Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Extend for 12 Months the Pilot Program Permitting the Exchange's Ownership Interest in BIDS Holdings L.P. (BIDS) and the Affiliation of BIDS With the New York Block Exchange LLC, 4889-4891 [2010-1850]
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Federal Register / Vol. 75, No. 19 / Friday, January 29, 2010 / Notices
received no comments on the proposal.
This order approves the proposed rule
change.
II. Description of the Proposal
jlentini on DSKJ8SOYB1PROD with NOTICES
Currently, Phlx Rule 909 requires
member organizations and applicants
for registration to provide and maintain
a security deposit, unless the member
organization maintains excess net
capital of at least the amount
established by the Exchange. The
Exchange proposes to eliminate the
requirement to provide and maintain a
security deposit and would instead
require member organizations and
applicants to provide a clearing account
number for an account at NSCC in order
to permit the Exchange to debit
undisputed or final fees, fines, charges
and/or other monetary sanctions or
monies owed to the Exchange or other
charges related to Rule 924.5
Additionally, the Exchange proposes to
amend the title of Rule 909 from
‘‘Security for Exchange Fees and Other
Claims’’ to ‘‘Collection of Exchange Fees
and Other Claims’’ in order to more
accurately describe the proposed rule.
Under the proposal, the Exchange
would send a monthly invoice to each
member organization on approximately
the fourth through sixth business day of
the month following the month in
which the charges were incurred.6 In
addition, the Exchange would send a
file to the member’s clearing firm which
will indicate the amounts to be debited
from each member. If a member is selfclearing, no such file would be sent,
since the member would receive the
invoice indicating the amount to be
debited. If a member disputes an invoice
in writing to the Exchange’s designated
staff by the fifteenth of the month, and
the amount in dispute is at least $10,000
or greater, the Exchange would not
include the disputed amount in the
debit.7
The Exchange then would send a file
to NSCC on approximately the twentythird of the month following the month
in which the charges were incurred to
initiate the debit of the appropriate
amount. Once NSCC receives the file
from the Exchange, NSCC would debit
5 Phlx Rule 924 (Obligations of Members and
Member Organizations to the Exchange) states,
among other things, that members and member
organizations shall be liable for such fees, fines,
dues, penalties and other amounts imposed by the
Exchange.
6 For example, invoices for the month of October
might be sent on November 5.
7 If the fifteenth day is not a business day, then
the member would have until the following
business day.
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16:49 Jan 28, 2010
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the amount indicated from the clearing
members’ account.8
The Exchange would provide
members with a thirty-day period, upon
Commission approval of this proposal,
to provide an NSCC number to the Phlx
Membership Department if the member
has not already provided one in the
past.9
III. Discussion and Commission
Findings
The Commission has carefully
reviewed the proposed rule change and
finds that it is consistent with the
requirements of the Act and the rules
and regulations thereunder applicable to
a national securities exchange.10 In
particular, the Commission finds that
the proposed rule change is consistent
with Section 6(b)(5) of the Act,11 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.
The Commission notes that Phlx
would only initiate a debit for an
undisputed or final fee, fine, charge, or
other monetary sanction or money owed
to the Exchange. In addition, because
members would receive invoices
approximately two weeks before any
funds are debited, members would have
a means to monitor the accuracy of their
invoices and, if necessary, would have
time to contact the Exchange staff prior
to amounts being debited.
Further, the Exchange has informed
the Commission that the vast majority of
the Exchange’s members already
voluntarily participate in the automaticdebit program, which the proposed rule
would make mandatory. Those members
that do not currently participate will
have thirty days from approval of this
proposal to provide the NSCC number
to the Exchange. Finally, the
Commission notes that no comments
were received regarding the proposal.
8 If the member clears through an Exchange
clearing member, the estimated transactions fees
owed to the Exchange are typically debited by the
clearing member on a daily basis using daily
transaction detail reports provided by the Exchange
to the clearing member in order to ensure adequate
funds have been escrowed.
9 The Exchange noted that many of its members
have already provided voluntarily the Exchange
with an NSCC clearing account number, and those
members’ accounts are currently being debited on
a monthly basis. See Notice, supra note 4, at note
10.
10 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).
11 15 U.S.C. 78f(b)(5).
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4889
IV. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,12 that the
proposed rule change, (SR–Phlx–2009–
101), be, and hereby is, approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.13
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–1848 Filed 1–28–10; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–61409; File No. SR–NYSE–
2010–04]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Extend for
12 Months the Pilot Program
Permitting the Exchange’s Ownership
Interest in BIDS Holdings L.P. (BIDS)
and the Affiliation of BIDS With the
New York Block Exchange LLC
January 22, 2010.
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 January
11, 2010, 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 filed this proposal pursuant to
Rule 19b–4(f)(6) under the Act 3 and
requested that the Commission waive
the 30-day pre-operative waiting period
contained in Rule 19b–4(f)(6)(iii).4 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 for
an additional 12 months the January 22,
2010 expiration date of the pilot
program that provides an exception to
NYSE Rule 2B by permitting the
Exchange’s equity ownership interest in
BIDS Holdings L.P. (‘‘BIDS’’), which is
the parent company of a member of the
Exchange, and BIDS’s affiliation with
12 15
U.S.C. 78s(b)(2).
CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 17 CFR 240.19b–4(f)(6).
4 17 CFR 240.19b–4(f)(6)(iii).
13 17
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4890
Federal Register / Vol. 75, No. 19 / Friday, January 29, 2010 / Notices
the New York Block Exchange LLC, an
affiliate of the Exchange. There is no
proposed rule text.
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
jlentini on DSKJ8SOYB1PROD with NOTICES
1. Purpose
On January 22, 2009, the Commission
approved the governance structure
proposed by the Exchange with respect
to the New York Block Exchange
(‘‘NYBX’’), a new electronic trading
facility of the Exchange for NYSE-listed
securities that was established by means
of a joint venture between the Exchange
and BIDS.5 The governance structure
that was approved is reflected in the
Limited Liability Company Agreement
of New York Block Exchange LLC (the
‘‘Company’’), the entity that owns and
operates NYBX. Under the governance
structure approved by the Commission,
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 10% of the
aggregate limited partnership interest in
BIDS. BIDS is the parent company of
BIDS Trading, L.P. (‘‘BIDS Trading’’),
which became a member of the
Exchange in connection with the
establishment of NYBX.
The foregoing ownership
arrangements would violate NYSE Rule
2B without an exception from the
Commission.6 First, the Exchange’s
5 See Securities Exchange Act Release No. 59281
(January 22, 2009), 74 FR 5014 (January 28, 2009)
(order approving SR–NYSE–2008–120) (‘‘Approval
Order’’).
6 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.’’
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16:49 Jan 28, 2010
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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,7 which violates the
prohibition in Rule 2B against a member
of the Exchange having such status.
Consequently, in the Approval Order,
the Commission permitted an exception
to these two potential violations of
NYSE Rule 2B, subject to a number of
limitations and conditions. One of the
conditions for Commission approval
was that the proposed exception from
NYSE Rule 2B to permit NYSE’s
indirect ownership/interest in BIDS
Trading and BIDS Trading’s affiliation
with the Company (which is an affiliate
of NYSE) would be for a pilot period of
12 months.8
In discussing the pilot basis of the
exception to NYSE Rule 2B, the
Approval Order noted that the pilot
period ‘‘will provide NYSE and the
Commission an opportunity to assess
whether there might be any adverse
consequences of the exception and
whether a permanent exception is
warranted.’’ 9 The 12-month pilot period
is due to expire on January 22, 2010.
While the Exchange believes that the
experience to date operating under the
exception to Rule 2B fully justifies
making the exception permanent, the
Exchange now seeks to extend the
ending date for the pilot program for
another 12 months to January 22, 2011
to allow additional time, if necessary,
for the Commission to obtain and
review the information it needs in order
to make its determination regarding any
adverse consequences of the exception
and whether a permanent exception is
warranted. During the proposed
extension of the pilot program period,
the Exchange’s current indirect
ownership interest in BIDS Trading 10
and BIDS Trading’s affiliation with the
7 Specifically, the Company is an affiliate of the
Exchange, and BIDS Trading is an affiliate of the
Company based on their common control by BIDS.
The affiliation in each case is the result of the 50%
ownership interest in the Company by each of the
Exchange and BIDS.
8 See Approval Order, 74 FR at 5018.
9 Id. at 5019.
10 Another condition for the exception to NYSE
Rule 2B specified in the Approval Order was that
the Exchange’s equity interest in BIDS must remain
less than 9%, absent prior Commission approval of
any increase. See id. at 5018. Subsequently, the
Commission approved a proposal by the Exchange
to slightly increase the ceiling on its equity
ownership in BIDS to less than 10%, and that will
be the applicable limitation during the extension of
the pilot period. See Securities Exchange Act
Release No. 61257 (December 30, 2009), 75 FR 500
(January 5, 2010) (order approving SR–NYSE–2009–
116).
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Frm 00122
Fmt 4703
Sfmt 4703
Company would continue to be
permitted.
If the Commission should determine
prior to the end of the extended pilot
period that a permanent exception to
NYSE Rule 2B is warranted, the
Exchange would have the option of
submitting a proposed rule change to
accomplish this and simultaneously
terminate the pilot program.
2. Statutory Basis
The proposed rule change is
consistent with Section 6(b) 11 of the
Act,12 in general, and furthers the
objectives of Section 6(b)(1) 13 of the
Act, 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 proposed rule
change is also consistent with, and
furthers the objectives of Section
6(b)(5) 14 of the Act, 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.
In the Approval Order, the
Commission determined that the
proposed exception from NYSE Rule 2B
to permit NYSE’s indirect ownership
interest in BIDS Trading and BIDS
Trading’s affiliation with the Company
was consistent with the Act, including
Section 6(b)(5) thereof.15 As the basis for
its determination, the Commission cited
the specific limitations and conditions
listed in the Approval Order to which
its approval of the exception to NYSE
Rule 2B was subject,16 stating: ‘‘These
conditions appear reasonably designed
to mitigate concerns about potential
conflicts of interest and unfair
competitive advantage. * * * These
conditions appear reasonably designed
to promote robust and independent
regulation of BIDS. * * * The
Commission believes that, taken
together, these conditions are
reasonably designed to mitigate
potential conflicts between the
Exchange’s commercial interest in BIDS
11 15
U.S.C. 78f(b).
U.S.C. 78.
13 15 U.S.C. 78f(b)(1).
14 15 U.S.C. 78f(b)(5).
15 See Approval Order, 74 FR at 5018–5019.
16 Id. at 5018.
12 15
E:\FR\FM\29JAN1.SGM
29JAN1
Federal Register / Vol. 75, No. 19 / Friday, January 29, 2010 / Notices
and its regulatory responsibilities with
respect to BIDS.’’ 17 Because these same
limitations and conditions will continue
to be applicable during the extension of
the pilot period, other than the ending
date of the pilot period and the recently
approved small increase in the ceiling
on the Exchange’s equity interest in
BIDS, the Exchange believes that the
exception from NYSE Rule 2B described
above will continue to be consistent
with the Act during that extension.
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.
jlentini on DSKJ8SOYB1PROD with NOTICES
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing proposal has become
effective pursuant to Section 19(b)(3)(A)
of the Act and Rule 19b–4(f)(6)
thereunder because it does not (i)
Significantly affect the protection of
investors or the public interest; (ii)
impose any significant burden on
competition; and (iii) become operative
for 30 days from the date on which it
was filed, or such shorter time as the
Commission may designate if consistent
with the protection of investors and the
public interest.18
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,
because the proposal would preserve
the benefits of the Exchange’s pilot
program without interruption as the
Exchange and the Commission monitor
and assess whether any adverse
consequences have resulted from the
exceptions to NYSE Rule 2B and if the
exceptions continue to be appropriate.
17 Id.
at 5019.
addition, Rule 19b–4(f)(6) requires the
Exchange to give 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 satisfied this requirement.
18 In
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16:49 Jan 28, 2010
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4891
Therefore, the Commission hereby
grants the Exchange’s request and
designates the proposal as 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.
Copies of the filing will also 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–2010–04 and should
be submitted on or before February 19,
2010.
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:
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.20
Florence E. Harmon,
Deputy Secretary.
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–2010–04 on the
subject line.
SECURITIES AND EXCHANGE
COMMISSION
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–2010–04. 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.
19 For purposes only of waiving the 30-day
operative delay of 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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[FR Doc. 2010–1850 Filed 1–28–10; 8:45 am]
BILLING CODE 8011–01–P
[Release No. 34–61411; File No. SR–ISE–
2010–05]
Self-Regulatory Organizations;
International Securities Exchange,
LLC; Notice of Filing and Immediate
Effectiveness of Proposed Rule
Change Regarding Market Maker
Trading Licenses for Foreign Currency
Options
January 22, 2010.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on January
14, 2010, the International Securities
Exchange, LLC (the ‘‘Exchange’’ or the
‘‘ISE’’) 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 filed the proposal as
a ‘‘non-controversial’’ 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.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend its
Rule 2213 regarding market maker
trading licenses for the Exchange’s
foreign currency options. The text of the
20 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A).
4 17 CFR 240.19b–4(f)(6).
1 15
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]]>Agencies
[Federal Register Volume 75, Number 19 (Friday, January 29, 2010)]
[Notices]
[Pages 4889-4891]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-1850]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-61409; File No. SR-NYSE-2010-04]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Extend for 12 Months the Pilot Program Permitting the Exchange's
Ownership Interest in BIDS Holdings L.P. (BIDS) and the Affiliation of
BIDS With the New York Block Exchange LLC
January 22, 2010.
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 January 11, 2010, 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
filed this proposal pursuant to Rule 19b-4(f)(6) under the Act \3\ and
requested that the Commission waive the 30-day pre-operative waiting
period contained in Rule 19b-4(f)(6)(iii).\4\ 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).
\4\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to extend for an additional 12 months the
January 22, 2010 expiration date of the pilot program that provides an
exception to NYSE Rule 2B by permitting the Exchange's equity ownership
interest in BIDS Holdings L.P. (``BIDS''), which is the parent company
of a member of the Exchange, and BIDS's affiliation with
[[Page 4890]]
the New York Block Exchange LLC, an affiliate of the Exchange. There is
no proposed rule text.
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
On January 22, 2009, the Commission approved the governance
structure proposed by the Exchange with respect to the New York Block
Exchange (``NYBX''), a new electronic trading facility of the Exchange
for NYSE-listed securities that was established by means of a joint
venture between the Exchange and BIDS.\5\ The governance structure that
was approved is reflected in the Limited Liability Company Agreement of
New York Block Exchange LLC (the ``Company''), the entity that owns and
operates NYBX. Under the governance structure approved by the
Commission, 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 10% of the aggregate
limited partnership interest in BIDS. BIDS is the parent company of
BIDS Trading, L.P. (``BIDS Trading''), which became a member of the
Exchange in connection with the establishment of NYBX.
---------------------------------------------------------------------------
\5\ See Securities Exchange Act Release No. 59281 (January 22,
2009), 74 FR 5014 (January 28, 2009) (order approving SR-NYSE-2008-
120) (``Approval Order'').
---------------------------------------------------------------------------
The foregoing ownership arrangements would violate NYSE Rule 2B
without an exception from the Commission.\6\ 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,\7\ which violates the prohibition in Rule 2B
against a member of the Exchange having such status. Consequently, in
the Approval Order, the Commission permitted an exception to these two
potential violations of NYSE Rule 2B, subject to a number of
limitations and conditions. One of the conditions for Commission
approval was that the proposed exception from NYSE Rule 2B to permit
NYSE's indirect ownership/interest in BIDS Trading and BIDS Trading's
affiliation with the Company (which is an affiliate of NYSE) would be
for a pilot period of 12 months.\8\
---------------------------------------------------------------------------
\6\ 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.''
\7\ Specifically, the Company is an affiliate of the Exchange,
and BIDS Trading is an affiliate of the Company based on their
common control by BIDS. The affiliation in each case is the result
of the 50% ownership interest in the Company by each of the Exchange
and BIDS.
\8\ See Approval Order, 74 FR at 5018.
---------------------------------------------------------------------------
In discussing the pilot basis of the exception to NYSE Rule 2B, the
Approval Order noted that the pilot period ``will provide NYSE and the
Commission an opportunity to assess whether there might be any adverse
consequences of the exception and whether a permanent exception is
warranted.'' \9\ The 12-month pilot period is due to expire on January
22, 2010. While the Exchange believes that the experience to date
operating under the exception to Rule 2B fully justifies making the
exception permanent, the Exchange now seeks to extend the ending date
for the pilot program for another 12 months to January 22, 2011 to
allow additional time, if necessary, for the Commission to obtain and
review the information it needs in order to make its determination
regarding any adverse consequences of the exception and whether a
permanent exception is warranted. During the proposed extension of the
pilot program period, the Exchange's current indirect ownership
interest in BIDS Trading \10\ and BIDS Trading's affiliation with the
Company would continue to be permitted.
---------------------------------------------------------------------------
\9\ Id. at 5019.
\10\ Another condition for the exception to NYSE Rule 2B
specified in the Approval Order was that the Exchange's equity
interest in BIDS must remain less than 9%, absent prior Commission
approval of any increase. See id. at 5018. Subsequently, the
Commission approved a proposal by the Exchange to slightly increase
the ceiling on its equity ownership in BIDS to less than 10%, and
that will be the applicable limitation during the extension of the
pilot period. See Securities Exchange Act Release No. 61257
(December 30, 2009), 75 FR 500 (January 5, 2010) (order approving
SR-NYSE-2009-116).
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If the Commission should determine prior to the end of the extended
pilot period that a permanent exception to NYSE Rule 2B is warranted,
the Exchange would have the option of submitting a proposed rule change
to accomplish this and simultaneously terminate the pilot program.
2. Statutory Basis
The proposed rule change is consistent with Section 6(b) \11\ of
the Act,\12\ in general, and furthers the objectives of Section 6(b)(1)
\13\ of the Act, 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
proposed rule change is also consistent with, and furthers the
objectives of Section 6(b)(5) \14\ of the Act, 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.
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\11\ 15 U.S.C. 78f(b).
\12\ 15 U.S.C. 78.
\13\ 15 U.S.C. 78f(b)(1).
\14\ 15 U.S.C. 78f(b)(5).
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In the Approval Order, the Commission determined that the proposed
exception from NYSE Rule 2B to permit NYSE's indirect ownership
interest in BIDS Trading and BIDS Trading's affiliation with the
Company was consistent with the Act, including Section 6(b)(5)
thereof.\15\ As the basis for its determination, the Commission cited
the specific limitations and conditions listed in the Approval Order to
which its approval of the exception to NYSE Rule 2B was subject,\16\
stating: ``These conditions appear reasonably designed to mitigate
concerns about potential conflicts of interest and unfair competitive
advantage. * * * These conditions appear reasonably designed to promote
robust and independent regulation of BIDS. * * * The Commission
believes that, taken together, these conditions are reasonably designed
to mitigate potential conflicts between the Exchange's commercial
interest in BIDS
[[Page 4891]]
and its regulatory responsibilities with respect to BIDS.'' \17\
Because these same limitations and conditions will continue to be
applicable during the extension of the pilot period, other than the
ending date of the pilot period and the recently approved small
increase in the ceiling on the Exchange's equity interest in BIDS, the
Exchange believes that the exception from NYSE Rule 2B described above
will continue to be consistent with the Act during that extension.
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\15\ See Approval Order, 74 FR at 5018-5019.
\16\ Id. at 5018.
\17\ Id. at 5019.
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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 foregoing proposal has become effective pursuant to Section
19(b)(3)(A) of the Act and Rule 19b-4(f)(6) thereunder because it does
not (i) Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate if consistent with
the protection of investors and the public interest.\18\
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\18\ In addition, Rule 19b-4(f)(6) requires the Exchange to give
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 satisfied this requirement.
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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,
because the proposal would preserve the benefits of the Exchange's
pilot program without interruption as the Exchange and the Commission
monitor and assess whether any adverse consequences have resulted from
the exceptions to NYSE Rule 2B and if the exceptions continue to be
appropriate. Therefore, the Commission hereby grants the Exchange's
request and designates the proposal as operative upon filing.\19\
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\19\ For purposes only of waiving the 30-day operative delay of
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-2010-04 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-2010-04. 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 the filing will also 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-2010-04 and should be
submitted on or before February 19, 2010.
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\20\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\20\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-1850 Filed 1-28-10; 8:45 am]
BILLING CODE 8011-01-P
