Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Making Permanent NYSE Rule 123C(9)(a)(1) and Amending Rule 123C(9)(a)(1)(iii), 600-602 [2010-33254]

Download as PDF 600 Federal Register / Vol. 76, No. 3 / Wednesday, January 5, 2011 / Notices that the instant filing is consistent with these principles because the NMM Pilot provides its market participants with a trading venue that utilizes an enhanced market structure to encourage the addition of liquidity, facilitate the trading of larger orders more efficiently and operates to reward aggressive liquidity providers. Moreover, the instant filing requesting an extension of the NMM Pilot will permit adequate time for: (i) The Exchange to prepare and submit a filing to make the rules governing the NMM Pilot permanent; (ii) public notice and comment; and (iii) completion of the 19b–4 approval process. 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: (1) Does not significantly affect the protection of investors or the public interest; (2) does not impose any significant burden on competition; and (3) by its terms does not become operative for 30 days after the date of this filing, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 14 and Rule 19b–4(f)(6) thereunder.15 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. jlentini on DSKJ8SOYB1PROD with NOTICES 14 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(6). In addition, Rule 19b– 4(f)(6)(iii) requires a self-regulatory organization to provide the Commission with 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 fulfilled this requirement. 15 17 VerDate Mar<15>2010 16:26 Jan 04, 2011 Jkt 223001 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-2010–122 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. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.17 Florence E. Harmon, Deputy Secretary. [FR Doc. 2010–33259 Filed 1–4–11; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–63614; File No. SR–NYSE– 2010–84] Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Making Permanent NYSE Rule 123C(9)(a)(1) and Amending Rule 123C(9)(a)(1)(iii) December 29, 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 December All submissions should refer to File 20, 2010, New York Stock Exchange Number SR–NYSEAmex-2010–122. This LLC (‘‘NYSE’’ or the ‘‘Exchange’’) filed file number should be included on the with the Securities and Exchange subject line if e-mail is used. To help the Commission (the ‘‘Commission’’) the Commission process and review your proposed rule change as described in comments more efficiently, please use Items I and II below, which Items have only one method. The Commission will been prepared by the self-regulatory post all comments on the Commission’s organization. The Commission is Internet Web site (https://www.sec.gov/ publishing this notice to solicit rules/sro.shtml). Copies of the comments on the proposed rule change submission, all subsequent from interested persons. amendments, all written statements I. Self-Regulatory Organization’s with respect to the proposed rule Statement of the Terms of Substance of change that are filed with the the Proposed Rule Change Commission, and all written communications relating to the The Exchange proposes to make proposed rule change between the permanent NYSE Rule 123C(9)(a)(1), Commission and any person, other than which currently operates on a pilot those that may be withheld from the basis. The Exchange also proposes to public in accordance with the amend Rule 123C(9)(a)(1)(iii) to provisions of 5 U.S.C. 552, will be eliminate the requirement that only available for website viewing and Floor brokers can represent interest after printing in the Commission’s Public 4:00 p.m. The text of the proposed rule Reference Room, 100 F Street, NE., change is available at the Exchange, the Washington, DC 20549, on official Commission’s Public Reference Room, business days between the hours of 10 https://www.sec.gov, and https:// a.m. and 3 p.m. Copies of the filing also www.nyse.com. will be available for inspection and II. Self-Regulatory Organization’s copying at the principal office of the Exchange.16 All comments received will Statement of the Purpose of, and Statutory Basis for, the Proposed Rule be posted without change; the Change 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–2010–122 and should be submitted on or before January 26, 2011. 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 17 17 16 The text of the proposed rule change is available on the Commission’s Web site at https:// www.sec.gov. PO 00000 Frm 00064 Fmt 4703 Sfmt 4703 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 15 U.S.C. 78a. 3 17 CFR 240.19b–4. 1 15 E:\FR\FM\05JAN1.SGM 05JAN1 Federal Register / Vol. 76, No. 3 / Wednesday, January 5, 2011 / Notices 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 The Exchange proposes to make permanent NYSE Rule 123C(9)(a)(1),4 which has operated on a pilot basis and allows the Exchange to temporarily suspend certain rule requirements at the close when extreme order imbalances may cause significant dislocation to the closing price (‘‘Extreme Order Imbalances Pilot’’ or ‘‘Pilot’’).5 The Pilot has recently been extended to June 1, 2011. In addition, in connection with proposing to make the rule permanent, the Exchange proposes to amend Rule 123C(9)(a)(1)(iii) to eliminate the requirement that only Floor brokers can represent interest after 4:00 p.m. and to make technical amendments related to the obligations of member firms entering interest pursuant to Rule 123C(9)(a)(1).6 jlentini on DSKJ8SOYB1PROD with NOTICES Background Pursuant to NYSE Rule 123C(9)(a)(1), the Exchange may suspend NYSE Rule 52 (Hours of Operation) to resolve an extreme order imbalance that may result in a price dislocation at the close as a result of an order entered into Exchange systems, or represented to a Designated Market Maker (‘‘DMM’’) orally at or near the close. NYSE Rule 123C(9)(a)(1) was intended to be and has been invoked to attract offsetting interest in rare circumstances where there exists an extreme imbalance at the close such that a DMM is unable to close the security without significantly dislocating the price. 4 The Exchange notes that parallel changes are proposed to be made to the rules of NYSE Amex LLC. See SR–NYSEAmex–2010–121. 5 See Securities Exchange Act Release Nos. 59755 (April 13, 2009), 74 FR 18009 (April 20, 2009) (SR– NYSE–2009–18) (order granting approval of the Pilot); 60809 (October 9, 2009), 74 FR 53532 (October 19, 2009) (SR–NYSE–2009–104) (extending the operation of the Pilot to December 31, 2009); 61264 (December 31, 2009), 75 FR 1107 (January 8, 2010) (SR–NYSE–2009–131) (extending the operation of the Pilot from December 31, 2009 to March 1, 2010); 61612 (March 1, 2010), 75 FR 10543 (March 8, 2010) (SR–NYSE–2010–11) (extending the operation of the Pilot from March 1, 2010 to June 1, 2010); 62231 (June 4, 2010), 75 FR 33872 (June 15, 2010) (SR–NYSE–2010–42) (extending the operation of the Pilot from June 1, 2010 to December 1, 2010); and SR–NYSE–2010–79 (filed November 30, 2010) (extending the operation of the Pilot from December 1, 2010 to June 1, 2011). 6 In addition, the Exchange proposes to make a technical change to the text of Rule 123C(9)(a)(1)(v). VerDate Mar<15>2010 16:26 Jan 04, 2011 Jkt 223001 As a condition of the approval to operate the Pilot, the Exchange committed to provide the Commission with information regarding: (i) How often an NYSE Rule 52 temporary suspension pursuant to the Pilot was invoked during the six months following its approval; and (ii) the Exchange’s determination as to how to proceed with technical modifications to reconfigure Exchange systems to accept orders electronically after 4 p.m. As the Exchange has previously noted in filings with the Commission, the Pilot has been invoked on only five occasions in NYSE-listed securities.7 Proposal To Make Permanent the Operation of the Extreme Order Imbalance Rule The Exchange has completed and tested the system modifications necessary to accept orders electronically after 4 p.m. The Exchange therefore proposes to make Rule 123C(9)(a)(1), as amended, permanent beginning on January 3, 2011. Because the Exchange can now accept orders electronically after 4 p.m., the Exchange proposes to amend Rule 123C(9)(a)(iii) to eliminate the restriction that only Floor brokers can represent offsetting interest in response to a solicitation of interest pursuant to the Rule. The Exchange further proposes to make technical changes to Rule 123C(9)(a)(1)(iii) to identify what interest may be entered in response to a solicitation, i.e., it must be offsetting interest, a limit order priced no worse than the last sale, and irrevocable. Market participants sending in interest electronically in response to a solicitation after 4 p.m. are responsible for assuring compliance with all provisions of subsection (iii), including that such interest must be on the opposite side of the imbalance, must be limit priced no worse than the last sale, and must be irrevocable. Failure to abide by these requirements could subject a market participant to regulatory review and possible disciplinary action.8 The Exchange also proposes to amend Rule 123C(9)(a)(iv) to make clear that all offsetting interest solicited pursuant to the Rule will be executed consistent with Rule 72(c), which governs the allocation of executions among market participants. 7 See SR–NYSE–2010–79 (filed November 30, 2010) (extending the operation of the Pilot from December 1, 2010 to June 1, 2011). 8 Prior to implementation of this rule change, the Exchange will issue guidance in the form of an Information Memo that member organizations entering interest will be responsible for complying with Rule 123C(9)(a)(1)(iii). PO 00000 Frm 00065 Fmt 4703 Sfmt 4703 601 2. Statutory Basis The basis under the Act for this proposed rule change is the requirement under Section 6(b)(5) 9 that an Exchange have rules that are designed 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 that this filing is consistent with these principles because the proposed rule change will increase the ability of market participants to enter trading interest designed to prevent significant dislocation to closing prices that could result from extreme order imbalances. The Exchange further believes that this filing is consistent with these principles in that it expands the field of market participants that can directly enter interest in response to a solicitation of offsetting interest after 4 p.m. pursuant to Rule 123C(9)(a)(1). 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, it has become effective pursuant to Section 19(b)(3)(A) of the Act 10 and Rule 19b– 4(f)(6)(iii) thereunder.11 The Exchange has asked the Commission to waive the 30-day operative delay so that the 9 15 U.S.C. 78f(b)(5). U.S.C. 78s(b)(3)(A). 11 17 CFR 240.19b–4(f)(6)(iii). In addition, Rule 19b–4(f)(6)(iii) requires that a self-regulatory organization 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 filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has satisfied this requirement. 10 15 E:\FR\FM\05JAN1.SGM 05JAN1 602 Federal Register / Vol. 76, No. 3 / Wednesday, January 5, 2011 / Notices proposal may become operative immediately upon filing. The Exchange reports in connection with this proposal to make permanent Rule 123C(9)(a)(1) that it has completed testing of a functionality that would enable the electronic submission of orders after 4 p.m., and thus now proposes to remove the requirement that all interest entered after 4 p.m. in response to a DMM’s solicitation of interest to offset an extreme order imbalance must be represented by Floor brokers. The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest because doing so would allow the benefits of the new systems modifications allowing all market participants to enter orders electronically (rather than solely through a Floor broker) during a Rule 123C(9)(a)(1) suspended close to be realized immediately.12 Accordingly, the Commission waives the 30-day operative delay requirement and designates the proposed rule change operative upon filing with the Commission. 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 rulecomments@sec.gov. Please include File Number SR–NYSE–2010–84 on the subject line. All submissions should refer to File Number SR–NYSE–2010–84. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s Internet Web site (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission’s Public Reference Room, 100 F Street, NE., Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. Copies of such filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make publicly available. All submissions should refer to File Number SR–NYSE– 2010–84 and should be submitted on or before January 26, 2011. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.13 Florence E. Harmon, Deputy Secretary. [FR Doc. 2010–33254 Filed 1–4–11; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–63623; File No. SR–OCC– 2010–19] Self-Regulatory Organizations; The Options Clearing Corporation; Notice of Filing of Proposed Rule Change Relating to Stock Loan Programs jlentini on DSKJ8SOYB1PROD with NOTICES Paper Comments December 30, 2010. • Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549–1090. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 notice is hereby given that on December 16, 2010, The Options Clearing Corporation (‘‘OCC’’) filed with the Securities and Exchange Commission the proposed rule change 12 For purposes only of waiving the 30-day operative delay, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). VerDate Mar<15>2010 16:26 Jan 04, 2011 Jkt 223001 I. Self-Regulatory Organization’s Statement of the Terms of the Substance of the Proposed Rule Change The proposed rule change would provide OCC’s clearing members with clarification regarding the regulatory treatment under Rule 15c3–1 2 of collateral and margin posted by clearing members participating in stock loan transactions through OCC’s Stock Loan/ Hedge Program or Market Loan Program. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, OCC 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. OCC has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change The purpose of the proposed rule change is to provide OCC’s clearing members with clarification regarding the regulatory treatment under Rule 15c3–1 of collateral and margin posted by clearing members participating in stock loan transactions through OCC’s Stock Loan/Hedge Program or Market Loan Program. 1. Background OCC’s Stock Loan/Hedge Program, provided for in Article XXI of OCC’s ByLaws and Chapter XXII of OCC’s Rules, provides a means for OCC clearing members to submit broker-to-broker stock loan transactions to OCC for clearance. Broker-to-broker transactions are independently-executed stock loan transactions that are negotiated directly between two OCC clearing members. OCC’s Market Loan Program, provided for in Article XXIA of OCC’s By-Laws and Chapter XXIIA of OCC’s Rules, accommodates securities loan transactions executed through electronic trading platforms that match lenders and borrowers on an anonymous basis. 13 17 1 15 PO 00000 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). as described in Items I and II below, which Items have been prepared primarily by OCC. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. Frm 00066 Fmt 4703 Sfmt 4703 2 17 E:\FR\FM\05JAN1.SGM CFR 240.15c3–1. 05JAN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 76, Number 3 (Wednesday, January 5, 2011)]
[Notices]
[Pages 600-602]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-33254]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63614; File No. SR-NYSE-2010-84]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Making Permanent NYSE Rule 123C(9)(a)(1) and Amending Rule 
123C(9)(a)(1)(iii)

December 29, 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 December 20, 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 make permanent NYSE Rule 123C(9)(a)(1), 
which currently operates on a pilot basis. The Exchange also proposes 
to amend Rule 123C(9)(a)(1)(iii) to eliminate the requirement that only 
Floor brokers can represent interest after 4:00 p.m. The text of the 
proposed rule change is available at the Exchange, the Commission's 
Public Reference Room, 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

[[Page 601]]

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
    The Exchange proposes to make permanent NYSE Rule 123C(9)(a)(1),\4\ 
which has operated on a pilot basis and allows the Exchange to 
temporarily suspend certain rule requirements at the close when extreme 
order imbalances may cause significant dislocation to the closing price 
(``Extreme Order Imbalances Pilot'' or ``Pilot'').\5\ The Pilot has 
recently been extended to June 1, 2011. In addition, in connection with 
proposing to make the rule permanent, the Exchange proposes to amend 
Rule 123C(9)(a)(1)(iii) to eliminate the requirement that only Floor 
brokers can represent interest after 4:00 p.m. and to make technical 
amendments related to the obligations of member firms entering interest 
pursuant to Rule 123C(9)(a)(1).\6\
---------------------------------------------------------------------------

    \4\ The Exchange notes that parallel changes are proposed to be 
made to the rules of NYSE Amex LLC. See SR-NYSEAmex-2010-121.
    \5\ See Securities Exchange Act Release Nos. 59755 (April 13, 
2009), 74 FR 18009 (April 20, 2009) (SR-NYSE-2009-18) (order 
granting approval of the Pilot); 60809 (October 9, 2009), 74 FR 
53532 (October 19, 2009) (SR-NYSE-2009-104) (extending the operation 
of the Pilot to December 31, 2009); 61264 (December 31, 2009), 75 FR 
1107 (January 8, 2010) (SR-NYSE-2009-131) (extending the operation 
of the Pilot from December 31, 2009 to March 1, 2010); 61612 (March 
1, 2010), 75 FR 10543 (March 8, 2010) (SR-NYSE-2010-11) (extending 
the operation of the Pilot from March 1, 2010 to June 1, 2010); 
62231 (June 4, 2010), 75 FR 33872 (June 15, 2010) (SR-NYSE-2010-42) 
(extending the operation of the Pilot from June 1, 2010 to December 
1, 2010); and SR-NYSE-2010-79 (filed November 30, 2010) (extending 
the operation of the Pilot from December 1, 2010 to June 1, 2011).
    \6\ In addition, the Exchange proposes to make a technical 
change to the text of Rule 123C(9)(a)(1)(v).
---------------------------------------------------------------------------

Background
    Pursuant to NYSE Rule 123C(9)(a)(1), the Exchange may suspend NYSE 
Rule 52 (Hours of Operation) to resolve an extreme order imbalance that 
may result in a price dislocation at the close as a result of an order 
entered into Exchange systems, or represented to a Designated Market 
Maker (``DMM'') orally at or near the close. NYSE Rule 123C(9)(a)(1) 
was intended to be and has been invoked to attract offsetting interest 
in rare circumstances where there exists an extreme imbalance at the 
close such that a DMM is unable to close the security without 
significantly dislocating the price.
    As a condition of the approval to operate the Pilot, the Exchange 
committed to provide the Commission with information regarding: (i) How 
often an NYSE Rule 52 temporary suspension pursuant to the Pilot was 
invoked during the six months following its approval; and (ii) the 
Exchange's determination as to how to proceed with technical 
modifications to reconfigure Exchange systems to accept orders 
electronically after 4 p.m. As the Exchange has previously noted in 
filings with the Commission, the Pilot has been invoked on only five 
occasions in NYSE-listed securities.\7\
---------------------------------------------------------------------------

    \7\ See SR-NYSE-2010-79 (filed November 30, 2010) (extending the 
operation of the Pilot from December 1, 2010 to June 1, 2011).
---------------------------------------------------------------------------

Proposal To Make Permanent the Operation of the Extreme Order Imbalance 
Rule
    The Exchange has completed and tested the system modifications 
necessary to accept orders electronically after 4 p.m. The Exchange 
therefore proposes to make Rule 123C(9)(a)(1), as amended, permanent 
beginning on January 3, 2011.
    Because the Exchange can now accept orders electronically after 4 
p.m., the Exchange proposes to amend Rule 123C(9)(a)(iii) to eliminate 
the restriction that only Floor brokers can represent offsetting 
interest in response to a solicitation of interest pursuant to the 
Rule. The Exchange further proposes to make technical changes to Rule 
123C(9)(a)(1)(iii) to identify what interest may be entered in response 
to a solicitation, i.e., it must be offsetting interest, a limit order 
priced no worse than the last sale, and irrevocable. Market 
participants sending in interest electronically in response to a 
solicitation after 4 p.m. are responsible for assuring compliance with 
all provisions of subsection (iii), including that such interest must 
be on the opposite side of the imbalance, must be limit priced no worse 
than the last sale, and must be irrevocable. Failure to abide by these 
requirements could subject a market participant to regulatory review 
and possible disciplinary action.\8\
---------------------------------------------------------------------------

    \8\ Prior to implementation of this rule change, the Exchange 
will issue guidance in the form of an Information Memo that member 
organizations entering interest will be responsible for complying 
with Rule 123C(9)(a)(1)(iii).
---------------------------------------------------------------------------

    The Exchange also proposes to amend Rule 123C(9)(a)(iv) to make 
clear that all offsetting interest solicited pursuant to the Rule will 
be executed consistent with Rule 72(c), which governs the allocation of 
executions among market participants.
2. Statutory Basis
    The basis under the Act for this proposed rule change is the 
requirement under Section 6(b)(5) \9\ that an Exchange have rules that 
are designed 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 that this 
filing is consistent with these principles because the proposed rule 
change will increase the ability of market participants to enter 
trading interest designed to prevent significant dislocation to closing 
prices that could result from extreme order imbalances. The Exchange 
further believes that this filing is consistent with these principles 
in that it expands the field of market participants that can directly 
enter interest in response to a solicitation of offsetting interest 
after 4 p.m. pursuant to Rule 123C(9)(a)(1).
---------------------------------------------------------------------------

    \9\ 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, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \10\ and Rule 19b-
4(f)(6)(iii) thereunder.\11\ The Exchange has asked the Commission to 
waive the 30-day operative delay so that the

[[Page 602]]

proposal may become operative immediately upon filing.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-
4(f)(6)(iii) requires that a self-regulatory organization 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 filing of the 
proposed rule change, or such shorter time as designated by the 
Commission. The Exchange has satisfied this requirement.
---------------------------------------------------------------------------

    The Exchange reports in connection with this proposal to make 
permanent Rule 123C(9)(a)(1) that it has completed testing of a 
functionality that would enable the electronic submission of orders 
after 4 p.m., and thus now proposes to remove the requirement that all 
interest entered after 4 p.m. in response to a DMM's solicitation of 
interest to offset an extreme order imbalance must be represented by 
Floor brokers. The Commission believes that waiving the 30-day 
operative delay is consistent with the protection of investors and the 
public interest because doing so would allow the benefits of the new 
systems modifications allowing all market participants to enter orders 
electronically (rather than solely through a Floor broker) during a 
Rule 123C(9)(a)(1) suspended close to be realized immediately.\12\ 
Accordingly, the Commission waives the 30-day operative delay 
requirement and designates the proposed rule change operative upon 
filing with the Commission.
---------------------------------------------------------------------------

    \12\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
---------------------------------------------------------------------------

    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-2010-84 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-2010-84. This file 
number should be included on the subject line if e-mail is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street, NE., 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 p.m. Copies of such filing also will be available for 
inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make publicly available. All 
submissions should refer to File Number SR-NYSE-2010-84 and should be 
submitted on or before January 26, 2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-33254 Filed 1-4-11; 8:45 am]
BILLING CODE 8011-01-P

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