Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending NYSE Rule 1600 To More Fully Incorporate Away Market Contra Side Liquidity in the Execution of New York Block Exchange Orders, 66184-66188 [E9-29631]
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Federal Register / Vol. 74, No. 238 / Monday, December 14, 2009 / Notices
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–NYSE–2009–122 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–2009–122. This file
number should be included on the
subject line if e-mail is used. To help the
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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
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available publicly. All submissions
should refer to File Number SR–NYSE–
2009–122 and should be submitted on
or before January 4, 2010.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.11
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–29630 Filed 12–11–09; 8:45 am]
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[Release No. 34–61126; File No. SR–NYSE–
2009–121]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change Amending
NYSE Rule 1600 To More Fully
Incorporate Away Market Contra Side
Liquidity in the Execution of New York
Block Exchange Orders
December 7, 2009.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2
notice is hereby given that, on December
4, 2009, the New York Stock Exchange
LLC (‘‘NYSE’’ or ‘‘Exchange’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been prepared by the Exchange. The
Exchange has designated this proposal
eligible for immediate effectiveness
pursuant to Rule 19b–4(f)(6) under the
Act.3 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 amend
Exchange Rule 1600 (New York Block
ExchangeSM) (‘‘NYBXSM’’ or the
‘‘Facility’’) to provide for (i) routing
away, for execution with all available
top-of-book contra side quotations (not
just those that would otherwise be
traded through) displayed by other
automated trading centers, of any
portion of an NYBX order that remains
after all available executions in the
NYSE Display Book® (‘‘Display Book’’
or ‘‘DBK’’) and the Facility have taken
place as provided in the current rule
and (ii) including those same away
market quotations of other automated
trading centers in the determination of
whether the optional, user-defined
Minimum Triggering Volume Quantity
(‘‘MTV’’) of an NYBX order is met. The
text of the proposed rule change is
available on NYSE’s Web site at https://
www.nyse.com, on the Commission’s
Web site at
https://www.sec.gov, at the Exchange’s
principal office, and at the
Commission’s Public Reference Room.
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 17 CFR 240.19b–4(f)(6).
2 17
11 17
CFR 200.30–3(a)(12).
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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 the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend
Exchange Rule 1600 (New York Block
ExchangeSM) to provide for (i) routing
away, for execution with all available
top-of-book contra side quotations (not
just those that would otherwise be
traded through) displayed by other
automated trading centers, of any
portion of an NYBX order that remains
after all available executions in DBK
and the Facility have taken place as
provided in the current rule and (ii)
including those same away market
quotations of other automated trading
centers in the determination of whether
the optional, user-defined MTV of an
NYBX order is met. The following
discussion includes examples to
demonstrate the functioning of these
changes in practice.
A. Provide routing to other automated
trading centers to allow the remaining
portion of an NYBX order to execute
with available top-of-book contra side
quotations on these markets
As currently provided in NYSE Rule
1600, an order or residual portion of an
order in the New York Block Exchange
facility (‘‘NYBX’’ or the ‘‘Facility’’) of
the NYSE that has exhausted all
available contra side liquidity in both
the NYSE Display Book (‘‘DBK’’) and
the Facility itself, as well as any trades
against protected quotations of
automated trading centers that would
otherwise have been traded through,
will be sent back to or remain in, as the
case may be, the Facility and be placed
on the NYBX book. As the system
currently operates, such an order
remaining in the Facility will continue
to attempt to execute with available
contra side liquidity in the Facility and
the DBK and with protected quotations
as described in the previous sentence
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until such orders are exhausted, expired
or cancelled back to the user pursuant
to time in force conditions or until all
applicable liquidity is exhausted at the
end of the regular trading day.
The purpose of the proposed
amendment is to increase execution
opportunities for orders entered into
NYBX by utilizing away markets more
fully than the Facility does at present.
This will be accomplished by adding
additional routing to away markets for
those orders in NYBX described above
that have exhausted all available contra
side liquidity in the Facility and the
DBK (if any) and the residual portion of
which would otherwise be placed on
the NYBX book. Portions of the residual
from such an order, or potentially the
entire order if there is no available
contra side liquidity in either the DBK
or the Facility itself, will be routed out
to other automated trading centers as
ISO/IOC orders for execution against
available contra side quotations
displayed by such markets, even though
no potential trade through is involved
and the routing is not required under
Regulation NMS.
Upon the return to the Facility of any
unexecuted volume following a routing
to the DBK and also upon execution
against any remaining available contra
side liquidity in the Facility, NYBX will
evaluate the market again to check for
updated market data and will route the
residual order based on that update.4
The amount of an NYBX residual order
routed to each away market will be
exactly the size displayed for the
available top-of-book contra side
protected quotation at each automated
trading center—there will be no
oversizing of the portion of the order
sent to any away market. An exception
will occur in any situation where the
residual order size is insufficient to
route the full displayed size to every
away market, in which case the number
of shares routed to one or more of the
away markets may be less than the full
displayed size on such market(s). In the
4 In the event that the DBK quotation has been
updated at the time of such an interim market
evaluation and there is new executable contra side
liquidity in DBK, the full size of the residual order
will be routed back to DBK and the normal
execution sequence will be repeated from that
point. If, at any point, such an evaluation indicates
that there is no new executable contra side liquidity
in the DBK but there is executable contra side
liquidity in the Facility, the order will execute to
the extent possible against that liquidity, evaluate
the market again to check for updated market data,
and route the residual order accordingly. Once this
iterative process has run its course, with no new
executable contra side liquidity available in either
the DBK or the Facility, the residual order or
portions thereof will be routed out to execute
against the available contra side protected
quotations displayed by other automated trading
centers, as described in the preceding paragraph.
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event that multiple away markets are
displaying available top-of-book contra
side quotations at the same price, and
the residual order size to be routed is
less than the total available top-of-book
contra side liquidity displayed on those
markets, the routing sequence of the
order as between those markets will be
determined by a routing table.
In the event that the residual order
size available to be routed away exceeds
the total available top-of-book contra
side liquidity displayed on all of the
away markets, the portion of the order
to be routed to each of those automated
trading centers will be the displayed
size of the available top-of-book contra
side quotation at each away market,
with the remaining portion of the order
simultaneously being placed on the
NYBX book, where it will continue to
attempt to further execute with available
contra side liquidity in the Facility, the
DBK and automated quotations of away
markets, in the same sequence as
described above as such liquidity
becomes available and assuming that
the MTV of the order is met. Any
volume from the order that was routed
away to other automated trading centers
for execution but was not executed will,
upon its return to the Facility, cause the
Facility to again evaluate the market to
check for updated market data that
could trigger additional routing of the
remaining portion of the order.
Otherwise, that unexecuted volume will
also be placed on the NYBX book.
The following examples demonstrate
how NYBX orders will be processed
under the proposed amendment.
NYBX Market Evaluation
NYBX (Sell orders):
500 shares @ 19.99
500 shares @20.00
500 shares @20.01
DBK (Sell orders):
400 shares @ 19.99 (hidden)
600 shares @ 20.00
300 shares @20.01
PHLX (Sell orders):
1000 shares @ 20.00 (NBBO)
NYSE Arca (Sell orders):
1000 shares @ 20.00
Scenario A: Buy 5000 shares at 20.00
(MTV = 100 shares) Results:
• 5000 routed to DBK at 19.99
• 400 executes on DBK at 19.99; leaves
4600
• 4600 sent back to NYBX at 19.99
• Verify no market data updates
• 500 executes on NYBX at 19.99;
leaves 4100
• Verify no market data updates
• 4100 routed to DBK at 20.00
• 600 executes on DBK at 20.00; leaves
3500
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66185
• 3500 sent back to NYBX at 20.00
• Verify no market data updates
• 500 executes on NYBX at 20.00;
leaves 3000
• Verify no market data updates
As the Facility currently operates, the
residual of 3000 shares to buy would be
placed on the NYBX book at 20.00.
Under the revised logic being proposed,
of the 3000 residual shares, 1000 shares
would be routed to PHLX and 1000
shares would be routed to NYSE Arca to
execute against the available contra side
size displayed on each of those markets,
resulting in the following additional
outcomes: 5
• 1000 routed to PHLX at 20.00
• 1000 routed to NYSE Arca at 20.00
• 1000 placed on the NYBX book at
20.00
• 1000 executes on PHLX at 20.00;
leaves 2000
• 1000 executes on NYSE Arca at 20.00;
leaves 1000
Note that the 1000 shares that are
placed back on the NYBX book at the
end of the revised process would not be
executable against any away automated
market center based on the market
evaluation being used for execution and
routing purposes. This is in contrast to
the 3000 shares that would be placed on
the NYBX book based on the way that
the Facility currently operates, a portion
of which would be capable of executing
against the top-of-book automated
quotes of PHLX and NYSE Arca.
Scenario B: Same as Scenario A
except that a new market evaluation
following the last execution on NYBX as
shown above (with 3,000 shares
remaining to be executed on the order)
indicates the following:
NYBX (Sell orders):
500 shares @ 20.00
DBK (Sell orders):
500 shares @ 20.00
500 shares @ 20.00 (hidden)
PHLX (Sell orders):
500 shares @ 19.99 (NBBO)
NYSE Arca (Sell orders):
500 shares @ 20.00
Under this scenario and the revised
logic being proposed, the fact that there
is new available liquidity indicated in
DBK (and in this example, in NYBX as
well) and a new top-of-book quotation at
an away automated market center
representing a potential trade through
situation completely alters the routing
sequence at this point from what it
would be based on the previous market
evaluation. The first priority is to
5 In this example, it is assumed that no change in
the state of the market is indicated at the time of
the updating market evaluation described above
that takes place following each routing to DBK.
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eliminate the potential trade through, so
500 shares are routed to PHLX in
compliance with Regulation NMS to
execute against the top-of-book liquidity
displayed there. The remaining 2500
shares are routed to DBK to execute
against the liquidity there and any
remaining portion of the order is then
sent back to the Facility to execute
against the liquidity there. Assume
these steps result in the following
additional outcomes:
• 500 executes on PHLX at 19.99
• 1000 executes on DBK at 20.00
• 500 executes on NYBX at 20.00
These executions would result in a
total of 1000 shares to buy remaining
from the order. Before appropriate
volume is routed out to execute against
the displayed top-of-book liquidity at
NYSE Arca, two more market
evaluations would have been performed
as indicated below as a result of (i) the
additional routing to DBK and the
return of unexecuted volume to the
Facility and (ii) the execution on NYBX
of a portion of the remaining volume
from the order. Assuming that neither of
these new market evaluations shows
any further change in the state of the
market (i.e., the only available sell
orders at the limit price or better are the
500 shares at NYSE Arca), 500 of the
remaining 1000 shares from the order
would be routed to NYSE Arca for
execution. Consequently, the complete
outcome for this scenario is as follows:
Results:
• 5000 routed to DBK at 19.99
• 400 executes on DBK at 19.99;
leaves 4600
• 4600 sent back to NYBX at 19.99
• Verify no market data updates
• 500 executes on NYBX at 19.99;
leaves 4100
• Verify no market data updates
• 4100 routed to DBK at 20.00
• 600 executes on DBK at 20.00;
leaves 3500
• 3500 sent back to NYBX at 20.00
• Verify no market data updates
• 500 executes on NYBX at 20.00;
leaves 3000
• Update of market data as indicated
above
• 500 routed to PHLX at 19.99
• 500 executes on PHLX at 19.99;
leaves 2500
• 2500 routed to DBK at 20.00
• 1000 executes on DBK at 20.00;
leaves 1500
• 1500 sent back to NYBX at 20.00
• Verify no market data updates
• 500 executes on NYBX at 20.00;
leaves 1000
• Verify no market data updates
• 500 placed on the NYBX book at
20.00
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• 500 routed to NYSE Arca at 20.00
• 500 executes on NYSE Arca at
20.00; leaves 500
Scenario C: Same as Scenario A
except that only 500 of the 1000 shares
routed to PHLX are actually executed
against the liquidity there, and the
remaining 500 shares are returned
unexecuted to the Facility
Under this scenario and the revised
logic being proposed, the return of the
500 unexecuted shares from PHLX will
cause the Facility to evaluate the market
once again as indicated below to check
for updated market data before placing
the unexecuted volume on the NYBX
book. As in Scenario A, the assumption
being made is that no change in the state
of the market is indicated by this
interim market evaluation, so the 500
unexecuted shares are placed on the
NYBX book at 20.00, joining the 1000
shares that were placed on the book at
the time of the routing to the away
markets and resulting in a residual buy
order of 1500 shares at 20.00 on the
NYBX book. Consequently, the
complete outcome for this scenario is as
follows:
Results:
• 5000 routed to DBK at 19.99
• 400 executes on DBK at 19.99;
leaves 4600
• 4600 sent back to NYBX at 19.99
• Verify no market data updates
• 500 executes on NYBX at 19.99;
leaves 4100
• Verify no market data updates
• 4100 routed to DBK at 20.00
• 600 executes on DBK at 20.00;
leaves 3500
• 3500 sent back to NYBX at 20.00
• Verify no market data updates
• 500 executes on NYBX at 20.00;
leaves 3000
• Verify no market data updates
• 1000 routed to PHLX at 20.00
• 1000 routed to NYSE Arca at 20.00
• 1000 placed on the NYBX book at
20.00
• 500 executes on PHLX at 20.00;
leaves 2500
• 500 returns to NYBX from PHLX at
20.00
• Verify no market data updates
• 500 placed on the NYBX book at
20.00
• 1000 executes on NYSE Arca at
20.00; leaves 1500
Scenario D: Same as Scenario A
except for the displayed quotes at PHLX
and NYSE Arca, which are as follows:
PHLX (Sell orders):
2000 shares @ 20.00 (NBBO)
NYSE Arca (Sell orders):
2000 shares at 20.00
Under this scenario and the revised
logic being proposed, the executions in
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the Facility and DBK would take place
exactly as in Scenario A, leaving a
residual of 3000 shares. As in Scenario
A, the assumption is that no change in
the state of the market is indicated by
any interim market evaluation. Because
the residual order size to be routed away
is less than the total top-of-book
available contra side liquidity of 4000
shares at the same price displayed on
PHLX and NYSE Arca, a routing table
would be used to determine which of
those two markets would get a complete
fill of its displayed contra side liquidity
and which would only get a partial fill.
In this example, if it is assumed that the
routing table assigns a higher rating to
PHLX for routing purposes, the
following additional outcomes would
result:
• 2000 executes on PHLX at 20.00
• 1000 executes on NYSE Arca at 20.00
• Fill is complete—no remaining shares
available to be placed back on NYBX
book
Consequently, the complete outcome
for this scenario is as follows:
Results:
• 5000 routed to DBK at 19.99
• 400 executes on DBK at 19.99;
leaves 4600
• 4600 sent back to NYBX at 19.99
• Verify no market data updates
• 500 executes on NYBX at 19.99;
leaves 4100
• Verify no market data updates
• 4100 routed to DBK at 20.00
• 600 executes on DBK at 20.00;
leaves 3500
• 3500 sent back to NYBX at 20.00
• Verify no market data updates
• 500 executes on NYBX at 20.00;
leaves 3000
• Verify no market data updates
• 2000 routed to PHLX at 20.00
• 1000 routed to NYSE Arca at 20.00
• 2000 executes on PHLX at 20.00;
leaves 1000
• 1000 executes on NYSE Arca at
20.00; leaves 0
In every instance under the proposed
amendment, all available contra side
liquidity on both DBK and NYBX must
be exhausted before portions of any
NYBX order are routed to away markets,
except for those routings that take place
(as under the current version of the
Facility) to execute against protected
quotations of automated trading centers
that would otherwise be traded through.
B. The Sizes of All Available Top-ofBook Displayed Contra Side Quotations
of Other Automated Trading Centers
Will Be Incorporated Into the MTV
Calculation
The second change to the Facility in
the proposed amendment is a logical
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consequence of the fact that available
top-of-book contra side displayed
liquidity at other automated market
centers will be included in the revised
routing logic as described above.
Because such quotations will now be
executed against if an NYBX order is
sufficiently large, their size(s) should
and will be included in the optional
MTV calculation under the proposed
amendment just as they would be if
those same quotations were in the DBK
or the NYBX book. Under the current
version of NYBX, available top-of-book
contra side liquidity on away markets is
included in determining whether an
MTV is met only if such quotations are
protected quotations of automated
trading centers that would otherwise be
traded through, and if consideration of
such quotations is not optionally
restricted by the NYBX user.
Currently, when an NYBX user
designates an optional MTV for an
order, that user may elect to restrict the
MTV calculation of the order to include
only the contra side liquidity at the
order’s limit price or better in the
Facility and the DBK, thereby excluding
consideration of protected quotations of
automated trading centers that would
otherwise be traded through in
determining whether the MTV is met.
However, regardless of the designated
MTV calculation, executions in or
through the Facility will always route
out to execute against the protected
quotations of automated trading centers
to avoid trade throughs in compliance
with Regulation NMS. Similarly, the
new version of NYBX under the
proposed amendment will provide that
an NYBX user may elect to restrict the
MTV calculation of the order to exclude
consideration of those available top-ofbook contra side quotations of other
automated trading centers that would
not otherwise be traded through in
determining whether an MTV is met.
And, as is currently the case for NYBX
orders that route out to execute with
away market quotations in order to
comply with Regulation NMS, NYBX
orders for which the MTV is met will
still be routed out to execute against
those away market available top-of-book
contra side quotations that would not
otherwise be traded through, even if an
NYBX user elects to restrict the MTV
calculation of an order to exclude
consideration of those away market
quotations. In other words, an NYBX
user will not have the ability to
eliminate the routing to protected
quotations of other automated trading
centers under any circumstances,
whether or not such routing is required
by Regulation NMS.
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The following example demonstrates
how the MTV will be triggered under
the proposed amendment. Assume the
same NYBX evaluation as indicated in
Scenario A above, including 1000 shares
for sale at 20.00 being displayed at topof-book by each of PHLX and NYSE
Arca.
Scenario E: Buy 5000 shares at 20.00
(MTV = 2500)
As the Facility currently operates, the
MTV of 2500 shares would not be
triggered because only 2000 shares are
available at the price or better in DBK
and on the NYBX book combined, and
we have assumed that there are no
protected quotations at automated
trading centers that would otherwise be
traded through to count toward the
MTV. Therefore, the order to buy 5000
shares at 20.00 would be placed on the
NYBX book without any execution
taking place. Under the proposed
amendment, the total of 2,000 shares
available at the price at PHLX and NYSE
Arca would be included in the MTV
calculation as well, resulting in an
overall total of 4000 shares available for
execution which exceeds the MTV
threshold level of 2500 shares. At this
point, the sequence of order execution
would be exactly the same as in
Scenario A above, with a residual buy
order for 1000 shares at 20.00 placed on
the NYBX book and top-of-book
executions at PHLX and NYSE Arca of
1000 shares each.
*
*
*
*
*
In summary, the proposed
amendment should result in (i) the
immediate execution of additional
orders that would otherwise sit on the
NYBX book due to their MTVs not being
triggered and (ii) the execution of more
shares on those orders whose MTVs are
triggered, due to the incorporation of
additional available contra side
liquidity at other market centers.
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with Section
6(b) 6 of the Securities Exchange Act of
1934 (the ‘‘Act’’), in general, and
furthers the objectives of Section
6(b)(5) 7 in particular in that it is
designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, to foster cooperation and
coordination with persons engaged in
facilitating transactions in securities, 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
6 15
7 15
PO 00000
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
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66187
public interest. More specifically, the
Exchange believes that, because the
proposed rule change will improve the
quality of the market and the outcomes
for investors by increasing the
probability that a large order placed in
the Facility will achieve a complete and
timely fill by incorporating available
contra side liquidity at other market
centers, it will thereby contribute to
perfecting the mechanism of a free and
open market and a national market
system and is also consistent with the
protection of investors and the public
interest.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed
rule change pursuant to Section
19(b)(3)(A)(iii) of the Act a8 and Rule
19b–4(f)(6) thereunder.9 Because the
proposed rule change does not: (i)
Significantly affect the protection of
investors or the public interest; (ii)
impose any significant burden on
competition; and (iii) by its terms,
become operative prior to 30 days from
the date on which it was filed, or such
shorter time as the Commission may
designate, if consistent with the
protection of investors and the public
interest, the proposed rule change has
become effective upon filing with the
Commission pursuant to Section
19(b)(3)(A) of the Act 10 and Rule 19b–
4(f)(6)(iii) thereunder.11
The Exchange requested the
Commission waive all or whatever part
of the 30-day operative delay period is
8 15
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6).
10 15 U.S.C. 78s(b)(3)(A).
11 17 CFR 240.19b–4(f)(6)(iii). In addition, Rule
19b–4(f)(6)(iii) requires the Exchange to give the
Commission written notice of the Exchange’s 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 Commission
waives the five-day pre-filing requirement in this
case.
9 17
E:\FR\FM\14DEN1.SGM
14DEN1
66188
Federal Register / Vol. 74, No. 238 / Monday, December 14, 2009 / Notices
necessary to allow the Exchange to
make the proposed rule change
operative on December 7, 2009. The
Commission hereby grants the
Exchange’s request and designates the
filing operative as of December 7,
2009.12 The Commission believes that
such action is consistent with the
protection of investors and the public
interest, because the proposed rule
language should result in (i) the
immediate execution of additional
orders that would otherwise sit on the
NYBX book due to their MTVs not being
triggered and (ii) the execution of more
shares on those orders whose MTVs are
triggered, due to the incorporation of
additional available contra side
liquidity at other market centers.
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.
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for inspection and copying in
the Commission’s Public Reference
Room, 100 F Street, NE., Washington,
DC 20549, on official business days
between the hours of 10 a.m. and 3 p.m.
Copies of such filing also will be
available for inspection and copying at
the principal office of the Exchange. All
comments received will be posted
without change; the Commission does
not edit personal identifying
information from submissions. You
should submit only information that
you wish to make available publicly. All
submissions should refer to File
Number SR–NYSE–2009–121 and
should be submitted on or before
January 4, 2010.
IV. Solicitation of Comments
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.13
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–29631 Filed 12–11–09; 8:45 am]
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–NYSE–2009–121 on the
subject line.
mstockstill on DSKH9S0YB1PROD with NOTICES
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–2009–121. 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
12 For purposes 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).
VerDate Nov<24>2008
17:54 Dec 11, 2009
Jkt 220001
BILLING CODE 8011–01–P
renders the proposal effective upon
filing with the Commission. 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
Pursuant to the provisions of Section
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Act’’),4 and Rule 19b–4
thereunder,5 NASDAQ OMX BX, Inc.
(‘‘BX’’) is filing with the Securities and
Exchange Commission (‘‘Commission’’)
a proposed rule change to amend BX
Rule 2330 and IM–2330 to reflect recent
changes to a corresponding rule of the
Financial Industry Regulatory Authority
(‘‘FINRA’’). The text of the proposed
rule change is below. Proposed new
language is italicized; proposed
deletions are in brackets: NASDAQ
OMX BX RULES
*
*
*
*
*
2150. Customers’ Securities or Funds
(a) Exchange Members and persons
associated with a member shall comply with
FINRA Rule 2150 as if such Rule were part
of the Rules of the Exchange.
(b) Nothing in FINRA Rule 2150, as
applied to Exchange members and their
associated persons, shall be construed to
authorize any Exchange member or
associated person to act in a manner
inconsistent with Section 11(a) of the Act.
[Release No. 34–61129; File No. SR–BX–
2009–080]
Self-Regulatory Organizations;
NASDAQ OMX BX, Inc.; Notice of Filing
and Immediate Effectiveness of
Proposed Rule Change To Amend Rule
2330 and IM–2330 To Reflect Changes
to Corresponding FINRA Rule
IM–2150. Segregation of Customers’
Securities
(a) Exchange Members and persons
associated with a member shall comply with
FINRA Interpretive Material 2150 as if such
Rule were part of the Rules of the Exchange.
(b) For purposes of this Rule, references to
Rule 2150 shall be construed as references to
Equity Rule 2150.
*
SECURITIES AND EXCHANGE
COMMISSION
December 8, 2009.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on December
4, 2009, NASDAQ OMX BX, Inc. (the
‘‘BX’’) filed with the Securities and
Exchange Commission (‘‘Commission’’)
the proposed rule change as described
in Items I, II, and III below, which Items
have been prepared by the Exchange.
The Exchange has designated the
proposed rule change as constituting a
non-controversial rule change under
Rule 19b–4(f)(6) under the Act,3 which
13 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 17 CFR 240.19b–4(f)(6).
*
*
*
1 15
PO 00000
Frm 00105
Fmt 4703
Sfmt 4703
*
[2330. Customers’ Securities or Funds
(a) Exchange Members and persons
associated with a member shall comply with
NASD Rule 2330 as if such Rule were part
of the Rules of the Exchange.
FINRA is in the process of consolidating
certain NASD rules into a new FINRA
rulebook. If the provisions of NASD Rule
2330 are transferred into the FINRA
rulebook, then Equity Rule 2330 shall be
construed to require Exchange members and
persons associated with a member to comply
with the FINRA rule corresponding to NASD
Rule 2330 (regardless of whether such rule is
renumbered or amended) as if such rule were
part of the Rules of the Exchange.
(b) Nothing in NASD Rule 2330, as applied
to Exchange members and their associated
persons, shall be construed to authorize any
Exchange member or associated person to act
in a manner inconsistent with Section 11(a)
of the Act.]
4 15
5 17
E:\FR\FM\14DEN1.SGM
U.S.C. 78s(b)(1).
CFR 240.19b–4.
14DEN1
]]>Agencies
[Federal Register Volume 74, Number 238 (Monday, December 14, 2009)]
[Notices]
[Pages 66184-66188]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-29631]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-61126; File No. SR-NYSE-2009-121]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Amending NYSE Rule 1600 To More Fully Incorporate Away Market Contra
Side Liquidity in the Execution of New York Block Exchange Orders
December 7, 2009.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that, on December 4, 2009, the New York Stock Exchange LLC (``NYSE'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II below, which Items have been prepared by the Exchange. The Exchange
has designated this proposal eligible for immediate effectiveness
pursuant to Rule 19b-4(f)(6) under the Act.\3\ The Commission is
publishing this notice to solicit comments on the proposed rule change
from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend Exchange Rule 1600 (New York Block
Exchange\SM\) (``NYBX\SM\'' or the ``Facility'') to provide for (i)
routing away, for execution with all available top-of-book contra side
quotations (not just those that would otherwise be traded through)
displayed by other automated trading centers, of any portion of an NYBX
order that remains after all available executions in the NYSE Display
Book[supreg] (``Display Book'' or ``DBK'') and the Facility have taken
place as provided in the current rule and (ii) including those same
away market quotations of other automated trading centers in the
determination of whether the optional, user-defined Minimum Triggering
Volume Quantity (``MTV'') of an NYBX order is met. The text of the
proposed rule change is available on NYSE's Web site at https://www.nyse.com, on the Commission's Web site at https://www.sec.gov, at
the Exchange's principal office, and at the Commission's Public
Reference Room.
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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend Exchange Rule 1600 (New York Block
Exchange\SM\) to provide for (i) routing away, for execution with all
available top-of-book contra side quotations (not just those that would
otherwise be traded through) displayed by other automated trading
centers, of any portion of an NYBX order that remains after all
available executions in DBK and the Facility have taken place as
provided in the current rule and (ii) including those same away market
quotations of other automated trading centers in the determination of
whether the optional, user-defined MTV of an NYBX order is met. The
following discussion includes examples to demonstrate the functioning
of these changes in practice.
A. Provide routing to other automated trading centers to allow the
remaining portion of an NYBX order to execute with available top-of-
book contra side quotations on these markets
As currently provided in NYSE Rule 1600, an order or residual
portion of an order in the New York Block Exchange facility (``NYBX''
or the ``Facility'') of the NYSE that has exhausted all available
contra side liquidity in both the NYSE Display Book (``DBK'') and the
Facility itself, as well as any trades against protected quotations of
automated trading centers that would otherwise have been traded
through, will be sent back to or remain in, as the case may be, the
Facility and be placed on the NYBX book. As the system currently
operates, such an order remaining in the Facility will continue to
attempt to execute with available contra side liquidity in the Facility
and the DBK and with protected quotations as described in the previous
sentence
[[Page 66185]]
until such orders are exhausted, expired or cancelled back to the user
pursuant to time in force conditions or until all applicable liquidity
is exhausted at the end of the regular trading day.
The purpose of the proposed amendment is to increase execution
opportunities for orders entered into NYBX by utilizing away markets
more fully than the Facility does at present. This will be accomplished
by adding additional routing to away markets for those orders in NYBX
described above that have exhausted all available contra side liquidity
in the Facility and the DBK (if any) and the residual portion of which
would otherwise be placed on the NYBX book. Portions of the residual
from such an order, or potentially the entire order if there is no
available contra side liquidity in either the DBK or the Facility
itself, will be routed out to other automated trading centers as ISO/
IOC orders for execution against available contra side quotations
displayed by such markets, even though no potential trade through is
involved and the routing is not required under Regulation NMS.
Upon the return to the Facility of any unexecuted volume following
a routing to the DBK and also upon execution against any remaining
available contra side liquidity in the Facility, NYBX will evaluate the
market again to check for updated market data and will route the
residual order based on that update.\4\ The amount of an NYBX residual
order routed to each away market will be exactly the size displayed for
the available top-of-book contra side protected quotation at each
automated trading center--there will be no oversizing of the portion of
the order sent to any away market. An exception will occur in any
situation where the residual order size is insufficient to route the
full displayed size to every away market, in which case the number of
shares routed to one or more of the away markets may be less than the
full displayed size on such market(s). In the event that multiple away
markets are displaying available top-of-book contra side quotations at
the same price, and the residual order size to be routed is less than
the total available top-of-book contra side liquidity displayed on
those markets, the routing sequence of the order as between those
markets will be determined by a routing table.
---------------------------------------------------------------------------
\4\ In the event that the DBK quotation has been updated at the
time of such an interim market evaluation and there is new
executable contra side liquidity in DBK, the full size of the
residual order will be routed back to DBK and the normal execution
sequence will be repeated from that point. If, at any point, such an
evaluation indicates that there is no new executable contra side
liquidity in the DBK but there is executable contra side liquidity
in the Facility, the order will execute to the extent possible
against that liquidity, evaluate the market again to check for
updated market data, and route the residual order accordingly. Once
this iterative process has run its course, with no new executable
contra side liquidity available in either the DBK or the Facility,
the residual order or portions thereof will be routed out to execute
against the available contra side protected quotations displayed by
other automated trading centers, as described in the preceding
paragraph.
---------------------------------------------------------------------------
In the event that the residual order size available to be routed
away exceeds the total available top-of-book contra side liquidity
displayed on all of the away markets, the portion of the order to be
routed to each of those automated trading centers will be the displayed
size of the available top-of-book contra side quotation at each away
market, with the remaining portion of the order simultaneously being
placed on the NYBX book, where it will continue to attempt to further
execute with available contra side liquidity in the Facility, the DBK
and automated quotations of away markets, in the same sequence as
described above as such liquidity becomes available and assuming that
the MTV of the order is met. Any volume from the order that was routed
away to other automated trading centers for execution but was not
executed will, upon its return to the Facility, cause the Facility to
again evaluate the market to check for updated market data that could
trigger additional routing of the remaining portion of the order.
Otherwise, that unexecuted volume will also be placed on the NYBX book.
The following examples demonstrate how NYBX orders will be
processed under the proposed amendment.
NYBX Market Evaluation
NYBX (Sell orders):
500 shares @ 19.99
500 shares @20.00
500 shares @20.01
DBK (Sell orders):
400 shares @ 19.99 (hidden)
600 shares @ 20.00
300 shares @20.01
PHLX (Sell orders):
1000 shares @ 20.00 (NBBO)
NYSE Arca (Sell orders):
1000 shares @ 20.00
Scenario A: Buy 5000 shares at 20.00 (MTV = 100 shares) Results:
5000 routed to DBK at 19.99
400 executes on DBK at 19.99; leaves 4600
4600 sent back to NYBX at 19.99
Verify no market data updates
500 executes on NYBX at 19.99; leaves 4100
Verify no market data updates
4100 routed to DBK at 20.00
600 executes on DBK at 20.00; leaves 3500
3500 sent back to NYBX at 20.00
Verify no market data updates
500 executes on NYBX at 20.00; leaves 3000
Verify no market data updates
As the Facility currently operates, the residual of 3000 shares to
buy would be placed on the NYBX book at 20.00. Under the revised logic
being proposed, of the 3000 residual shares, 1000 shares would be
routed to PHLX and 1000 shares would be routed to NYSE Arca to execute
against the available contra side size displayed on each of those
markets, resulting in the following additional outcomes: \5\
---------------------------------------------------------------------------
\5\ In this example, it is assumed that no change in the state
of the market is indicated at the time of the updating market
evaluation described above that takes place following each routing
to DBK.
1000 routed to PHLX at 20.00
1000 routed to NYSE Arca at 20.00
1000 placed on the NYBX book at 20.00
1000 executes on PHLX at 20.00; leaves 2000
1000 executes on NYSE Arca at 20.00; leaves 1000
Note that the 1000 shares that are placed back on the NYBX book at
the end of the revised process would not be executable against any away
automated market center based on the market evaluation being used for
execution and routing purposes. This is in contrast to the 3000 shares
that would be placed on the NYBX book based on the way that the
Facility currently operates, a portion of which would be capable of
executing against the top-of-book automated quotes of PHLX and NYSE
Arca.
Scenario B: Same as Scenario A except that a new market evaluation
following the last execution on NYBX as shown above (with 3,000 shares
remaining to be executed on the order) indicates the following:
NYBX (Sell orders):
500 shares @ 20.00
DBK (Sell orders):
500 shares @ 20.00
500 shares @ 20.00 (hidden)
PHLX (Sell orders):
500 shares @ 19.99 (NBBO)
NYSE Arca (Sell orders):
500 shares @ 20.00
Under this scenario and the revised logic being proposed, the fact
that there is new available liquidity indicated in DBK (and in this
example, in NYBX as well) and a new top-of-book quotation at an away
automated market center representing a potential trade through
situation completely alters the routing sequence at this point from
what it would be based on the previous market evaluation. The first
priority is to
[[Page 66186]]
eliminate the potential trade through, so 500 shares are routed to PHLX
in compliance with Regulation NMS to execute against the top-of-book
liquidity displayed there. The remaining 2500 shares are routed to DBK
to execute against the liquidity there and any remaining portion of the
order is then sent back to the Facility to execute against the
liquidity there. Assume these steps result in the following additional
outcomes:
500 executes on PHLX at 19.99
1000 executes on DBK at 20.00
500 executes on NYBX at 20.00
These executions would result in a total of 1000 shares to buy
remaining from the order. Before appropriate volume is routed out to
execute against the displayed top-of-book liquidity at NYSE Arca, two
more market evaluations would have been performed as indicated below as
a result of (i) the additional routing to DBK and the return of
unexecuted volume to the Facility and (ii) the execution on NYBX of a
portion of the remaining volume from the order. Assuming that neither
of these new market evaluations shows any further change in the state
of the market (i.e., the only available sell orders at the limit price
or better are the 500 shares at NYSE Arca), 500 of the remaining 1000
shares from the order would be routed to NYSE Arca for execution.
Consequently, the complete outcome for this scenario is as follows:
Results:
5000 routed to DBK at 19.99
400 executes on DBK at 19.99; leaves 4600
4600 sent back to NYBX at 19.99
Verify no market data updates
500 executes on NYBX at 19.99; leaves 4100
Verify no market data updates
4100 routed to DBK at 20.00
600 executes on DBK at 20.00; leaves 3500
3500 sent back to NYBX at 20.00
Verify no market data updates
500 executes on NYBX at 20.00; leaves 3000
Update of market data as indicated above
500 routed to PHLX at 19.99
500 executes on PHLX at 19.99; leaves 2500
2500 routed to DBK at 20.00
1000 executes on DBK at 20.00; leaves 1500
1500 sent back to NYBX at 20.00
Verify no market data updates
500 executes on NYBX at 20.00; leaves 1000
Verify no market data updates
500 placed on the NYBX book at 20.00
500 routed to NYSE Arca at 20.00
500 executes on NYSE Arca at 20.00; leaves 500
Scenario C: Same as Scenario A except that only 500 of the 1000
shares routed to PHLX are actually executed against the liquidity
there, and the remaining 500 shares are returned unexecuted to the
Facility
Under this scenario and the revised logic being proposed, the
return of the 500 unexecuted shares from PHLX will cause the Facility
to evaluate the market once again as indicated below to check for
updated market data before placing the unexecuted volume on the NYBX
book. As in Scenario A, the assumption being made is that no change in
the state of the market is indicated by this interim market evaluation,
so the 500 unexecuted shares are placed on the NYBX book at 20.00,
joining the 1000 shares that were placed on the book at the time of the
routing to the away markets and resulting in a residual buy order of
1500 shares at 20.00 on the NYBX book. Consequently, the complete
outcome for this scenario is as follows:
Results:
5000 routed to DBK at 19.99
400 executes on DBK at 19.99; leaves 4600
4600 sent back to NYBX at 19.99
Verify no market data updates
500 executes on NYBX at 19.99; leaves 4100
Verify no market data updates
4100 routed to DBK at 20.00
600 executes on DBK at 20.00; leaves 3500
3500 sent back to NYBX at 20.00
Verify no market data updates
500 executes on NYBX at 20.00; leaves 3000
Verify no market data updates
1000 routed to PHLX at 20.00
1000 routed to NYSE Arca at 20.00
1000 placed on the NYBX book at 20.00
500 executes on PHLX at 20.00; leaves 2500
500 returns to NYBX from PHLX at 20.00
Verify no market data updates
500 placed on the NYBX book at 20.00
1000 executes on NYSE Arca at 20.00; leaves 1500
Scenario D: Same as Scenario A except for the displayed quotes at
PHLX and NYSE Arca, which are as follows:
PHLX (Sell orders):
2000 shares @ 20.00 (NBBO)
NYSE Arca (Sell orders):
2000 shares at 20.00
Under this scenario and the revised logic being proposed, the
executions in the Facility and DBK would take place exactly as in
Scenario A, leaving a residual of 3000 shares. As in Scenario A, the
assumption is that no change in the state of the market is indicated by
any interim market evaluation. Because the residual order size to be
routed away is less than the total top-of-book available contra side
liquidity of 4000 shares at the same price displayed on PHLX and NYSE
Arca, a routing table would be used to determine which of those two
markets would get a complete fill of its displayed contra side
liquidity and which would only get a partial fill. In this example, if
it is assumed that the routing table assigns a higher rating to PHLX
for routing purposes, the following additional outcomes would result:
2000 executes on PHLX at 20.00
1000 executes on NYSE Arca at 20.00
Fill is complete--no remaining shares available to be placed
back on NYBX book
Consequently, the complete outcome for this scenario is as follows:
Results:
5000 routed to DBK at 19.99
400 executes on DBK at 19.99; leaves 4600
4600 sent back to NYBX at 19.99
Verify no market data updates
500 executes on NYBX at 19.99; leaves 4100
Verify no market data updates
4100 routed to DBK at 20.00
600 executes on DBK at 20.00; leaves 3500
3500 sent back to NYBX at 20.00
Verify no market data updates
500 executes on NYBX at 20.00; leaves 3000
Verify no market data updates
2000 routed to PHLX at 20.00
1000 routed to NYSE Arca at 20.00
2000 executes on PHLX at 20.00; leaves 1000
1000 executes on NYSE Arca at 20.00; leaves 0
In every instance under the proposed amendment, all available
contra side liquidity on both DBK and NYBX must be exhausted before
portions of any NYBX order are routed to away markets, except for those
routings that take place (as under the current version of the Facility)
to execute against protected quotations of automated trading centers
that would otherwise be traded through.
B. The Sizes of All Available Top-of-Book Displayed Contra Side
Quotations of Other Automated Trading Centers Will Be Incorporated Into
the MTV Calculation
The second change to the Facility in the proposed amendment is a
logical
[[Page 66187]]
consequence of the fact that available top-of-book contra side
displayed liquidity at other automated market centers will be included
in the revised routing logic as described above. Because such
quotations will now be executed against if an NYBX order is
sufficiently large, their size(s) should and will be included in the
optional MTV calculation under the proposed amendment just as they
would be if those same quotations were in the DBK or the NYBX book.
Under the current version of NYBX, available top-of-book contra side
liquidity on away markets is included in determining whether an MTV is
met only if such quotations are protected quotations of automated
trading centers that would otherwise be traded through, and if
consideration of such quotations is not optionally restricted by the
NYBX user.
Currently, when an NYBX user designates an optional MTV for an
order, that user may elect to restrict the MTV calculation of the order
to include only the contra side liquidity at the order's limit price or
better in the Facility and the DBK, thereby excluding consideration of
protected quotations of automated trading centers that would otherwise
be traded through in determining whether the MTV is met. However,
regardless of the designated MTV calculation, executions in or through
the Facility will always route out to execute against the protected
quotations of automated trading centers to avoid trade throughs in
compliance with Regulation NMS. Similarly, the new version of NYBX
under the proposed amendment will provide that an NYBX user may elect
to restrict the MTV calculation of the order to exclude consideration
of those available top-of-book contra side quotations of other
automated trading centers that would not otherwise be traded through in
determining whether an MTV is met. And, as is currently the case for
NYBX orders that route out to execute with away market quotations in
order to comply with Regulation NMS, NYBX orders for which the MTV is
met will still be routed out to execute against those away market
available top-of-book contra side quotations that would not otherwise
be traded through, even if an NYBX user elects to restrict the MTV
calculation of an order to exclude consideration of those away market
quotations. In other words, an NYBX user will not have the ability to
eliminate the routing to protected quotations of other automated
trading centers under any circumstances, whether or not such routing is
required by Regulation NMS.
The following example demonstrates how the MTV will be triggered
under the proposed amendment. Assume the same NYBX evaluation as
indicated in Scenario A above, including 1000 shares for sale at 20.00
being displayed at top-of-book by each of PHLX and NYSE Arca.
Scenario E: Buy 5000 shares at 20.00 (MTV = 2500)
As the Facility currently operates, the MTV of 2500 shares would
not be triggered because only 2000 shares are available at the price or
better in DBK and on the NYBX book combined, and we have assumed that
there are no protected quotations at automated trading centers that
would otherwise be traded through to count toward the MTV. Therefore,
the order to buy 5000 shares at 20.00 would be placed on the NYBX book
without any execution taking place. Under the proposed amendment, the
total of 2,000 shares available at the price at PHLX and NYSE Arca
would be included in the MTV calculation as well, resulting in an
overall total of 4000 shares available for execution which exceeds the
MTV threshold level of 2500 shares. At this point, the sequence of
order execution would be exactly the same as in Scenario A above, with
a residual buy order for 1000 shares at 20.00 placed on the NYBX book
and top-of-book executions at PHLX and NYSE Arca of 1000 shares each.
* * * * *
In summary, the proposed amendment should result in (i) the
immediate execution of additional orders that would otherwise sit on
the NYBX book due to their MTVs not being triggered and (ii) the
execution of more shares on those orders whose MTVs are triggered, due
to the incorporation of additional available contra side liquidity at
other market centers.
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
Section 6(b) \6\ of the Securities Exchange Act of 1934 (the ``Act''),
in general, and furthers the objectives of Section 6(b)(5) \7\ in
particular in that it is designed to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade, to foster cooperation and coordination with
persons engaged in facilitating transactions in securities, 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. More specifically, the Exchange believes that, because
the proposed rule change will improve the quality of the market and the
outcomes for investors by increasing the probability that a large order
placed in the Facility will achieve a complete and timely fill by
incorporating available contra side liquidity at other market centers,
it will thereby contribute to perfecting the mechanism of a free and
open market and a national market system and is also consistent with
the protection of investors and the public interest.
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\6\ 15 U.S.C. 78f(b).
\7\ 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
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act a\8\ and Rule 19b-4(f)(6) thereunder.\9\
Because the proposed rule change does not: (i) Significantly affect the
protection of investors or the public interest; (ii) impose any
significant burden on competition; and (iii) by its terms, become
operative prior to 30 days from the date on which it was filed, or such
shorter time as the Commission may designate, if consistent with the
protection of investors and the public interest, the proposed rule
change has become effective upon filing with the Commission pursuant to
Section 19(b)(3)(A) of the Act \10\ and Rule 19b-4(f)(6)(iii)
thereunder.\11\
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\8\ 15 U.S.C. 78s(b)(3)(A)(iii).
\9\ 17 CFR 240.19b-4(f)(6).
\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-
4(f)(6)(iii) requires the Exchange to give the Commission written
notice of the Exchange's 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 Commission waives the five-day pre-filing
requirement in this case.
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The Exchange requested the Commission waive all or whatever part of
the 30-day operative delay period is
[[Page 66188]]
necessary to allow the Exchange to make the proposed rule change
operative on December 7, 2009. The Commission hereby grants the
Exchange's request and designates the filing operative as of December
7, 2009.\12\ The Commission believes that such action is consistent
with the protection of investors and the public interest, because the
proposed rule language should result in (i) the immediate execution of
additional orders that would otherwise sit on the NYBX book due to
their MTVs not being triggered and (ii) the execution of more shares on
those orders whose MTVs are triggered, due to the incorporation of
additional available contra side liquidity at other market centers.
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\12\ For purposes 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-NYSE-2009-121 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-2009-121. This file
number should be included on the subject line if e-mail is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for inspection and
copying in the Commission's Public Reference Room, 100 F Street, NE.,
Washington, DC 20549, on official business days between the hours of 10
a.m. and 3 p.m. Copies of such filing also will be available for
inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-NYSE-2009-121 and should be
submitted on or before January 4, 2010.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-29631 Filed 12-11-09; 8:45 am]
BILLING CODE 8011-01-P
