Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Extend the Temporary Suspension of Those Aspects of Rules 36.20, 36.21, and 36.30 That Would Not Permit Designated Market Makers and Floor Brokers To Use Personal Portable Phone Devices on the Trading Floor Following the Aftermath of Hurricane Sandy From November 5, 2012 Until the Earlier of When Phone Service Is Fully Restored or Friday, November 9, 2012, 67704-67707 [2012-27548]
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67704
Federal Register / Vol. 77, No. 219 / Tuesday, November 13, 2012 / Notices
Excluded Classes from the CFLEX AIM
Credit is equitable and not unfairly
discriminatory because the Exchange
expended significant resources
developing the products listed in the
Excluded Classes and must receive fees
in order to recoup such expenditures.
Limiting the CFLEX AIM Credit to FLEX
Options AIM transactions is equitable
and not unfairly discriminatory because
the Exchange expended considerable
resources to develop the new FLEX
Options AIM technology and therefore
desires to encourage the adoption of
such technology. Further, AIM is a
facilitation mechanism and greater
facilitation of FLEX Options trading will
encourage greater trading of FLEX
Options. Limiting the CFLEX AIM
Credit to the Agency/Primary side of
FLEX Options AIM transactions is
equitable and not unfairly
discriminatory because the Agency/
Primary side of an AIM transaction is
the side on which an order is entered.
Providing the CFLEX AIM Credit for the
Primary side of FLEX Options AIM
orders will encourage the entry of more
FLEX Options orders, which will benefit
parties wishing to take the Contra side
of FLEX Options AIM orders by
providing them with more FLEX
Options AIM orders on which to take
the Contra side. Capping the CFLEX
AIM Credit at $250 per transaction and
limiting the CFLEX AIM Credit to one
order per underlying product per TPH
(per day and only the smallest order
from that TPH) is equitable and not
unfairly discriminatory because such
limitations are necessary to ensure the
financial viability of the CFLEX AIM
Credit, and without such limitations the
Exchange would not be able to offer the
CFLEX AIM Credit at all. Further, these
limitations will apply to all market
participants equally.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
CBOE 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.
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C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange neither solicited nor
received comments on the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section
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19(b)(3)(A) 5 of the Act and paragraph (f)
of Rule 19b–4 6 thereunder. 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 email to rulecomments@sec.gov. Please include File
Number SR–CBOE–2012–105 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–CBOE–2012–105. This file
number should be included on the
subject line if email 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
10:00 a.m. and 3:00 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–CBOE–
2012–105, and should be submitted on
or before December 4, 2012.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.7
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2012–27511 Filed 11–9–12; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–68161; File No. SR–NYSE–
2012–61]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Extend the
Temporary Suspension of Those
Aspects of Rules 36.20, 36.21, and
36.30 That Would Not Permit
Designated Market Makers and Floor
Brokers To Use Personal Portable
Phone Devices on the Trading Floor
Following the Aftermath of Hurricane
Sandy From November 5, 2012 Until
the Earlier of When Phone Service Is
Fully Restored or Friday, November 9,
2012
November 5, 2012.
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
5, 2012, New York Stock Exchange LLC
(‘‘NYSE’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘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
temporary suspension of those aspects
of Rules 36.20, 36.21, and 36.30 that
would not permit Designated Market
Makers (‘‘DMMs’’) and Floor brokers to
use personal portable phone devices on
the Trading Floor following the
7 17
5 15
U.S.C. 78s(b)(3)(A).
6 17 CFR [sic] 240.19b–4(f).
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CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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Federal Register / Vol. 77, No. 219 / Tuesday, November 13, 2012 / Notices
aftermath of Hurricane Sandy from
November 5, 2012 until the earlier of
when phone service is fully restored or
Friday, November 9, 2012. The text of
the proposed rule change is available on
the Exchange’s Web site at
www.nyse.com, at the principal office of
the Exchange, and at the Commission’s
Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
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On Thursday, November 1, 2012, the
Exchange filed a rule proposal to
temporarily suspend those aspects of
Rules 36.20, 36.21, and 36.30 that
would not permit Floor brokers and
Designated Market Makers (‘‘DMMs’’) to
use personal portable phone devices on
the Trading Floor 3 following the
aftermath of Hurricane Sandy and
during the period that phone service
was not fully functional.4 Pursuant to
that filing, all other aspects of those
rules remained applicable and the
temporary suspensions of Rule 36
requirements were in effect beginning
the first day trading resumed following
Hurricane Sandy until Friday,
November 2, 2012.
As of Monday, November 5, 2012,
although power has been restored to the
downtown Manhattan vicinity, other
services are not yet fully operational.
Among other things, the telephone
services provided by third-party carriers
to the Exchange are still not fully
operational on the Trading Floor, which
impacts the ability of Floor members to
communicate from the Trading Floor as
permitted by Rule 36.
3 Pursuant to Rule 6A, the Trading Floor is
defined as the restricted-access physical areas
designated by the Exchange for the trading of
securities, but does not include the physical
locations where NYSE Amex Options are traded.
4 See Securities Exchange Act Release No. 68137
(Nov. 1, 2012) (SR–NYSE–2012–58).
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Because of intermittent cell phone
service, many Exchange authorized and
provided portable phones continue to
not be functional and therefore Floor
brokers still cannot use the Exchange
authorized and provided portable
phones, pursuant to Rules 36.20 and
36.21. In certain instances, however, the
personal cell phones of Floor brokers
are operational on the Trading Floor.
The Exchange believes that because
communications with customers is a
vital part of a Floor broker’s role as
agent and therefore contributes to
maintaining a fair and orderly market,
during the period when phone service
continues to be intermittent, Floor
brokers should be permitted to use
personal portable phone devices in lieu
of the non-operational Exchange
authorized and provided portable
phones.
Similarly, the Exchange continues to
experience problems with the DMM
unit wired telephone lines, which are
permitted pursuant to Rule 36.30. In
some circumstances, the DMM unit
location at the Trading Floor post may
receive incoming calls, but the phones
are not capable of making outgoing
calls. The continued inability of a DMM
unit to use its telephone lines could
impact the ability of a DMM unit to
comply with its obligations in securities
registered to the DMM unit. For
example, if a DMM unit experiences
connectivity issues or problems with its
algorithms and needs to speak with one
of its back-office support teams, with
the current phone limitations, the DMM
would not be able to do so.
Accordingly, the Exchange proposes
to extend the temporary suspension of
those aspects of Rules 36.20, 36.21, and
36.30 that would not permit Floor
brokers and DMMs to use personal
portable phone devices on the Trading
Floor. The Exchange proposes that the
extension of the temporary suspension
of those aspects of Rules 36.20, 36.21,
and 36.30 to permit use of the personal
portable phones on the Trading Floor be
pursuant to the same terms and
conditions of the temporary suspension
filed for October 31, 2012 through
November 2, 2012, including the record
retention requirements related to any
use of personal portable phones.5
In particular, as set forth in the prior
filing, Floor brokers and DMMs that use
a portable personal phone must provide
the Exchange with the names of all
Floor-based personnel who used
personal portable phones during this
temporary suspension period, together
with the phone number and applicable
5 See id. (notice that describes the terms and
conditions of the temporary suspension).
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67705
carrier for each number. Floor broker
and DMM member organizations must
maintain in their books and records all
cell phone records that show both
incoming and outgoing calls that were
made during the period that a personal
portable phone was used on the Trading
Floor. To the extent the records are
unavailable from the third-party carrier,
the Floor broker and DMM member
organizations must maintain
contemporaneous records of all calls
made or received on a personal portable
phone while on the Trading Floor. As
with all member organization records,
such cell phone records must be
provided to Exchange regulatory staff,
including without limitation staff of the
Financial Industry Regulatory Authority
(‘‘FINRA’’), on request.
In addition, the Exchange further
notes that DMM units and their Floorbased personnel would remain subject
to both the Rule 36.30 and 98
limitations of whom they may contact
directly from the Trading Floor.6
However, because of the extensive,
ongoing issues with power and phone
lines in the New York City area and
vicinity, the persons with whom a DMM
may be permitted to communicate from
the Trading Floor may not be at their
regular physical location. Accordingly,
the Exchange proposes to continue to
temporarily permit DMMs to use their
personal portable phones to contact the
off-Floor persons that they are permitted
to contact by rule, even if such off-Floor
personnel are not located in their
regular office locations. The Exchange
believes that this relief is consistent
with guidance issued by FINRA, which
recognizes that in the aftermath of
Hurricane Sandy, a FINRA member may
relocate displaced office personnel to
temporary locations.7
As noted above, because the Exchange
is dependent on third-party carriers for
both wired and wireless phone service
on the Trading Floor, the Exchange does
not know how long the proposed
temporary suspension will be required.
However, based on current estimates,
the Exchange understands that phone
service may not be fully restored until
at least Wednesday, November 7, 2012,
and most likely later than that date.
Accordingly, the Exchange proposes
6 Rule 36.30 restricts a DMM unit from using the
post telephone lines to transmit to the Floor orders
for the purchase or sale of securities. In addition,
Rule 98 sets forth restrictions on communications
between the Floor-based personnel of a DMM unit
and off-Floor personnel. See, e.g., Rules 98(c)(2)(A),
(d)(2)(B)(iii), (f)(1)(A)(ii), and (f)(2)(A).
7 See FINRA Regulatory Notice 12–45. The
Exchange notes that all member organizations
operating a DMM unit are also FINRA members,
and therefore subject to the guidance set forth in
FINRA Regulatory Notice 12–45.
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67706
Federal Register / Vol. 77, No. 219 / Tuesday, November 13, 2012 / Notices
that the extension of the temporary
suspensions of those aspects of Rule 36
that do not permit DMMs or Floor
brokers to use personal portable phones
on the Trading Floor continue until the
earlier of when phone service is fully
restored or Friday, November 9, 2012.8
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2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
Section 6(b) of the Act,9 in general, and
furthers the objectives of Section 6(b)(5)
of the Act,10 in particular, 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,
and to remove impediments to and
perfect the mechanism of a free and
open market and a national market
system.
In particular, in the aftermath of
Hurricane Sandy, while the Exchange
was able to open for trading, many of
the services that the Exchange depends
on from third-party carriers, such as
wired and wireless telephone
connections, are not fully restored. The
Exchange believes that the proposed
extension of the temporary suspensions
from those aspects of Rule 36 that
restrict the use of personal portable
phones on the Trading Floor removes
impediments to and perfects the
mechanism of a free and open market
and national market system because the
proposed relief will enable both Floor
brokers and DMMs to conduct their
regular business, notwithstanding the
ongoing issues with telephone service.
The Exchange further believes that
without the requested relief, both Floor
brokers and DMMs would be
compromised in their ability to conduct
their regular course of business on the
Trading Floor, which could adversely
impact the market generally and
investor confidence during this time of
unprecedented weather disruptions. In
particular, for Floor brokers, because
they operate as agents for customers,
their inability to communicate with
customers could compromise their
ability to represent public orders on the
Trading Floor. For DMM units, any
8 The Exchange will provide notice of this rule
filing to the DMMs and Floor brokers, including the
applicable recordkeeping and other requirements. If
telephone service is fully restored prior to
November 9, 2012, the Exchange will notify DMMs
and Floor brokers that the temporary suspension of
those aspects of Rule 36 that do not permit the use
of personal portable phones on the Trading Floor
has expired as of the time that phone service is fully
restored.
9 15 U.S.C. 78f(b).
10 15 U.S.C. 78f(b)(5).
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inability to communicate with
personnel from their off-Floor offices,
clearing firms, or non-trading related
support staff, regardless of where such
off-Floor personnel may be located in
the aftermath of Hurricane Sandy, could
compromise the DMM unit’s ability to
meet their obligations, particularly if the
DMM unit experiences issues with
connectivity or its algorithms.
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 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 prior to 30 days from the date
on which it was filed, or such shorter
time as the Commission may designate,
the proposed rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 11 and Rule 19b–4(f)(6)
thereunder.12
A proposed rule change filed
pursuant to Rule 19b–4(f)(6) under the
Act 13 normally does not become
operative for 30 days after the date of its
filing. However, Rule 19b–4(f)(6) 14
permits the Commission to designate a
shorter time if such action is consistent
with the protection of investors and the
public interest. The Exchange has asked
the Commission to waive the 30-day
operative delay. The Commission
believes that waiving the 30-day
operative delay is consistent with the
protection of investors and the public
interest. The Commission notes that
doing so will allow the Exchange to
11 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6) requires a self-regulatory organization 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
has satisfied this requirement.
13 17 CFR 240.19b–4(f)(6).
14 17 CFR 240.19b–4(f)(6).
12 17
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continue uninterrupted the emergency
temporary relief necessitated by
Hurricane Sandy’s disruption of
telephone service, as described herein
and in the Exchange’s prior filing
seeking such relief, until the earlier of
when phone service is fully restored or
Friday, November 9, 2012. Therefore,
the Commission hereby waives the 30day operative delay and designates the
proposal operative upon filing.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.
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 email to rulecomments@sec.gov. Please include File
Number SR–NYSE–2012–61 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–2012–61. This file
number should be included on the
subject line if email 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
15 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).
E:\FR\FM\13NON1.SGM
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Federal Register / Vol. 77, No. 219 / Tuesday, November 13, 2012 / Notices
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
10:00 a.m. and 3:00 p.m. Copies of the
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–
2012–61 and should be submitted on or
before December 4, 2012.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.16
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2012–27548 Filed 11–9–12; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–68165; File No. SR–
NYSEArca–2012–102]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Order Granting Approval of
Proposed Rule Change Relating to the
Listing and Trading of Twelve Funds of
the Direxion Shares ETF Trust II Under
NYSE Arca Equities Rule 8.200
November 6, 2012.
I. Introduction
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On September 5, 2012, NYSE Arca,
Inc. (‘‘Exchange’’ or ‘‘NYSE Arca’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’), pursuant
to Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’ or
‘‘Exchange Act’’) 1 and Rule 19b–4
thereunder,2 a proposed rule change to
list and trade shares (‘‘Shares’’) of
twelve funds of the Direxion Shares ETF
Trust II (each a ‘‘Fund’’ and,
collectively, ‘‘Funds’’) under NYSE Arca
Equities Rule 8.200, Commentary .02.
The proposed rule change was
published for comment in the Federal
Register on September 24, 2012.3 The
Commission received no comments on
the proposed rule change. This order
16 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 See Securities Exchange Act Release No. 67882
(September 18, 2012), 77 FR 58881 (‘‘Notice’’).
1 15
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grants approval of the proposed rule
change.
II. Description of the Proposed Rule
Change
The Exchange proposes to list and
trade Shares of the following Funds
pursuant to NYSE Arca Equities Rule
8.200, Commentary .02: Direxion Daily
Gold Bear 1X Shares; Direxion Daily
Gold Bull 3X Shares; Direxion Daily
Gold Bear 3X Shares; Direxion Daily
Silver Bear 1X Shares; Direxion Daily
Silver Bull 3X Shares; Direxion Daily
Silver Bear 3X Shares; Direxion Daily
Japanese Yen Bull 3X Shares; Direxion
Daily Japanese Yen Bear 3X Shares;
Direxion Daily Dollar Bull 3X Shares;
Direxion Daily Dollar Bear 3X Shares;
Direxion Daily Euro Bull 3X Shares; and
Direxion Daily Euro Bear 3X Shares.4
The Shares will be issued by Direxion
Shares ETF Trust II (‘‘Trust’’), a
Delaware statutory trust.5 Direxion
Asset Management, LLC will be the
sponsor (‘‘Sponsor’’) for the Trust. The
Bank of New York Mellon will be the
administrator, custodian, and transfer
agent for the Funds, and Foreside Fund
Services, LLC will be the distributor for
the Shares.
Twelve Funds of the Direxion Shares
ETF Trust II
All Funds except for the Direxion
Daily Gold Bear 1X Shares and Direxion
Daily Silver Bear 1X Shares are also
referred to herein as ‘‘Leveraged
Funds,’’ and the Direxion Daily Gold
Bear 1X Shares and Direxion Daily
Silver Bear 1X Shares are also referred
to herein as ‘‘Bear 1X Funds.’’ The
Leveraged Funds will seek daily
leveraged investment results and are
intended to be used as short-term
trading vehicles. The Leveraged Funds
with the word ‘‘Bull’’ in their name
(collectively, ‘‘Leveraged Bull Funds’’)
will attempt to provide daily leveraged
investment results (before fees and
expenses) that correlate positively to
three times (300%) the daily return of a
target benchmark, meaning a Leveraged
Bull Fund will attempt to move in the
same direction as the target benchmark.
The Leveraged Funds with the word
‘‘Bear’’ in their name (collectively,
4 Commentary .02 to NYSE Arca Equities Rule
8.200 applies to Trust Issued Receipts that invest
in ‘‘Financial Instruments.’’ The term ‘‘Financial
Instruments,’’ as defined in Commentary .02(b)(4) to
NYSE Arca Equities Rule 8.200, means any
combination of investments, including cash;
securities; options on securities and indices; futures
contracts; options on futures contracts; forward
contracts; equity caps, collars, and floors; and swap
agreements.
5 See Pre-Effective Amendment No. 1 to Form S–
1, dated October 13, 2010 (‘‘Registration
Statement’’) (File No. 333–168227).
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67707
‘‘Leveraged Bear Funds’’) will attempt to
provide daily leveraged investment
results (before fees and expenses) that
correlate to the inverse (opposite) of
three times the return of a target
benchmark, meaning that the Leveraged
Bear Funds will attempt to move in the
opposite or inverse direction of the
target benchmark.
The Bear 1X Funds will attempt to
provide daily investment results (before
fees and expenses) that correlate to the
inverse (opposite) of the return of a
target benchmark commodity, meaning
that the Bear 1X Funds will attempt to
move in the opposite or inverse
direction of a target benchmark
commodity.
Principal Investment Strategies
In seeking to achieve each Fund’s
daily investment objective, the Sponsor
will use statistical and quantitative
analysis to determine the investments
each Fund will make and the techniques
it will employ. Using this approach, the
Sponsor will determine the type,
quantity, and mix of investment
positions that the Sponsor believes in
combination should produce daily
returns consistent with a Fund’s
objective. The Sponsor will rely upon a
pre-determined model to generate
orders that result in repositioning each
Fund’s investments in accordance with
its daily investment objective. As a
consequence, if a Fund is performing as
designed, the return of the applicable
benchmark (as discussed below) will
dictate the return for that Fund. Each
Fund will pursue its investment
objective regardless of market
conditions and will not take defensive
positions.
Each of the Direxion Daily Gold Bear
1X Shares, Direxion Daily Gold Bull 3X
Shares, and Direxion Daily Gold Bear
3X Shares (collectively, ‘‘Gold Funds’’)
and Direxion Daily Silver Bear 1X
Shares, Direxion Daily Silver Bull 3X
Shares, and Direxion Daily Silver Bear
3X Shares (collectively, ‘‘Silver Funds,’’
and collectively with the Gold Funds,
‘‘Commodity Funds’’) will seek to
achieve its investment objective by
investing in futures contracts related to
its benchmark commodity. As such, the
Gold Funds will invest in gold futures
contracts traded on the Commodity
Exchange, Inc. (‘‘COMEX,’’ an affiliate
of the CME Group, Inc. (‘‘CME’’)) (‘‘Gold
Futures Contracts’’), and the Silver
Funds will invest in silver futures
contracts traded on COMEX (‘‘Silver
Futures Contracts’’ and, collectively
with Gold Futures Contracts,
E:\FR\FM\13NON1.SGM
13NON1
]]>Agencies
[Federal Register Volume 77, Number 219 (Tuesday, November 13, 2012)]
[Notices]
[Pages 67704-67707]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-27548]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-68161; File No. SR-NYSE-2012-61]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Extend the Temporary Suspension of Those Aspects of Rules 36.20, 36.21,
and 36.30 That Would Not Permit Designated Market Makers and Floor
Brokers To Use Personal Portable Phone Devices on the Trading Floor
Following the Aftermath of Hurricane Sandy From November 5, 2012 Until
the Earlier of When Phone Service Is Fully Restored or Friday, November
9, 2012
November 5, 2012.
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 5, 2012, New York Stock Exchange LLC (``NYSE'' or
``Exchange'') filed with the Securities and Exchange Commission
(``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.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to extend the temporary suspension of those
aspects of Rules 36.20, 36.21, and 36.30 that would not permit
Designated Market Makers (``DMMs'') and Floor brokers to use personal
portable phone devices on the Trading Floor following the
[[Page 67705]]
aftermath of Hurricane Sandy from November 5, 2012 until the earlier of
when phone service is fully restored or Friday, November 9, 2012. The
text of the proposed rule change is available on the Exchange's Web
site at www.nyse.com, at the principal office of the Exchange, and at
the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
On Thursday, November 1, 2012, the Exchange filed a rule proposal
to temporarily suspend those aspects of Rules 36.20, 36.21, and 36.30
that would not permit Floor brokers and Designated Market Makers
(``DMMs'') to use personal portable phone devices on the Trading Floor
\3\ following the aftermath of Hurricane Sandy and during the period
that phone service was not fully functional.\4\ Pursuant to that
filing, all other aspects of those rules remained applicable and the
temporary suspensions of Rule 36 requirements were in effect beginning
the first day trading resumed following Hurricane Sandy until Friday,
November 2, 2012.
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\3\ Pursuant to Rule 6A, the Trading Floor is defined as the
restricted-access physical areas designated by the Exchange for the
trading of securities, but does not include the physical locations
where NYSE Amex Options are traded.
\4\ See Securities Exchange Act Release No. 68137 (Nov. 1, 2012)
(SR-NYSE-2012-58).
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As of Monday, November 5, 2012, although power has been restored to
the downtown Manhattan vicinity, other services are not yet fully
operational. Among other things, the telephone services provided by
third-party carriers to the Exchange are still not fully operational on
the Trading Floor, which impacts the ability of Floor members to
communicate from the Trading Floor as permitted by Rule 36.
Because of intermittent cell phone service, many Exchange
authorized and provided portable phones continue to not be functional
and therefore Floor brokers still cannot use the Exchange authorized
and provided portable phones, pursuant to Rules 36.20 and 36.21. In
certain instances, however, the personal cell phones of Floor brokers
are operational on the Trading Floor. The Exchange believes that
because communications with customers is a vital part of a Floor
broker's role as agent and therefore contributes to maintaining a fair
and orderly market, during the period when phone service continues to
be intermittent, Floor brokers should be permitted to use personal
portable phone devices in lieu of the non-operational Exchange
authorized and provided portable phones.
Similarly, the Exchange continues to experience problems with the
DMM unit wired telephone lines, which are permitted pursuant to Rule
36.30. In some circumstances, the DMM unit location at the Trading
Floor post may receive incoming calls, but the phones are not capable
of making outgoing calls. The continued inability of a DMM unit to use
its telephone lines could impact the ability of a DMM unit to comply
with its obligations in securities registered to the DMM unit. For
example, if a DMM unit experiences connectivity issues or problems with
its algorithms and needs to speak with one of its back-office support
teams, with the current phone limitations, the DMM would not be able to
do so.
Accordingly, the Exchange proposes to extend the temporary
suspension of those aspects of Rules 36.20, 36.21, and 36.30 that would
not permit Floor brokers and DMMs to use personal portable phone
devices on the Trading Floor. The Exchange proposes that the extension
of the temporary suspension of those aspects of Rules 36.20, 36.21, and
36.30 to permit use of the personal portable phones on the Trading
Floor be pursuant to the same terms and conditions of the temporary
suspension filed for October 31, 2012 through November 2, 2012,
including the record retention requirements related to any use of
personal portable phones.\5\
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\5\ See id. (notice that describes the terms and conditions of
the temporary suspension).
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In particular, as set forth in the prior filing, Floor brokers and
DMMs that use a portable personal phone must provide the Exchange with
the names of all Floor-based personnel who used personal portable
phones during this temporary suspension period, together with the phone
number and applicable carrier for each number. Floor broker and DMM
member organizations must maintain in their books and records all cell
phone records that show both incoming and outgoing calls that were made
during the period that a personal portable phone was used on the
Trading Floor. To the extent the records are unavailable from the
third-party carrier, the Floor broker and DMM member organizations must
maintain contemporaneous records of all calls made or received on a
personal portable phone while on the Trading Floor. As with all member
organization records, such cell phone records must be provided to
Exchange regulatory staff, including without limitation staff of the
Financial Industry Regulatory Authority (``FINRA''), on request.
In addition, the Exchange further notes that DMM units and their
Floor-based personnel would remain subject to both the Rule 36.30 and
98 limitations of whom they may contact directly from the Trading
Floor.\6\ However, because of the extensive, ongoing issues with power
and phone lines in the New York City area and vicinity, the persons
with whom a DMM may be permitted to communicate from the Trading Floor
may not be at their regular physical location. Accordingly, the
Exchange proposes to continue to temporarily permit DMMs to use their
personal portable phones to contact the off-Floor persons that they are
permitted to contact by rule, even if such off-Floor personnel are not
located in their regular office locations. The Exchange believes that
this relief is consistent with guidance issued by FINRA, which
recognizes that in the aftermath of Hurricane Sandy, a FINRA member may
relocate displaced office personnel to temporary locations.\7\
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\6\ Rule 36.30 restricts a DMM unit from using the post
telephone lines to transmit to the Floor orders for the purchase or
sale of securities. In addition, Rule 98 sets forth restrictions on
communications between the Floor-based personnel of a DMM unit and
off-Floor personnel. See, e.g., Rules 98(c)(2)(A), (d)(2)(B)(iii),
(f)(1)(A)(ii), and (f)(2)(A).
\7\ See FINRA Regulatory Notice 12-45. The Exchange notes that
all member organizations operating a DMM unit are also FINRA
members, and therefore subject to the guidance set forth in FINRA
Regulatory Notice 12-45.
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As noted above, because the Exchange is dependent on third-party
carriers for both wired and wireless phone service on the Trading
Floor, the Exchange does not know how long the proposed temporary
suspension will be required. However, based on current estimates, the
Exchange understands that phone service may not be fully restored until
at least Wednesday, November 7, 2012, and most likely later than that
date. Accordingly, the Exchange proposes
[[Page 67706]]
that the extension of the temporary suspensions of those aspects of
Rule 36 that do not permit DMMs or Floor brokers to use personal
portable phones on the Trading Floor continue until the earlier of when
phone service is fully restored or Friday, November 9, 2012.\8\
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\8\ The Exchange will provide notice of this rule filing to the
DMMs and Floor brokers, including the applicable recordkeeping and
other requirements. If telephone service is fully restored prior to
November 9, 2012, the Exchange will notify DMMs and Floor brokers
that the temporary suspension of those aspects of Rule 36 that do
not permit the use of personal portable phones on the Trading Floor
has expired as of the time that phone service is fully restored.
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2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\9\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\10\ in particular, 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, and to remove impediments to and perfect
the mechanism of a free and open market and a national market system.
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\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(5).
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In particular, in the aftermath of Hurricane Sandy, while the
Exchange was able to open for trading, many of the services that the
Exchange depends on from third-party carriers, such as wired and
wireless telephone connections, are not fully restored. The Exchange
believes that the proposed extension of the temporary suspensions from
those aspects of Rule 36 that restrict the use of personal portable
phones on the Trading Floor removes impediments to and perfects the
mechanism of a free and open market and national market system because
the proposed relief will enable both Floor brokers and DMMs to conduct
their regular business, notwithstanding the ongoing issues with
telephone service. The Exchange further believes that without the
requested relief, both Floor brokers and DMMs would be compromised in
their ability to conduct their regular course of business on the
Trading Floor, which could adversely impact the market generally and
investor confidence during this time of unprecedented weather
disruptions. In particular, for Floor brokers, because they operate as
agents for customers, their inability to communicate with customers
could compromise their ability to represent public orders on the
Trading Floor. For DMM units, any inability to communicate with
personnel from their off-Floor offices, clearing firms, or non-trading
related support staff, regardless of where such off-Floor personnel may
be located in the aftermath of Hurricane Sandy, could compromise the
DMM unit's ability to meet their obligations, particularly if the DMM
unit experiences issues with connectivity or its algorithms.
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 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 prior to
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act \11\ and Rule 19b-
4(f)(6) thereunder.\12\
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\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization 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 has satisfied this requirement.
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A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act \13\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6) \14\ permits the Commission to
designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has asked
the Commission to waive the 30-day operative delay. The Commission
believes that waiving the 30-day operative delay is consistent with the
protection of investors and the public interest. The Commission notes
that doing so will allow the Exchange to continue uninterrupted the
emergency temporary relief necessitated by Hurricane Sandy's disruption
of telephone service, as described herein and in the Exchange's prior
filing seeking such relief, until the earlier of when phone service is
fully restored or Friday, November 9, 2012. Therefore, the Commission
hereby waives the 30-day operative delay and designates the proposal
operative upon filing.\15\
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\13\ 17 CFR 240.19b-4(f)(6).
\14\ 17 CFR 240.19b-4(f)(6).
\15\ 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).
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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 email to rule-comments@sec.gov. Please include
File Number SR-NYSE-2012-61 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-2012-61. This file
number should be included on the subject line if email 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
[[Page 67707]]
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 10:00 a.m. and 3:00 p.m. Copies of
the 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-2012-61 and should be submitted on or before
December 4, 2012.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-27548 Filed 11-9-12; 8:45 am]
BILLING CODE 8011-01-P
