Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by NYSE Arca, Inc. to Clarify, Eliminate, Revise, or Delete Certain Out-Dated or Obsolete Rules, 26832-26837 [2010-11253]
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26832
Federal Register / Vol. 75, No. 91 / Wednesday, May 12, 2010 / Notices
transaction in the Exchange’s flash
auction as a response to orders from
persons who are not broker/dealers and
who are not Priority Customers to $0.10
per contract.
• The Exchange has a $0.20 per
contract fee for market maker orders
sent to the Exchange by EAMs.16 Market
maker orders sent to the Exchange by
EAMs will be assessed a fee of $0.25 per
contract for removing liquidity in
QQQQ, BAC, C, SPY, IWM, XLF, AAPL,
GE, JPM, INTC, GS, RIMM, T, VZ, UNG,
FCX, CSCO, DIA, AMZN and X options
and $0.10 per contract for adding
liquidity in QQQQ, BAC, C, SPY, IWM,
XLF, AAPL, GE, JPM, INTC, GS, RIMM,
T, VZ, UNG, FCX, CSCO, DIA, AMZN
and X options.
The Exchange has designated this
proposal to be operative on May 3, 2010.
2. Statutory Basis
WReier-Aviles on DSKGBLS3C1PROD with NOTICES
The basis under the Exchange Act for
this proposed rule change is the
requirement under Section 6(b)(4) that
an exchange have an equitable
allocation of reasonable dues, fees and
other charges among its members and
other persons using its facilities. The
impact of the proposal upon the net fees
paid by a particular market participant
will depend on a number of variables,
most important of which will be its
propensity to add or remove liquidity in
QQQQ, BAC, C, SPY, IWM, XLF, AAPL,
GE, JPM, INTC, GS, RIMM, T, VZ, UNG,
FCX, CSCO, DIA, AMZN and X options.
The Exchange operates in a highly
competitive market in which market
participants can readily direct order
flow to another exchange if they deem
fee levels at a particular exchange to be
excessive. The Exchange believes that
the proposed fees it charges for options
overlying QQQQ, BAC, C, SPY, IWM,
XLF, AAPL, GE, JPM, INTC, GS, RIMM,
T, VZ, UNG, FCX, CSCO, DIA, AMZN
and X remain competitive with fees
charged by other exchanges and
therefore continue to be reasonable and
equitably allocated to those members
that opt to direct orders to the Exchange
rather than to a competing exchange.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The proposed rule change does not
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
The Exchange has not solicited, and
does not intend to solicit, comments on
this proposed rule change. The
Exchange has not received any
unsolicited written comments from
members or other interested parties.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section 19(b)(3) of
the Act 17 and Rule 19b–4(f)(2) 18
thereunder. At any time within 60 days
of the filing of such proposed rule
change, the Commission may summarily
abrogate such rule change if it appears
to the Commission that such action is
necessary or appropriate in the public
interest, for the protection of investors,
or otherwise in furtherance of the
purposes of the Act.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–ISE–2010–43 on the subject
line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, Station Place, 100 F Street,
NE., Washington, DC 20549–1090.
All submissions should refer to File
Number SR–ISE–2010–43. 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 Web site viewing and
printing 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
publicly available. All submissions
should refer to File Number SR–ISE–
2010–43 and should be submitted on or
before June 2, 2010.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.19
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–11254 Filed 5–11–10; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–62052; File No. SR–
NYSEArca–2010–38]
Self-Regulatory Organizations; Notice
of Filing and Immediate Effectiveness
of Proposed Rule Change by NYSE
Arca, Inc. to Clarify, Eliminate, Revise,
or Delete Certain Out-Dated or
Obsolete Rules
May 6, 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 April 28,
2010, NYSE Arca, Inc. (‘‘NYSE Arca’’ or
‘‘Exchange’’) filed with the Securities
and Exchange Commission (the
‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by the self-regulatory
organization. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
19 17
16 See
Securities Exchange Act Release No. 60817
(October 13, 2009), 74 FR 54111 (October 21, 2009).
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CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
17 15
U.S.C. 78s(b)(3)(A).
18 17 CFR 240.19b–4(f)(2).
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Federal Register / Vol. 75, No. 91 / Wednesday, May 12, 2010 / Notices
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to revise its
rules by clarifying existing provisions,
eliminating superfluous provisions, and
revising or deleting certain out-dated or
obsolete rules. The text of the proposed
rule change is available on the
Exchange’s Web site at https://
www.nyse.com, at the principal office of
the Exchange, on the Commission’s Web
site at https://www.sec.gov, 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 these 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 aspects of such
statements.
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A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The purpose of this filing is to revise
certain Exchange rules in order to
clarify existing provisions, eliminate
superfluous provisions, delete certain
out-dated or obsolete rules and to
incorporate current policies and
procedures applicable to existing rules.
A description of each of the proposed
rules changes is shown below.
Rule 2.12—OTP Holders and OTP
Firms:
Rule 2.12(a) requires that each OTP
Firm and OTP Holder shall be fully
qualified to do business in California.
This rule dates back to when NYSE Arca
(f/k/a The Pacific Exchange) was
headquartered in California and all
business on the Exchange was
conducted on the physical trading floor.
While the Exchange still operates a
trading floor in California, OTP Holders
and OTP Firms are not required to have
a floor presence. OTP Holders and OTP
Firms are able to conduct business from
remote locations throughout the
country.
NYSE Arca proposes to remove this
outdated and obsolete requirement that
OTP Holders and OTP Firms be fully
qualified to conduct business in
California.
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Rule 2.24—Floor Employees of OTP
Firms:
Rule 2.24(d) states that an OTP Firm
or OTP Holder with an employee on the
options trading floor of the Exchange
must have at least one OTP Holder or
nominee present on the floor at all
times, and that such OTP Holders or
nominees shall be responsible for all
floor employees of the OTP Firm. The
rationale for this rule is to help ensure
that there is adequate supervision of all
firm employees while on the options
trading floor.
With the advent of remote market
making and electronic access, NYSE
Arca no longer requires that all OTP
Holders, or nominees thereof, be
physically present on the floor.
However, there could be occasions
where an OTP Firm does have
employees on the floor, but the actual
person designated as the OTP Holder
works from a remote location. These
employees would typically operate in a
trade support, technical or clearing
capacity, but would not be directly
involved in the trading of options.
Pursuant to Rule 11.18, OTP Holders
or OTP Firms must establish and
maintain a system to supervise the
activities of its associated persons and
the operations of its business. Such
system must be reasonably designed to
ensure compliance with applicable
federal securities laws and regulations
and the rulers [sic] of NYSE Arca. In
addition, OTP Holders and OTP Firms
must designate a person with authority
to reasonably discharge his/her duties
and obligations in connection with
supervision and control of the activities
of the associated persons of the OTP
Holder or OTP Firm. In addition, the
OTP Holder or OTP Firm must
undertake reasonable efforts to
determine that all supervisory personnel
are qualified by virtue of experience or
training to carry out their assigned
responsibilities.
The Exchange now proposes to revise
Rule 2.24 so that an OTP Holder or OTP
Firm with employees on the options
trading floor, none of which are directly
involved in the trading of options, will
no longer be required to have an OTP
Holder, or Nominee thereof, present on
the options trading floor at all times.
Instead, the Exchange proposes that in
keeping with the supervisory
obligations contained in rule 11.18, OTP
Holders and OTP Firms with nontrading employees on the options floor,
must have at least one employee with
supervisory responsibilities present on
the trading floor. Each OTP Holder or
OTP Firm must designate and
specifically identify to the Exchange one
or more persons who will be responsible
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26833
for supervision and control of the
activities of the associated persons of
the OTP Holder or OTP Firm.
This rule change does not in any way
affect the obligation of OTP Holders and
OTP Firms to properly supervise their
floor employees. The proposed rule
change is simply designed to offer
flexibility to OTP Holders and OTP
Firms when establishing their
supervisory systems in accordance with
Rule 11.18.
Rule 3.1—Overview:
Rule 3.1 Commentary .01 contains an
outdated provision related to the
demutualization of The Pacific
Exchange (n/k/a NYSE Arca).
Commentary .01 states that rule changes
regarding demutualization in SR–PCX–
2004–08 would become effective once
the appropriate federal and state
regulatory approvals were received and
NYSE Arca filed the applicable
documentation with the State of
Delaware. All approvals pertaining to
the demutualization of the Pacific
Exchange were received, and all
applicable documentation was filed
with the State of Delaware. The
Exchange now proposes to delete Rule
3.1 Commentary .01, in its entirety.
Rule 6.17—Verification of Compared
Trades and Reconciliation of
Uncompared Trades:
Rule 6.17 Commentary .01 states that
OTP Holders and OTP Firms that are
clearing members of the Options
Clearing Corporation must have a
representative physically present on the
trading floor to reconcile uncompared
trades. In addition, Rule 6.17
Commentary .01 contains guidelines for
how long such representative must
remain on the floor after the close of
trading.
The Exchange realizes that it is no
longer necessary for a representative of
an OTP Holder or OTP Firm to be
physically present on the trading floor
in order to reconcile uncompared
trades. Thus, the Exchange proposes to
revise Rule 6.17, Commentary .01 by
adding language stating that in addition
to being physically present on the floor,
such representative may be accessible
via telephone or e-mail.3 In addition,
the Exchange proposes to remove the
specific guidelines for how long a
representative must remain available
after the close of trading and instead
state that a representative of an OTP
Holder or OTP Firm must be available
to resolve unmatched trades until the
3 OTP Holders and OTP Firms are required to
keep a current e-mail address on file with the
Exchange. In addition, the NYSE Arca Trade
Processing Department maintains contact names
and phone numbers for all OTP Holders.
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Federal Register / Vol. 75, No. 91 / Wednesday, May 12, 2010 / Notices
final trade transmission is sent to The
Options Clearing Corporation (‘‘OCC’’).4
Rule 6.17 also states that OTP Holders
and OTP Firms, that are clearing
members of the Options Clearing
Corporation, must have a representative
present on the floor each Saturday
immediately following expiration, and
that it is the responsibility of the
Exchange staff member to determine
that such representative is present. The
Exchange now proposes to add language
stating that an alternative to being
physically present on the floor, such
representative may be accessible via
telephone or e-mail.
In addition, Exchange staff will no
longer make a determination as to
whether representatives are present on
the Trading Floor, or otherwise
accessible. However, it will be
considered a violation of Rule 6.17 if the
responsible OTP Holder or OTP Firm is
not available to reconcile an
uncompared trade when contacted by
NYSE Arca Trade Processing
Department.
Currently, OTP Holders that fail to
remain accessible for a specified amount
of time after trade processing are subject
to disciplinary action pursuant to the
NYSE Arca Minor Rule Plan. The
Exchange proposes to revise the text in
Rule 10.12(h)(9) and Rule 10.12(k)(9) of
the Minor Rule Plan to state that it will
be a violation if an OTP Holder is not
available when contacted by the
Exchange to reconcile an uncompared
trade.
Rule 6.29—Payment for Floor
Brokerage Services:
When an OTP Holder acts as a Floor
Broker for another OTP Holder they may
receive remuneration for such brokerage
services. Rule 6.29 states that payment
of brokerage commissions to Floor
Brokers shall be made no later than the
thirtieth day of the month provided that
an invoice detailing the brokerage
charges for the services performed is
delivered to the OTP Holder or OTP
Firm receiving such brokerage services
no later than the tenth day of that
month.
The terms of floor brokerage
remuneration is generally spelled out in
a contractual agreement between OTP
Holders. The Exchange does not set
commission rates for brokerage services,
nor is the Exchange a party to any
contractual agreements between OTP
Holders, nor is the Exchange involved
in the billing and collecting of such
commissions. All terms related to the
payment of brokerage commissions are
between OTP Holders, and do not in
4 This requirement is based on Rule 6.61(a) of The
Chicago Board Options Exchange.
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any way involve the Exchange.5
Therefore, NYSE Arca does not believe
there is cause for an Exchange rule that
specifies when payment for brokerage
services is payable by OTP Holders.
The Exchange proposes to delete the
text of Rule 6.29 in its entirety and
reserve the rule number for future use.
Rule 6.32—Market Maker Defined
6.32A—Market Maker Defined—OX:
Rule 6.32(a) defines a Market Maker
as an individual who is registered with
the Exchange for the purpose of making
transactions as a dealer-specialist on the
Floor of the Exchange or for the purpose
of submitting quotes electronically and
making transactions as a dealerspecialist through the NYSE Arca OX
electronic trading system.
Rule 6.32A defines a Market Maker as
an OTP Holder or OTP Firm that is
registered with the Exchange for the
purpose of submitting quotes
electronically and making transactions
as a dealer-specialist through the OX
trading platform from on the trading
floor or remotely from off the trading
floor.
Both 6.32(a) and 6.32A also contain
additional descriptive language
regarding Market Makers, and Lead
Market Makers. This language is
virtually identical in both rules. In
addition, Rule 6.32A contains a
provision that states that a Market
Maker submitting quotes remotely is not
eligible to participate in trades effected
in open outcry except to the extent that
such Market Maker’s quotation
represents the BBO.
Given that the two rules described
above are vastly similar, the Exchange
now proposes to delete Rule 6.32A in its
entirety while incorporating a portion of
it into Rule 6.32(a). Since most of Rule
6.32A is already included in Rule
6.32(a), Rule 6.32(a) will remain
virtually unchanged except for the
addition of a new subsection (2) which
will contain the provision from Rule
6.32A regarding a remote Market
Maker’s ability to participate in trades
effected in open outcry.
This proposal is intended to simplify
existing rules regarding the definition of
a Market Maker by deleting the
duplicative text contained in Rule
6.32A, while incorporating the still
relevant portions into Rule 6.32(a). This
rule change will not in any way affect
the rights or obligations of Market
Makers.
5 The Exchange notes that books and records
pertaining to brokerage commissions may be
requested by the Exchange during the course of an
examination or investigation of OTP Holders and
OTP Firms.
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The Exchange also proposes to make
technical revisions to rule reference
contained in Rule 6.1A(a)(8) and Rule
6.87 Commentary .05 to reflect the
proposed change to Rule 6.32A.
Rule 6.36—Letters of Guarantee
Rule 6.45—Letters of Authorization:
Rule 6.36(c) addresses Letters of
Guarantee for Market Makers and states
that a Letter of Guarantee shall remain
in effect until a final written notice of
revocation has been filed with the
Exchange and posted on the bulletin
board of the Options Trading Floor. If
such final written notice has not been
posted for at least one hour prior to the
opening of trading on a particular
business day, such revocation shall not
become effective until the close of
trading on such day.
Rule 6.45(c) addresses Letters of
Authorization for Floor Brokers and
states that a Letter of Authorization
shall remain in effect until a written
notice of revocation has been filed with
the Exchange and posted on the bulletin
board of the Options Trading Floor. If
such written notice has not been posted
for at least one hour prior to the opening
of trading on a particular business day,
such revocation shall not become
effective until the close of trading on
such day.
NYSE Arca believes that the posting
of notices of revocation on a bulletin
board is simply an administrative
function of the Exchange and should not
actually define when a notice of
revocation should be effective. The
Exchange does not believe that it is
necessary to require the actual posting
of notices of revocations in order for
them to be effective, provided the
Exchange does receive notification at
least one hour prior to the opening of
trading.
The Exchange now proposes to revise
Rule 6.36(c) and Rule 6.45(c) by
removing the requirement that the
Exchange post the Letter of Revocation
on the bulletin board on the floor one
hour before the opening of business in
order for the revocation to be effective.
Instead, pursuant to the proposed rule
change, Letters of Guarantee and Letters
of Authorization will remain in effect
until a final written notice of revocation
has been filed via e-mail with the
Exchange. If such final written notice
has not been received via e-mail by the
Exchange at least one hour prior to the
opening of trading on a particular
business day, such revocation shall not
become effective until the close of
trading on such day.
Making notices of revocation, filed
one hour before the opening of trading,
effective without posting on a bulletin
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Federal Register / Vol. 75, No. 91 / Wednesday, May 12, 2010 / Notices
WReier-Aviles on DSKGBLS3C1PROD with NOTICES
board is consistent with rules regarding
notices of revocation presently in place
at NASDAQ OMX PHLX, and NYSE
Amex.6
The Exchange recognizes that posting
notices on the bulletin board also serves
as a way to communicate membership
information to OTP Holders.
Accordingly, NYSE Arca will continue
to publish the names of all terminated
Market Makers and Floor Brokers in the
Weekly Bulletin. The Weekly Bulletin is
distributed via e-mail to all OTP
Holders and is also posted on the
Exchange Web site.7
Rule 6.37—Obligations of Market
Makers
Rule 6.37A—Obligations of Market
Makers—OX:
NYSE Arca proposes to amend Rules
6.37 and 6.37A by eliminating
provisions in each rule that provide for
bids/offers to be no higher/lower than
the last preceding transaction plus or
minus the aggregate change in the last
sale price of the underlying security
(‘‘one point rule’’).
Specifically, Rule 6.37(b)(2) and Rule
6.37A(b)(6) both provide that Market
Makers are expected ordinarily not to
bid more than $1 lower or offer more
than $1 higher than the last preceding
transaction price for the particular
option contract plus or minus the
aggregate change in the last sale price of
the underlying security since the time of
the last preceding transaction for the
particular option contract.
The Exchange now proposes to
eliminate the one point rule. The one
point rule was first established when
NYSE Arca (f/k/a The Pacific Exchange)
started trading listed options in 1976.
Since that time various market changes
have rendered the rule obsolete and
unnecessary. For example, market
makers are now subject to various
quotation requirements, including bid/
ask quote width requirements contained
elsewhere in Rules 6.37 and 6.37A. The
Exchange also has an obvious error rule
that contains provisions on erroneous
pricing errors (e.g., Rule 6.87). In
addition, the NYSE Arca automated
trading system has in place certain price
check parameters that will not permit
the automatic execution of certain
orders if the execution would take place
at prices inferior to the national best
bid/offer.
The text of Rule 6.37(b)(2) and Rule
6.37A(b)(6) will be deleted; however the
Exchange proposes to designate the rule
6 See NASDAQ PHLX OMX Rule 1062(c), NYSE
Amex Rule 924NY(c).
7 NYSE Arca Weekly Bulletins can be found at
https://www.nyx.com/regulation, under ‘‘Public
Information.’’
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numbers as ‘‘reserved’’ for possible
future use.
The elimination of the NYSE Arca one
point rule is consistent with similar rule
changes by the Chicago Board Options
Exchange (‘‘CBOE’’) and the
International Securities Exchange
(‘‘ISE’’).8
NYSE Arca is also proposing to make
non-substantive changes to certain
provisions of Rules 6.37 and 6.37A
containing references to the proposed
rule deletions.
Rule 6.60—Order Service Firms:
An Order Service Firm is an OTP
Holder or OTP Firm that is registered
with the Exchange for the purpose of
accepting orders for the purchase or sale
of stocks or commodity futures contracts
from Market Makers on the Floor of the
Exchange, and forwarding such orders
for execution.
Prior to the advent of electronic
access to the equities markets, Market
Makers on the floor of the Exchange
would use Order Service Firms to place
stock orders used in hedging options
trades. All Market Makers now have
electronic access to the equities markets,
rendering the use of an Order Service
Firm obsolete. There are presently no
Order Service Firms operating on the
floor,9 nor does the Exchange anticipate
ever having the need for them in the
future. Therefore, NYSE Arca proposes
to delete the language from Rule 6.60 in
its entirety, and reserve the rule number
for possible future use.
Rule 6.66—Order Identification:
Rule 6.66 deals with order
identification and a Floor Broker’s
responsibility to disclose certain
information pertaining to the party for
whom they are acting as agent.
Rule 6.66 Commentary .01 requires a
Floor Broker, when requesting a market
and size, to disclose the name of the
OTP Holder or OTP Firm for whom he
is acting. Commentary .01 goes on to say
a Floor Broker must, upon request,
disclose the name of such OTP Holder
or OTP Firm immediately upon
effecting any transaction.
NYSE Arca no longer believes that it
is necessarily in the best interest of the
marketplace to require Floor Brokers to
supply such information when
requesting quotations or effecting
transactions. The Exchange feels that
disclosing the name of the OTP Holder
or OTP Firm when asking for a market
and size could lead to disparate
8 See Securities Exchange Act Release No. 60295
(July 13, 2009), 74 FR 35215 (July 20, 2009) (SR–
CBOE–2009–49) and Securities Exchange Act
Release No. 60897 (October 28, 2009) 74 FR 57217
(November 4, 2009) (SR–ISE–2009–85).
9 The last Order Service Firm ceased operations
on the floor of the Exchange in 2005.
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26835
treatment on the part of trading crowd
participants. Furthermore, requiring a
Floor Broker to disclose the name of the
OTP Holder or OTP Firm participating
on a trade is not in keeping with an
effort to provide anonymity when
trading on NYSE Arca.
While these provisions may have had
merit when initially enacted, they have
become outdated by today’s standards.
There are other provisions within
Exchange rules requiring a Floor Broker
to disclose when they are trading on
behalf of a BD or Market Maker, without
compromising the anonymity of the
market. Therefore, the Exchange
proposes to eliminate Commentary .01
in its entirety.
Rule 6.68—Record of Orders:
Rule 6.68(a) requires OTP Holder and
OTP Firms to maintain and preserve a
record of every order and of any other
instruction given or received for the
purchase or sale of option contracts for
the period specified under SEC Rule
17a–4. Rule 6.68(a) also states that the
Exchange shall maintain and preserve
all electronic orders on behalf of OTP
Holders and OTP Firms.
The maintenance and preservation of
electronic orders by the Exchange, on
behalf of OTP Holders and OTP Firms,
came about in 2004 when the Exchange
introduced the Electronic Order Capture
(‘‘EOC’’) System.10 The EOC system is
the Exchange’s electronic audit trail and
order tracking system designed to
provide an accurate time-sequenced
record of all orders and transactions on
the Exchange. Prior to the introduction
of the EOC system, all orders were
written on paper tickets, the
maintenance of which was the
responsibility of OTP Holders and OTP
Firms. The EOC system is an Exchange
proprietary system and at the time it
was introduced OTP Holders and OTP
Firms did not have access to historic
order records contained in the system.
In order to allow OTP Holders and OTP
Firms to remain in compliance with
their own books and records
requirements, the Exchange preserved
and maintained all records of electronic
orders on their behalf. In the event an
OTP Holder or OTP Firm needed access
to these order records, the Exchange
would furnish such records upon
request.
Beginning in 2007, the Exchange
made electronic order records available
to OTP Holders and OTP Firms via an
electronic file. OTP Holders and OTP
Firms are able to download this file on
10 See SR–PCX–2004–122 (December 14, 2004),
Securities Exchange Act Release No. 50854
(December 14, 2004), 72 FR 76808 (December 22,
2004).
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Federal Register / Vol. 75, No. 91 / Wednesday, May 12, 2010 / Notices
WReier-Aviles on DSKGBLS3C1PROD with NOTICES
a daily basis and store the information
on their own proprietary systems. The
information contained in the daily
report is identical to the information
that the Exchange kept on behalf of OTP
Holders and OTP Firms. Each daily
trade report remains available on-line
for a period of thirty days. Since OTP
Holders and OTP Firms can now access
this information themselves, there is no
longer an ongoing need for the Exchange
to maintain such records on behalf of
OTP Holders and OTP Firms. The
Exchange now proposes to remove the
provision in Rule 6.68(a) that states that
the Exchange shall maintain and
preserve all electronic orders on behalf
of OTP Holders and OTP Firms.
NYSE Arca notes that this proposed
rule change only affects the Exchange’s
maintenance and preservation of
electronic order records on behalf of
OTP Holders and OTP Firms. The
proposed rule change does not in any
way alter the Exchange’s obligation to
maintain and preserve order records
pursuant to its own books and records
requirements.
Rule 6.70—Price Binding Despite
Erroneous Report:
Rule 6.70 states that the price at
which an order is executed shall be
binding notwithstanding that an
erroneous report in respect thereto may
have been rendered, or no report
rendered. In addition, Rule 6.70
contains commentary pertaining to
erroneous prints and trades in securities
underlying options traded on the
Exchange.
At the time this rule was adopted in
1999,11 all trading was conducted on the
floor of the Exchange via open outcry.
Since that time, the Exchange has
introduced electronic options trading,
along with associated rules governing
such trading. Specifically, erroneous
transactions in the electronic market are
governed by Rule 6.87. The Exchange
now proposes to add commentary to
Rule 6.70 stating that the rule is
applicable only to non-electronic orders
and transactions. The proposed rule
change does not alter existing Exchange
procedures pertaining to erroneous
transactions, but simply serves to offer
clarity on the applicability of Rule 6.70
to open outcry transactions only.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
Section 6(b) of the Act 12 in general, and
furthers the objectives of Section 6(b)(5)
11 See SR–PCX–1999–44 (October 29, 1999),
Securities Exchange Act Release No. 43149 (August
11, 2000), 65 FR 51392 (August 23, 2000) (File No.
SR–PCX–99–44).
12 15 U.S.C. 78f(b).
VerDate Mar<15>2010
15:00 May 11, 2010
Jkt 220001
of the Act 13 in particular, because 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,
and to remove impediments to and
perfect the mechanism of a free and
open market and a national market
system. The changes proposed in this
filing are simply designed to eliminate
or revise outdated or obsolete rules and
practices on NYSE Arca.
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 written comments were either
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 14 and Rule
19b–4(f)(6) thereunder.15 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) 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 pursuant to Section 19(b)(3)(A)
of the Act 16 and Rule 19b–4(f)(6)(iii)
thereunder.17
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
13 15
U.S.C. 78f(b)(5).
U.S.C. 78s(b)(3)(A)(iii).
15 17 CFR 240.19b–4(f)(6).
16 15 U.S.C. 78s(b)(3)(A).
17 17 CFR 240.19b–4(f)(6). 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 Exchange
has satisfied the pre-filing requirement.
14 15
PO 00000
Frm 00131
Fmt 4703
Sfmt 4703
necessary or appropriate in the public
interest, for the protection of investors,
or otherwise in furtherance of the
purposes of the Act.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–NYSEArca–2010–38 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–NYSEArca–2010–38. 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 Web site viewing and
printing in the Commission’s Public
Reference Room, 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 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–NYSEArca–2010–38 and
should be submitted on or before June
2, 2010.
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Federal Register / Vol. 75, No. 91 / Wednesday, May 12, 2010 / Notices
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.18
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–11253 Filed 5–11–10; 8:45 am]
BILLING CODE 8010–01–P
DEPARTMENT OF STATE
[Public Notice 6999]
Advisory Committee on Historical
Diplomatic Documentation Notice of
Meeting
The Advisory Committee on
Historical Diplomatic Documentation
will meet on June 7 and June 8, 2010 at
the Department of State, 2201 ‘‘C’’ Street
NW., Washington, DC.
Prior notification and a valid
government-issued photo ID (such as
driver’s license, passport, U.S.
government or military ID) are required
for entrance into the building. Members
of the public planning to attend must
notify Margaret Morrissey, Office of the
Historian (202–663–3529) no later than
June 3, 2010, to provide date of birth,
valid government-issued photo
identification number and type (such as
driver’s license number/state, passport
number/country, or US government ID
number/agency or military ID number/
branch), and relevant telephone
numbers. If you cannot provide one of
the specified forms of ID, please consult
with Margaret Morrissey for acceptable
alternative forms of picture
identification. In addition, any requests
for reasonable accommodation should
be made no later than June 1, 2010.
Requests for reasonable accommodation
received after that time will be
considered, but might be impossible to
fulfill.
The Committee will meet in open
session from 1:30 p.m. through 2:30
p.m. on Monday, June 7, 2010, in the
Department of State, 2201 ‘‘C’’ Street
NW., Washington, DC, in Conference
Room 1205, to discuss declassification
and transfer of Department of State
records to the National Archives and
Records Administration and the status
of the Foreign Relations series. The
remainder of the Committee’s sessions
from 2:45 p.m. until 5 p.m. on Monday,
June 7, 2010 and 9 a.m. until 12 p.m. on
Tuesday, June 8, 2010, will be closed in
accordance with Section 10(d) of the
Federal Advisory Committee Act (Pub.
L. 92–463). The agenda calls for
discussions of agency declassification
decisions concerning the Foreign
WReier-Aviles on DSKGBLS3C1PROD with NOTICES
SUMMARY:
18 17
CFR 200.30–3(a)(12).
VerDate Mar<15>2010
15:00 May 11, 2010
Jkt 220001
Relations series and other
declassification issues. These are
matters properly classified and not
subject to public disclosure under 5
U.S.C. 552b(c)(1) and the public interest
requires that such activities be withheld
from disclosure. Questions concerning
the meeting should be directed to
Ambassador Edward Brynn, Executive
Secretary, Advisory Committee on
Historical Diplomatic Documentation,
Department of State, Office of the
Historian, Washington, DC 20520,
telephone (202) 663–1123, (e-mail
history@state.gov).
Dated: April 29, 2010.
Ambassador Edward Brynn,
Executive Secretary, Advisory Committee on
Historical Diplomatic Documentation,
Department of State.
[FR Doc. 2010–11328 Filed 5–11–10; 8:45 am]
BILLING CODE 4710–11–P
DEPARTMENT OF TRANSPORTATION
National Highway Traffic Safety
Administration
[U.S. DOT Docket No. NHTSA–2010–0038]
Reports, Forms, and Record Keeping
Requirements
AGENCY: National Highway Traffic
Safety Administration (NHTSA), DOT.
ACTION: Request for public comment on
proposed collection of information.
SUMMARY: Before a Federal agency can
collect certain information from the
public, it must receive approval from
the Office of Management and Budget
(OMB). Under procedures established
by the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.), before seeking
OMB approval, Federal agencies must
solicit public comment on proposed
collections of information, including
extensions and reinstatements of
previously approved collections.
This document describes an
Information Collection Request (ICR) for
which NHTSA intends to seek OMB
approval.
DATES: Comments must be submitted on
or before July 12, 2010.
ADDRESSES: Direct all written comments
to the U.S. Department of
Transportation Dockets, 1200 New
Jersey Ave, SE., Washington, DC, 20590.
Docket No. NHTSA–2010–0038.
FOR FURTHER INFORMATION CONTACT:
Randolph Atkins, PhD, Contracting
Officer’s Technical Representative,
Office of Behavioral Safety Research
(NTI–131), National Highway Traffic
Safety Administration, 1200 New Jersey
PO 00000
Frm 00132
Fmt 4703
Sfmt 4703
26837
Ave, SE., W46–500, Washington, DC,
20590. Dr. Atkins’ phone number is
202–366–5597 and his e-mail address is
randolph.atkins@dot.gov.
SUPPLEMENTARY INFORMATION:
Under the Paperwork Reduction Act
of 1995, before an agency submits a
proposed collection of information to
OMB for approval, it must publish a
document in the Federal Register
providing a 60-day comment period and
otherwise consult with members of the
public and affected agencies concerning
each proposed collection of information.
The OMB has promulgated regulations
describing what must be included in
such a document. Under OMB’s
regulations (at 5 CFR 1320.8(d)), an
agency must ask for public comment on
the following:
(i) Whether the proposed collection of
information is necessary for the proper
performance of the functions of the
agency, including whether the
information will have practical utility;
(ii) The accuracy of the agency’s
estimate of the burden of the proposed
collection of information, including the
validity of the methodology and
assumptions used;
(iii) How to enhance the quality,
utility, and clarity of the information to
be collected; and
(iv) How to minimize the burden of
the collection of information on those
who are to respond, including the use
of appropriate automated, electronic,
mechanical, or other technological
collection techniques or other forms of
information technology, e.g., permitting
electronic submission of responses.
In compliance with these
requirements, NHTSA asks public
comment on the following proposed
collection of information:
Title: Investigate the Use and
Feasibility of Speed Warning Devices.
Type of Request: New information
collection request—debriefing session
follow-up with participants from an
earlier on-road instrumented vehicle
study.
OMB Clearance Number: N/A.
Form Number: This collection of
information uses no standard forms.
Requested Expiration Date of
Approval: September 17, 2011.
Summary of the Collection of
Information: In this pilot study, the
National Highway Traffic Safety
Administration (NHTSA) will be
conducting on-road instrumented
vehicle data collection in the Rockville,
MD area with a total of 80 participants
who have a history of speeding
violations to examine the impact of invehicle speed warning devices on their
driving speed patterns and speeding
E:\FR\FM\12MYN1.SGM
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Agencies
[Federal Register Volume 75, Number 91 (Wednesday, May 12, 2010)]
[Notices]
[Pages 26832-26837]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-11253]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-62052; File No. SR-NYSEArca-2010-38]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by NYSE Arca, Inc. to Clarify,
Eliminate, Revise, or Delete Certain Out-Dated or Obsolete Rules
May 6, 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 April 28, 2010, NYSE Arca, Inc. (``NYSE Arca'' or ``Exchange'')
filed with the Securities and Exchange Commission (the ``Commission'')
the proposed rule change as described in Items I, II, and III below,
which Items have been prepared by the self-regulatory organization. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
[[Page 26833]]
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to revise its rules by clarifying existing
provisions, eliminating superfluous provisions, and revising or
deleting certain out-dated or obsolete rules. The text of the proposed
rule change is available on the Exchange's Web site at https://www.nyse.com, at the principal office of the Exchange, on the
Commission's Web site at https://www.sec.gov, 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 these 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 aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of this filing is to revise certain Exchange rules in
order to clarify existing provisions, eliminate superfluous provisions,
delete certain out-dated or obsolete rules and to incorporate current
policies and procedures applicable to existing rules. A description of
each of the proposed rules changes is shown below.
Rule 2.12--OTP Holders and OTP Firms:
Rule 2.12(a) requires that each OTP Firm and OTP Holder shall be
fully qualified to do business in California. This rule dates back to
when NYSE Arca (f/k/a The Pacific Exchange) was headquartered in
California and all business on the Exchange was conducted on the
physical trading floor.
While the Exchange still operates a trading floor in California,
OTP Holders and OTP Firms are not required to have a floor presence.
OTP Holders and OTP Firms are able to conduct business from remote
locations throughout the country.
NYSE Arca proposes to remove this outdated and obsolete requirement
that OTP Holders and OTP Firms be fully qualified to conduct business
in California.
Rule 2.24--Floor Employees of OTP Firms:
Rule 2.24(d) states that an OTP Firm or OTP Holder with an employee
on the options trading floor of the Exchange must have at least one OTP
Holder or nominee present on the floor at all times, and that such OTP
Holders or nominees shall be responsible for all floor employees of the
OTP Firm. The rationale for this rule is to help ensure that there is
adequate supervision of all firm employees while on the options trading
floor.
With the advent of remote market making and electronic access, NYSE
Arca no longer requires that all OTP Holders, or nominees thereof, be
physically present on the floor. However, there could be occasions
where an OTP Firm does have employees on the floor, but the actual
person designated as the OTP Holder works from a remote location. These
employees would typically operate in a trade support, technical or
clearing capacity, but would not be directly involved in the trading of
options.
Pursuant to Rule 11.18, OTP Holders or OTP Firms must establish and
maintain a system to supervise the activities of its associated persons
and the operations of its business. Such system must be reasonably
designed to ensure compliance with applicable federal securities laws
and regulations and the rulers [sic] of NYSE Arca. In addition, OTP
Holders and OTP Firms must designate a person with authority to
reasonably discharge his/her duties and obligations in connection with
supervision and control of the activities of the associated persons of
the OTP Holder or OTP Firm. In addition, the OTP Holder or OTP Firm
must undertake reasonable efforts to determine that all supervisory
personnel are qualified by virtue of experience or training to carry
out their assigned responsibilities.
The Exchange now proposes to revise Rule 2.24 so that an OTP Holder
or OTP Firm with employees on the options trading floor, none of which
are directly involved in the trading of options, will no longer be
required to have an OTP Holder, or Nominee thereof, present on the
options trading floor at all times. Instead, the Exchange proposes that
in keeping with the supervisory obligations contained in rule 11.18,
OTP Holders and OTP Firms with non-trading employees on the options
floor, must have at least one employee with supervisory
responsibilities present on the trading floor. Each OTP Holder or OTP
Firm must designate and specifically identify to the Exchange one or
more persons who will be responsible for supervision and control of the
activities of the associated persons of the OTP Holder or OTP Firm.
This rule change does not in any way affect the obligation of OTP
Holders and OTP Firms to properly supervise their floor employees. The
proposed rule change is simply designed to offer flexibility to OTP
Holders and OTP Firms when establishing their supervisory systems in
accordance with Rule 11.18.
Rule 3.1--Overview:
Rule 3.1 Commentary .01 contains an outdated provision related to
the demutualization of The Pacific Exchange (n/k/a NYSE Arca).
Commentary .01 states that rule changes regarding demutualization in
SR-PCX-2004-08 would become effective once the appropriate federal and
state regulatory approvals were received and NYSE Arca filed the
applicable documentation with the State of Delaware. All approvals
pertaining to the demutualization of the Pacific Exchange were
received, and all applicable documentation was filed with the State of
Delaware. The Exchange now proposes to delete Rule 3.1 Commentary .01,
in its entirety.
Rule 6.17--Verification of Compared Trades and Reconciliation of
Uncompared Trades:
Rule 6.17 Commentary .01 states that OTP Holders and OTP Firms that
are clearing members of the Options Clearing Corporation must have a
representative physically present on the trading floor to reconcile
uncompared trades. In addition, Rule 6.17 Commentary .01 contains
guidelines for how long such representative must remain on the floor
after the close of trading.
The Exchange realizes that it is no longer necessary for a
representative of an OTP Holder or OTP Firm to be physically present on
the trading floor in order to reconcile uncompared trades. Thus, the
Exchange proposes to revise Rule 6.17, Commentary .01 by adding
language stating that in addition to being physically present on the
floor, such representative may be accessible via telephone or e-
mail.\3\ In addition, the Exchange proposes to remove the specific
guidelines for how long a representative must remain available after
the close of trading and instead state that a representative of an OTP
Holder or OTP Firm must be available to resolve unmatched trades until
the
[[Page 26834]]
final trade transmission is sent to The Options Clearing Corporation
(``OCC'').\4\
---------------------------------------------------------------------------
\3\ OTP Holders and OTP Firms are required to keep a current e-
mail address on file with the Exchange. In addition, the NYSE Arca
Trade Processing Department maintains contact names and phone
numbers for all OTP Holders.
\4\ This requirement is based on Rule 6.61(a) of The Chicago
Board Options Exchange.
---------------------------------------------------------------------------
Rule 6.17 also states that OTP Holders and OTP Firms, that are
clearing members of the Options Clearing Corporation, must have a
representative present on the floor each Saturday immediately following
expiration, and that it is the responsibility of the Exchange staff
member to determine that such representative is present. The Exchange
now proposes to add language stating that an alternative to being
physically present on the floor, such representative may be accessible
via telephone or e-mail.
In addition, Exchange staff will no longer make a determination as
to whether representatives are present on the Trading Floor, or
otherwise accessible. However, it will be considered a violation of
Rule 6.17 if the responsible OTP Holder or OTP Firm is not available to
reconcile an uncompared trade when contacted by NYSE Arca Trade
Processing Department.
Currently, OTP Holders that fail to remain accessible for a
specified amount of time after trade processing are subject to
disciplinary action pursuant to the NYSE Arca Minor Rule Plan. The
Exchange proposes to revise the text in Rule 10.12(h)(9) and Rule
10.12(k)(9) of the Minor Rule Plan to state that it will be a violation
if an OTP Holder is not available when contacted by the Exchange to
reconcile an uncompared trade.
Rule 6.29--Payment for Floor Brokerage Services:
When an OTP Holder acts as a Floor Broker for another OTP Holder
they may receive remuneration for such brokerage services. Rule 6.29
states that payment of brokerage commissions to Floor Brokers shall be
made no later than the thirtieth day of the month provided that an
invoice detailing the brokerage charges for the services performed is
delivered to the OTP Holder or OTP Firm receiving such brokerage
services no later than the tenth day of that month.
The terms of floor brokerage remuneration is generally spelled out
in a contractual agreement between OTP Holders. The Exchange does not
set commission rates for brokerage services, nor is the Exchange a
party to any contractual agreements between OTP Holders, nor is the
Exchange involved in the billing and collecting of such commissions.
All terms related to the payment of brokerage commissions are between
OTP Holders, and do not in any way involve the Exchange.\5\ Therefore,
NYSE Arca does not believe there is cause for an Exchange rule that
specifies when payment for brokerage services is payable by OTP
Holders.
---------------------------------------------------------------------------
\5\ The Exchange notes that books and records pertaining to
brokerage commissions may be requested by the Exchange during the
course of an examination or investigation of OTP Holders and OTP
Firms.
---------------------------------------------------------------------------
The Exchange proposes to delete the text of Rule 6.29 in its
entirety and reserve the rule number for future use.
Rule 6.32--Market Maker Defined
6.32A--Market Maker Defined--OX:
Rule 6.32(a) defines a Market Maker as an individual who is
registered with the Exchange for the purpose of making transactions as
a dealer-specialist on the Floor of the Exchange or for the purpose of
submitting quotes electronically and making transactions as a dealer-
specialist through the NYSE Arca OX electronic trading system.
Rule 6.32A defines a Market Maker as an OTP Holder or OTP Firm that
is registered with the Exchange for the purpose of submitting quotes
electronically and making transactions as a dealer-specialist through
the OX trading platform from on the trading floor or remotely from off
the trading floor.
Both 6.32(a) and 6.32A also contain additional descriptive language
regarding Market Makers, and Lead Market Makers. This language is
virtually identical in both rules. In addition, Rule 6.32A contains a
provision that states that a Market Maker submitting quotes remotely is
not eligible to participate in trades effected in open outcry except to
the extent that such Market Maker's quotation represents the BBO.
Given that the two rules described above are vastly similar, the
Exchange now proposes to delete Rule 6.32A in its entirety while
incorporating a portion of it into Rule 6.32(a). Since most of Rule
6.32A is already included in Rule 6.32(a), Rule 6.32(a) will remain
virtually unchanged except for the addition of a new subsection (2)
which will contain the provision from Rule 6.32A regarding a remote
Market Maker's ability to participate in trades effected in open
outcry.
This proposal is intended to simplify existing rules regarding the
definition of a Market Maker by deleting the duplicative text contained
in Rule 6.32A, while incorporating the still relevant portions into
Rule 6.32(a). This rule change will not in any way affect the rights or
obligations of Market Makers.
The Exchange also proposes to make technical revisions to rule
reference contained in Rule 6.1A(a)(8) and Rule 6.87 Commentary .05 to
reflect the proposed change to Rule 6.32A.
Rule 6.36--Letters of Guarantee
Rule 6.45--Letters of Authorization:
Rule 6.36(c) addresses Letters of Guarantee for Market Makers and
states that a Letter of Guarantee shall remain in effect until a final
written notice of revocation has been filed with the Exchange and
posted on the bulletin board of the Options Trading Floor. If such
final written notice has not been posted for at least one hour prior to
the opening of trading on a particular business day, such revocation
shall not become effective until the close of trading on such day.
Rule 6.45(c) addresses Letters of Authorization for Floor Brokers
and states that a Letter of Authorization shall remain in effect until
a written notice of revocation has been filed with the Exchange and
posted on the bulletin board of the Options Trading Floor. If such
written notice has not been posted for at least one hour prior to the
opening of trading on a particular business day, such revocation shall
not become effective until the close of trading on such day.
NYSE Arca believes that the posting of notices of revocation on a
bulletin board is simply an administrative function of the Exchange and
should not actually define when a notice of revocation should be
effective. The Exchange does not believe that it is necessary to
require the actual posting of notices of revocations in order for them
to be effective, provided the Exchange does receive notification at
least one hour prior to the opening of trading.
The Exchange now proposes to revise Rule 6.36(c) and Rule 6.45(c)
by removing the requirement that the Exchange post the Letter of
Revocation on the bulletin board on the floor one hour before the
opening of business in order for the revocation to be effective.
Instead, pursuant to the proposed rule change, Letters of Guarantee and
Letters of Authorization will remain in effect until a final written
notice of revocation has been filed via e-mail with the Exchange. If
such final written notice has not been received via e-mail by the
Exchange at least one hour prior to the opening of trading on a
particular business day, such revocation shall not become effective
until the close of trading on such day.
Making notices of revocation, filed one hour before the opening of
trading, effective without posting on a bulletin
[[Page 26835]]
board is consistent with rules regarding notices of revocation
presently in place at NASDAQ OMX PHLX, and NYSE Amex.\6\
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\6\ See NASDAQ PHLX OMX Rule 1062(c), NYSE Amex Rule 924NY(c).
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The Exchange recognizes that posting notices on the bulletin board
also serves as a way to communicate membership information to OTP
Holders. Accordingly, NYSE Arca will continue to publish the names of
all terminated Market Makers and Floor Brokers in the Weekly Bulletin.
The Weekly Bulletin is distributed via e-mail to all OTP Holders and is
also posted on the Exchange Web site.\7\
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\7\ NYSE Arca Weekly Bulletins can be found at https://www.nyx.com/regulation, under ``Public Information.''
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Rule 6.37--Obligations of Market Makers
Rule 6.37A--Obligations of Market Makers--OX:
NYSE Arca proposes to amend Rules 6.37 and 6.37A by eliminating
provisions in each rule that provide for bids/offers to be no higher/
lower than the last preceding transaction plus or minus the aggregate
change in the last sale price of the underlying security (``one point
rule'').
Specifically, Rule 6.37(b)(2) and Rule 6.37A(b)(6) both provide
that Market Makers are expected ordinarily not to bid more than $1
lower or offer more than $1 higher than the last preceding transaction
price for the particular option contract plus or minus the aggregate
change in the last sale price of the underlying security since the time
of the last preceding transaction for the particular option contract.
The Exchange now proposes to eliminate the one point rule. The one
point rule was first established when NYSE Arca (f/k/a The Pacific
Exchange) started trading listed options in 1976. Since that time
various market changes have rendered the rule obsolete and unnecessary.
For example, market makers are now subject to various quotation
requirements, including bid/ask quote width requirements contained
elsewhere in Rules 6.37 and 6.37A. The Exchange also has an obvious
error rule that contains provisions on erroneous pricing errors (e.g.,
Rule 6.87). In addition, the NYSE Arca automated trading system has in
place certain price check parameters that will not permit the automatic
execution of certain orders if the execution would take place at prices
inferior to the national best bid/offer.
The text of Rule 6.37(b)(2) and Rule 6.37A(b)(6) will be deleted;
however the Exchange proposes to designate the rule numbers as
``reserved'' for possible future use.
The elimination of the NYSE Arca one point rule is consistent with
similar rule changes by the Chicago Board Options Exchange (``CBOE'')
and the International Securities Exchange (``ISE'').\8\
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\8\ See Securities Exchange Act Release No. 60295 (July 13,
2009), 74 FR 35215 (July 20, 2009) (SR-CBOE-2009-49) and Securities
Exchange Act Release No. 60897 (October 28, 2009) 74 FR 57217
(November 4, 2009) (SR-ISE-2009-85).
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NYSE Arca is also proposing to make non-substantive changes to
certain provisions of Rules 6.37 and 6.37A containing references to the
proposed rule deletions.
Rule 6.60--Order Service Firms:
An Order Service Firm is an OTP Holder or OTP Firm that is
registered with the Exchange for the purpose of accepting orders for
the purchase or sale of stocks or commodity futures contracts from
Market Makers on the Floor of the Exchange, and forwarding such orders
for execution.
Prior to the advent of electronic access to the equities markets,
Market Makers on the floor of the Exchange would use Order Service
Firms to place stock orders used in hedging options trades. All Market
Makers now have electronic access to the equities markets, rendering
the use of an Order Service Firm obsolete. There are presently no Order
Service Firms operating on the floor,\9\ nor does the Exchange
anticipate ever having the need for them in the future. Therefore, NYSE
Arca proposes to delete the language from Rule 6.60 in its entirety,
and reserve the rule number for possible future use.
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\9\ The last Order Service Firm ceased operations on the floor
of the Exchange in 2005.
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Rule 6.66--Order Identification:
Rule 6.66 deals with order identification and a Floor Broker's
responsibility to disclose certain information pertaining to the party
for whom they are acting as agent.
Rule 6.66 Commentary .01 requires a Floor Broker, when requesting a
market and size, to disclose the name of the OTP Holder or OTP Firm for
whom he is acting. Commentary .01 goes on to say a Floor Broker must,
upon request, disclose the name of such OTP Holder or OTP Firm
immediately upon effecting any transaction.
NYSE Arca no longer believes that it is necessarily in the best
interest of the marketplace to require Floor Brokers to supply such
information when requesting quotations or effecting transactions. The
Exchange feels that disclosing the name of the OTP Holder or OTP Firm
when asking for a market and size could lead to disparate treatment on
the part of trading crowd participants. Furthermore, requiring a Floor
Broker to disclose the name of the OTP Holder or OTP Firm participating
on a trade is not in keeping with an effort to provide anonymity when
trading on NYSE Arca.
While these provisions may have had merit when initially enacted,
they have become outdated by today's standards. There are other
provisions within Exchange rules requiring a Floor Broker to disclose
when they are trading on behalf of a BD or Market Maker, without
compromising the anonymity of the market. Therefore, the Exchange
proposes to eliminate Commentary .01 in its entirety.
Rule 6.68--Record of Orders:
Rule 6.68(a) requires OTP Holder and OTP Firms to maintain and
preserve a record of every order and of any other instruction given or
received for the purchase or sale of option contracts for the period
specified under SEC Rule 17a-4. Rule 6.68(a) also states that the
Exchange shall maintain and preserve all electronic orders on behalf of
OTP Holders and OTP Firms.
The maintenance and preservation of electronic orders by the
Exchange, on behalf of OTP Holders and OTP Firms, came about in 2004
when the Exchange introduced the Electronic Order Capture (``EOC'')
System.\10\ The EOC system is the Exchange's electronic audit trail and
order tracking system designed to provide an accurate time-sequenced
record of all orders and transactions on the Exchange. Prior to the
introduction of the EOC system, all orders were written on paper
tickets, the maintenance of which was the responsibility of OTP Holders
and OTP Firms. The EOC system is an Exchange proprietary system and at
the time it was introduced OTP Holders and OTP Firms did not have
access to historic order records contained in the system. In order to
allow OTP Holders and OTP Firms to remain in compliance with their own
books and records requirements, the Exchange preserved and maintained
all records of electronic orders on their behalf. In the event an OTP
Holder or OTP Firm needed access to these order records, the Exchange
would furnish such records upon request.
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\10\ See SR-PCX-2004-122 (December 14, 2004), Securities
Exchange Act Release No. 50854 (December 14, 2004), 72 FR 76808
(December 22, 2004).
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Beginning in 2007, the Exchange made electronic order records
available to OTP Holders and OTP Firms via an electronic file. OTP
Holders and OTP Firms are able to download this file on
[[Page 26836]]
a daily basis and store the information on their own proprietary
systems. The information contained in the daily report is identical to
the information that the Exchange kept on behalf of OTP Holders and OTP
Firms. Each daily trade report remains available on-line for a period
of thirty days. Since OTP Holders and OTP Firms can now access this
information themselves, there is no longer an ongoing need for the
Exchange to maintain such records on behalf of OTP Holders and OTP
Firms. The Exchange now proposes to remove the provision in Rule
6.68(a) that states that the Exchange shall maintain and preserve all
electronic orders on behalf of OTP Holders and OTP Firms.
NYSE Arca notes that this proposed rule change only affects the
Exchange's maintenance and preservation of electronic order records on
behalf of OTP Holders and OTP Firms. The proposed rule change does not
in any way alter the Exchange's obligation to maintain and preserve
order records pursuant to its own books and records requirements.
Rule 6.70--Price Binding Despite Erroneous Report:
Rule 6.70 states that the price at which an order is executed shall
be binding notwithstanding that an erroneous report in respect thereto
may have been rendered, or no report rendered. In addition, Rule 6.70
contains commentary pertaining to erroneous prints and trades in
securities underlying options traded on the Exchange.
At the time this rule was adopted in 1999,\11\ all trading was
conducted on the floor of the Exchange via open outcry. Since that
time, the Exchange has introduced electronic options trading, along
with associated rules governing such trading. Specifically, erroneous
transactions in the electronic market are governed by Rule 6.87. The
Exchange now proposes to add commentary to Rule 6.70 stating that the
rule is applicable only to non-electronic orders and transactions. The
proposed rule change does not alter existing Exchange procedures
pertaining to erroneous transactions, but simply serves to offer
clarity on the applicability of Rule 6.70 to open outcry transactions
only.
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\11\ See SR-PCX-1999-44 (October 29, 1999), Securities Exchange
Act Release No. 43149 (August 11, 2000), 65 FR 51392 (August 23,
2000) (File No. SR-PCX-99-44).
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2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act \12\ in general, and furthers the
objectives of Section 6(b)(5) of the Act \13\ in particular, because 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, and to remove impediments to and perfect
the mechanism of a free and open market and a national market system.
The changes proposed in this filing are simply designed to eliminate or
revise outdated or obsolete rules and practices on NYSE Arca.
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\12\ 15 U.S.C. 78f(b).
\13\ 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 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 either 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 \14\ and Rule 19b-4(f)(6) thereunder.\15\
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) 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 pursuant to Section 19(b)(3)(A) of the Act \16\ and Rule 19b-
4(f)(6)(iii) thereunder.\17\
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\14\ 15 U.S.C. 78s(b)(3)(A)(iii).
\15\ 17 CFR 240.19b-4(f)(6).
\16\ 15 U.S.C. 78s(b)(3)(A).
\17\ 17 CFR 240.19b-4(f)(6). 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
Exchange has satisfied the pre-filing requirement.
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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-NYSEArca-2010-38 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-NYSEArca-2010-38.
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 Web site
viewing and printing in the Commission's Public Reference Room, 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 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-NYSEArca-2010-38 and should be submitted on or before
June 2, 2010.
[[Page 26837]]
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
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\18\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-11253 Filed 5-11-10; 8:45 am]
BILLING CODE 8010-01-P