Self-Regulatory Organizations; NYSE Amex LLC; Notice of Filing of Proposed Rule Change Amending NYSE Amex Rule 123C To Allow Exchange Systems To Provide Order Imbalance Information With Respect to Market At-the-Close and Marketable Limit At-the-Close Interest to Floor Brokers Beginning Two Hours and Until Fifteen Minutes Prior to the Scheduled Close of Trading on Every Trading Day, 36140-36143 [2010-15245]
Download as PDF
<![CDATA[
36140
Federal Register / Vol. 75, No. 121 / Thursday, June 24, 2010 / Notices
enhance the Floor brokers’ ability to
meet their best execution obligations in
the face of a dilemma that is unique to
a physical Trading Floor, i.e., how to
position resources so that they are in the
correct place to execute orders on behalf
of sophisticated customers whose needs
are not effectively met by strictly
electronic trading. While the imbalance
information is important to Floor
brokers in carrying out their obligations
to those customers, the Exchange
believes this information would not be
material to market participants
executing automated orders. In this
regard, the Exchange believes it is
appropriate to provide Floor brokers
with specific types of information that
is directly related to the unique
functions they perform on the Trading
Floor.
In this particular case, the Exchange
believes that the dissemination of MOC/
LOC information to Floor brokers would
promote the efficient operation of the
Exchange’s market by reducing the
frequency of time-consuming Floor
broker oral market probes leading up to
the closing transaction, thus affording
DMMs more time to monitor trading. As
trading has become more electronic,
staffing on the trading Floor has
declined, so that there are now fewer
Floor brokers even as the number of
listed securities has increased.9
Similarly, DMM units and individual
DMMs on the Floor are managing
trading in greater numbers of stocks
than ever before. The need for DMMs to
be focused on their assigned securities,
particularly on high volume trading
days, such as an Expiration Friday or an
index rebalancing event, or trading days
with high levels of market volatility, is
critical to the maintenance of fair and
orderly markets.10
B. Self-Regulatory Organization’s
Statement on Burden on Competition
emcdonald on DSK2BSOYB1PROD with NOTICES
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.
9 The number of Floor brokers operating on the
Exchange Floor has decreased since 2004 from
approximately 800 Floor brokers to approximately
325 Floor brokers operating on the Floor today.
10 It should be noted that NYSE rules and the
Federal securities laws provide safeguards that are
designed to deter the potential abuse of market
probe information. For example, Floor broker
member organizations are not permitted to initiate
proprietary orders on the Floor. In addition, Floor
brokers representing a principal or proprietary
order that has been initiated in the off-Floor
premises of the firm are subject to the requirements
of Section 11(a) of the Securities Exchange Act of
1934.
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16:47 Jun 23, 2010
Jkt 220001
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
Within 35 days of the date of
publication of this notice in the Federal
Register or within such longer period (i)
as the Commission may designate up to
90 days of such date if it finds such
longer period to be appropriate and
publishes its reasons for so finding or
(ii) as to which the self-regulatory
organization consents, the Commission
will:
(A) By order approve such proposed
rule change, or
(B) Institute proceedings to determine
whether the proposed rule change
should be disapproved.
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–2010–20 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–2010–20. 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
PO 00000
Frm 00083
Fmt 4703
Sfmt 4703
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–NYSE–
2010–20 and should be submitted on or
before July 15, 2010.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.11
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–15246 Filed 6–23–10; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–62311; File No. SR–
NYSEAmex–2010–25]
Self-Regulatory Organizations; NYSE
Amex LLC; Notice of Filing of
Proposed Rule Change Amending
NYSE Amex Rule 123C To Allow
Exchange Systems To Provide Order
Imbalance Information With Respect to
Market At-the-Close and Marketable
Limit At-the-Close Interest to Floor
Brokers Beginning Two Hours and
Until Fifteen Minutes Prior to the
Scheduled Close of Trading on Every
Trading Day
June 17, 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 June 9,
2010, NYSE Amex LLC (‘‘NYSE Amex’’
or ‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by the self-regulatory
organization. The Commission is
publishing this notice to solicit
11 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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Federal Register / Vol. 75, No. 121 / Thursday, June 24, 2010 / Notices
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 Amex Rule 123C (‘‘The Closing
Procedures’’) to describe the manner in
which Exchange systems provide order
imbalance information to Floor brokers.
The text of the proposed rule change is
available at the Exchange, the
Commission’s Public Reference Room,
and https://www.nyse.com.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
NYSE Amex LLC (‘‘NYSE Amex’’ or
‘‘Exchange’’) proposes to amend NYSE
Amex Rule 123C(6) to specify that,
beginning at 2:00 p.m. on every trading
day,3 Floor brokers will receive an
electronic communication from
Exchange systems that provides the
amount of, and any imbalance between,
Market ‘‘At-The-Close’’ (‘‘MOC’’) interest
and marketable Limit ‘‘At-The-Close’’
(‘‘LOC’’) interest to buy and MOC
interest and marketable LOC interest to
sell in certain securities.4 The MOC/
LOC interest is executable only on the
Close and is subject to cancellation at
any time before 3:45 p.m.5
Background
Pursuant to NYSE Amex Rule 115
(‘‘Disclosure of Orders by DMMs’’),
emcdonald on DSK2BSOYB1PROD with NOTICES
3 See
e-mail from Theodore R. Lazo, NYSE
Euronext, to Steve Kuan, Securities and Exchange
Commission, on June 16, 2010 (‘‘June 16, 2010
e-mail’’). On any day that the scheduled close of
trading on the Exchange is earlier than 4:00 p.m.,
the information will be disseminated beginning two
hours prior to the scheduled close of trading.
4 The Exchange notes that parallel changes are
proposed to the rules of its affiliate, the New York
Stock Exchange LLC. See SR–NYSE–2010–20 and
June 16, 2010 e-mail.
5 See NYSE Rule 123C(3) and (9).
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16:47 Jun 23, 2010
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36141
DMMs may, while acting in a market
making capacity, provide information
about buying or selling interest in the
market, including (a) Aggregated buying
or selling interest contained in Floor
broker agency interest files other than
interest the broker has chosen to
exclude from the aggregated buying and
selling interest, (b) aggregated interest of
Minimum Display Reserve Orders and
(c) the interest included in DMM
interest files, excluding CCS interest as
described in Rule 1000(c), in response
to an inquiry from a member conducting
a market probe in the normal course of
business. Market probes assist Floor
brokers in representing customer orders
efficiently and effectively. There is no
limitation in Rule 115 as to the number
of market probes permitted during the
trading day.
Historically, Floor brokers could only
orally request a market probe from the
specialist.6 As the NYSE Amex evolved
to a more automated trading venue, the
Exchange and the Floor community
endeavored to address an increase in the
volume of market probes by Floor
brokers to specialists in the afternoon
hours leading up to the closing
transaction. In May 2008, Exchange
systems began electronically providing
to Floor brokers, the amount of, and any
imbalance between MOC interest and
marketable LOC interest to buy and
MOC interest and marketable LOC
interest to sell in each security in which
a Floor broker is representing an order
or in any security that the Floor broker
electronically requests such
information. In March 2010, as part of
changes to the Exchange’s closing
process, Exchange systems began
decrementing the total imbalance
between MOC interest and marketable
LOC interest to buy and MOC interest
and marketable LOC interest to sell by
any Closing Offset Orders on the
opposite side of the imbalance to
calculate the imbalance (the ‘‘MOC/LOC
imbalance information’’). The
dissemination of the MOC/LOC
imbalance information to Floor brokers
between 2 and 3:45 p.m. was
deactivated on May 17, 2010. Floor
brokers may still orally request and
receive responses to market probes
directly from DMMs.
day that the scheduled close of trading
on the Exchange is earlier than 4 p.m.),
Exchange systems shall automatically
provide the MOC/LOC imbalance
information to Floor brokers,
approximately every 15 seconds, for any
security in which the Floor broker is
representing an order and in any
security that the Floor broker
specifically requests. Specific requests
for information by Floor brokers will not
carry over to the next trading day and
must be re-entered on each trade date
Floor brokers want to receive the
information. Beginning at 3:45 p.m.,
Floor brokers may receive the
Exchange’s proprietary Order
Information Imbalance datafeed
pursuant to NYSE Amex Rule
123C(6)(a)(iv). The Exchange provides
the Order Information Imbalance
datafeed to subscribers for a fee.
The Exchange’s proposed
dissemination of this MOC/LOC
imbalance information is the electronic
evolution of the market probe response
that Floor brokers have always been
entitled to receive and may otherwise
orally request directly from DMMs.
While a vast majority of the transactions
executed on the Exchange are
automated, Floor brokers play an
important role for customers in those
transactions that require the expertise of
a professional trading floor agent.
Providing the MOC/LOC imbalance
information to Floor brokers is
appropriate because a key component of
their role as agent for these
sophisticated customers is to provide
market ‘‘color’’ to the extent permitted
under applicable rules. The Exchange’s
electronic dissemination of this
information would be limited to the
Floor broker hand-held devices, which
are unable to automatically forward or
re-transmit the electronic datafeed to
any other location, although Floor
brokers are permitted to provide their
customers with specific data points
from the feed.7
Finally, the Exchange proposes to
correct erroneous rule text in
123C(6)(a)(v). The rule text incorrectly
states that the dissemination of the
Order Imbalance Datafeed commences
10 minutes prior to the scheduled close
Proposed Amendments to NYSE Amex
Rule 123C(6)
The Exchange proposes to amend
NYSE Amex Rule 123C(6) to state that,
between 2:00 p.m. and 3:45 p.m. on any
trading day (or two hours prior to the
closing transaction until 15 minutes
prior to the closing transaction on any
7 Current NYSE Amex rules permit a Floor broker
to communicate information obtained through a
market probe to a customer using a wired telephone
line (NYSE Amex Rule 36.20), an NYSE Amex
approved portable phone (NYSE Amex Rule 36.21),
or through a written electronic communication from
the Floor brokers’ hand-held device as permitted by
the NYSE Amex’s ‘‘Wireless Data Communications
Initiatives’’ (See Securities Exchange Act Release
No. 59627 (March 25, 2009), 74 FR 14834 (April 1,
2009) (SR–NYSEAmex–2009–02). See June 16, 2010
e-mail. The Exchange records all of the information
sent to and transmitted from the hand-held devices.
6 The
PO 00000
specialist is the predecessor to the DMM.
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36142
Federal Register / Vol. 75, No. 121 / Thursday, June 24, 2010 / Notices
emcdonald on DSK2BSOYB1PROD with NOTICES
of trading on any day that the scheduled
close of trading on the Exchange is
earlier than 4 p.m. The 10 minute
interval is a legacy time frame related to
the Exchange’s prior publication of
imbalance at 3:40 p.m. and 3:50 p.m.
When the Exchange moved to a single
imbalance publication at 3:45 p.m., the
rule text should have been modified to
reflect that dissemination of the Order
Imbalance Information on any day that
the scheduled close was prior to 4 p.m.
would commence approximately 15
minutes before the scheduled closing
time consistent with the single
imbalance publication. The Exchange
therefore seeks to amend NYSE Amex
Rule 123C(6)(a)(v) accordingly.
2. Statutory Basis
The basis under the Act for the
proposed rule change is the requirement
under Section 6(b)(5),8 which requires
that an exchange have rules that are
designed to foster cooperation and
coordination with persons engaged in
regulating, clearing, settling, processing
information with respect to, and
facilitating transactions in securities, to
remove impediments to and perfect the
mechanism of a free and open market
and a national market system and, in
general, to protect investors and the
public interest. The proposed rule
change is consistent with these
objectives in that the dissemination of
MOC/LOC imbalance information
would provide Floor brokers with an
understanding of developing trends
early enough to get appropriate
direction from their customers and to
know where on the physical Trading
Floor it needs to deploy its brokers in
preparation for the closing transaction.
Overall, the Exchange believes that
dissemination of MOC/LOC imbalance
information to Floor brokers is
consistent with the above objectives
because it removes impediments to and
perfects the mechanism of a free and
open market through the efficient
operation of the Exchange.
Dissemination of MOC/LOC
imbalance information to Floor brokers
would serve as an efficiency tool to
enhance the Floor brokers’ ability to
meet their best execution obligations in
the face of a dilemma that is unique to
a physical Trading Floor, i.e., how to
position resources so that they are in the
correct place to execute orders on behalf
of sophisticated customers whose needs
are not effectively met by strictly
electronic trading. While the imbalance
information is important to Floor
brokers in carrying out their obligations
to those customers, the Exchange
8 15
U.S.C. 78f(b)(5).
VerDate Mar<15>2010
16:47 Jun 23, 2010
Jkt 220001
believes this information would not be
material to market participants
executing automated orders. In this
regard, the Exchange believes it is
appropriate to provide Floor brokers
with specific types of information that
is directly related to the unique
functions they perform on the Trading
Floor.
In this particular case, the Exchange
believes that the dissemination of MOC/
LOC information to Floor brokers would
promote the efficient operation of the
Exchange’s market by reducing the
frequency of time-consuming Floor
broker oral market probes leading up to
the closing transaction, thus affording
DMMs more time to monitor trading. As
trading has become more electronic,
staffing on the trading Floor has
declined, so that there are now fewer
Floor brokers even as the number of
listed securities has increased.9
Similarly, DMM units and individual
DMMs on the Floor, are managing
trading in greater numbers of stocks
than ever before. The need for DMMs to
be focused on their assigned securities,
particularly on high volume trading
days, such as an Expiration Friday or an
index rebalancing event, or trading days
with high levels of market volatility, is
critical to the maintenance of fair and
orderly markets.10
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
Within 35 days of the date of
publication of this notice in the Federal
9 The number of Floor brokers operating on the
Exchange Floor has decreased since 2004 from
approximately 800 Floor brokers to approximately
325 Floor brokers operating on the Floor today.
10 It should be noted that NYSE rules and the
Federal securities laws provide safeguards that are
designed to deter the potential abuse of market
probe information. For example, Floor broker
member organizations are not permitted to initiate
proprietary orders on the Floor. In addition, Floor
brokers representing a principal or proprietary
order that has been initiated in the off-Floor
premises of the firm are subject to the requirements
of Section 11(a) of the Securities Exchange Act of
1934.
PO 00000
Frm 00085
Fmt 4703
Sfmt 4703
Register or within such longer period (i)
as the Commission may designate up to
90 days of such date if it finds such
longer period to be appropriate and
publishes its reasons for so finding or
(ii) as to which the self-regulatory
organization consents, the Commission
will:
(A) By order approve such proposed
rule change, or
(B) Institute proceedings to determine
whether the proposed rule change
should be disapproved.
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–2010–25 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–2010–25. 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
E:\FR\FM\24JNN1.SGM
24JNN1
Federal Register / Vol. 75, No. 121 / Thursday, June 24, 2010 / Notices
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–2010–25 and should be
submitted on or before July 15, 2010.
order that cannot be executed upon
entry, or placed on the Exchange’s limit
order book, will be automatically
cancelled.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.11
Florence E. Harmon,
Deputy Secretary.
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 self-regulatory organization has
prepared summaries, set forth in
sections A, B and C below, of the most
significant aspects of such statements.
Supplementary Material to Rule 715
.01 no change.
* * *
[FR Doc. 2010–15245 Filed 6–23–10; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–62301; File No. SR–ISE–
2010–49]
Self-Regulatory Organizations;
International Securities Exchange,
LLC; Notice of Filing and Immediate
Effectiveness of Proposed Rule
Change Related to Do-Not-Route
Orders
June 16, 2010.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Exchange Act’’),1 and Rule 19b–4
thereunder,2 notice is hereby given that
on June 14, 2010, the International
Securities Exchange, LLC (the
‘‘Exchange’’ or the ‘‘ISE’’) filed with the
Securities and Exchange Commission
(the ‘‘SEC’’ or the ‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III below, which items
have been prepared by the selfregulatory organization. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
emcdonald on DSK2BSOYB1PROD with NOTICES
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to adopt a donot-route order type. The text of the rule
amendment is as follows (additions are
in italics):
Rule 715. Types of Orders
(a) through (l) no change.
(m) Do-Not-Route Orders. A do-notroute order is a market or limit order
that is to be executed in whole or in part
on the Exchange only. Due to prices
available on another options exchange
(as provided in Chapter 19 (Order
Protection; Locked and Crossed
Markets)), any balance of a do-not-route
11 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
VerDate Mar<15>2010
16:47 Jun 23, 2010
Jkt 220001
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
(1) Purpose—The Exchange’s rules
related to intermarket linkage provide,
among other things, that transactions
not be executed at prices that are
inferior to the national best bid or offer
(the ‘‘trade-through rule’’).3 Currently,
the Exchange cancels marketable noncustomer orders that cannot be executed
because its prices are inferior to the
national best bid or offer, while such
marketable customer orders are
presented to the primary market maker
for handling.4 The Exchange is
proposing to adopt a do-not-route order
so that customers may indicate that they
want their orders canceled if they are
marketable, but not executable on the
Exchange. If a customer order is not
marked as a do-not-route order, it would
continue to be presented to the primary
market maker for handling if it is
marketable but not executable on the
Exchange. A do-not-route order is a
market or limit order. This order type is
commonly offered on other exchanges.5
(2) Basis—The basis under the
Securities Exchange Act of 1934
(‘‘Exchange Act’’) for this proposed rule
change is the requirement under Section
6(b)(5) that an exchange have rules that
are designed to promote just and
equitable principles of trade, and to
3 ISE
Rule 1901 (Order Protection).
Rule 714 (Automatic Execution of Orders).
5 E.g., NYSE Arca Rule 6.62(p) (PNP Orders are
not routable orders); NASDAQ OMX PHLX Rule
1066(c)(8) (Immediate or Cancel Orders are not
routable orders); and CBOE Rule 6.53(s) (CBOE
Only orders are not routable orders).
4 ISE
PO 00000
Frm 00086
Fmt 4703
Sfmt 4703
36143
remove impediments to and perfect the
mechanism for a free and open market
and a national market system, and in
general, to protect investors and the
public interest. In particular, the
proposal will give customers greater
control over where their orders are
executed if they so choose.
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
Exchange 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
Because the foregoing 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 for 30 days after the date of
the filing, or such shorter time as the
Commission may designate, it has
become effective pursuant to Section
19(b)(3)(A) of the Act 6 and Rule 19b–
4(f)(6) thereunder.7
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:
6 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.
7 17
E:\FR\FM\24JNN1.SGM
24JNN1
]]>Agencies
[Federal Register Volume 75, Number 121 (Thursday, June 24, 2010)]
[Notices]
[Pages 36140-36143]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-15245]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-62311; File No. SR-NYSEAmex-2010-25]
Self-Regulatory Organizations; NYSE Amex LLC; Notice of Filing of
Proposed Rule Change Amending NYSE Amex Rule 123C To Allow Exchange
Systems To Provide Order Imbalance Information With Respect to Market
At-the-Close and Marketable Limit At-the-Close Interest to Floor
Brokers Beginning Two Hours and Until Fifteen Minutes Prior to the
Scheduled Close of Trading on Every Trading Day
June 17, 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 June 9, 2010, NYSE Amex LLC (``NYSE Amex'' or ``Exchange'')
filed with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I, II, and III below, which
Items have been prepared by the self-regulatory organization. The
Commission is publishing this notice to solicit
[[Page 36141]]
comments on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend NYSE Amex Rule 123C (``The Closing
Procedures'') to describe the manner in which Exchange systems provide
order imbalance information to Floor brokers. The text of the proposed
rule change is available at the Exchange, the Commission's Public
Reference Room, and https://www.nyse.com.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
NYSE Amex LLC (``NYSE Amex'' or ``Exchange'') proposes to amend
NYSE Amex Rule 123C(6) to specify that, beginning at 2:00 p.m. on every
trading day,\3\ Floor brokers will receive an electronic communication
from Exchange systems that provides the amount of, and any imbalance
between, Market ``At-The-Close'' (``MOC'') interest and marketable
Limit ``At-The-Close'' (``LOC'') interest to buy and MOC interest and
marketable LOC interest to sell in certain securities.\4\ The MOC/LOC
interest is executable only on the Close and is subject to cancellation
at any time before 3:45 p.m.\5\
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\3\ See e-mail from Theodore R. Lazo, NYSE Euronext, to Steve
Kuan, Securities and Exchange Commission, on June 16, 2010 (``June
16, 2010 e-mail''). On any day that the scheduled close of trading
on the Exchange is earlier than 4:00 p.m., the information will be
disseminated beginning two hours prior to the scheduled close of
trading.
\4\ The Exchange notes that parallel changes are proposed to the
rules of its affiliate, the New York Stock Exchange LLC. See SR-
NYSE-2010-20 and June 16, 2010 e-mail.
\5\ See NYSE Rule 123C(3) and (9).
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Background
Pursuant to NYSE Amex Rule 115 (``Disclosure of Orders by DMMs''),
DMMs may, while acting in a market making capacity, provide information
about buying or selling interest in the market, including (a)
Aggregated buying or selling interest contained in Floor broker agency
interest files other than interest the broker has chosen to exclude
from the aggregated buying and selling interest, (b) aggregated
interest of Minimum Display Reserve Orders and (c) the interest
included in DMM interest files, excluding CCS interest as described in
Rule 1000(c), in response to an inquiry from a member conducting a
market probe in the normal course of business. Market probes assist
Floor brokers in representing customer orders efficiently and
effectively. There is no limitation in Rule 115 as to the number of
market probes permitted during the trading day.
Historically, Floor brokers could only orally request a market
probe from the specialist.\6\ As the NYSE Amex evolved to a more
automated trading venue, the Exchange and the Floor community
endeavored to address an increase in the volume of market probes by
Floor brokers to specialists in the afternoon hours leading up to the
closing transaction. In May 2008, Exchange systems began electronically
providing to Floor brokers, the amount of, and any imbalance between
MOC interest and marketable LOC interest to buy and MOC interest and
marketable LOC interest to sell in each security in which a Floor
broker is representing an order or in any security that the Floor
broker electronically requests such information. In March 2010, as part
of changes to the Exchange's closing process, Exchange systems began
decrementing the total imbalance between MOC interest and marketable
LOC interest to buy and MOC interest and marketable LOC interest to
sell by any Closing Offset Orders on the opposite side of the imbalance
to calculate the imbalance (the ``MOC/LOC imbalance information''). The
dissemination of the MOC/LOC imbalance information to Floor brokers
between 2 and 3:45 p.m. was deactivated on May 17, 2010. Floor brokers
may still orally request and receive responses to market probes
directly from DMMs.
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\6\ The specialist is the predecessor to the DMM.
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Proposed Amendments to NYSE Amex Rule 123C(6)
The Exchange proposes to amend NYSE Amex Rule 123C(6) to state
that, between 2:00 p.m. and 3:45 p.m. on any trading day (or two hours
prior to the closing transaction until 15 minutes prior to the closing
transaction on any day that the scheduled close of trading on the
Exchange is earlier than 4 p.m.), Exchange systems shall automatically
provide the MOC/LOC imbalance information to Floor brokers,
approximately every 15 seconds, for any security in which the Floor
broker is representing an order and in any security that the Floor
broker specifically requests. Specific requests for information by
Floor brokers will not carry over to the next trading day and must be
re-entered on each trade date Floor brokers want to receive the
information. Beginning at 3:45 p.m., Floor brokers may receive the
Exchange's proprietary Order Information Imbalance datafeed pursuant to
NYSE Amex Rule 123C(6)(a)(iv). The Exchange provides the Order
Information Imbalance datafeed to subscribers for a fee.
The Exchange's proposed dissemination of this MOC/LOC imbalance
information is the electronic evolution of the market probe response
that Floor brokers have always been entitled to receive and may
otherwise orally request directly from DMMs. While a vast majority of
the transactions executed on the Exchange are automated, Floor brokers
play an important role for customers in those transactions that require
the expertise of a professional trading floor agent. Providing the MOC/
LOC imbalance information to Floor brokers is appropriate because a key
component of their role as agent for these sophisticated customers is
to provide market ``color'' to the extent permitted under applicable
rules. The Exchange's electronic dissemination of this information
would be limited to the Floor broker hand-held devices, which are
unable to automatically forward or re-transmit the electronic datafeed
to any other location, although Floor brokers are permitted to provide
their customers with specific data points from the feed.\7\
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\7\ Current NYSE Amex rules permit a Floor broker to communicate
information obtained through a market probe to a customer using a
wired telephone line (NYSE Amex Rule 36.20), an NYSE Amex approved
portable phone (NYSE Amex Rule 36.21), or through a written
electronic communication from the Floor brokers' hand-held device as
permitted by the NYSE Amex's ``Wireless Data Communications
Initiatives'' (See Securities Exchange Act Release No. 59627 (March
25, 2009), 74 FR 14834 (April 1, 2009) (SR-NYSEAmex-2009-02). See
June 16, 2010 e-mail. The Exchange records all of the information
sent to and transmitted from the hand-held devices.
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Finally, the Exchange proposes to correct erroneous rule text in
123C(6)(a)(v). The rule text incorrectly states that the dissemination
of the Order Imbalance Datafeed commences 10 minutes prior to the
scheduled close
[[Page 36142]]
of trading on any day that the scheduled close of trading on the
Exchange is earlier than 4 p.m. The 10 minute interval is a legacy time
frame related to the Exchange's prior publication of imbalance at 3:40
p.m. and 3:50 p.m. When the Exchange moved to a single imbalance
publication at 3:45 p.m., the rule text should have been modified to
reflect that dissemination of the Order Imbalance Information on any
day that the scheduled close was prior to 4 p.m. would commence
approximately 15 minutes before the scheduled closing time consistent
with the single imbalance publication. The Exchange therefore seeks to
amend NYSE Amex Rule 123C(6)(a)(v) accordingly.
2. Statutory Basis
The basis under the Act for the proposed rule change is the
requirement under Section 6(b)(5),\8\ which requires that an exchange
have rules that are designed to foster cooperation and coordination
with persons engaged in regulating, clearing, settling, processing
information with respect to, and facilitating transactions in
securities, to remove impediments to and perfect the mechanism of a
free and open market and a national market system and, in general, to
protect investors and the public interest. The proposed rule change is
consistent with these objectives in that the dissemination of MOC/LOC
imbalance information would provide Floor brokers with an understanding
of developing trends early enough to get appropriate direction from
their customers and to know where on the physical Trading Floor it
needs to deploy its brokers in preparation for the closing transaction.
Overall, the Exchange believes that dissemination of MOC/LOC imbalance
information to Floor brokers is consistent with the above objectives
because it removes impediments to and perfects the mechanism of a free
and open market through the efficient operation of the Exchange.
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\8\ 15 U.S.C. 78f(b)(5).
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Dissemination of MOC/LOC imbalance information to Floor brokers
would serve as an efficiency tool to enhance the Floor brokers' ability
to meet their best execution obligations in the face of a dilemma that
is unique to a physical Trading Floor, i.e., how to position resources
so that they are in the correct place to execute orders on behalf of
sophisticated customers whose needs are not effectively met by strictly
electronic trading. While the imbalance information is important to
Floor brokers in carrying out their obligations to those customers, the
Exchange believes this information would not be material to market
participants executing automated orders. In this regard, the Exchange
believes it is appropriate to provide Floor brokers with specific types
of information that is directly related to the unique functions they
perform on the Trading Floor.
In this particular case, the Exchange believes that the
dissemination of MOC/LOC information to Floor brokers would promote the
efficient operation of the Exchange's market by reducing the frequency
of time-consuming Floor broker oral market probes leading up to the
closing transaction, thus affording DMMs more time to monitor trading.
As trading has become more electronic, staffing on the trading Floor
has declined, so that there are now fewer Floor brokers even as the
number of listed securities has increased.\9\ Similarly, DMM units and
individual DMMs on the Floor, are managing trading in greater numbers
of stocks than ever before. The need for DMMs to be focused on their
assigned securities, particularly on high volume trading days, such as
an Expiration Friday or an index rebalancing event, or trading days
with high levels of market volatility, is critical to the maintenance
of fair and orderly markets.\10\
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\9\ The number of Floor brokers operating on the Exchange Floor
has decreased since 2004 from approximately 800 Floor brokers to
approximately 325 Floor brokers operating on the Floor today.
\10\ It should be noted that NYSE rules and the Federal
securities laws provide safeguards that are designed to deter the
potential abuse of market probe information. For example, Floor
broker member organizations are not permitted to initiate
proprietary orders on the Floor. In addition, Floor brokers
representing a principal or proprietary order that has been
initiated in the off-Floor premises of the firm are subject to the
requirements of Section 11(a) of the Securities Exchange Act of
1934.
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 35 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(A) By order approve such proposed rule change, or
(B) Institute proceedings to determine whether the proposed rule
change should be disapproved.
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-NYSEAmex-2010-25 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-2010-25. 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
[[Page 36143]]
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-2010-25 and should be submitted on or before July 15, 2010.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-15245 Filed 6-23-10; 8:45 am]
BILLING CODE 8010-01-P
