[Federal Register Volume 76, Number 236 (Thursday, December 8, 2011)]
[Notices]
[Pages 76775-76777]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-31473]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-65864; File No. SR-NYSEAMEX-2011-90]
Self-Regulatory Organizations; NYSE Amex LLC; Notice of Filing
and Immediate Effectiveness of a Proposed Rule Change To Amend NYSE
Rule 104(a)(1)(A) To Reflect That Designated Market Maker Unit Quoting
Requirements Are Based on Consolidated Average Daily Volume
December 2, 2011.
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 18, 2011, NYSE Amex LLC (``NYSE Amex'' or the ``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 Exchange. The Exchange has designated the
proposed rule change as constituting a non-controversial rule change
under Rule 19b-4(f)(6) under the Act,\3\ which renders the proposal
effective upon filing with the Commission. 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.
\3\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend NYSE Amex Equities Rule 104(a)(1)(A)
to reflect that, when determining the specific percentage quoting
requirement applicable to a Designated Market Maker unit (``DMM
unit''), volume for the particular security is based on consolidated
average daily volume (``CADV''). The text of the proposed rule change
is available at the Exchange, the Commission's Public Reference Room,
and http://www.nyse.com.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend NYSE Amex Equities Rule 104(a)(1)(A)
\4\ to reflect that, when determining the specific percentage quoting
requirement applicable to a DMM unit,\5\ volume for the particular
security is based on CADV.\6\
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\4\ NYSE Amex Equities Rule 104 is currently in effect during a
pilot period (``New Market Model Pilot'' or ``NMM Pilot''). The
Exchange adopted the NMM Pilot pursuant to its merger with the New
York Stock Exchange LLC (``NYSE''). See Securities Exchange Act
Release No. 59022 (November 26, 2008), 73 FR 73683 (December 3,
2008) (SR-NYSEALTR-2008-10) (the ``NYSE Amex NMM Approval''). See
also Securities Exchange Act Release No. 58845 (October 24, 2008),
73 FR 64379 (October 29, 2008) (SR-NYSE-2008-46) (the ``NYSE NMM
Approval''). The Exchange has extended the operation of the NMM
Pilot several times and it is currently set to expire on January 31,
2012. See Securities Exchange Act Release No. 64773 (June 29, 2011),
76 FR 39453 (July 6, 2011) (SR-NYSEAmex-2011-43).
\5\ See NYSE Amex Equities Rule 98(b)(2). ``DMM unit'' means any
member organization, aggregation unit within a member organization,
or division or department within an integrated proprietary
aggregation unit of a member organization that (i) Has been approved
by NYSE Regulation pursuant to section (c) of NYSE Amex Equities
Rule 98, (ii) is eligible for allocations under NYSE Amex Equities
Rule 103B as a DMM unit in a security listed or traded on the
Exchange, and (iii) has met all registration and qualification
requirements for DMM units assigned to such unit.
\6\ Given the multitude of venues where equity securities trade,
CADV is more reflective of the trading characteristics of a security
than the volume on any single market.
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A DMM unit must maintain a bid or an offer at the National Best Bid
and National Best Offer (``inside'') a minimum of either 5% or 10% of
the trading day, depending on trading volume for the security. NYSE
Amex Equities Rule 104(a)(1)(A) currently reflects for one of the
calculations, but not the other, that, when determining the specific
percentage quoting requirement applicable to a DMM unit, trading volume
for the particular security is based on volume ``on the Exchange.'' The
reference to ``on the Exchange'' was inadvertently included in the
Exchange's proposal to implement the NMM Pilot, which was based on the
same language that was approved by the Commission in the
[[Page 76776]]
NYSE NMM Approval.\7\ In this regard, and as reflected in the NYSE NMM
Approval, the Exchange intended that trading volume for a particular
security would be based on CADV when determining the specific
percentage quoting requirement applicable to a DMM unit.\8\
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\7\ NYSE has filed a similar proposal to similarly change the
text of NYSE Rule 104(a)(1)(A) from volume ``on the Exchange'' to
``consolidated'' volume.
\8\ See NYSE NMM Approval at 64381, which states that ``[f]or
securities that have a consolidated average daily volume of less
than one million shares per calendar month, a DMM Unit must maintain
a bid or an offer at the NBBO for at least 10% of the trading day
(calculated as an average over the course of a calendar month). For
securities that have a consolidated average daily volume of equal to
or greater than one million shares per calendar month, a DMM Unit
must maintain a bid or an offer at the NBBO for at least 5% or more
of the trading day (calculated as an average over the courts (sic)
of a calendar month.'' See also NYSE NMM Approval at n.71. A
subsequent NYSE rule change similarly noted that, ``with respect to
maintaining a continuous two-sided quote with reasonable size, DMMs
must maintain a bid or offer at the NBBO * * * at a prescribed level
based on the average daily volume of the security. Securities that
have a consolidated average daily volume of less than one million
shares per calendar month are defined as Less Active Securities and
securities that have a consolidated average daily volume of equal to
or greater than one million shares per calendar month are defined as
More Active Securities. For Less Active Securities, a [DMM] unit
must maintain a bid or an offer at the NBBO for at least 10% of the
trading day during a calendar month. For More Active Securities, a
[DMM] unit must maintain a bid or an offer at the NBBO for at least
5% or more of the trading day during a calendar month.'' See
Securities Exchange Act Release No. 58971 (November 17, 2008), 73 FR
71070 (November 24, 2008) (SR-NYSE-2008-115) at n.5. CADV is
similarly used to differentiate between ``more active'' and ``less
active'' securities under NYSE Amex Equities Rule 103B.
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As proposed, NYSE Amex Equities Rule 104(a)(1)(A) would reflect
that, with respect to maintaining a continuous two-sided quote with
reasonable size, DMM units must maintain a bid or an offer at the
inside at least 10% of the trading day for securities in which the DMM
unit is registered with a consolidated average daily volume of less
than one million shares, and at least 5% for securities in which the
DMM unit is registered with a consolidated average daily volume equal
to or greater than one million shares.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Securities Exchange Act of 1934 (the ``Act''),\9\ in
general, and furthers the objectives of Section 6(b)(5) of the Act,\10\
in particular, because it is designed to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade, to remove impediments to and perfect the mechanism
of a free and open market and a national market system, and, in
general, to protect investors and the public interest. Specifically,
the proposed change would align the text of NYSE Amex Equities Rule
104(a)(1)(A) with the previously approved manner by which to measure
trading volume of a particular security, as set forth in NYSE Amex
Equities Rule 103B, and consistent with the NYSE NMM Approval order,
which also discussed the use of CADV, and not just trading volume on
the Exchange, for purposes of measuring the quoting requirement
applicable to a DMM unit.
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\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not significantly
affect the protection of investors or the public interest, does not
impose any significant burden on competition, and, by its terms, does
not 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 \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)(iii)
requires the Exchange to give the Commission written notice of the
Exchange's 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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The Exchange has requested that the Commission waive the 30-day
operative delay. The Commission believes that waiver of the operative
delay is consistent with the protection of investors and the public
interest. Such waiver will allow the Exchange's Rules to immediately
reflect the fact that DMM unit quoting requirements are calculated
based on CADV rather than trading volume on the Exchange. Because CADV
is more reflective of the trading characteristics of a security than
the volume on any single market, investors will benefit from
implementation of the proposed rule change without undue delay.
Therefore, the Commission designates the proposal operative upon
filing.\13\
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\13\ 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 (http://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-NYSEAMEX-2011-90 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSEAMEX-2011-90. 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 (http://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
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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 the
filing will also be available for inspection and copying at the NYSE's
principal office and on its Internet Web site at http://www.nyse.com.
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-NYSEAMEX-
2011-90 and should be submitted on or before December 29, 2011.
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\14\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2011-31473 Filed 12-7-11; 8:45 am]
BILLING CODE 8011-01-P