Self-Regulatory Organizations; New York Stock Exchange LLC; Order Approving a Proposed Rule Change To Increase the Ceiling on Its Equity Ownership Interest in BIDS Holdings L.P. to Less Than 10%, 500-501 [E9-31343]
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Federal Register / Vol. 75, No. 2 / Tuesday, January 5, 2010 / Notices
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for inspection and copying in
the Commission’s Public Reference
Room, 100 F Street, NE., Washington,
DC 20549, on official business days
between the hours of 10 a.m. and 3 p.m.
Copies of the filing also will be available
for inspection and copying at the
principal office of the CBOE. All
comments received will be posted
without change; the Commission does
not edit personal identifying
information from submissions. You
should submit only information that
you wish to make available publicly. All
submissions should refer to File
Number SR–CBOE–2009–097 and
should be submitted on or before
January 26, 2010.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.12
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–31342 Filed 1–4–10; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–61257; File No. SR–NYSE–
2009–116]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Order
Approving a Proposed Rule Change To
Increase the Ceiling on Its Equity
Ownership Interest in BIDS Holdings
L.P. to Less Than 10%
srobinson on DSKHWCL6B1PROD with PROPOSALS
December 30, 2009.
On November 18, 2009, the New York
Stock Exchange LLC (‘‘NYSE’’ or
‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’) a proposed rule
change, pursuant to Section 19(b)(1) of
the Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2
proposing to increase the ceiling on the
Exchange’s equity ownership interest in
BIDS Holdings L.P. (‘‘BIDS’’) to less
than 10% from the current level of less
than 9%. The proposed rule change was
published for comment in the Federal
Register on November 27, 2009.3 The
Commission received no comments on
the proposal. This order approves the
proposed rule change.
On January 22, 2009, the Commission
approved the formation of New York
Block Exchange (‘‘NYBX’’), an
12 17
CFR 200.30–3(a)(12).
U.S.C.78s(b)(1).
2 17 CFR 240.19b–4.
3 See Securities Act Exchange Release No. 61043
(November 20, 2009), 74 FR 62612.
1 15
VerDate Nov<24>2008
16:41 Jan 04, 2010
Jkt 220001
electronic trading facility of the
Exchange for NYSE-listed securities,
established as a joint venture between
the Exchange and BIDS.4 The
governance structure as approved is
reflected in the Limited Liability
Company Agreement (‘‘LLC
Agreement’’) of New York Block
Exchange LLC (‘‘Company’’), the entity
that owns and operates NYBX. Pursuant
to the LLC Agreement, the Exchange
and BIDS each own a 50% economic
interest in the Company. In addition,
the Exchange, through its wholly-owned
subsidiary, NYSE Market, Inc., owns
less than 9% of the aggregate limited
partnership interest in BIDS. BIDS,
through its subsidiary, BIDS Trading,
L.P. (‘‘BIDS Trading’’), operates BIDS
Alternative Trading System (ATS). In
connection with the establishment of
NYBX, BIDS Trading became a member
of the Exchange.
Absent prior Commission approval,
the foregoing ownership arrangements
would violate NYSE Rule 2B 5 for two
reasons. First, the Exchange’s indirect
ownership interest in BIDS Trading
violates the prohibition in Rule 2B
against the Exchange maintaining an
ownership interest in a member
organization. Second, BIDS Trading is
an affiliate of an affiliate of the
Exchange,6 which violates the
prohibition in Rule 2B against a member
of the Exchange having such affiliation.
Consequently, in the Approval Order,
the Commission permitted an exception
to NYSE Rule 2B, subject to a number
of limitations and conditions. One of the
conditions for Commission approval of
the ownership arrangements was that
the proposed exception from NYSE Rule
2B to permit NYSE’s indirect interest in
BIDS Trading and BIDS Trading’s
affiliation with the Company would be
for a pilot period of 12 months.7
Another condition for Commission
approval was that NYSE, or any of its
affiliates, would not directly or
indirectly increase its equity interest in
4 See Securities Exchange Act Release No. 59281
(January 22, 2009), 74 FR 5014 (January 28, 2009)
(order approving SR–NYSE–2008–120) (‘‘Approval
Order’’).
5 NYSE Rule 2B provides, in relevant part, that:
‘‘[w]ithout prior SEC approval, the Exchange or any
entity with which it is affiliated shall not, directly
or indirectly, acquire or maintain an ownership
interest in a member organization. In addition, a
member organization shall not be or become an
affiliate of the Exchange, or an affiliate of any
affiliate of the Exchange. * * * The term affiliate
shall have the meaning specified in Rule 12b–2
under the Act.’’
6 Specifically, the Company is an affiliate of the
Exchange, and BIDS Trading is an affiliate of the
Company. The affiliation in each case is the result
of the 50% ownership interest in the Company by
each of the Exchange and BIDS.
7 See Approval Order, 74 FR at 5018.
PO 00000
Frm 00165
Fmt 4703
Sfmt 4703
BIDS without prior Commission
approval.8
The Exchange proposes to increase
the ceiling of its equity ownership in
BIDS from the current limit of less than
9% to less than 10%. BIDS is offering
its members the opportunity to invest,
on a pro rata basis, in a new class of
preferred equity interests, and the
Exchange wishes to participate in the
new round of capital raising by BIDS
without inadvertently exceeding the
current limit. The Exchange represents
that, based on its expectations, the
participation of the Exchange in the
capital raising could slightly increase its
percentage ownership in BIDS to
between 9% and 10%. Other than this
increase in the Exchange’s equity
ownership, all of the other limitations
and conditions required by the terms of
the Approval Order for the exception to
NYSE Rule 2B would continue to apply
during the pilot period.9 Further, the
Exchange and its affiliates do not, and
would continue not to, have any voting
or other control arrangement with any of
the other limited partners or general
partner of BIDS.10
The Commission finds that the
proposed rule change is consistent with
the requirements of the Act and the
rules and regulations thereunder
applicable to a national securities
exchange.11 In particular, the
Commission finds that the proposed
rule change furthers the objectives of
Section 6(b)(1) of the Act,12 which
requires a national securities exchange
to be so organized and have the capacity
to carry out the purposes of the Act and
to comply, and to enforce compliance
by its members and persons associated
with its members, with the provisions of
the Act. The Commission also finds that
the proposed rule change is consistent
with, and furthers the objectives of
Section 6(b)(5) of the Act,13 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
mechanisms of a free and open market
and a national market system and, in
general, to protect investors and the
public interest.
8 See
id.
id.
10 See id., n. 69.
11 In approving this proposed rule change, the
Commission has considered the proposed rule’s
impact on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f).
12 15 U.S.C. 78f(b)(1).
13 15 U.S.C. 78f(b)(5).
9 See
E:\FR\FM\05JAN1.SGM
05JAN1
Federal Register / Vol. 75, No. 2 / Tuesday, January 5, 2010 / Notices
In the Approval Order, the
Commission determined that the
exception from NYSE Rule 2B to permit
NYSE’s indirect interest in BIDS
Trading and BIDS Trading’s affiliation
with an affiliate of the Exchange is
consistent with the Act, because the
limitations and conditions stipulated
appear reasonably designed to mitigate
concerns about potential conflicts of
interest and unfair competitive
advantage. Further, the Commission
determined that these conditions appear
reasonably designed to promote robust
and independent regulation of BIDS
Trading.
The Commission has consistently
expressed concern that an affiliation of
an exchange with, or an ownership of,
one of its members could raise a
potential conflict of interest and impede
its self-regulatory responsibilities with
respect to such member. Although the
Exchange proposes a small increase in
the ceiling of its equity ownership of
BIDS, the Commission notes that all of
the other limitations and conditions
would continue to apply, and the
exceptions to NYSE Rule 2B would
continue to be on a pilot basis. Further,
the increase in the Exchange’s equity
ownership does not appear sufficiently
large to raise additional or new
concerns. Therefore, the Commission
continues to find that the exception
from NYSE Rule 2B described above
would continue to be consistent with
the Act.
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,14 that the
proposed rule change (SR–NYSE–2009–
116) is hereby approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.15
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–31343 Filed 1–4–10; 8:45 am]
SECURITIES AND EXCHANGE
COMMISSION
srobinson on DSKHWCL6B1PROD with PROPOSALS
[Release No. 34–61258; File No. SR–Phlx–
2009–107]
Self-Regulatory Organizations;
NASDAQ OMX PHLX, Inc.; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change Relating to a
Technical Change to the Exchange’s
Complex Order Program
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to terminate a
feature of its complex order program.
The text of the proposed rule change
is available on the Exchange’s Web site
at https://
nasdaqomxphlx.cchwallstreet.com/
NASDAQOMXPHLX/Filings/, on the
Commission’s Web site at https://
www.sec.gov, at the principal office of
the Exchange, 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
Statutory Basis for, the Proposed Rule
Change
BILLING CODE 8011–01–P
December 30, 2009.
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2
notice is hereby given that on December
29, 2009, NASDAQ OMX PHLX, Inc.
(‘‘Phlx’’ or the ‘‘Exchange’’) 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 Phlx filed the proposed rule change
pursuant to Section 19(b)(3)(A)(iii) of
the Act 3 and Rule 19b–4(f)(6)
thereunder.4 The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
1. Purpose
The purpose of the proposed rule
change is to discontinue a feature of the
Exchange’s complex orders system,
sometimes called ‘‘NBBO protection.’’
This feature enables a complex order to
be designated as ineligible for execution
at a price that is inferior to the NBBO
for the individual components of the
order. Otherwise, the existing rules
permit COLA-eligible orders (defined in
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(iii).
4 17 CFR 240.19b–4(f)(6).
2 17
14 15
15 17
U.S.C. 78s(b)(2).
CFR 200.30–3(a)(12).
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16:41 Jan 04, 2010
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PO 00000
Frm 00166
Fmt 4703
Sfmt 4703
501
the rule) to be executed without
consideration of any prices that might
be available on other exchanges trading
the same options contracts.5
This feature is mentioned several
times in the rules, referring to various
points in the Exchange’s complex order
processing where an order is executable
but for this designation. In the original
proposal adopting complex orders, the
Exchange stated that the purpose of this
provision is to provide a method to
protect each component of a Complex
Order from trading through the National
Best Bid and/or Offer (‘‘NBBO’’) in that
option series, until such time that the
order is placed on the complex order
book.6 The Exchange believes that the
feature has never been used.
Accordingly, the Exchange believes that
the proposal is a simple change to
eliminate a feature.
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with Section
6(b) of the Act 7 in general, and furthers
the objectives of Section 6(b)(5) of the
Act 8 in particular, in that it is 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, by
removing a feature that the Exchange
believes has not been taken advantage of
by users.
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 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 comments were either solicited or
received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The proposed rule change is
designated by the Exchange as a ‘‘noncontroversial’’ rule pursuant to Section
5 See
e.g., Rule 1080.08(e)(i)(B).
Exchange Act Release No. 58099 (July
3, 2008), 73 FR 39769 (July 10, 2008) (SR–Phlx–
2008–50) (Notice of Filing of Proposed Rule Change
Relating to Complex Orders). The description of
how this feature operates during the Complex Order
Live Auction (‘‘COLA’’) appears at 73 FR 39772.
7 15 U.S.C. 78f(b).
8 15 U.S.C. 78f(b)(5).
6 Securities
E:\FR\FM\05JAN1.SGM
05JAN1
]]>Agencies
[Federal Register Volume 75, Number 2 (Tuesday, January 5, 2010)]
[Notices]
[Pages 500-501]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-31343]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-61257; File No. SR-NYSE-2009-116]
Self-Regulatory Organizations; New York Stock Exchange LLC; Order
Approving a Proposed Rule Change To Increase the Ceiling on Its Equity
Ownership Interest in BIDS Holdings L.P. to Less Than 10%
December 30, 2009.
On November 18, 2009, the New York Stock Exchange LLC (``NYSE'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') a proposed rule change, pursuant to Section 19(b)(1)
of the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4
thereunder,\2\ proposing to increase the ceiling on the Exchange's
equity ownership interest in BIDS Holdings L.P. (``BIDS'') to less than
10% from the current level of less than 9%. The proposed rule change
was published for comment in the Federal Register on November 27,
2009.\3\ The Commission received no comments on the proposal. This
order approves the proposed rule change.
---------------------------------------------------------------------------
\1\ 15 U.S.C.78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Act Exchange Release No. 61043 (November 20,
2009), 74 FR 62612.
---------------------------------------------------------------------------
On January 22, 2009, the Commission approved the formation of New
York Block Exchange (``NYBX''), an electronic trading facility of the
Exchange for NYSE-listed securities, established as a joint venture
between the Exchange and BIDS.\4\ The governance structure as approved
is reflected in the Limited Liability Company Agreement (``LLC
Agreement'') of New York Block Exchange LLC (``Company''), the entity
that owns and operates NYBX. Pursuant to the LLC Agreement, the
Exchange and BIDS each own a 50% economic interest in the Company. In
addition, the Exchange, through its wholly-owned subsidiary, NYSE
Market, Inc., owns less than 9% of the aggregate limited partnership
interest in BIDS. BIDS, through its subsidiary, BIDS Trading, L.P.
(``BIDS Trading''), operates BIDS Alternative Trading System (ATS). In
connection with the establishment of NYBX, BIDS Trading became a member
of the Exchange.
---------------------------------------------------------------------------
\4\ See Securities Exchange Act Release No. 59281 (January 22,
2009), 74 FR 5014 (January 28, 2009) (order approving SR-NYSE-2008-
120) (``Approval Order'').
---------------------------------------------------------------------------
Absent prior Commission approval, the foregoing ownership
arrangements would violate NYSE Rule 2B \5\ for two reasons. First, the
Exchange's indirect ownership interest in BIDS Trading violates the
prohibition in Rule 2B against the Exchange maintaining an ownership
interest in a member organization. Second, BIDS Trading is an affiliate
of an affiliate of the Exchange,\6\ which violates the prohibition in
Rule 2B against a member of the Exchange having such affiliation.
---------------------------------------------------------------------------
\5\ NYSE Rule 2B provides, in relevant part, that: ``[w]ithout
prior SEC approval, the Exchange or any entity with which it is
affiliated shall not, directly or indirectly, acquire or maintain an
ownership interest in a member organization. In addition, a member
organization shall not be or become an affiliate of the Exchange, or
an affiliate of any affiliate of the Exchange. * * * The term
affiliate shall have the meaning specified in Rule 12b-2 under the
Act.''
\6\ Specifically, the Company is an affiliate of the Exchange,
and BIDS Trading is an affiliate of the Company. The affiliation in
each case is the result of the 50% ownership interest in the Company
by each of the Exchange and BIDS.
---------------------------------------------------------------------------
Consequently, in the Approval Order, the Commission permitted an
exception to NYSE Rule 2B, subject to a number of limitations and
conditions. One of the conditions for Commission approval of the
ownership arrangements was that the proposed exception from NYSE Rule
2B to permit NYSE's indirect interest in BIDS Trading and BIDS
Trading's affiliation with the Company would be for a pilot period of
12 months.\7\ Another condition for Commission approval was that NYSE,
or any of its affiliates, would not directly or indirectly increase its
equity interest in BIDS without prior Commission approval.\8\
---------------------------------------------------------------------------
\7\ See Approval Order, 74 FR at 5018.
\8\ See id.
---------------------------------------------------------------------------
The Exchange proposes to increase the ceiling of its equity
ownership in BIDS from the current limit of less than 9% to less than
10%. BIDS is offering its members the opportunity to invest, on a pro
rata basis, in a new class of preferred equity interests, and the
Exchange wishes to participate in the new round of capital raising by
BIDS without inadvertently exceeding the current limit. The Exchange
represents that, based on its expectations, the participation of the
Exchange in the capital raising could slightly increase its percentage
ownership in BIDS to between 9% and 10%. Other than this increase in
the Exchange's equity ownership, all of the other limitations and
conditions required by the terms of the Approval Order for the
exception to NYSE Rule 2B would continue to apply during the pilot
period.\9\ Further, the Exchange and its affiliates do not, and would
continue not to, have any voting or other control arrangement with any
of the other limited partners or general partner of BIDS.\10\
---------------------------------------------------------------------------
\9\ See id.
\10\ See id., n. 69.
---------------------------------------------------------------------------
The Commission finds that the proposed rule change is consistent
with the requirements of the Act and the rules and regulations
thereunder applicable to a national securities exchange.\11\ In
particular, the Commission finds that the proposed rule change furthers
the objectives of Section 6(b)(1) of the Act,\12\ which requires a
national securities exchange to be so organized and have the capacity
to carry out the purposes of the Act and to comply, and to enforce
compliance by its members and persons associated with its members, with
the provisions of the Act. The Commission also finds that the proposed
rule change is consistent with, and furthers the objectives of Section
6(b)(5) of the Act,\13\ 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 mechanisms of a free and open market and
a national market system and, in general, to protect investors and the
public interest.
---------------------------------------------------------------------------
\11\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
\12\ 15 U.S.C. 78f(b)(1).
\13\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
[[Page 501]]
In the Approval Order, the Commission determined that the exception
from NYSE Rule 2B to permit NYSE's indirect interest in BIDS Trading
and BIDS Trading's affiliation with an affiliate of the Exchange is
consistent with the Act, because the limitations and conditions
stipulated appear reasonably designed to mitigate concerns about
potential conflicts of interest and unfair competitive advantage.
Further, the Commission determined that these conditions appear
reasonably designed to promote robust and independent regulation of
BIDS Trading.
The Commission has consistently expressed concern that an
affiliation of an exchange with, or an ownership of, one of its members
could raise a potential conflict of interest and impede its self-
regulatory responsibilities with respect to such member. Although the
Exchange proposes a small increase in the ceiling of its equity
ownership of BIDS, the Commission notes that all of the other
limitations and conditions would continue to apply, and the exceptions
to NYSE Rule 2B would continue to be on a pilot basis. Further, the
increase in the Exchange's equity ownership does not appear
sufficiently large to raise additional or new concerns. Therefore, the
Commission continues to find that the exception from NYSE Rule 2B
described above would continue to be consistent with the Act.
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\14\ that the proposed rule change (SR-NYSE-2009-116) is hereby
approved.
---------------------------------------------------------------------------
\14\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
---------------------------------------------------------------------------
\15\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-31343 Filed 1-4-10; 8:45 am]
BILLING CODE 8011-01-P
