[Federal Register Volume 77, Number 32 (Thursday, February 16, 2012)]
[Notices]
[Pages 9287-9288]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-3611]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-66371; File No. SR-NYSEAmex-2011-101]
Self-Regulatory Organizations; NYSE Amex LLC.; Order Granting
Approval of Proposed Rule Change Amending NYSE Amex Equities Rules 504
and 509 To Modify the Quoting Requirements Applicable to Designated
Market Maker Units Registered in Nasdaq Stock Market Securities Traded
on the Exchange Subject to the Unlisted Trading Privileges Pilot
Program
February 10, 2012.
I. Introduction
On December 15, 2011, NYSE Amex LLC (``NYSE Amex'' or ``Exchange'')
filed with the Securities and Exchange Commission (``Commission''),
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to
modify the quoting requirements applicable to Designated Market Maker
(``DMM'') units registered in Nasdaq Stock Market securities traded on
the Exchange pursuant to a grant of unlisted trading privileges
(``UTP''). The proposed rule change was published for comment in the
Federal Register on December 30, 2011.\3\ The Commission received no
comment letters on the proposal. This order approves the proposed rule
change.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ Securities Exchange Act Release No. 66043 (December 23,
2011), 76 FR 82329 (``Notice'').
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II. Description of the Proposal
Certain securities listed on Nasdaq may be traded on NYSE Amex
pursuant to a grant of unlisted trading privileges as part of a pilot
program on the Exchange (``UTP Pilot Program'').\4\ NYSE Amex's
proposal seeks to modify the UTP Pilot Program's obligations imposed on
DMM units who quote in such securities.
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\4\ The UTP Pilot Program is scheduled to expire on the earlier
of Commission approval to make such pilot permanent or July 31,
2012. See Securities Exchange Act Release No. 66040 (December 23,
2011), 76 FR 82324 (December 30, 2011).
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Currently, under NYSE Amex Equities Rule 509(a)(1), DMM units who
are registered in securities subject to the UTP Pilot Program must
maintain continuous two-sided quotes at the National Best Bid or Offer
(``NBBO'') with reasonable size for each such security for at least 10%
of the time during the regular business hours of the Exchange for each
calendar month.\5\ The proposal would amend NYSE Amex Equities Rule
509(a)(1) to lower a DMM unit's quoting obligations for ``more active''
\6\ securities in the UTP Pilot Program from at least 10% of the time
during the regular trading day to at least 5% of the time during the
regular trading day.\7\ The proposed quoting obligations would continue
to apply on a security-by-security basis. The current quoting
obligation for ``less active'' securities, i.e., those with a
consolidated average daily volume of less than one million shares per
calendar month, would remain unchanged at 10% of the time during the
regular trading day.
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\5\ These obligations are also included within current NYSE Amex
Equities Rule 504.
\6\ Under NYSE Amex Equities Rule 103B(II)(C), ``more active''
securities are those with a consolidated average daily volume equal
to or greater than one million shares per calendar month.
\7\ The Exchange proposed to make conforming changes to NYSE
Amex Equities Rule 504(b)(1)(A), which contains a requirement
similar to NYSE Amex Equities Rule 509(a)(1) requiring DMM Units to
quote at the NBBO on average at least 10% of the trading day.
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The Exchange also proposes to delete from NYSE Amex Equities Rule
504(b)(1)(A) the text that references NYSE Amex Equities Rule 103B(II),
which provides for security allocation eligibility. The Exchange
represented that this reference is not necessary within Rule
504(b)(1)(A), and that, despite the proposed deletion, DMM units would
remain subject to NYSE Amex Equities Rule 103B(II) with respect to
security allocation eligibility.
III. Discussion and Commission Findings
After careful review, the Commission finds that the proposed rule
change is consistent with the requirements of the Act and the rules and
regulations thereunder that are applicable to a national securities
exchange, and, in particular, with the requirements of Section 6(b) of
the Act.\8\ In particular, the proposed change is consistent with
Section 6(b)(5) of the Act,\9\ because it would promote just and
equitable principles of trade, and, in general, protect investors and
the public interest.\10\ The Commission also finds that the proposed
rule change is consistent with Section 12(f) of the Act,\11\ because it
furthers the goals of maintaining fair and orderly markets, and
protecting investors and the public
[[Page 9288]]
interest, for securities traded pursuant to UTP.
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\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(5).
\10\ In approving the proposed rule change, the Commission notes
that it has considered the proposed rule's impact on efficiency,
competition, and capital formation. 15 U.S.C. 78c(f).
\11\ 15 U.S.C. 78l(f).
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The Exchange proposes to reduce DMM units' quoting obligations
applicable to ``more active'' securities traded in the UTP Pilot
Program to quoting at the NBBO for 5% of the trading day. The
Commission notes that this percentage would reflect the quoting
requirement currently applicable to DMM units quoting non-UTP Pilot
Program securities, i.e., those listed on the Exchange.\12\ There would
be one significant difference between the proposed quoting obligation
for the UTP Pilot Program and the current quoting obligation for non-
UTP Pilot Program securities--UTP Pilot Program quoting obligations are
and would continue to be calculated on a security-by-security basis,
rather than averaged across a portfolio of all of a DMM unit's assigned
securities. The Commission believes that this security-by-security
basis calculation is reasonably designed to maintain robust quotes for
all UTP Pilot Program securities. In addition, the Exchange's proposal
would reduce quoting obligations only for ``more active'' securities,
which by definition are more liquid and may, therefore, be less reliant
on quoting obligations for continued liquidity. Finally, based on the
Exchange's experience during the UTP Pilot Program, the proposed
quoting obligation is designed to ensure the continued active
participation by DMM units in such securities.
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\12\ See NYSE Amex Equities Rule 104(a)(1)(A).
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The Commission also finds that the proposed deletion in NYSE Amex
Equities Rule 504(b)(1)(A) to the reference to NYSE Amex Equities Rule
103B(II) is consistent with the Act. The Exchange represented that this
reference is not necessary within Rule 504(b)(1)(A), and that, despite
the proposed deletion, DMM units would remain subject to NYSE Amex
Equities Rule 103B(II) with respect to security allocation eligibility.
For the foregoing reasons, the Commission finds that the proposal
to amend the UTP Pilot Program is consistent with the requirements of
the Act.
IV. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\13\ that the proposed rule change (SR-NYSEAmex-2011-101) be, and
it hereby is, approved.
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\13\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-3611 Filed 2-15-12; 8:45 am]
BILLING CODE 8011-01-P