Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Extend for 12 Months the Pilot Program Permitting the Exchange's Ownership Interest in BIDS Holdings L.P. (BIDS) and the Affiliation of BIDS With the New York Block Exchange LLC, 80088-80090 [2010-31931]
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Federal Register / Vol. 75, No. 244 / Tuesday, December 21, 2010 / Notices
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
III. Date of Effectiveness of the
change that are filed with the
Proposed Rule Change and Timing for
Commission, and all written
Commission Action
communications relating to the
proposed rule change between the
The foregoing proposed rule change
Commission and any person, other than
will take effect upon filing with the
those that may be withheld from the
Commission pursuant to Section
19(b)(3)(A)(i) of the Act 10 and Rule 19b– public in accordance with the
provisions of 5 U.S.C. 552, will be
4(f)(1) thereunder,11 because it
available for Web site viewing and
constitutes a stated policy, practice, or
printing in the Commission’s Public
interpretation with respect to the
Reference Room, 100 F Street, NE.,
meaning, administration, or
Washington, DC 20549, on official
enforcement of an existing rule.
business days between the hours of 10
Specifically, the change proposed
a.m. and 3 p.m. Copies of the filing also
herein would reflect that Exchange
will be available for inspection and
systems enforce compliance with Rule
copying at the principal office of the
123C(2) and (3) and therefore clarify
Exchange. All comments received will
that Exchange members and member
be posted without change; the
organizations are not responsible for
Commission does not edit personal
ensuring such compliance.
identifying information from
At any time within 60 days of the
submissions. You should submit only
filing of the proposed rule change, the
information that you wish to make
Commission summarily may
temporarily suspend such rule change if available publicly. All submissions
should refer to File Number SR–
it appears to the Commission that such
action is necessary or appropriate in the NYSEAmex–2010–110 and should be
submitted on or before January 11, 2011.
public interest, for the protection of
investors, or otherwise in furtherance of
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
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.
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:
srobinson on DSKHWCL6B1PROD with 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–2010–110 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–2010–110.
This file number should be included on
the subject line if e-mail is used. To help
the Commission process and review
11 17
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
authority.12
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–31926 Filed 12–20–10; 8:45 am]
[Release No. 34–63545; File No. SR–NYSE–
2010–82]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Extend for
12 Months the Pilot Program
Permitting the Exchange’s Ownership
Interest in BIDS Holdings L.P. (BIDS)
and the Affiliation of BIDS With the
New York Block Exchange LLC
December 14, 2010.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’)F 1F and Rule 19b–4 thereunder,2
notice is hereby given that, on December
9, 2010, the New York Stock Exchange
LLC (‘‘NYSE’’ or the ‘‘Exchange’’) filed
CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
U.S.C. 78s(b)(3)(A)(i).
CFR 240.19b–4(f)(1).
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I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to extend for
an additional 12 months the January 22,
2011 expiration date of the pilot
program that provides an exception to
NYSE Rule 2B by permitting the
Exchange’s equity ownership interest in
BIDS Holdings L.P. (‘‘BIDS’’), which is
the parent company of a member of the
Exchange, and BIDS’s affiliation with
the New York Block Exchange LLC, an
affiliate of the Exchange. There is no
proposed rule text.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
12 17
10 15
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 Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
PO 00000
Frm 00055
Fmt 4703
Sfmt 4703
1. Purpose
On January 22, 2009, the Commission
approved the governance structure
proposed by the Exchange with respect
to the New York Block Exchange
(‘‘NYBX’’), a new electronic trading
facility of the Exchange for NYSE-listed
securities that was established by means
of a joint venture between the Exchange
and BIDS.3 The governance structure
that was approved is reflected in the
Limited Liability Company Agreement
of New York Block Exchange LLC (the
‘‘Company’’), the entity that owns and
operates NYBX. Under the governance
structure approved by the Commission,
the Exchange and BIDS each own a 50%
economic interest in the Company. In
3 See Securities Exchange Act Release No. 59281
(January 22, 2009), 74 FR 5014 (January 28, 2009)
(order approving SR–NYSE–2008–120) (‘‘Approval
Order’’).
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srobinson on DSKHWCL6B1PROD with NOTICES
addition, the Exchange, through its
wholly-owned subsidiary NYSE Market,
Inc., owns less than 10% of the
aggregate limited partnership interest in
BIDS. BIDS is the parent company of
BIDS Trading, L.P. (‘‘BIDS Trading’’),
which became a member of the
Exchange in connection with the
establishment of NYBX.
The foregoing ownership
arrangements would violate NYSE Rule
2B without an exception from the
Commission.4 First, the Exchange’s
indirect ownership interest in BIDS
Trading violates the prohibition in Rule
2B against the Exchange maintaining an
ownership interest in a member
organization. Second, BIDS Trading is
an affiliate of an affiliate of the
Exchange,5 which violates the
prohibition in Rule 2B against a member
of the Exchange having such status.
Consequently, in the Approval Order,
the Commission permitted an exception
to these two potential violations of
NYSE Rule 2B, subject to a number of
limitations and conditions. One of the
conditions for Commission approval
was that the proposed exception from
NYSE Rule 2B to permit NYSE’s
indirect ownership/interest in BIDS
Trading and BIDS Trading’s affiliation
with the Company (which is an affiliate
of NYSE) would be for a pilot period of
12 months.6
In discussing the pilot basis of the
exception to NYSE Rule 2B, the
Approval Order noted that the pilot
period ‘‘will provide NYSE and the
Commission an opportunity to assess
whether there might be any adverse
consequences of the exception and
whether a permanent exception is
warranted.’’ 7 The original 12-month
pilot period expired on January 22, 2010
and was extended for an additional 12
months to January 22, 2011 by a rule
filing made by the Exchange on January
11, 2010 and noticed in a release by the
Commission dated January 22, 2010.8
4 NYSE Rule 2B provides, in relevant part, that:
‘‘[w]ithout prior SEC approval, the Exchange or any
entity with which it is affiliated shall not, directly
or indirectly, acquire or maintain an ownership
interest in a member organization. In addition, a
member organization shall not be or become an
affiliate of the Exchange, or an affiliate of any
affiliate of the Exchange.* * * The term affiliate
shall have the meaning specified in Rule 12b–2
under the Act.’’
5 Specifically, the Company is an affiliate of the
Exchange, and BIDS Trading is an affiliate of the
Company based on their common control by BIDS.
The affiliation in each case is the result of the 50%
ownership interest in the Company by each of the
Exchange and BIDS.
6 See Approval Order, 74 FR at 5018.
7 Id. at 5019.
8 See Securities Exchange Act Release No. 61409
(January 22, 2010), 75 FR 4889 (January 29, 2010)
(File No. SR–NYSE–2010–04).
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While the Exchange believes that the
experience to date operating under the
exception to Rule 2B fully justifies
making the exception permanent, the
Exchange now seeks to extend the
ending date for the pilot program for
another 12 months to January 22, 2012
to allow additional time, if necessary,
for the Commission to obtain and
review the information it needs in order
to make its determination regarding any
adverse consequences of the exception
and whether a permanent exception is
warranted. During the proposed
extension of the pilot program period,
the Exchange’s current indirect
ownership interest in BIDS Trading 9
and BIDS Trading’s affiliation with the
Company would continue to be
permitted.
If the Commission should determine
prior to the end of the extended pilot
period that a permanent exception to
NYSE Rule 2B is warranted, the
Exchange would have the option of
submitting a proposed rule change to
accomplish this and simultaneously
terminate the pilot program.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
Section 6(b) 10 of the Act,11 in general,
and furthers the objectives of Section
6(b)(1) 12 of the Act, which requires a
national securities exchange to be so
organized and have the capacity to carry
out the purposes of the Act and to
comply, and to enforce compliance by
its members and persons associated
with its members, with the provisions of
the Act. The Exchange further believes
that the proposed rule change is also
consistent with, and furthers the
objectives of, Section 6(b)(5) 13 of the
Act, in that it is designed to prevent
fraudulent and manipulative acts and
practices, to promote just and equitable
principles of trade, to foster cooperation
and coordination with persons engaged
in facilitating transactions in securities,
to remove impediments to and perfect
the mechanisms of a free and open
market and a national market system
9 Another condition for the exception to NYSE
Rule 2B specified in the Approval Order was that
the Exchange’s equity interest in BIDS must remain
less than 9%, absent prior Commission approval of
any increase. See id. at 5018. Subsequently, the
Commission approved a proposal by the Exchange
to slightly increase the ceiling on its equity
ownership in BIDS to less than 10%, and that will
be the applicable limitation during the extension of
the pilot period. See Securities Exchange Act
Release No. 61257 (December 30, 2009), 75 FR 500
(January 5, 2010) (order approving SR–NYSE–2009–
116).
10 15 U.S.C. 78f(b).
11 15 U.S.C. 78.
12 15 U.S.C. 78f(b)(1).
13 15 U.S.C. 78f(b)(5).
PO 00000
Frm 00056
Fmt 4703
Sfmt 4703
80089
and, in general, to protect investors and
the public interest.
In the Approval Order, the
Commission determined that the
proposed exception from NYSE Rule 2B
to permit NYSE’s indirect ownership
interest in BIDS Trading and BIDS
Trading’s affiliation with the Company
was consistent with the Act, including
Section 6(b)(5) thereof.14 As the basis for
its determination, the Commission cited
the specific limitations and conditions
listed in the Approval Order to which
its approval of the exception to NYSE
Rule 2B was subject,15 stating: ‘‘These
conditions appear reasonably designed
to mitigate concerns about potential
conflicts of interest and unfair
competitive advantage. * * * These
conditions appear reasonably designed
to promote robust and independent
regulation of BIDS. * * * The
Commission believes that, taken
together, these conditions are
reasonably designed to mitigate
potential conflicts between the
Exchange’s commercial interest in BIDS
and its regulatory responsibilities with
respect to BIDS.’’ 16 Because these same
limitations and conditions will continue
to be applicable during the additional
extension of the pilot period, other than
the ending date of the pilot period and
the aforementioned small increase in
the ceiling on the Exchange’s equity
interest in BIDS, the Exchange believes
that the exception from NYSE Rule 2B
described above will continue to be
consistent with the Act during that
extension.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing proposal has become
effective pursuant to Section 19(b)(3)(A)
of the Act and Rule 19b–4(f)(6)
thereunder because it does not: (i)
Significantly affect the protection of
14 See
Approval Order, 74 FR at 5018–5019.
at 5018.
16 Id. at 5019.
15 Id.
E:\FR\FM\21DEN1.SGM
21DEN1
80090
Federal Register / Vol. 75, No. 244 / Tuesday, December 21, 2010 / Notices
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.17
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.
IV. Solicitation of Comments
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–
2010–82 and should be submitted on or
before January 11, 2011.
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. 18
Florence E. Harmon,
Deputy Secretary.
Electronic Comments
BILLING CODE 8011–01–P
• 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–2010–82 on the
subject line.
srobinson on DSKHWCL6B1PROD with NOTICES
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–2010–82. 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
17 In addition, Rule 19b–4(f)(6) requires the
Exchange to give the Commission written notice of
its intent to file the proposed rule change, along
with a brief description and text of the proposed
rule change, at least five business days prior to the
date of filing of the proposed rule change, or such
shorter time as designated by the Commission. The
Exchange satisfied this requirement.
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20:40 Dec 20, 2010
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[FR Doc. 2010–31931 Filed 12–20–10; 8:45 am]
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–63553; File No. SR–
NYSEAmex–2010–119]
Self-Regulatory Organizations; Notice
of Filing and Immediate Effectiveness
of Proposed Rule Change by NYSE
Amex LLC To Establish Royalty Fees
for Non-Customer Executions in
Options Based on the KBW Bank Index
December 15, 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 December
10, 2010, NYSE Amex LLC. (‘‘NYSE
Amex’’ 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 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 establish
royalty fees for non-Customer
executions in options based on the KBW
Bank Index, symbol BKX. The text of
the proposed rule change is available on
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
the Exchange’s Web site at https://
www.nyse.com, at the Exchange’s
principal office, on the Commission’s
Web site at https://www.sec.gov, and at
the Commission’s Public Reference
Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange 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 its
Schedule of Fees and Charges (‘‘Fee
Schedule’’) to implement new royalty
fees of $0.10 per contract associated
with executions in options based on the
KBW Bank Index (BKX). The fees are
intended to be effective on Monday,
December 13, 2010 when the Exchange
expects to commence trading of these
options. The Exchange has entered into
a licensing agreement with Keefe,
Bruyette & Woods, Inc. (‘‘KBW’’), the
firm that created and maintains the
index, and will pay a fee to KBW on
every contract traded on the Exchange.
As with other royalty fees charged by
the Exchange, these fees reflect the passthrough charges associated with the
licensing of this product. The Exchange
notes that royalty fees do not apply to
public Customer orders in these
products.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
the provisions of Section 6 of the Act,3
in general, and Section 6(b)(4) of the
Act,4 in particular, in that it is designed
to provide for the equitable allocation of
reasonable dues, fees, and other charges
among its members and other persons
using its facilities. The proposed
changes to the Fee Schedule are
equitable in that they apply uniformly
18 17
1 15
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3 15
4 15
E:\FR\FM\21DEN1.SGM
U.S.C. 78f.
U.S.C. 78f(b)(4).
21DEN1
]]>Agencies
[Federal Register Volume 75, Number 244 (Tuesday, December 21, 2010)]
[Notices]
[Pages 80088-80090]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-31931]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-63545; File No. SR-NYSE-2010-82]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Extend for 12 Months the Pilot Program Permitting the Exchange's
Ownership Interest in BIDS Holdings L.P. (BIDS) and the Affiliation of
BIDS With the New York Block Exchange LLC
December 14, 2010.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act'')F \1\F and Rule 19b-4 thereunder,\2\ notice is hereby
given that, on December 9, 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 and II 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 extend for an additional 12 months the
January 22, 2011 expiration date of the pilot program that provides an
exception to NYSE Rule 2B by permitting the Exchange's equity ownership
interest in BIDS Holdings L.P. (``BIDS''), which is the parent company
of a member of the Exchange, and BIDS's affiliation with the New York
Block Exchange LLC, an affiliate of the Exchange. There is no proposed
rule text.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
On January 22, 2009, the Commission approved the governance
structure proposed by the Exchange with respect to the New York Block
Exchange (``NYBX''), a new electronic trading facility of the Exchange
for NYSE-listed securities that was established by means of a joint
venture between the Exchange and BIDS.\3\ The governance structure that
was approved is reflected in the Limited Liability Company Agreement of
New York Block Exchange LLC (the ``Company''), the entity that owns and
operates NYBX. Under the governance structure approved by the
Commission, the Exchange and BIDS each own a 50% economic interest in
the Company. In
[[Page 80089]]
addition, the Exchange, through its wholly-owned subsidiary NYSE
Market, Inc., owns less than 10% of the aggregate limited partnership
interest in BIDS. BIDS is the parent company of BIDS Trading, L.P.
(``BIDS Trading''), which became a member of the Exchange in connection
with the establishment of NYBX.
---------------------------------------------------------------------------
\3\ See Securities Exchange Act Release No. 59281 (January 22,
2009), 74 FR 5014 (January 28, 2009) (order approving SR-NYSE-2008-
120) (``Approval Order'').
---------------------------------------------------------------------------
The foregoing ownership arrangements would violate NYSE Rule 2B
without an exception from the Commission.\4\ First, the Exchange's
indirect ownership interest in BIDS Trading violates the prohibition in
Rule 2B against the Exchange maintaining an ownership interest in a
member organization. Second, BIDS Trading is an affiliate of an
affiliate of the Exchange,\5\ which violates the prohibition in Rule 2B
against a member of the Exchange having such status. Consequently, in
the Approval Order, the Commission permitted an exception to these two
potential violations of NYSE Rule 2B, subject to a number of
limitations and conditions. One of the conditions for Commission
approval was that the proposed exception from NYSE Rule 2B to permit
NYSE's indirect ownership/interest in BIDS Trading and BIDS Trading's
affiliation with the Company (which is an affiliate of NYSE) would be
for a pilot period of 12 months.\6\
---------------------------------------------------------------------------
\4\ NYSE Rule 2B provides, in relevant part, that: ``[w]ithout
prior SEC approval, the Exchange or any entity with which it is
affiliated shall not, directly or indirectly, acquire or maintain an
ownership interest in a member organization. In addition, a member
organization shall not be or become an affiliate of the Exchange, or
an affiliate of any affiliate of the Exchange.* * * The term
affiliate shall have the meaning specified in Rule 12b-2 under the
Act.''
\5\ Specifically, the Company is an affiliate of the Exchange,
and BIDS Trading is an affiliate of the Company based on their
common control by BIDS. The affiliation in each case is the result
of the 50% ownership interest in the Company by each of the Exchange
and BIDS.
\6\ See Approval Order, 74 FR at 5018.
---------------------------------------------------------------------------
In discussing the pilot basis of the exception to NYSE Rule 2B, the
Approval Order noted that the pilot period ``will provide NYSE and the
Commission an opportunity to assess whether there might be any adverse
consequences of the exception and whether a permanent exception is
warranted.'' \7\ The original 12-month pilot period expired on January
22, 2010 and was extended for an additional 12 months to January 22,
2011 by a rule filing made by the Exchange on January 11, 2010 and
noticed in a release by the Commission dated January 22, 2010.\8\ While
the Exchange believes that the experience to date operating under the
exception to Rule 2B fully justifies making the exception permanent,
the Exchange now seeks to extend the ending date for the pilot program
for another 12 months to January 22, 2012 to allow additional time, if
necessary, for the Commission to obtain and review the information it
needs in order to make its determination regarding any adverse
consequences of the exception and whether a permanent exception is
warranted. During the proposed extension of the pilot program period,
the Exchange's current indirect ownership interest in BIDS Trading \9\
and BIDS Trading's affiliation with the Company would continue to be
permitted.
---------------------------------------------------------------------------
\7\ Id. at 5019.
\8\ See Securities Exchange Act Release No. 61409 (January 22,
2010), 75 FR 4889 (January 29, 2010) (File No. SR-NYSE-2010-04).
\9\ Another condition for the exception to NYSE Rule 2B
specified in the Approval Order was that the Exchange's equity
interest in BIDS must remain less than 9%, absent prior Commission
approval of any increase. See id. at 5018. Subsequently, the
Commission approved a proposal by the Exchange to slightly increase
the ceiling on its equity ownership in BIDS to less than 10%, and
that will be the applicable limitation during the extension of the
pilot period. See Securities Exchange Act Release No. 61257
(December 30, 2009), 75 FR 500 (January 5, 2010) (order approving
SR-NYSE-2009-116).
---------------------------------------------------------------------------
If the Commission should determine prior to the end of the extended
pilot period that a permanent exception to NYSE Rule 2B is warranted,
the Exchange would have the option of submitting a proposed rule change
to accomplish this and simultaneously terminate the pilot program.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) \10\ of the Act,\11\ in general, and furthers the
objectives of Section 6(b)(1) \12\ of the Act, which requires a
national securities exchange to be so organized and have the capacity
to carry out the purposes of the Act and to comply, and to enforce
compliance by its members and persons associated with its members, with
the provisions of the Act. The Exchange further believes that the
proposed rule change is also consistent with, and furthers the
objectives of, Section 6(b)(5) \13\ of the Act, in that it is designed
to prevent fraudulent and manipulative acts and practices, to promote
just and equitable principles of trade, to foster cooperation and
coordination with persons engaged in facilitating transactions in
securities, to remove impediments to and perfect the mechanisms of a
free and open market and a national market system and, in general, to
protect investors and the public interest.
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\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78.
\12\ 15 U.S.C. 78f(b)(1).
\13\ 15 U.S.C. 78f(b)(5).
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In the Approval Order, the Commission determined that the proposed
exception from NYSE Rule 2B to permit NYSE's indirect ownership
interest in BIDS Trading and BIDS Trading's affiliation with the
Company was consistent with the Act, including Section 6(b)(5)
thereof.\14\ As the basis for its determination, the Commission cited
the specific limitations and conditions listed in the Approval Order to
which its approval of the exception to NYSE Rule 2B was subject,\15\
stating: ``These conditions appear reasonably designed to mitigate
concerns about potential conflicts of interest and unfair competitive
advantage. * * * These conditions appear reasonably designed to promote
robust and independent regulation of BIDS. * * * The Commission
believes that, taken together, these conditions are reasonably designed
to mitigate potential conflicts between the Exchange's commercial
interest in BIDS and its regulatory responsibilities with respect to
BIDS.'' \16\ Because these same limitations and conditions will
continue to be applicable during the additional extension of the pilot
period, other than the ending date of the pilot period and the
aforementioned small increase in the ceiling on the Exchange's equity
interest in BIDS, the Exchange believes that the exception from NYSE
Rule 2B described above will continue to be consistent with the Act
during that extension.
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\14\ See Approval Order, 74 FR at 5018-5019.
\15\ Id. at 5018.
\16\ Id. at 5019.
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing proposal has become effective pursuant to Section
19(b)(3)(A) of the Act and Rule 19b-4(f)(6) thereunder because it does
not: (i) Significantly affect the protection of
[[Page 80090]]
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.\17\
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\17\ In addition, Rule 19b-4(f)(6) requires the Exchange to give
the Commission written notice of its intent to file the proposed
rule change, along with a brief description and text of the proposed
rule change, at least five business days prior to the date of filing
of the proposed rule change, or such shorter time as designated by
the Commission. The Exchange satisfied this requirement.
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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.
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-2010-82 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-2010-82. 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 available publicly. All
submissions should refer to File Number SR-NYSE-2010-82 and should be
submitted on or before January 11, 2011.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority. \18\
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\18\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-31931 Filed 12-20-10; 8:45 am]
BILLING CODE 8011-01-P
