Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Extending the Operation of Its New Market Model Pilot Until the Earlier of Securities and Exchange Commission Approval To Make Such Pilot Permanent or July 31, 2013, 1288-1290 [2013-00079]
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Federal Register / Vol. 78, No. 5 / Tuesday, January 8, 2013 / Notices
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–
NYSEMKT–2012–84 and should be
submitted on or before January 29, 2013.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.18
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2013–00080 Filed 1–7–13; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–68558; File No. SR–NYSE–
2012–75]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change Extending the
Operation of Its New Market Model
Pilot Until the Earlier of Securities and
Exchange Commission Approval To
Make Such Pilot Permanent or July 31,
2013
January 2, 2013.
srobinson on DSK4SPTVN1PROD with
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on December
18, 2012, New York Stock Exchange
LLC (the ‘‘Exchange’’ or ‘‘NYSE’’) 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
Exchange filed the proposal as a ‘‘noncontroversial’’ proposed rule change
pursuant to Section 19(b)(3)(A)(iii) of
the Act 3 and Rule 19b–4(f)(6)
thereunder.4 The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
18 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(iii).
4 17 CFR 240.19b–4(f)(6).
1 15
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19:11 Jan 07, 2013
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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
operation of its New Market Model
Pilot, currently scheduled to expire on
January 31, 2013, until the earlier of
Securities and Exchange Commission
(‘‘Commission’’) approval to make such
pilot permanent or July 31, 2013. 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
The Exchange proposes to extend the
operation of its New Market Model Pilot
(‘‘NMM Pilot’’),5 currently scheduled to
expire on January 31, 2013, until the
earlier of Commission approval to make
such pilot permanent or July 31, 2013.
The Exchange notes that parallel
changes are proposed to be made to the
rules of NYSE MKT LLC.6
5 See Securities Exchange Act Release No. 58845
(October 24, 2008), 73 FR 64379 (October 29, 2008)
(SR–NYSE–2008–46). See also Securities Exchange
Act Release Nos. 60756 (October 1, 2009), 74 FR
51628 (October 7, 2009) (SR–NYSE–2009–100)
(extending Pilot to November 30, 2009); 61031
(November 19, 2009), 74 FR 62368 (November 27,
2009) (SR–NYSE–2009–113) (extending Pilot to
March 30, 2010); 61724 (March 17, 2010), 75 FR
14221 (March 24, 2010) (SR–NYSE–2010–25)
(extending Pilot to September 30, 2010); 62819
(September 1, 2010), 75 FR 54937 (September 9,
2010) (SR–NYSE–2010–61) (extending Pilot to
January 31, 2011); 63616 (December 29, 2010), 76
FR 612 (January 5, 2011) (SR–NYSE–2010–86)
(extending Pilot to August 1, 2011); 64761 (June 28,
2011), 76 FR 39147 (July 5, 2011) (SR–NYSE–2011–
29) (extending Pilot to January 31, 2012); 66046
(December 23, 2011), 76 FR 82340 (December 30,
2011) (SR–NYSE–2011–65) (extending Pilot to July
31, 2012); and 67494 (July 25, 2012), 77 FR 45408
(July 31, 2012) (SR–NYSE–2012–26) (extending
Pilot to January 31, 2013).
6 See SR–NYSEMKT–2012–84.
PO 00000
Frm 00093
Fmt 4703
Sfmt 4703
Background 7
In October 2008, the NYSE
implemented significant changes to its
market rules, execution technology and
the rights and obligations of its market
participants all of which were designed
to improve execution quality on the
Exchange. These changes are all
elements of the Exchange’s enhanced
market model. Certain of the enhanced
market model changes were
implemented through a pilot program.
As part of the NMM Pilot, NYSE
eliminated the function of specialists on
the Exchange creating a new category of
market participant, the Designated
Market Maker or DMM.8 The DMMs,
like specialists, have affirmative
obligations to make an orderly market,
including continuous quoting
requirements and obligations to re-enter
the market when reaching across to
execute against trading interest. Unlike
specialists, DMMs have a minimum
quoting requirement 9 in their assigned
securities and no longer have a negative
obligation. DMMs are also no longer
agents for public customer orders.10
In addition, the Exchange
implemented a system change that
allowed DMMs to create a schedule of
additional non-displayed liquidity at
various price points where the DMM is
willing to interact with interest and
provide price improvement to orders in
the Exchange’s system. This schedule is
known as the DMM Capital
Commitment Schedule (‘‘CCS’’).11 CCS
provides the Display Book® 12 with the
amount of shares that the DMM is
willing to trade at price points outside,
at and inside the Exchange Best Bid or
Best Offer (‘‘BBO’’). CCS interest is
separate and distinct from other DMM
interest in that it serves as the interest
of last resort.
The NMM Pilot further modified the
logic for allocating executed shares
among market participants having
trading interest at a price point upon
execution of incoming orders. The
7 The information contained herein is a summary
of the NMM Pilot. See supra note 5 for a fuller
description.
8 See NYSE Rule 103.
9 See NYSE Rule 104.
10 See NYSE Rule 60; see also NYSE Rules 104
and 1000.
11 See NYSE Rule 1000.
12 The Display Book system is an order
management and execution facility. The Display
Book system receives and displays orders to the
DMMs, contains the order information, and
provides a mechanism to execute and report
transactions and publish the results to the
Consolidated Tape. The Display Book system is
connected to a number of other Exchange systems
for the purposes of comparison, surveillance, and
reporting information to customers and other
market data and national market systems.
E:\FR\FM\08JAN1.SGM
08JAN1
Federal Register / Vol. 78, No. 5 / Tuesday, January 8, 2013 / Notices
modified logic rewards displayed orders
that establish the Exchange’s BBO.
During the operation of the NMM Pilot,
orders or portions thereof that establish
priority 13 retain that priority until the
portion of the order that established
priority is exhausted. Where no one
order has established priority, shares are
distributed among all market
participants on parity.
The NMM Pilot was originally
scheduled to end operation on October
1, 2009, or such earlier time as the
Commission may determine to make the
rules permanent. The Exchange filed to
extend the operation of the Pilot on
several occasions in order to prepare a
rule filing seeking permission to make
the above described changes
permanent.14 The Exchange is currently
still preparing such formal submission
but does not expect that filing to be
completed and approved by the
Commission before January 31, 2013.
srobinson on DSK4SPTVN1PROD with
Proposal To Extend the Operation of the
NMM Pilot
The NYSE established the NMM Pilot
to provide incentives for quoting, to
enhance competition among the existing
group of liquidity providers and to add
a new competitive market participant.
The Exchange believes that the NMM
Pilot allows the Exchange to provide 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.
As such, the Exchange believes that the
rules governing the NMM Pilot should
be made permanent. Through this filing
the Exchange seeks to extend the
current operation of the NMM Pilot
until July 31, 2013, in order to allow the
Exchange time to formally submit a
filing to the Commission to convert the
pilot rules to permanent rules.
2. Statutory Basis
The basis under the Securities
Exchange Act of 1934 (the ‘‘Act’’) for
this proposed rule change is the
requirement under Section 6(b)(5) that
an exchange have rules that are
designed to promote just and equitable
principles of trade, 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 NMM Pilot
provides its market participants with a
13 See
14 See
NYSE Rule 72(a)(ii).
supra note 5.
VerDate Mar<15>2010
19:11 Jan 07, 2013
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,
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
does not (i) significantly affect the
protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate if
consistent with the protection of
investors and the public interest,
provided that the self-regulatory
organization has given the Commission
written notice of its intent to file 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 proposed rule change
has become effective pursuant to
Section 19(b)(3)(A) of the Act 15 and
Rule 19b–4(f)(6) thereunder.16
At any time within 60 days of the
filing of such 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.
15 15
16 17
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PO 00000
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6).
Frm 00094
Fmt 4703
Sfmt 4703
1289
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–2012–75 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–2012–75. 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–NYSE–
2012–75 and should be submitted on or
before January 29, 2013.
17 17
E:\FR\FM\08JAN1.SGM
CFR 200.30–3(a)(12).
08JAN1
1290
Federal Register / Vol. 78, No. 5 / Tuesday, January 8, 2013 / Notices
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.17
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2013–00079 Filed 1–7–13; 8:45 am]
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–68455; File No. SR–CHX–
2012–14]
Self-Regulatory Organizations;
Chicago Stock Exchange, Inc.; Notice
of Filing and Immediate Effectiveness
of a Proposed Rule Change Relating to
Telemarketing Rules
December 18, 2012.
Correction
In notice document 2012–30886
appearing on pages 76141–76145 in the
issue of December 26, 2012, make the
following correction:
On page 76145, in the third column,
in the 12th line, ‘‘January 14, 2013’’
should read ‘‘January 16, 2013’’.
[FR Doc. C1–2012–30886 Filed 1–7–13; 8:45 am]
BILLING CODE 1505–01–D
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–68561; File No. SR–
NYSEMKT–2012–86]
Self-Regulatory Organizations; NYSE
MKT LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change Amending NYSE MKT
Rule 500—Equities To Extend the
Operation of the Pilot Program That
Allows Nasdaq Stock Market
(‘‘Nasdaq’’) Securities To Be Traded on
the Exchange Pursuant to a Grant of
Unlisted Trading Privileges
srobinson on DSK4SPTVN1PROD with
January 2, 2013.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on December
18, 2012, NYSE MKT LLC (the
‘‘Exchange’’ or ‘‘NYSE MKT’’) 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
Exchange filed the proposal as a ‘‘noncontroversial’’ proposed rule change
pursuant to Section 19(b)(3)(A)(iii) of
1 15
2 17
U.S.C. 78s(b)(1).
CFR 240.19b–4.
VerDate Mar<15>2010
19:11 Jan 07, 2013
Jkt 229001
the Act 3 and Rule 19b–4(f)(6)
thereunder.4 The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
The Exchange proposes to amend
NYSE MKT Rule 500—Equities to
Extend the Operation of the Pilot
Program that Allows Nasdaq Stock
Market (‘‘Nasdaq’’) Securities to be
Traded on the Exchange Pursuant to a
Grant of Unlisted Trading Privileges.
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 the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
NYSE MKT Rules 500–525—Equities,
as a pilot program, govern the trading of
any Nasdaq-listed security on the
Exchange pursuant to unlisted trading
privileges (‘‘UTP Pilot Program’’).5 The
Exchange hereby seeks to extend the
operation of the UTP Pilot Program,
currently scheduled to expire on
January 31, 2013, until the earlier of
3 15
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6).
5 See Securities Exchange Act Release No. 62479
(July 9, 2010), 75 FR 41264 (July 15, 2010) (SR–
NYSEAmex–2010–31). See also Securities
Exchange Act Release Nos. 62857 (September 7,
2010), 75 FR 55837 (September 14, 2010) (SR–
NYSEAmex–2010–89); 63601 (December 22, 2010),
75 FR 82117 (December 29, 2010) (SR–NYSEAmex–
2010–124); 64746 (June 24, 2011), 76 FR 38446
(June 30, 2011) (SR–NYSEAmex–2011–45); 66040
(December 23, 2011), 76 FR 82324 (December 30,
2011) (SR–NYSEAmex–2011–104); and 67497 (July
25, 2012), 77 FR 45404 (July 31, 2012) (SR–
NYSEMKT–2012–25).
4 17
PO 00000
Frm 00095
Fmt 4703
Sfmt 4703
Commission approval to make such
pilot permanent or July 31, 2013.
The UTP Pilot Program includes any
security listed on Nasdaq that (i) is
designated as an ‘‘eligible security’’
under the Joint Self-Regulatory
Organization Plan Governing the
Collection, Consolidation and
Dissemination of Quotation and
Transaction Information for NasdaqListed Securities Traded on Exchanges
on an Unlisted Trading Privilege Basis,
as amended (‘‘UTP Plan’’),6 and (ii) has
been admitted to dealings on the
Exchange pursuant to a grant of unlisted
trading privileges in accordance with
Section 12(f) of the Securities Exchange
Act of 1934, as amended (the ‘‘Act’’),7
(collectively, ‘‘Nasdaq Securities’’).8
The Exchange notes that its New
Market Model Pilot (‘‘NMM Pilot’’),
which, among other things, eliminated
the function of specialists on the
Exchange and created a new category of
market participant, the Designated
Market Maker (‘‘DMM’’),9 is also
scheduled to end on January 31, 2013.10
The timing of the operation of the UTP
Pilot Program was designed to
correspond to that of the NMM Pilot. In
approving the UTP Pilot Program, the
Commission acknowledged that the
rules relating to DMM benefits and
duties in trading Nasdaq Securities on
the Exchange pursuant to the UTP Pilot
6 See Securities Exchange Act Release No. 58863
(October 27, 2008), 73 FR 65417 (November 3, 2008)
(File No. S7–24–89). The Exchange’s predecessor,
the American Stock Exchange LLC, joined the UTP
Plan in 2001. See Securities Exchange Act Release
No. 55647 (April 19, 2007), 72 FR 20891 (April 26,
2007) (File No. S7–24–89). In March 2009, the
Exchange changed its name to NYSE Amex LLC,
and, in May 2012, the Exchange subsequently
changed its name to NYSE MKT LLC. See Securities
Exchange Act Release Nos. 59575 (March 13, 2009),
74 FR 11803 (March 19, 2009) (SR–NYSEALTR–
2009–24) and 67037 (May 21, 2012), 77 FR 31415
(May 25, 2012) (SR–NYSEAmex–2012–32).
7 15 U.S.C. 78l.
8 ‘‘Nasdaq Securities’’ is included within the
definition of ‘‘security’’ as that term is used in the
NYSE MKT Equities Rules. See NYSE MKT Rule
3—Equities. In accordance with this definition,
Nasdaq Securities are admitted to dealings on the
Exchange on an ‘‘issued,’’ ‘‘when issued,’’ or ‘‘when
distributed’’ basis. See NYSE MKT Rule 501—
Equities.
9 See NYSE MKT Rule 103—Equities.
10 See Securities Exchange Act Release No. 60758
(October 1, 2009), 74 FR 51639 (October 7, 2009)
(SR–NYSEAmex–2009–65). See also Securities
Exchange Act Release Nos. 61030 (November 19,
2009), 74 FR 62365 (November 27, 2009) (SR–
NYSEAmex–2009–83); 61725 (March 17, 2010), 75
FR 14223 (March 24, 2010) (SR–NYSEAmex–2010–
28); 62820 (September 1, 2010), 75 FR 54935
(September 9, 2010) (SR–NYSEAmex–2010–86);
63615 (December 29, 2010), 76 FR 611 (January 5,
2011) (SR–NYSEAmex–2010–123); 64773 (June 29,
2011), 76 FR 39453 (July 6, 2011) (SR–NYSEAmex–
2011–43); 66042 (December 23, 2011), 76 FR 82326
(December 30, 2011) (SR–NYSEAmex–2011–102);
and 67495 (July 25, 2012), 77 FR 45406 (July 31,
2012) (SR–NYSEMKT–2012–21).
E:\FR\FM\08JAN1.SGM
08JAN1
]]>Agencies
[Federal Register Volume 78, Number 5 (Tuesday, January 8, 2013)]
[Notices]
[Pages 1288-1290]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-00079]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-68558; File No. SR-NYSE-2012-75]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Extending the Operation of Its New Market Model Pilot Until the Earlier
of Securities and Exchange Commission Approval To Make Such Pilot
Permanent or July 31, 2013
January 2, 2013.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on December 18, 2012, New York Stock Exchange LLC (the
``Exchange'' or ``NYSE'') 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 Exchange filed the proposal as a ``non-controversial''
proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act
\3\ and Rule 19b-4(f)(6) thereunder.\4\ 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.
\3\ 15 U.S.C. 78s(b)(3)(A)(iii).
\4\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to extend the operation of its New Market
Model Pilot, currently scheduled to expire on January 31, 2013, until
the earlier of Securities and Exchange Commission (``Commission'')
approval to make such pilot permanent or July 31, 2013. 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
The Exchange proposes to extend the operation of its New Market
Model Pilot (``NMM Pilot''),\5\ currently scheduled to expire on
January 31, 2013, until the earlier of Commission approval to make such
pilot permanent or July 31, 2013.
---------------------------------------------------------------------------
\5\ See Securities Exchange Act Release No. 58845 (October 24,
2008), 73 FR 64379 (October 29, 2008) (SR-NYSE-2008-46). See also
Securities Exchange Act Release Nos. 60756 (October 1, 2009), 74 FR
51628 (October 7, 2009) (SR-NYSE-2009-100) (extending Pilot to
November 30, 2009); 61031 (November 19, 2009), 74 FR 62368 (November
27, 2009) (SR-NYSE-2009-113) (extending Pilot to March 30, 2010);
61724 (March 17, 2010), 75 FR 14221 (March 24, 2010) (SR-NYSE-2010-
25) (extending Pilot to September 30, 2010); 62819 (September 1,
2010), 75 FR 54937 (September 9, 2010) (SR-NYSE-2010-61) (extending
Pilot to January 31, 2011); 63616 (December 29, 2010), 76 FR 612
(January 5, 2011) (SR-NYSE-2010-86) (extending Pilot to August 1,
2011); 64761 (June 28, 2011), 76 FR 39147 (July 5, 2011) (SR-NYSE-
2011-29) (extending Pilot to January 31, 2012); 66046 (December 23,
2011), 76 FR 82340 (December 30, 2011) (SR-NYSE-2011-65) (extending
Pilot to July 31, 2012); and 67494 (July 25, 2012), 77 FR 45408
(July 31, 2012) (SR-NYSE-2012-26) (extending Pilot to January 31,
2013).
---------------------------------------------------------------------------
The Exchange notes that parallel changes are proposed to be made to
the rules of NYSE MKT LLC.\6\
---------------------------------------------------------------------------
\6\ See SR-NYSEMKT-2012-84.
---------------------------------------------------------------------------
Background \7\
---------------------------------------------------------------------------
\7\ The information contained herein is a summary of the NMM
Pilot. See supra note 5 for a fuller description.
---------------------------------------------------------------------------
In October 2008, the NYSE implemented significant changes to its
market rules, execution technology and the rights and obligations of
its market participants all of which were designed to improve execution
quality on the Exchange. These changes are all elements of the
Exchange's enhanced market model. Certain of the enhanced market model
changes were implemented through a pilot program.
As part of the NMM Pilot, NYSE eliminated the function of
specialists on the Exchange creating a new category of market
participant, the Designated Market Maker or DMM.\8\ The DMMs, like
specialists, have affirmative obligations to make an orderly market,
including continuous quoting requirements and obligations to re-enter
the market when reaching across to execute against trading interest.
Unlike specialists, DMMs have a minimum quoting requirement \9\ in
their assigned securities and no longer have a negative obligation.
DMMs are also no longer agents for public customer orders.\10\
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\8\ See NYSE Rule 103.
\9\ See NYSE Rule 104.
\10\ See NYSE Rule 60; see also NYSE Rules 104 and 1000.
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In addition, the Exchange implemented a system change that allowed
DMMs to create a schedule of additional non-displayed liquidity at
various price points where the DMM is willing to interact with interest
and provide price improvement to orders in the Exchange's system. This
schedule is known as the DMM Capital Commitment Schedule (``CCS'').\11\
CCS provides the Display Book[supreg] \12\ with the amount of shares
that the DMM is willing to trade at price points outside, at and inside
the Exchange Best Bid or Best Offer (``BBO''). CCS interest is separate
and distinct from other DMM interest in that it serves as the interest
of last resort.
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\11\ See NYSE Rule 1000.
\12\ The Display Book system is an order management and
execution facility. The Display Book system receives and displays
orders to the DMMs, contains the order information, and provides a
mechanism to execute and report transactions and publish the results
to the Consolidated Tape. The Display Book system is connected to a
number of other Exchange systems for the purposes of comparison,
surveillance, and reporting information to customers and other
market data and national market systems.
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The NMM Pilot further modified the logic for allocating executed
shares among market participants having trading interest at a price
point upon execution of incoming orders. The
[[Page 1289]]
modified logic rewards displayed orders that establish the Exchange's
BBO. During the operation of the NMM Pilot, orders or portions thereof
that establish priority \13\ retain that priority until the portion of
the order that established priority is exhausted. Where no one order
has established priority, shares are distributed among all market
participants on parity.
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\13\ See NYSE Rule 72(a)(ii).
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The NMM Pilot was originally scheduled to end operation on October
1, 2009, or such earlier time as the Commission may determine to make
the rules permanent. The Exchange filed to extend the operation of the
Pilot on several occasions in order to prepare a rule filing seeking
permission to make the above described changes permanent.\14\ The
Exchange is currently still preparing such formal submission but does
not expect that filing to be completed and approved by the Commission
before January 31, 2013.
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\14\ See supra note 5.
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Proposal To Extend the Operation of the NMM Pilot
The NYSE established the NMM Pilot to provide incentives for
quoting, to enhance competition among the existing group of liquidity
providers and to add a new competitive market participant. The Exchange
believes that the NMM Pilot allows the Exchange to provide 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. As such, the Exchange believes that the
rules governing the NMM Pilot should be made permanent. Through this
filing the Exchange seeks to extend the current operation of the NMM
Pilot until July 31, 2013, in order to allow the Exchange time to
formally submit a filing to the Commission to convert the pilot rules
to permanent rules.
2. Statutory Basis
The basis under the Securities Exchange Act of 1934 (the ``Act'')
for this proposed rule change is the requirement under Section 6(b)(5)
that an exchange have rules that are designed to promote just and
equitable principles of trade, 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 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, 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 does not (i) significantly
affect the protection of investors or the public interest; (ii) impose
any significant burden on competition; and (iii) become operative for
30 days from the date on which it was filed, or such shorter time as
the Commission may designate if consistent with the protection of
investors and the public interest, provided that the self-regulatory
organization has given the Commission written notice of its intent to
file 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 proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act \15\ and Rule 19b-
4(f)(6) thereunder.\16\
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\15\ 15 U.S.C. 78s(b)(3)(A).
\16\ 17 CFR 240.19b-4(f)(6).
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At any time within 60 days of the filing of such 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-2012-75 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-2012-75. 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-NYSE-2012-75 and should be
submitted on or before January 29, 2013.
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\17\ 17 CFR 200.30-3(a)(12).
[[Page 1290]]
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For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-00079 Filed 1-7-13; 8:45 am]
BILLING CODE 8011-01-P
