that established priority is
exhausted. Where no one order has
established priority, shares are
distributed among all market
participants on parity.
The NMM Pilot was originally
scheduled to end operation on October
1, 2009, or such earlier time as the
Commission may determine to make the
rules permanent. The Exchange filed to
extend the operation of the Pilot to
November 30, 2009 14 in order to
9 See
NYSE Amex Equities Rule 104.
NYSE Amex Equities Rule 60; See also 104
and 1000.
11 See NYSE Amex Equities Rule 1000.
12 The Display Book® system is an order
management and execution facility. The Display
Book system receives and displays orders to the
DMMs, contains the order information, and
provides a mechanism to execute and report
transactions and publish the results to the
Consolidated Tape. The Display Book system is
connected to a number of other Exchange systems
for the purposes of comparison, surveillance, and
reporting information to customers and other
market data and national market systems.
13 See NYSE Amex Equities Rule 72(a)(ii).
14 See Securities Exchange Act Release No. 60758
(October 1, 2009), 74 FR [sic] (October 7, 2009) (SR–
NYSEAmex–2009–65).
10 See
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Federal Register / Vol. 74, No. 227 / Friday, November 27, 2009 / Notices
prepare a rule filing seeking permission
to make the above described changes
permanent. The Exchange is currently
still preparing such formal submission
but does not expect that filing to be
completed and approved by the
Commission before November 30, 2009.
sroberts on DSKD5P82C1PROD with NOTICES
Proposal To Extend the Operation of the
NMM Pilot
NYSE Amex established the NMM
Pilot to provide incentives for quoting,
to enhance competition among the
existing group of liquidity providers and
add a new competitive market
participant. The Exchange believes that
the NMM Pilot allows the Exchange to
provide its market participants with a
trading venue that utilizes an enhanced
market structure to encourage the
addition of liquidity, facilitate the
trading of larger orders more efficiently
and operates to reward aggressive
liquidity providers. As such, the
Exchange believes that rules governing
the NMM Pilot should be made
permanent. Through this filing the
Exchange seeks to extend the current
operation of the NMM Pilot until March
30, 2010, in order to allow the Exchange
time to formally submit a filing to the
Commission to convert the pilot rules to
permanent rules.
2. Statutory Basis
The basis under the Securities
Exchange Act of 1934 (the ‘‘Act’’) for
this proposed rule change is the
requirement under Section 6(b)(5) 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. The Exchange believes
that the instant filing is consistent with
these principles because the NMM Pilot
provides its market participants with a
trading venue that utilizes an enhanced
market structure to encourage the
addition of liquidity, facilitate the
trading of larger orders more efficiently
and operates to reward aggressive
liquidity providers. Moreover, the
instant filing requesting an extension of
the NMM Pilot will permit adequate
time for: (i) The Exchange to prepare
and submit a filing to make the rules
governing the NMM Pilot permanent
rules; (ii) public notice and comment;
and (iii) completion of the 19b–4
approval process.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
VerDate Nov<24>2008
18:08 Nov 25, 2009
Jkt 220001
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: (i) Does not significantly affect
the protection of investors or the public
interest; (ii) does not impose any
significant burden on competition; and
(iii) by its terms, does not become
operative for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate, if
consistent with the protection of
investors and the public interest, it has
become effective pursuant to Section
19(b)(3)(A) of the Act 15 and Rule 19b–
4(f)(6) thereunder.16
A proposed rule change filed under
Rule 19b–4(f)(6) 17 normally does not
become operative prior to 30 days after
the date of the filing. However, pursuant
to Rule 19b4(f)(6)(iii),18 the Commission
may designate a shorter time if such
action is consistent with the protection
of investors and the public interest. The
Exchange has asked the Commission to
waive the 30-day operative delay so that
the proposal may become operative
immediately upon filing.
The Commission believes that
waiving the 30-day operative delay is
consistent with the protection of
investors and the public interest. The
Commission notes that because the pilot
program will expire on November 30,
2009, waiver of the operative delay is
necessary so that no interruption of the
pilot program will occur. In addition,
the Commission notes that the Exchange
has requested extensions of the pilot to
allow the Exchange time to formally
request permanent approval for the
pilot. Therefore, the Commission
15 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6)(iii) requires the self-regulatory organization
to submit to the Commission written notice of its
intent to file the proposed rule change, along with
a brief description and text of the proposed rule
change, at least five business days prior to the date
of filing of the proposed rule change, or such
shorter time as designated by the Commission. The
Exchange has satisfied this requirement.
17 17 CFR 240.19b–4(f)(6).
18 17 CFR 240.19b–4(f)(6)(iii).
16 17
PO 00000
Frm 00085
Fmt 4703
Sfmt 4703
designates the proposal operative upon
filing.19
At any time within 60 days of the
filing of the proposed rule change, the
Commission may summarily abrogate
such rule change if it appears to the
Commission that such action is
necessary or appropriate in the public
interest, for the protection of investors,
or otherwise in furtherance of the
purposes of the Act.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–NYSEAmex–2009–83 on
the subject line.
Paper Comments
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–1090.
All submissions should refer to File
Number SR–NYSEAmex–2009–83. This
file number should be included on the
subject line if e-mail is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for inspection and copying in
the Commission’s Public Reference
Room on official business days between
the hours of 10 a.m. and 3 p.m. Copies
of such filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
19 For purposes only of waiving the operative
delay for this proposal, the Commission has
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
E:\FR\FM\27NON1.SGM
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Federal Register / Vol. 74, No. 227 / Friday, November 27, 2009 / Notices
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–
NYSEAmex–2009–83 and should be
submitted on or before December 18,
2009.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.20
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–28348 Filed 11–25–09; 8:45 am]
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–61035; File No. SR–
NYSEArca–2009–105]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend the $1.00
Strike Program To Allow Low-Strike
LEAPS
November 19, 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 November
18, 2009, NYSE Arca, Inc. (‘‘NYSE
Arca’’ 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 Exchange. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
sroberts on DSKD5P82C1PROD with NOTICES
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend
Commentary .04 to Rule 6.4 Series of
Options Open for Trading to permit the
expansion of the $1.00 Strike Program.
The text of the proposed rule change is
attached as Exhibit 5 to the 19b–4 form.
A copy of this filing is available on the
Exchange’s Web site at https://
www.nyse.com, at the Exchange’s
principal office and at the Commission’s
Public Reference Room.
20 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
1 15
VerDate Nov<24>2008
18:08 Nov 25, 2009
Jkt 220001
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.
1. Purpose
The proposed rule change is based on
a filing submitted by Chicago Board
Options Exchange Incorporated
(‘‘CBOE’’) that was recently approved by
the Commission.4
The purpose of the proposed rule
change is to expand the $1.00 Strike
Program (‘‘Program’’) in a limited
fashion to allow NYSE Arca to list new
series in $1.00 intervals up to $5.00 in
long-term option series (‘‘LEAPS’’) in up
to 200 option classes on individual
stocks. Currently, under the Program,
NYSE Arca may not list LEAPS at $1.00
strike price intervals for any class
selected for the Program. NYSE Arca
also is restricted from listing any series
that would result in strike prices being
$0.50 apart, unless the series are part of
the $0.50 Strike Program.5
NYSE Arca believes that this proposal
is appropriate and will allow investors
to establish option positions that are
better tailored to meet their investment
`
objectives, vis-a-vis credit risk, using
deep out-of-the-money put options.
Deep out-of-the-money put options are
viewed as a viable, liquid alternative to
OTC-traded credit default swaps
(‘‘CDS’’). These options do not possess
the negative characteristics associated
with CDS, namely, lack of transparency,
insufficient collateral requirements, and
inefficient trade processing. Moreover,
deep out-of-the-money put options and
CDS are functionally similar, as there is
a high correlation between low-strike
put prices and CDS spreads.6
4 See Exchange Act Release No. 60978 (November
10, 2009), 74 FR 59296 (November 17, 2009)
(approving SR–CBOE–2009–68).
5 See Exchange Act Release No. 60721 (September
25, 2009) 74 FR 50858 (October 1, 2009).
6 More information on this trading strategy may
be found at the website of the CBOE at https://
www.cboe.com/institutional/DOOM.aspx.
PO 00000
Frm 00086
Fmt 4703
Sfmt 4703
62367
NYSE Arca notes that its proposal is
limited in scope, as $1.00 strikes in
LEAPS may only be listed up to $5.00
and in only 200 option classes. As is
currently the case, NYSE Arca would
not list series with $1.00 intervals
within $0.50 of an existing $2.50 strike
price in the same series. As a result,
NYSE Arca does not believe this
proposal will cause a significant
increase in quote traffic.
Moreover, as the Commission is
aware, NYSE Arca has a vigorous quote
mitigation strategy in place in an effort
to lessen the growth rate of quotations.
When it expanded the Program several
months ago, NYSE Arca included a
delisting policy that would be
applicable with regard to this proposed
expansion.7 NYSE Arca and the other
options exchanges amended the Options
Listing Procedures Plan (‘‘OLPP’’) in
2008 to impose a minimum volume
threshold of 1,000 contracts national
average daily volume per underlying
class to qualify for an additional year of
LEAP series.8 Most recently, NYSE
Arca, along with the other options
exchanges, amended the OLPP to adopt
objective exercise price range
limitations applicable to equity option
classes, options on ETFs and options on
trust issued receipts.9 NYSE Arca
believes that these price range
limitations will have a meaningful quote
mitigation impact.
The margin requirements of NYSE
Arca Rule 4 and the position and
exercise requirements set forth in Rule
6.8 and Rule 6.9 will continue to apply
to these new series, and no changes are
being proposed to those requirements by
this rule change.
With regard to the impact on system
capacity, NYSE Arca has analyzed its
capacity and represents that it and the
Options Price Reporting Authority have
the necessary systems capacity to
handle the additional traffic associated
with the listing and trading of an
expanded number of series as proposed
by this filing.
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with Section
7 The delisting policy includes a provision that
states NYSE Arca may grant OTP Holder requests
to add strikes and/or maintain strikes in series of
options classes traded pursuant to the Program that
are eligible for delisting.
8 See Exchange Act SEC Release No. 58630
(September 24, 2008), 73 FR 57166 (October 1,
2008).
9 See Exchange Act Release No. 60531 (August 19,
2009), 74 FR 43173 (August 26, 2009) (approving
Amendment No. 3 to the OLPP). NYSE Arca’s
proposal to list $1.00 strikes in LEAPS to $5.00
would not be subject to the exercise price range
limitations contained in new paragraph (3)(g)(ii) of
the OLPP.
E:\FR\FM\27NON1.SGM
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Agencies
[Federal Register Volume 74, Number 227 (Friday, November 27, 2009)]
[Notices]
[Pages 62365-62367]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-28348]
[[Page 62365]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-61030; File No. SR-NYSEAmex-2009-83]
Self-Regulatory Organizations; NYSE Amex LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change Extending the
Operation of Its New Market Model Pilot Until the Earlier of Securities
and Exchange Commission Approval To Make Such Pilot Permanent or March
30, 2010
November 19, 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 November 16, 2009, NYSE Amex LLC (``NYSE Amex'' 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 the operation of its New Market
Model Pilot currently scheduled to expire on November 30, 2009, until
the earlier of Securities and Exchange Commission approval to make such
pilot permanent on March 30, 2010. 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 the operation of its New Market
Model Pilot (``NMM Pilot'') that was adopted pursuant to its merger
with the New York Stock Exchange LLC.\4\ The NMM Pilot was approved by
the Securities and Exchange Commission (``SEC'' or ``Commission'') to
operate until October 1, 2009. The Exchange filed to extend the
operation of the Pilot to November 30, 2009.\5\ The Exchange now seeks
to extend the operation of the NMM Pilot from November 30, 2009, until
the earlier of Securities and Exchange Commission approval to make such
pilot permanent on March 30, 2010.
---------------------------------------------------------------------------
\4\ NYSE Euronext acquired The Amex Membership Corporation
(``AMC'') pursuant to an Agreement and Plan of Merger, dated January
17, 2008 (the ``Merger''). In connection with the Merger, the
Exchange's predecessor, the American Stock Exchange LLC (``Amex''),
a subsidiary of AMC, became a subsidiary of NYSE Euronext called
NYSE Alternext US LLC. Securities Exchange Act Release No. 58673
(September 29, 2008), 73 FR 57707 (October 3, 2008) (SR-NYSE-2008-60
and SR-Amex-2008-62) (approving the Merger). Subsequently NYSE
Alternext US LLC was renamed NYSE Amex LLC and continues to operate
as a national securities exchange registered under Section 6 of the
Securities Exchange Act of 1934, as amended (the ``Act''). NYSE
Alternext US LLC was subsequently renamed NYSE Amex LLC. See
Securities Exchange Act Release No. 59575 (March 13, 2009), 74 FR
11803 (March 19, 2009) (SR-NYSEALTR-2009-24).
\5\ See Securities Exchange Act Release No. 60758 (October 1,
2009), 74 FR [sic] (October 7, 2009) (SR-NYSEAmex-2009-65).
---------------------------------------------------------------------------
The Exchange notes that parallel changes are proposed to be made to
the rules of New York Stock Exchange LLC.\6\
---------------------------------------------------------------------------
\6\ See SR-NYSE-2009-83 [sic].
---------------------------------------------------------------------------
Background \7\
---------------------------------------------------------------------------
\7\ The information contained herein is a summary of the NMM
Pilot. For a fuller description of the pilot see Securities Exchange
Act Release No. 58845 (October 24, 2008), 73 FR 64379 (October 29,
2008) (SR-NYSE-2008-46).
---------------------------------------------------------------------------
In December 2008, NYSE Amex implemented significant changes to its
market rules, execution technology and the rights and obligations of
its market participants all of which were designed to improve execution
quality on the Exchange. These changes are all elements of the
Exchange's enhanced market model that it implemented through the NMM
Pilot.
As part of the NMM Pilot, NYSE Amex eliminated the function of
specialists on the Exchange creating a new category of market
participant, the Designated Market Maker or DMM.\8\ The DMMs, like
specialists, have affirmative obligations to make an orderly market,
including continuous quoting requirements and obligations to re-enter
the market when reaching across to execute against trading interest.
Unlike specialists, DMMs have a minimum quoting requirement \9\ in
their assigned securities and no longer have a negative obligation.
DMMs are also no longer agents for public customer orders.\10\
---------------------------------------------------------------------------
\8\ See NYSE Amex Equities Rule 103.
\9\ See NYSE Amex Equities Rule 104.
\10\ See NYSE Amex Equities Rule 60; See also 104 and 1000.
---------------------------------------------------------------------------
In addition, the Exchange implemented a system change that allowed
DMMs to create a schedule of additional non-displayed liquidity at
various price points where the DMM is willing to interact with interest
and provide price improvement to orders in the Exchange's system. This
schedule is known as the DMM Capital Commitment Schedule (``CCS'').\11\
CCS provides the Display Book[supreg] \12\ with the amount of shares
that the DMM is willing to trade at price points outside, at and inside
the Exchange BBO. CCS interest is separate and distinct from other DMM
interest in that it serves as the interest of last resort.
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\11\ See NYSE Amex Equities Rule 1000.
\12\ The Display Book[supreg] system is an order management and
execution facility. The Display Book system receives and displays
orders to the DMMs, contains the order information, and provides a
mechanism to execute and report transactions and publish the results
to the Consolidated Tape. The Display Book system is connected to a
number of other Exchange systems for the purposes of comparison,
surveillance, and reporting information to customers and other
market data and national market systems.
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The NMM Pilot further modified the logic for allocating executed
shares among market participants having trading interest at a price
point upon execution of incoming orders. The modified logic rewards
displayed orders that establish the Exchange's best bid or Exchange's
best offer. During the operation of the NMM Pilot orders or portions
thereof that establish priority \13\ retain that priority until the
portion of the order that established priority is exhausted. Where no
one order has established priority, shares are distributed among all
market participants on parity.
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\13\ See NYSE Amex Equities Rule 72(a)(ii).
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The NMM Pilot was originally scheduled to end operation on October
1, 2009, or such earlier time as the Commission may determine to make
the rules permanent. The Exchange filed to extend the operation of the
Pilot to November 30, 2009 \14\ in order to
[[Page 62366]]
prepare a rule filing seeking permission to make the above described
changes permanent. The Exchange is currently still preparing such
formal submission but does not expect that filing to be completed and
approved by the Commission before November 30, 2009.
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\14\ See Securities Exchange Act Release No. 60758 (October 1,
2009), 74 FR [sic] (October 7, 2009) (SR-NYSEAmex-2009-65).
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Proposal To Extend the Operation of the NMM Pilot
NYSE Amex established the NMM Pilot to provide incentives for
quoting, to enhance competition among the existing group of liquidity
providers and add a new competitive market participant. The Exchange
believes that the NMM Pilot allows the Exchange to provide its market
participants with a trading venue that utilizes an enhanced market
structure to encourage the addition of liquidity, facilitate the
trading of larger orders more efficiently and operates to reward
aggressive liquidity providers. As such, the Exchange believes that
rules governing the NMM Pilot should be made permanent. Through this
filing the Exchange seeks to extend the current operation of the NMM
Pilot until March 30, 2010, in order to allow the Exchange time to
formally submit a filing to the Commission to convert the pilot rules
to permanent rules.
2. Statutory Basis
The basis under the Securities Exchange Act of 1934 (the ``Act'')
for this proposed rule change is the requirement under Section 6(b)(5)
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. The Exchange
believes that the instant filing is consistent with these principles
because the NMM Pilot provides its market participants with a trading
venue that utilizes an enhanced market structure to encourage the
addition of liquidity, facilitate the trading of larger orders more
efficiently and operates to reward aggressive liquidity providers.
Moreover, the instant filing requesting an extension of the NMM Pilot
will permit adequate time for: (i) The Exchange to prepare and submit a
filing to make the rules governing the NMM Pilot permanent rules; (ii)
public notice and comment; and (iii) completion of the 19b-4 approval
process.
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: (i) Does not
significantly affect the protection of investors or the public
interest; (ii) does not impose any significant burden on competition;
and (iii) by its terms, does not become operative for 30 days from the
date on which it was filed, or such shorter time as the Commission may
designate, if consistent with the protection of investors and the
public interest, it has become effective pursuant to Section
19(b)(3)(A) of the Act \15\ and Rule 19b-4(f)(6) thereunder.\16\
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\15\ 15 U.S.C. 78s(b)(3)(A).
\16\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires the self-regulatory organization to submit to the
Commission written notice of its intent to file the proposed rule
change, along with a brief description and text of the proposed rule
change, at least five business days prior to the date of filing of
the proposed rule change, or such shorter time as designated by the
Commission. The Exchange has satisfied this requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) \17\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b4(f)(6)(iii),\18\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has asked
the Commission to waive the 30-day operative delay so that the proposal
may become operative immediately upon filing.
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\17\ 17 CFR 240.19b-4(f)(6).
\18\ 17 CFR 240.19b-4(f)(6)(iii).
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The Commission believes that waiving the 30-day operative delay is
consistent with the protection of investors and the public interest.
The Commission notes that because the pilot program will expire on
November 30, 2009, waiver of the operative delay is necessary so that
no interruption of the pilot program will occur. In addition, the
Commission notes that the Exchange has requested extensions of the
pilot to allow the Exchange time to formally request permanent approval
for the pilot. Therefore, the Commission designates the proposal
operative upon filing.\19\
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\19\ For purposes only of waiving the operative delay for this
proposal, the Commission has considered the proposed rule's impact
on efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of the proposed rule
change, the Commission may summarily abrogate such rule change if it
appears to the Commission that such action is necessary or appropriate
in the public interest, for the protection of investors, or otherwise
in furtherance of the purposes of the Act.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-NYSEAmex-2009-83 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSEAmex-2009-83. This
file number should be included on the subject line if e-mail is used.
To help the Commission process and review your comments more
efficiently, please use only one method. The Commission will post all
comments on the Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments,
all written statements with respect to the proposed rule change that
are filed with the Commission, and all written communications relating
to the proposed rule change between the Commission and any person,
other than those that may be withheld from the public in accordance
with the provisions of 5 U.S.C. 552, will be available for inspection
and copying in the Commission's Public Reference Room on official
business days between the hours of 10 a.m. and 3 p.m. Copies of such
filing also will be available for inspection and copying at the
principal office of the Exchange. All comments
[[Page 62367]]
received will be posted without change; the Commission does not edit
personal identifying information from submissions. You should submit
only information that you wish to make available publicly. All
submissions should refer to File Number SR-NYSEAmex-2009-83 and should
be submitted on or before December 18, 2009.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\20\
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\20\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-28348 Filed 11-25-09; 8:45 am]
BILLING CODE 8011-01-P