Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Add Certain Violations of Its Communications and Give-Up Policies to Its MRVP, 31496-31499 [2010-13338]

Download as PDF 31496 Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Notices become effective pursuant to Section 19(b)(3)(A) of the Act 12 and Rule 19b– 4(f)(6) thereunder.13 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 raises no novel issues and is consistent with prior approved rules on which it is based.14 Therefore, the Commission designates the proposal operative upon filing.15 At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–NYSEAmex–2010–43 on the subject line. Paper Comments • Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–NYSEAmex–2010–43. This file number should be included on the 12 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(6). In addition, Rule 19b– 4(f)(6)(iii) requires the self-regulatory organization to submit to the Commission written notice of its intent to file the proposed rule change, along with a brief description and text of the proposed rule change, at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has satisfied this requirement. 14 See e.g., Securities Exchange Act Release No. 44512 (July 3, 2001), 66 FR 36812 (July 13, 2001) (SR–NASD–00–39). 15 For purposes only of waiving the operative delay for this proposal, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). sroberts on DSKD5P82C1PROD with NOTICES 13 17 VerDate Mar<15>2010 18:21 Jun 02, 2010 Jkt 220001 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 available publicly. All submissions should refer to File Number SR– NYSEAmex–2010–43 and should be submitted on or before June 24, 2010. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.16 Florence E. Harmon, Deputy Secretary. [FR Doc. 2010–13340 Filed 6–2–10; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–62167; File No. SR–NYSE– 2010–37] Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Add Certain Violations of Its Communications and Give-Up Policies to Its MRVP May 25, 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 May 12, 2010, the New York Stock Exchange LLC (‘‘NYSE’’ or the ‘‘Exchange’’) filed with the Securities and Exchange 16 17 CFR 200.30–3(a)(12) and 200.30–3(a)(44). U.S.C.78s(b)(1). 2 17 CFR 240.19b–4. 1 15 PO 00000 Frm 00085 Fmt 4703 Sfmt 4703 Commission (the ‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend NYSE Rule 476A to add Rule 36 (Communications Between Exchange and Members’ Offices) to its List of Exchange Rule Violations and Fines Applicable Thereto (‘‘Minor Rule Violation Plan’’).3 The text of the proposed rule change is available on NYSE’s Web site at https:// www.nyse.com, on the Commission’s Web site at https://www.sec.gov, at NYSE, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend NYSE Rule 476A to add Rule 36 (Communications Between Exchange and Members’ Offices) to its Minor Rule Violation Plan. Background Effective October 1, 2008, the Exchange’s parent company, NYSE Euronext, acquired the parent company of NYSE Amex pursuant to an Agreement and Plan of Merger (the ‘‘Merger’’).4 In connection with the 3 The Exchange’s corporate affiliate, NYSE Amex LLC (‘‘NYSE Amex’’), submitted a companion rule filing proposing corresponding amendments to NYSE Amex Disciplinary Rule 476A. See SR– NYSEAmex–2010–44. 4 See Securities Exchange Act Release No. 58673 (September 29, 2008), 73 FR 57707 (October 3, E:\FR\FM\03JNN1.SGM 03JNN1 Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Notices Merger, on December 1, 2008, NYSE Amex relocated all equities trading conducted on its legacy trading systems and facilities located at 86 Trinity Place, New York, New York to systems and facilities located at 11 Wall Street, New York, New York (the ‘‘Equities Relocation’’).5 Similarly, on March 2, 2009, NYSE Amex relocated all its options trading to trading systems and facilities located at 11 Wall Street, New York, New York (the ‘‘Options Relocation’’).6 As a result of the Equities and Options Relocations, the NYSE and NYSE Amex Equities Trading Floors are located within the 11 Wall Street building in a room adjacent to the NYSE Amex Options Trading Floor. Current NYSE Rule 36 sroberts on DSKD5P82C1PROD with NOTICES NYSE Rule 36 governs two primary areas: (i) Communications between the Floor and other locations, and (ii) the use and/or possession of portable or wireless communication or trading devices. First, Rule 36 broadly prohibits members and member organizations from establishing or maintaining any telephonic or electronic communication between the Floor and any other location without Exchange approval. In addition, there are several supplementary provisions that provide more detailed prescriptions for members and member firms. Rule 36.10 advises members and member organizations that the phone company will not install or disconnect any line between the Floor and any other location without Exchange approval and that such requests should be sent to the Exchange’s Market Operations Division. Rule 36.60 further prohibits members and member organizations from listing a phone line in the name of a non-member. Rule 36.20 provides that Floor brokers may maintain a phone line at their booth locations on the Floor, or use an Exchange issued and authorized portable phone, to communicate with non-members off the Floor. Only Exchange issued and authorized portable phones may be used on the Floor in accordance with the prescriptions of Rule 36.21, and the use of personal phones is expressly 2008) (SR–NYSE–2008–60 and SR–Amex–2008–62) (order approving the Merger). 5 See Securities Exchange Act Release No. 58705 (October 1, 2008), 73 FR 58995 (October 8, 2008) (SR–Amex–2008–63) (order approving the Equities Relocation). 6 See Securities Exchange Act Release No. 59472 (February 27, 2009), 74 FR 9843 (March 6, 2009) (SR–NYSEALTR–2008–14) (order approving the Options Relocation). VerDate Mar<15>2010 18:21 Jun 02, 2010 Jkt 220001 prohibited.7 Rule 36.21 provides that Floor brokers using an Exchange issued and authorized portable phone may communicate directly from the point of sale on the Floor with someone offFloor. In addition to processing orders, Floor brokers may also provide ‘‘market look’’ observations over the phone. When taking orders over the phone, Floor brokers must comply with Rule 123(e), which requires entry of the order into an electronic system, as well as any and all other record retention requirements under Exchange Rules and the federal securities laws. Exchange issued phones do not permit callforwarding or call-waiting and may not block a caller’s identification. Notwithstanding the prescriptions of Rule 36.20, Rule 36.23 provides that members and employees of member organizations may use personal portable or wireless communications devices, including phones, outside the Exchange Trading Floor.8 In addition, members and employees of member organizations may not use personal portable or wireless communication devices on the NYSE Amex Options Trading Floor unless they are also registered to trade options on NYSE Amex. Rule 36.30 provides that, subject to Exchange approval, a DMM Unit may maintain a phone line at its post to communicate with its off-Floor business operations and/or its clearing firm. For trading purposes, a DMM Unit’s phone line may only be used to enter hedging orders through the firm’s off-Floor office or clearing firm, or through a member of an options or futures exchange as permitted under Rules 98 and 105. Under Rule 36.30, a DMM Unit may also maintain a wired or wireless device that has been registered with the Exchange, such as a computer terminal or laptop, to communicate with the DMM Unit’s off-Floor algorithms. A DMM Unit using such a wired or wireless device must certify that the device operates in accordance with all SEC and Exchange rules, policies, and procedures. In addition, the DMM Unit must create and maintain records of all messages generated by the wired or wireless device in compliance with 7 Although the Exchange does not currently trade ‘‘basket’’ securities, as defined in Rule 800, Rule 36 provides that Floor brokers trading such securities may establish phone lines at the basket trading location. 8 Rule 6A defines ‘‘Trading Floor’’ as the restricted-access physical areas designated by the Exchange for the trading of equities securities, commonly known as the ‘‘Main Room’’ and the ‘‘Garage.’’ The Exchange’s Trading Floor does not include the areas where NYSE Amex-listed options are traded, commonly known as the ‘‘Blue Room’’ and the ‘‘Extended Blue Room,’’ also known as the ‘‘NYSE Amex Options Trading Floor.’’ PO 00000 Frm 00086 Fmt 4703 Sfmt 4703 31497 NYSE Rule 440 and SEC Rules 17a–3 and 17a–4. In addition, a DMM Unit registered in an Investment Company Unit (as defined in Section 703.16 of the Listed Company Manual) or a Trust Issued Receipt (as defined in Rule 1200) may use a telephone connection or order entry terminal at its post to enter proprietary orders in (i) the Investment Company Unit or Trust Issued Receipt in another market center, (ii) a component security of such a Unit or Receipt, or (iii) options or futures related to such Unit or Receipt, and may also use the phone to obtain market information with respect to such securities. Any such order executed on the Exchange must be entered and executed in compliance with Exchange Rule 112.20 and SEC Rule 11a2–2(T) and may only be entered for hedging purposes.9 To address concerns regarding improper information sharing between the Exchange’s Trading Floor and the adjacent NYSE Amex Options Trading Floor, Rule 36.70 prohibits members and member firm employees from (i) using or possessing any wireless trading device that may be used to view or enter orders into the Exchange’s trading systems while on the NYSE Amex Options Trading Floor, and (ii) using or possessing any wireless trading device that may be used to view or enter orders into the NYSE Amex Options trading systems while on the Exchange’s Trading Floor. These prohibitions apply to any and all wireless trading devices, including devices issued by the Exchange or NYSE Amex, as well as devices that are proprietary to a member, member organization or other entity. Finally, Rules 36.40 and 36.50 prescribe certain timing and handling requirements for ‘‘give-up’’ or ‘‘step out’’ transactions, whereby a member or member organization executes a customer trade on behalf of another member. While not directly related to member or member organization communications or the use and/or possession of portable or wireless communication or trading devices, these requirements are important for ensuring that members and member organizations properly document these types of transactions. Proposed Rule Change As noted above, the Exchange proposes to add NYSE Rule 36 to its 9 The Exchange does not currently list or trade any Investment Company Units or Trust Issued Receipts. E:\FR\FM\03JNN1.SGM 03JNN1 31498 Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Notices Minor Rule Violation Plan under Rule 476A. Under the Exchange’s Minor Rule Violation Plan, the Exchange may impose a fine, not to exceed $5,000, on any member, member organization, allied member, approved person, or registered or non-registered employee of a member or member organization for a minor violation of specified Exchange rules. Such fines provide a meaningful sanction for rule violations where the facts and circumstances of the violation do not warrant the initiation of a formal disciplinary procedure under Rule 476, but do require a regulatory response that is more significant than an admonition letter.10 Currently, because Rule 36 is not part of the Exchange’s Minor Rule Violation Plan, if a member or member firm employee were to violate the prohibitions set forth in Rule 36 the Exchange would be limited to issuing either an admonition letter or initiating formal proceedings under Rule 476. This is the case whether or not the member or member firm employee violated the rule once or many times, and regardless of whether he or she made an inadvertent error or an intentional one. The Exchange believes that the current regulatory approach for dealing with Rule 36 violations is too inflexible. The Exchange recognizes that members or member firm employees may violate the prescriptions of Rule 36 intentionally, as well as accidentally or inadvertently. When a violation is intentional, formal disciplinary measures in accordance with Rule 476 may be warranted. However, while an admonition letter might be appropriate for an isolated accidental or inadvertent violation, in other cases an admonition letter would be inadequate even though a formal proceeding may not be warranted. The Exchange believes that the addition of Rule 36 to its Minor Rule Violation Plan under Rule 476A will provide a more flexible and appropriate enforcement tool that preserves the Exchange’s discretion to seek formal discipline under appropriate circumstances. sroberts on DSKD5P82C1PROD with NOTICES 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with, and furthers the objectives of, Section 10 The Exchange’s Minor Rule Violation Plan was originally adopted by the Exchange and approved by the Commission in 1985. See Securities Exchange Act Release No. 34–21688 (January 25, 1985), 50 FR 5025–01 (February 5, 1985) (SR– NYSE–84–27). It has been amended numerous times since its adoption. VerDate Mar<15>2010 18:21 Jun 02, 2010 Jkt 220001 6(b)(5) of the Act,11 in that it is designed to prevent fraudulent and manipulative acts and practices, 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 proposed rule change also furthers the objectives of Section 6(b)(6) of the Act,12 in that it provides for appropriate discipline for violations of Exchange rules and regulations. The Exchange believes that the proposed rule change will provide the Exchange with greater regulatory flexibility to enforce the prescriptions of NYSE Rule 36 in a more informal manner while also preserving the Exchange’s discretion to seek formal discipline for more serious transgressions as warranted. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change: (i) Does not significantly affect the protection of investors or the public interest; (ii) does not impose any significant burden on competition; and (iii) by its terms, does not become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, if consistent with the protection of investors and the public interest, it has become effective pursuant to Section 19(b)(3)(A) of the Act 13 and Rule 19b– 4(f)(6) thereunder.14 11 15 U.S.C. 78f(b)(5). U.S.C. 78f(b)(6). 13 15 U.S.C. 78s(b)(3)(A). 14 17 CFR 240.19b–4(f)(6). In addition, Rule 19b4(f)(6)(iii) requires the self-regulatory organization to submit to the Commission written notice of its intent to file the proposed rule change, along with a brief description and text of the proposed rule change, at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has satisfied this requirement. 12 15 PO 00000 Frm 00087 Fmt 4703 Sfmt 4703 At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–NYSE–2010–37 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–2010–37. 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 E:\FR\FM\03JNN1.SGM 03JNN1 Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Notices available publicly. All submissions should refer to File Number SR–NYSE– 2010–37 and should be submitted on or before June 24, 2010. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.15 Florence E. Harmon, Deputy Secretary. [FR Doc. 2010–13338 Filed 6–2–10; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–62179; File No. SR–Phlx– 2010–77] Self-Regulatory Organizations; NASDAQ OMX PHLX, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Reformatting the Fee Schedule May 26, 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 May 25, 2010, NASDAQ OMX PHLX, Inc. (‘‘Phlx’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) the proposed rule change as described in Items I, II, and III, below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. sroberts on DSKD5P82C1PROD with NOTICES I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend its existing NASDAQ OMX PHLX, Inc. Fee Schedule (‘‘fee schedule’’) solely to create a more user-friendly Fee Schedule. The text of the proposed rule change is available on the Exchange’s Web site at https://nasdaqtrader.com/ micro.aspx?id=PHLXfilings, at the principal office of the Exchange, at the Commission’s Public Reference Room, and on the Commission’s Web site at https://www.sec.gov. 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 Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed 15 17 CFR 200.30–3(a)(12) and 200.30–3(a)(44). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 VerDate Mar<15>2010 18:21 Jun 02, 2010 Jkt 220001 31499 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. and Non-Penny Pilot options for customers, professionals and firms. The Exchange is proposing to display the separate categories in this revised Fee Schedule although the fees remain unchanged. The Exchange’s proposal displays a similar fee for Penny Pilot and non-Penny Pilot options transactions charges for customer, A. Self-Regulatory Organization’s professionals and firms to make clear Statement of the Purpose of, and that there is no price distinction for Statutory Basis for, the Proposed Rule those market participants between Change Penny and non-Penny options. The 1. Purpose Exchange is not proposing any amendments to its fees. The purpose of the proposed rule Additionally, the Exchange proposes change is to reformat the Fee Schedule to transplant endnotes (C) and (5) from to make it more user-friendly. The the endnote section of the Fee Schedule, newly proposed Fee Schedule includes which the Exchange proposes to the current fees, which remain eliminate, into the Equity Options Fees unchanged. In the process of section to clarify which notes apply to reformatting the Fee Schedule, the displayed fees. The Exchange also additional connecting language was proposes a similar change in the added where appropriate to provide Payment for Order Flow Fees section of clarity to the end-user. The proposal the Equity Option Fees with respect to eliminates the current endnotes. The endnotes (30) and (32). Additional nonExchange believes that by placing the substantive language has been added language that is currently contained in where appropriate to indicate what endnotes into the text of the fees better section of the Fee Schedule the displays any exceptions or exclusions transplanted endnote refers to in the Fee referenced in those endnotes by more prominently displaying them in the text. Schedule. For example, the words ‘‘Payment for Order Flow Fees will be’’ Table of Contents was added to the beginning of endnote The Exchange proposes to replace the (30) to clarify the context of that descriptive term ‘‘Category’’ with a new transplanted endnote with respect to the term, ‘‘Sections’’, in the table of contents. Payment for Order Flow Fees. The This is being done solely to eliminate Exchange added similar language to the confusion in the use of the word beginning of endnotes throughout the ‘‘category’’ which is utilized in different Fee Schedule when transplanting that ways by the Exchange in its fee text to add reference for the reader and proposals. The Exchange is also for purposes of clarity. combining the Sector Index Options Sector Index Options Fees and U.S. Fees and the U.S. Dollar-Settled Foreign Dollar-Settled Foreign Currency Options Currency (‘‘WCO’’) Options Fees into Fees one section on the Fee Schedule. The Exchange similarly converted the Equity Options Fees current fees into a table for ease of The Exchange converted the current reference and combined the sector index equity options fees into a table format and U.S. dollar-settled foreign currency for ease of reference.3 Currently, the option fees into the same section of the Exchange does not separately display an Fee Schedule. options transaction charge for penny Access Service, Cancellation, pilot program options (‘‘Penny Pilot’’) 4 Membership, Regulatory and Other Fees 3 The Exchange also proposes removing all The Exchange reformatted this section references to ‘‘per contract’’ after each fee in the of the Fee Schedule to reorder these fees table. for ease of reference. The Options 4 The Penny Pilot was established in January Regulatory Fee was relocated after the 2007; and in October 2009, it was expanded and Real-Time Risk Management Fee with extended through December 31, 2010. See Securities Exchange Act Release Nos. 55153 no changes. Next, all permit related fees (January 23, 2007), 72 FR 4553 (January 31, 2007) were grouped together with the (SR–Phlx–2006–74) (approval order establishing Penny Pilot); 60873 (October 23, 2009), 74 FR 56675 endnotes weaved into this section with the clarifying language added to each (November 2, 2009) (SR–Phlx–2009–91) (expanding and extending Penny Pilot); 60966 (November 9, endnote as described herein. The 2009), 74 FR 59331 (November 17, 2009) (SR–Phlx– Streaming Quote Trader and Remote 2009–94) (adding seventy-five classes to Penny Streaming Quote Trader Fees were Pilot); and 61454 (February 1, 2010), 75 FR 6233 (February 8, 2010) (SR–Phlx–2010–12) (adding seventy-five options classes to the Penny Pilot). See also SR–Phlx–2010–65 (adding additional seventy- PO 00000 Frm 00088 Fmt 4703 Sfmt 4703 five option classes to the Penny Pilot). See also Exchange Rule 1034. E:\FR\FM\03JNN1.SGM 03JNN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 75, Number 106 (Thursday, June 3, 2010)]
[Notices]
[Pages 31496-31499]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-13338]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62167; File No. SR-NYSE-2010-37]

Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Add Certain Violations of Its Communications and Give-Up Policies to
Its MRVP

May 25, 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 May 12, 2010, the New York Stock Exchange LLC (``NYSE'' or the
``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 Exchange. 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.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

The Exchange proposes to amend NYSE Rule 476A to add Rule 36
(Communications Between Exchange and Members' Offices) to its List of
Exchange Rule Violations and Fines Applicable Thereto (``Minor Rule
Violation Plan'').\3\ The text of the proposed rule change is available
on NYSE's Web site at https://www.nyse.com, on the Commission's Web site
at https://www.sec.gov, at NYSE, and at the Commission's Public
Reference Room.
---------------------------------------------------------------------------

\3\ The Exchange's corporate affiliate, NYSE Amex LLC (``NYSE
Amex''), submitted a companion rule filing proposing corresponding
amendments to NYSE Amex Disciplinary Rule 476A. See SR-NYSEAmex-
2010-44.
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II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

1. Purpose
The Exchange proposes to amend NYSE Rule 476A to add Rule 36
(Communications Between Exchange and Members' Offices) to its Minor
Rule Violation Plan.
Background
Effective October 1, 2008, the Exchange's parent company, NYSE
Euronext, acquired the parent company of NYSE Amex pursuant to an
Agreement and Plan of Merger (the ``Merger'').\4\ In connection with
the

[[Page 31497]]

Merger, on December 1, 2008, NYSE Amex relocated all equities trading
conducted on its legacy trading systems and facilities located at 86
Trinity Place, New York, New York to systems and facilities located at
11 Wall Street, New York, New York (the ``Equities Relocation'').\5\
Similarly, on March 2, 2009, NYSE Amex relocated all its options
trading to trading systems and facilities located at 11 Wall Street,
New York, New York (the ``Options Relocation'').\6\ As a result of the
Equities and Options Relocations, the NYSE and NYSE Amex Equities
Trading Floors are located within the 11 Wall Street building in a room
adjacent to the NYSE Amex Options Trading Floor.
---------------------------------------------------------------------------

\4\ See Securities Exchange Act Release No. 58673 (September 29,
2008), 73 FR 57707 (October 3, 2008) (SR-NYSE-2008-60 and SR-Amex-
2008-62) (order approving the Merger).
\5\ See Securities Exchange Act Release No. 58705 (October 1,
2008), 73 FR 58995 (October 8, 2008) (SR-Amex-2008-63) (order
approving the Equities Relocation).
\6\ See Securities Exchange Act Release No. 59472 (February 27,
2009), 74 FR 9843 (March 6, 2009) (SR-NYSEALTR-2008-14) (order
approving the Options Relocation).
---------------------------------------------------------------------------

Current NYSE Rule 36
NYSE Rule 36 governs two primary areas: (i) Communications between
the Floor and other locations, and (ii) the use and/or possession of
portable or wireless communication or trading devices.
First, Rule 36 broadly prohibits members and member organizations
from establishing or maintaining any telephonic or electronic
communication between the Floor and any other location without Exchange
approval. In addition, there are several supplementary provisions that
provide more detailed prescriptions for members and member firms.
Rule 36.10 advises members and member organizations that the phone
company will not install or disconnect any line between the Floor and
any other location without Exchange approval and that such requests
should be sent to the Exchange's Market Operations Division. Rule 36.60
further prohibits members and member organizations from listing a phone
line in the name of a non-member.
Rule 36.20 provides that Floor brokers may maintain a phone line at
their booth locations on the Floor, or use an Exchange issued and
authorized portable phone, to communicate with non-members off the
Floor. Only Exchange issued and authorized portable phones may be used
on the Floor in accordance with the prescriptions of Rule 36.21, and
the use of personal phones is expressly prohibited.\7\ Rule 36.21
provides that Floor brokers using an Exchange issued and authorized
portable phone may communicate directly from the point of sale on the
Floor with someone off-Floor. In addition to processing orders, Floor
brokers may also provide ``market look'' observations over the phone.
When taking orders over the phone, Floor brokers must comply with Rule
123(e), which requires entry of the order into an electronic system, as
well as any and all other record retention requirements under Exchange
Rules and the federal securities laws. Exchange issued phones do not
permit call-forwarding or call-waiting and may not block a caller's
identification.
---------------------------------------------------------------------------

\7\ Although the Exchange does not currently trade ``basket''
securities, as defined in Rule 800, Rule 36 provides that Floor
brokers trading such securities may establish phone lines at the
basket trading location.
---------------------------------------------------------------------------

Notwithstanding the prescriptions of Rule 36.20, Rule 36.23
provides that members and employees of member organizations may use
personal portable or wireless communications devices, including phones,
outside the Exchange Trading Floor.\8\ In addition, members and
employees of member organizations may not use personal portable or
wireless communication devices on the NYSE Amex Options Trading Floor
unless they are also registered to trade options on NYSE Amex.
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\8\ Rule 6A defines ``Trading Floor'' as the restricted-access
physical areas designated by the Exchange for the trading of
equities securities, commonly known as the ``Main Room'' and the
``Garage.'' The Exchange's Trading Floor does not include the areas
where NYSE Amex-listed options are traded, commonly known as the
``Blue Room'' and the ``Extended Blue Room,'' also known as the
``NYSE Amex Options Trading Floor.''
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Rule 36.30 provides that, subject to Exchange approval, a DMM Unit
may maintain a phone line at its post to communicate with its off-Floor
business operations and/or its clearing firm. For trading purposes, a
DMM Unit's phone line may only be used to enter hedging orders through
the firm's off-Floor office or clearing firm, or through a member of an
options or futures exchange as permitted under Rules 98 and 105.
Under Rule 36.30, a DMM Unit may also maintain a wired or wireless
device that has been registered with the Exchange, such as a computer
terminal or laptop, to communicate with the DMM Unit's off-Floor
algorithms. A DMM Unit using such a wired or wireless device must
certify that the device operates in accordance with all SEC and
Exchange rules, policies, and procedures. In addition, the DMM Unit
must create and maintain records of all messages generated by the wired
or wireless device in compliance with NYSE Rule 440 and SEC Rules 17a-3
and 17a-4.
In addition, a DMM Unit registered in an Investment Company Unit
(as defined in Section 703.16 of the Listed Company Manual) or a Trust
Issued Receipt (as defined in Rule 1200) may use a telephone connection
or order entry terminal at its post to enter proprietary orders in (i)
the Investment Company Unit or Trust Issued Receipt in another market
center, (ii) a component security of such a Unit or Receipt, or (iii)
options or futures related to such Unit or Receipt, and may also use
the phone to obtain market information with respect to such securities.
Any such order executed on the Exchange must be entered and executed in
compliance with Exchange Rule 112.20 and SEC Rule 11a2-2(T) and may
only be entered for hedging purposes.\9\
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\9\ The Exchange does not currently list or trade any Investment
Company Units or Trust Issued Receipts.
---------------------------------------------------------------------------

To address concerns regarding improper information sharing between
the Exchange's Trading Floor and the adjacent NYSE Amex Options Trading
Floor, Rule 36.70 prohibits members and member firm employees from (i)
using or possessing any wireless trading device that may be used to
view or enter orders into the Exchange's trading systems while on the
NYSE Amex Options Trading Floor, and (ii) using or possessing any
wireless trading device that may be used to view or enter orders into
the NYSE Amex Options trading systems while on the Exchange's Trading
Floor. These prohibitions apply to any and all wireless trading
devices, including devices issued by the Exchange or NYSE Amex, as well
as devices that are proprietary to a member, member organization or
other entity.
Finally, Rules 36.40 and 36.50 prescribe certain timing and
handling requirements for ``give-up'' or ``step out'' transactions,
whereby a member or member organization executes a customer trade on
behalf of another member. While not directly related to member or
member organization communications or the use and/or possession of
portable or wireless communication or trading devices, these
requirements are important for ensuring that members and member
organizations properly document these types of transactions.
Proposed Rule Change
As noted above, the Exchange proposes to add NYSE Rule 36 to its

[[Page 31498]]

Minor Rule Violation Plan under Rule 476A.
Under the Exchange's Minor Rule Violation Plan, the Exchange may
impose a fine, not to exceed $5,000, on any member, member
organization, allied member, approved person, or registered or non-
registered employee of a member or member organization for a minor
violation of specified Exchange rules. Such fines provide a meaningful
sanction for rule violations where the facts and circumstances of the
violation do not warrant the initiation of a formal disciplinary
procedure under Rule 476, but do require a regulatory response that is
more significant than an admonition letter.\10\
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\10\ The Exchange's Minor Rule Violation Plan was originally
adopted by the Exchange and approved by the Commission in 1985. See
Securities Exchange Act Release No. 34-21688 (January 25, 1985), 50
FR 5025-01 (February 5, 1985) (SR-NYSE-84-27). It has been amended
numerous times since its adoption.
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Currently, because Rule 36 is not part of the Exchange's Minor Rule
Violation Plan, if a member or member firm employee were to violate the
prohibitions set forth in Rule 36 the Exchange would be limited to
issuing either an admonition letter or initiating formal proceedings
under Rule 476. This is the case whether or not the member or member
firm employee violated the rule once or many times, and regardless of
whether he or she made an inadvertent error or an intentional one.
The Exchange believes that the current regulatory approach for
dealing with Rule 36 violations is too inflexible. The Exchange
recognizes that members or member firm employees may violate the
prescriptions of Rule 36 intentionally, as well as accidentally or
inadvertently. When a violation is intentional, formal disciplinary
measures in accordance with Rule 476 may be warranted. However, while
an admonition letter might be appropriate for an isolated accidental or
inadvertent violation, in other cases an admonition letter would be
inadequate even though a formal proceeding may not be warranted. The
Exchange believes that the addition of Rule 36 to its Minor Rule
Violation Plan under Rule 476A will provide a more flexible and
appropriate enforcement tool that preserves the Exchange's discretion
to seek formal discipline under appropriate circumstances.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with, and furthers the objectives of, Section 6(b)(5) of the Act,\11\
in that it is designed to prevent fraudulent and manipulative acts and
practices, 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 proposed rule change also furthers the objectives
of Section 6(b)(6) of the Act,\12\ in that it provides for appropriate
discipline for violations of Exchange rules and regulations.
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\11\ 15 U.S.C. 78f(b)(5).
\12\ 15 U.S.C. 78f(b)(6).
---------------------------------------------------------------------------

The Exchange believes that the proposed rule change will provide
the Exchange with greater regulatory flexibility to enforce the
prescriptions of NYSE Rule 36 in a more informal manner while also
preserving the Exchange's discretion to seek formal discipline for more
serious transgressions as warranted.

B. Self-Regulatory Organization's Statement on Burden on Competition

The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others

No written comments were solicited or received with respect to the
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action

Because the foregoing proposed rule change: (i) Does not
significantly affect the protection of investors or the public
interest; (ii) does not impose any significant burden on competition;
and (iii) by its terms, does not become operative for 30 days from the
date on which it was filed, or such shorter time as the Commission may
designate, if consistent with the protection of investors and the
public interest, it has become effective pursuant to Section
19(b)(3)(A) of the Act \13\ and Rule 19b-4(f)(6) thereunder.\14\
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\13\ 15 U.S.C. 78s(b)(3)(A).
\14\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires the self-regulatory organization to submit to the
Commission written notice of its intent to file the proposed rule
change, along with a brief description and text of the proposed rule
change, at least five business days prior to the date of filing of
the proposed rule change, or such shorter time as designated by the
Commission. The Exchange has satisfied this requirement.
---------------------------------------------------------------------------

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-2010-37 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-2010-37. 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

[[Page 31499]]

available publicly. All submissions should refer to File Number SR-
NYSE-2010-37 and should be submitted on or before June 24, 2010.

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12) and 200.30-3(a)(44).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-13338 Filed 6-2-10; 8:45 am]
BILLING CODE 8010-01-P

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