Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by New York Stock Exchange LLC Extending the Operative Date of NYSE Rule 92(c)(3) From December 31, 2010 to August 1, 2011, 77687-77689 [2010-31200]

Download as PDF Federal Register / Vol. 75, No. 238 / Monday, December 13, 2010 / Notices 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–2010–111 on the subject line. Paper Comments wwoods2 on DSK1DXX6B1PROD with NOTICES_PART 1 • 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–2010–111. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s Internet Web site https:// www.sec.gov/rules/sro.shtml. Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission’s Public Reference Room on official business days between the hours of 10 a.m. and 3 p.m. Copies of 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–2010–111 and should be submitted on or before January 3, 2011. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.17 Florence E. Harmon, Deputy Secretary. [FR Doc. 2010–31199 Filed 12–10–10; 8:45 am] SECURITIES AND EXCHANGE COMMISSION [Release No. 34–63455; File No. SR–NYSE– 2010–76] Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by New York Stock Exchange LLC Extending the Operative Date of NYSE Rule 92(c)(3) From December 31, 2010 to August 1, 2011 December 7, 2010. Pursuant to Section 19(b)(1) 1 of the Securities Exchange Act of 1934 (the ‘‘Act’’) 2 and Rule 19b–4 thereunder,3 notice is hereby given that on November 29, 2010, 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 and II below, which Items have been prepared by the self-regulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to extend the operative date of NYSE Rule 92(c)(3) from December 31, 2010 to August 1, 2011. The text of the proposed rule change is available at the Exchange, the Commission’s Public Reference Room, on the Commission’s Web site at https://www.sec.gov 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. 77687 A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange is proposing to extend the delayed operative date of NYSE Rule 92(c)(3) from December 31, 2010 to August 1, 2011. The Exchange believes that this extension will provide the time necessary for the Exchange and the Financial Industry Regulatory Authority, Inc. (‘‘FINRA’’) to harmonize their respective rules concerning customer order protection to achieve a standardized industry practice. Background On July 5, 2007, the Commission approved amendments to NYSE Rule 92 to permit riskless principal trading at the Exchange.4 These amendments were filed in part to begin the harmonization process between Rule 92 and FINRA’s Manning Rule.5 In connection with those amendments, the Exchange implemented for an operative date of January 16, 2008, NYSE Rule 92(c)(3), which permits Exchange member organizations to submit riskless principal orders to the Exchange, but requires them to submit to a designated Exchange database a report of the execution of the facilitated order. That rule also requires members to submit to that same database sufficient information to provide an electronic link of the execution of the facilitated order to all of the underlying orders. For purposes of NYSE Rule 92(c)(3), the Exchange informed member organizations that when executing riskless principal transactions, firms must submit order execution reports to the Exchange’s Front End Systemic Capture (‘‘FESC’’) database linking the execution of the riskless principal order on the Exchange to the specific underlying orders. The information provided must be sufficient for both member firms and the Exchange to reconstruct in a time-sequenced manner all orders, including allocations to the underlying orders, with respect to which a member organization is claiming the riskless principal exception. Because the rule change required both the Exchange and member organizations to make certain changes to their trading and order management systems, the NYSE filed to delay to May 14, 2008 the operative date of the NYSE Rule 92(c)(3) BILLING CODE 8011–01–P 4 See Securities Exchange Act Release No. 56017 (July 5, 2007), 72 FR 38110 (July 12, 2007) (SR– NYSE–2007–21). 5 See NASD Rule 2111 and IM–2110–2. 1 15 U.S.C. 78s(b)(1). U.S.C. 78a. 3 17 CFR 240.19b–4. 2 15 17 17 CFR 200.30–3(a)(12). VerDate Mar<15>2010 15:42 Dec 10, 2010 Jkt 223001 PO 00000 Frm 00082 Fmt 4703 Sfmt 4703 E:\FR\FM\13DEN1.SGM 13DEN1 77688 Federal Register / Vol. 75, No. 238 / Monday, December 13, 2010 / Notices requirements, including submitting endof-day allocation reports for riskless principal transactions and using the riskless principal account type indicator.6 The Exchange filed for additional extensions of the operative date of Rule 92(c)(3), the most recent of which was an extension to December 31, 2010.7 wwoods2 on DSK1DXX6B1PROD with NOTICES_PART 1 Request for Extension 8 FINRA and the Exchange have been working diligently on fully harmonizing their respective rules, including reviewing the possibilities for a uniform reporting standard for riskless principal transactions. However, because of the complexity of the existing customer order protection rules, including the need for input from industry participants as well as Commission approval, the Exchange and FINRA will not have harmonized their respective customer order protection rules by the current December 31, 2010 date for the implementation of the FESC riskless principal reporting. The Exchange notes that it has agreed with FINRA to pursue efforts to harmonize customer order protection rules. On December 10, 2009, FINRA filed with the Commission its rule proposal to adopt a new industry standard for customer order protection as proposed FINRA Rule 5320.9 That proposed filing is based on the draft rule text that FINRA and NYSE Regulation each circulated to their respective member participants and includes copies of the comment letters that FINRA and NYSE Regulation received on the rule proposal. The Exchange intends to adopt a new customer order protection rule that is substantially identical to proposed FINRA Rule 5320. FINRA has filed to extend the time for Commission action on its rule filing to adopt proposed FINRA Rule 5320 to December 3, 2010. As proposed by FINRA, however, its proposed new rule will not be effective upon approval. Rather, the rule filing will become 6 See Securities Exchange Act Release No. 56968 (Dec. 14, 2007), 72 FR 72432 (Dec. 20, 2007) (SR– NYSE–2007–114). 7 See Securities Exchange Act Release Nos. 57682 (Apr. 17, 2008), 73 FR 22193 (Apr. 24, 2008) (SR– NYSE–2008–29); 59621 (Mar. 23, 2009), 74 FR 14179 (Mar. 30, 2009) (SR–NYSE–2009–30); 60396 (July 30, 2009), 74 FR 39126 (Aug. 5, 2009) (SR– NYSE–2009–73); 61251 (Dec. 29, 2009), 75 FR 482 (Jan. 5, 2010) (SR–NYSE–2009–129); and 62541 (July 21, 2010), 75 FR 44042 (July 27, 2010) (SR– NYSE–2010–52). 8 NYSE Amex LLC has filed a companion rule filing to conform its Equities Rules to the changes proposed in this filing. See SR–NYSEAmex–2009– 111, formally submitted November 29, 2010. 9 See Securities Exchange Act Release No. 61168 (Dec. 15, 2009), 74 FR 68084 (Dec. 22, 2009) (SR– FINRA–2009–90). VerDate Mar<15>2010 15:42 Dec 10, 2010 Jkt 223001 effective at a later date, not yet known, in order to provide time for FINRA, NYSE, and market participants to implement programming changes associated with the proposed new rule. The Exchange continues to believe that pending full harmonization of the respective customer order protection rules, it would be premature to require firms to meet the current Rule 92(c)(3) FESC reporting requirements.10 Indeed, having differing reporting standards for riskless principal orders would be inconsistent with the overall goal of the harmonization process. Accordingly, to provide the Exchange and FINRA the time necessary to obtain Commission approval for and implement a harmonized rule set that would apply across their respective marketplaces, including a harmonized approach to riskless principal trade reporting, the Exchange is proposing to delay the operative date for NYSE Rule 92(c)(3) from December 31, 2010 to August 1, 2011. Pending the harmonization of the two rules, the Exchange will continue to require that, as of the date each member organization implements riskless principal routing, the member organization have in place systems and controls that allow them to easily match and tie riskless principal execution on the Exchange to the underlying orders and that they be able to provide this information to the Exchange upon request. To make clear that this requirement continues, the Exchange proposes to amend supplementary material .95 to Rule 92 to specifically provide that the Rule 92(c)(3) reporting requirements are suspended until August 1, 2011 and that member organizations are required to have in place such systems and controls relating to their riskless principal executions on the Exchange. Moreover, the Exchange will coordinate with FINRA to examine for compliance with the rule requirements for those firms that engage in riskless principal trading under Rule 92(c). 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Securities Exchange Act of 1934 (the ‘‘Act’’),11 in general, and furthers the objectives of Section 6(b)(5) of the Act,12 in particular, in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and 10 The Exchange notes that it would also need to make technological changes to implement the proposed FESC reporting solution for Rule 92(c)(3). 11 15 U.S.C. 78f(b). 12 15 U.S.C. 78f(b)(5). PO 00000 Frm 00083 Fmt 4703 Sfmt 4703 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 Exchange believes the proposed extension provides the Exchange and FINRA the time necessary to develop a harmonized rule concerning customer order protection that will enable member organizations to participate in the national market system without unnecessary impediments. 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 does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, if consistent with the protection of investors and the public interest, it has become effective pursuant to Section 19(b)(3)(A) of the Act 13 and Rule 19b–4(f)(6) thereunder.14 At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend 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. 13 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 17 E:\FR\FM\13DEN1.SGM 13DEN1 Federal Register / Vol. 75, No. 238 / Monday, December 13, 2010 / Notices IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.15 Florence E. Harmon, Deputy Secretary. [FR Doc. 2010–31200 Filed 12–10–10; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION 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–2010–76 on the subject line. [Release No. 34–63462; File No. SR– NYSEArca–2010–106] Paper Comments December 8, 2010. Self-Regulatory Organizations; Notice of Filing of Proposed Rule Change by NYSE Arca, Inc. Amending Its Rules Regarding the Listing of Option Series With $1 Strike Prices 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 November 24, 2010, NYSE Arca, Inc. (the ‘‘Exchange’’ or ‘‘NYSE Arca’’) filed with the Securities and Exchange All submissions should refer to File Commission (the ‘‘Commission’’) the Number SR–NYSE–2010–76. This file proposed rule change as described in number should be included on the subject line if e-mail is used. To help the Items I and II below, which Items have been prepared by the Exchange. The Commission process and review your Commission is publishing this notice to comments more efficiently, please use only one method. The Commission will solicit comments on the proposed rule post all comments on the Commission’s change from interested persons. Internet Web site https://www.sec.gov/ I. Self-Regulatory Organization’s rules/sro.shtml. Copies of the Statement of the Terms of Substance of submission, all subsequent the Proposed Rule Change amendments, all written statements The Exchange proposes to amend its with respect to the proposed rule rules regarding the listing of $1 strike change that are filed with the prices. The text of the proposed rule Commission, and all written change is available at the principal communications relating to the office of the Exchange, the proposed rule change between the Commission’s Public Reference Room, Commission and any person, other than on the Commission’s Web site at those that may be withheld from the https://www.sec.gov and https:// public in accordance with the www.nyse.com. provisions of 5 U.S.C. 552, will be II. Self-Regulatory Organization’s available for Web site viewing and Statement of the Purpose of, and printing in the Commission’s Public Statutory Basis for, the Proposed Rule Reference Room on official business Change days between the hours of 10 a.m. and In its filing with the Commission, the 3 p.m. Copies of such filing also will be self-regulatory organization included available for inspection and copying at the principal office of the Exchange. All statements concerning the purpose of, and basis for, the proposed rule change comments received will be posted and discussed any comments it received without change; the Commission does on the proposed rule change. The text not edit personal identifying of those statements may be examined at information from submissions. You the places specified in Item IV below. should submit only information that The Exchange has prepared summaries, you wish to make available publicly. All set forth in sections A, B, and C below, submissions should refer to File of the most significant parts of such Number SR–NYSE–2010–76 and should statements. be submitted on or before January 3, 15 17 CFR 200.30–3(a)(12). 2011 wwoods2 on DSK1DXX6B1PROD with NOTICES_PART 1 • Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549–1090. 1 15 2 17 VerDate Mar<15>2010 15:42 Dec 10, 2010 Jkt 223001 PO 00000 U.S.C. 78s(b)(1). CFR 240.19b–4. Frm 00084 Fmt 4703 Sfmt 4703 77689 A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend Rule 6.4 Commentary .04 to improve the operation of the $1 Strike Price Program. Currently, the $1 Strike Price Program only allows the listing of new $1 strikes within $5 of the previous day’s closing price. In certain circumstances this has led to situations where there are no atthe-money $1 strikes for a day, despite significant demand. For instance, on November 15, 2010, the underlying shares of Isilon Systems Inc. opened at $33.83. It had closed the previous trading day at $26.29. Options were available in $1 intervals up to $31, but because of the restriction to only listing within $5 of the previous close, the Exchange was not able to add $32, $33, $34, $36, $37 or $38 strikes during the day. The Exchange proposes that $1 interval strike prices be allowed to be added immediately within $5 of the official opening price in the primary listing market. Thus, on any day, $1 Strike Program strikes may be added within $5 of either the opening price or the previous day’s closing price. On occasion, the price movement in the underlying security has been so great that listing within $5 of either the previous day’s closing price or the day’s opening price will leave a gap in the continuity of strike prices. For instance, if an issue closes at $14 one day, and the next day opens above $27, the $21 and $22 strikes will be more than $5 from either benchmark. The Exchange proposes that any such discontinuity be avoided by allowing the listing of all $1 Strike Program strikes between the closing price and the opening price. Additionally, issues that are in the $1 Strike Price Program may currently have $2.50 interval strike prices added that are more than $5 from the underlying price or are more than a nine months to expiration (long-term options series). In such cases, the listing of a $2.50 interval strike may lead to discontinuities in strike prices and also a lack of parallel strikes in different expiration months of the same issue. For instance, under the current rules, the Exchange may list a $12.50 strike in a $1 Strike Program issue where the underlying price is $24. This allowance was provided to avoid too large of an interval between the standard strike prices of $10 and $15. The unintended consequence, however, is that if the underlying price should decline to $16, the Exchange would not be able to list a $12 or $13 strike. If the E:\FR\FM\13DEN1.SGM 13DEN1

Agencies

[Federal Register Volume 75, Number 238 (Monday, December 13, 2010)]
[Notices]
[Pages 77687-77689]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-31200]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63455; File No. SR-NYSE-2010-76]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by New York Stock Exchange LLC 
Extending the Operative Date of NYSE Rule 92(c)(3) From December 31, 
2010 to August 1, 2011

December 7, 2010.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that on November 29, 2010, 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 
and II below, which Items have been prepared by the self-regulatory 
organization. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 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 extend the operative date of NYSE Rule 
92(c)(3) from December 31, 2010 to August 1, 2011. The text of the 
proposed rule change is available at the Exchange, the Commission's 
Public Reference Room, on the Commission's Web site at https://www.sec.gov 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange is proposing to extend the delayed operative date of 
NYSE Rule 92(c)(3) from December 31, 2010 to August 1, 2011. The 
Exchange believes that this extension will provide the time necessary 
for the Exchange and the Financial Industry Regulatory Authority, Inc. 
(``FINRA'') to harmonize their respective rules concerning customer 
order protection to achieve a standardized industry practice.
Background
    On July 5, 2007, the Commission approved amendments to NYSE Rule 92 
to permit riskless principal trading at the Exchange.\4\ These 
amendments were filed in part to begin the harmonization process 
between Rule 92 and FINRA's Manning Rule.\5\ In connection with those 
amendments, the Exchange implemented for an operative date of January 
16, 2008, NYSE Rule 92(c)(3), which permits Exchange member 
organizations to submit riskless principal orders to the Exchange, but 
requires them to submit to a designated Exchange database a report of 
the execution of the facilitated order. That rule also requires members 
to submit to that same database sufficient information to provide an 
electronic link of the execution of the facilitated order to all of the 
underlying orders.
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 56017 (July 5, 
2007), 72 FR 38110 (July 12, 2007) (SR-NYSE-2007-21).
    \5\ See NASD Rule 2111 and IM-2110-2.
---------------------------------------------------------------------------

    For purposes of NYSE Rule 92(c)(3), the Exchange informed member 
organizations that when executing riskless principal transactions, 
firms must submit order execution reports to the Exchange's Front End 
Systemic Capture (``FESC'') database linking the execution of the 
riskless principal order on the Exchange to the specific underlying 
orders. The information provided must be sufficient for both member 
firms and the Exchange to reconstruct in a time-sequenced manner all 
orders, including allocations to the underlying orders, with respect to 
which a member organization is claiming the riskless principal 
exception.
    Because the rule change required both the Exchange and member 
organizations to make certain changes to their trading and order 
management systems, the NYSE filed to delay to May 14, 2008 the 
operative date of the NYSE Rule 92(c)(3)

[[Page 77688]]

requirements, including submitting end-of-day allocation reports for 
riskless principal transactions and using the riskless principal 
account type indicator.\6\ The Exchange filed for additional extensions 
of the operative date of Rule 92(c)(3), the most recent of which was an 
extension to December 31, 2010.\7\
---------------------------------------------------------------------------

    \6\ See Securities Exchange Act Release No. 56968 (Dec. 14, 
2007), 72 FR 72432 (Dec. 20, 2007) (SR-NYSE-2007-114).
    \7\ See Securities Exchange Act Release Nos. 57682 (Apr. 17, 
2008), 73 FR 22193 (Apr. 24, 2008) (SR-NYSE-2008-29); 59621 (Mar. 
23, 2009), 74 FR 14179 (Mar. 30, 2009) (SR-NYSE-2009-30); 60396 
(July 30, 2009), 74 FR 39126 (Aug. 5, 2009) (SR-NYSE-2009-73); 61251 
(Dec. 29, 2009), 75 FR 482 (Jan. 5, 2010) (SR-NYSE-2009-129); and 
62541 (July 21, 2010), 75 FR 44042 (July 27, 2010) (SR-NYSE-2010-
52).
---------------------------------------------------------------------------

Request for Extension \8\
---------------------------------------------------------------------------

    \8\ NYSE Amex LLC has filed a companion rule filing to conform 
its Equities Rules to the changes proposed in this filing. See SR-
NYSEAmex-2009-111, formally submitted November 29, 2010.
---------------------------------------------------------------------------

    FINRA and the Exchange have been working diligently on fully 
harmonizing their respective rules, including reviewing the 
possibilities for a uniform reporting standard for riskless principal 
transactions. However, because of the complexity of the existing 
customer order protection rules, including the need for input from 
industry participants as well as Commission approval, the Exchange and 
FINRA will not have harmonized their respective customer order 
protection rules by the current December 31, 2010 date for the 
implementation of the FESC riskless principal reporting.
    The Exchange notes that it has agreed with FINRA to pursue efforts 
to harmonize customer order protection rules. On December 10, 2009, 
FINRA filed with the Commission its rule proposal to adopt a new 
industry standard for customer order protection as proposed FINRA Rule 
5320.\9\ That proposed filing is based on the draft rule text that 
FINRA and NYSE Regulation each circulated to their respective member 
participants and includes copies of the comment letters that FINRA and 
NYSE Regulation received on the rule proposal. The Exchange intends to 
adopt a new customer order protection rule that is substantially 
identical to proposed FINRA Rule 5320.
---------------------------------------------------------------------------

    \9\ See Securities Exchange Act Release No. 61168 (Dec. 15, 
2009), 74 FR 68084 (Dec. 22, 2009) (SR-FINRA-2009-90).
---------------------------------------------------------------------------

    FINRA has filed to extend the time for Commission action on its 
rule filing to adopt proposed FINRA Rule 5320 to December 3, 2010. As 
proposed by FINRA, however, its proposed new rule will not be effective 
upon approval. Rather, the rule filing will become effective at a later 
date, not yet known, in order to provide time for FINRA, NYSE, and 
market participants to implement programming changes associated with 
the proposed new rule.
    The Exchange continues to believe that pending full harmonization 
of the respective customer order protection rules, it would be 
premature to require firms to meet the current Rule 92(c)(3) FESC 
reporting requirements.\10\ Indeed, having differing reporting 
standards for riskless principal orders would be inconsistent with the 
overall goal of the harmonization process.
---------------------------------------------------------------------------

    \10\ The Exchange notes that it would also need to make 
technological changes to implement the proposed FESC reporting 
solution for Rule 92(c)(3).
---------------------------------------------------------------------------

    Accordingly, to provide the Exchange and FINRA the time necessary 
to obtain Commission approval for and implement a harmonized rule set 
that would apply across their respective marketplaces, including a 
harmonized approach to riskless principal trade reporting, the Exchange 
is proposing to delay the operative date for NYSE Rule 92(c)(3) from 
December 31, 2010 to August 1, 2011.
    Pending the harmonization of the two rules, the Exchange will 
continue to require that, as of the date each member organization 
implements riskless principal routing, the member organization have in 
place systems and controls that allow them to easily match and tie 
riskless principal execution on the Exchange to the underlying orders 
and that they be able to provide this information to the Exchange upon 
request. To make clear that this requirement continues, the Exchange 
proposes to amend supplementary material .95 to Rule 92 to specifically 
provide that the Rule 92(c)(3) reporting requirements are suspended 
until August 1, 2011 and that member organizations are required to have 
in place such systems and controls relating to their riskless principal 
executions on the Exchange. Moreover, the Exchange will coordinate with 
FINRA to examine for compliance with the rule requirements for those 
firms that engage in riskless principal trading under Rule 92(c).
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Securities Exchange Act of 1934 (the ``Act''),\11\ in 
general, and furthers the objectives of Section 6(b)(5) of the Act,\12\ 
in particular, 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 Exchange 
believes the proposed extension provides the Exchange and FINRA the 
time necessary to develop a harmonized rule concerning customer order 
protection that will enable member organizations to participate in the 
national market system without unnecessary impediments.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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 does not:
    (i) Significantly affect the protection of investors or the public 
interest;
    (ii) impose any significant burden on competition; and
    (iii) become operative for 30 days from the date on which it was 
filed, or such shorter time as the Commission may designate, if 
consistent with the protection of investors and the public interest, it 
has become effective pursuant to Section 19(b)(3)(A) of the Act \13\ 
and Rule 19b-4(f)(6) thereunder.\14\
---------------------------------------------------------------------------

    \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 summarily may temporarily suspend 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.

[[Page 77689]]

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-2010-76 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-2010-76. This file 
number should be included on the subject line if e-mail is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site https://www.sec.gov/rules/sro.shtml. 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for Web site viewing and printing in 
the Commission's Public Reference Room on official business days 
between the hours of 10 a.m. and 3 p.m. Copies of 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-2010-76 and should be submitted on or before January 3, 2011

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
---------------------------------------------------------------------------

    \15\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-31200 Filed 12-10-10; 8:45 am]
BILLING CODE 8011-01-P
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.