[Federal Register Volume 77, Number 166 (Monday, August 27, 2012)]
[Notices]
[Pages 51837-51839]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-20971]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-67702; File No. SR-NYSEMKT-2012-43]
Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and
Immediate Effectiveness of Proposed Rule Change Amending the NYSE Amex
Options LLC Limited Liability Company Agreement To Eliminate Certain
Restrictions Relating to the Qualification of Founding Firm Advisory
Committee Members
August 21, 2012.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that on August 17, 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 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\ 15 U.S.C. 78a.
\3\ 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 amend the NYSE Amex Options LLC (``NYSE
Amex Options'') Limited Liability Company Agreement (``LLC Agreement'')
to eliminate certain restrictions relating to the qualification of
Founding Firm Advisory Committee Members. 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, on the Commission's Web site at
www.sec.gov, 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
The Exchange proposes to amend the LLC Agreement to eliminate
certain restrictions relating to the qualification of Founding Firm \4\
Advisory Committee (``Advisory Committee'') Members. The LLC Agreement
is the source of NYSE Amex Options' governance and operating authority
and, therefore, functions in a similar manner as articles of
incorporation and by-laws function
[[Page 51838]]
for a corporation.\5\ The Founding Firm Advisory Committee is comprised
of natural persons (each, an ``Advisory Committee Member'') who provide
advice to the Board.\6\ The Board considers such advice but is not
bound by it.\7\
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\4\ Founding Firm means each of the Initial Members (NYSE MKT,
Goldman, Sachs & Co., Citadel Securities LLC, Banc of America
Strategic Investments Corporation, Citigroup Financial Strategies,
Inc., Datek Online Management Corp., UBS Americas Inc., and Barclays
Electronic Commerce Holdings Inc.) other than NYSE MKT and any
permitted transferee(s) of such Initial Member, (ii) any required
transferee deemed to be a Founding Firm by the Board of NYSE Amex
Options, and (iii) any other Member (a person who is a signatory to
the LLC Agreement, other than NYSE Euronext, or who has been
admitted to NYSE Amex Options as a Member in accordance with the LLC
Agreement and has not ceased to be a Member in accordance with the
LLC Agreement or for any other reason), other than NYSE MKT, deemed
to be a Founding Firm by the Board of NYSE Amex Options. See LLC
Agreement, Section 1.1.
\5\ See Securities Exchange Act Release No. 64144 (March 29,
2011), 76 FR 18591 (April 4, 2011) (SR-NYSEAmex-2011-18) (approving
the formation of a joint venture between the Exchange, its ultimate
parent NYSE Euronext, and seven other entities to operate an
electronic trading facility for options contracts).
\6\ See LLC Agreement, Section 8.3(a).
\7\ Id.
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Currently, Section 8.3(d) of the LLC Agreement provides that each
Founding Firm, prior to designating an individual to the Advisory
Committee, shall certify in writing to the Board that such individual
is not then a director (or an alternate director or observer to the
board or any committee of the board), officer, or employee of a
Specified Entity; \8\ in the event an individual designated to the
Advisory Committee becomes a member of the board of directors or
similar governing body of a Specified Entity, such individual shall
immediately cease to be an Advisory Committee Member.
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\8\ Specified Entity means, as of any date, (i) any U.S.
securities option exchange (or facility thereof) or U.S. alternative
trading system on which securities option contracts are executed
(other than NYSE Amex Options or any of its Affiliates) that lists
for trading any option contract that competes with a product or a
contract that is contemplated by the then-current business plan of
NYSE Amex Options to be listed for trading by the Exchange within
ninety (90) days of such date, (ii) any person that owns or controls
a U.S. securities option exchange or U.S. alternative trading system
described in clause (i), and (iii) any affiliate of a person
described in clause (i) or (ii) above; provided that, in the event
of a change in applicable law permitting the execution of
transactions in exchange-listed securities options otherwise than on
a national securities exchange or facility thereof (including, but
not limited to, internalization of orders for exchange-listed
securities options or the execution of such orders on an alternative
trading system), (x) a system operated by or on behalf of a Founding
Firm or its affiliates for purposes of the internalization or
crossing of: (i) Orders of customers of such Founding Firm or its
affiliates, (ii) orders of such Founding Firm or its affiliates or
(iii) orders routed from a retail broker-dealer or retail brokerage
unit, shall not be considered a Specified Entity and (y) in addition
to the matters covered in clause (x), NYSE Amex Options and the
Founding Firms will negotiate in good faith the terms of an
exception from the definition of Specified Entity for any
alternative trading system owned solely by an individual Founding
Firm or its affiliates that performs order crossing in a manner that
does not substantially compete with the Exchange in terms of market
share and other relevant factors. See LLC Agreement, Section 1.1.
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The Excange proposes to amend the LLC Agreement to remove the
restrictions that an individual who serves on the Advisory Committee
cannot then be or later become a director (or alternate director or
observer to the board or any committee of the board) of a Specified
Entity.\9\ The Exchange believes that the Advisory Committee should not
exclude individuals with certain affiliations with Specified Entities
because Advisory Committee Members have no formal authority over NYSE
Amex Options and only provide non-binding advice to the Board.
Moreover, the Board determines which matters are referred to the
Advisory Committee and may choose, if necessary and in light of the
affiliations of Advisory Committee Members, not to seek its advice on
sensitive competitive issues.\10\ As such, the Exchange believes that
proposed rule change would not create a significant conflict of
interest for Advisory Committee Members. In addition, the Exchange
believes that the current restrictions unnecessarily limit the pool of
qualified candidates, and the Exchange could benefit from the advice
and industry knowledge provided by Advisory Committee Members that are
affiliated with Specified Entities.
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\9\ The restriction would continue to apply to officers and
employees of Specified Entities.
\10\ The Exchange does not propose to change the qualification
for directors and alternates of the Board of NYSE Amex Options,
which similarly restricts certain affiliations with Specified
Entities. See LLC Agreement, Section 8.1(h).
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2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Securities Exchange Act of 1934 (the
``Act''),\11\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\12\ 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 regulating, clearing, settling,
processing information with respect to, and facilitating transactions
in securities, 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.
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\11\ 15 U.S.C. 78f(b).
\12\ 15 U.S.C. 78f(b)(5).
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Specifically, the Exchange believes the proposed rule change would
expand the pool of candidates eligible for membership on the Advisory
Committee and thereby increase the breadth of industry knowledge that
will be available to it without creating any conflicts of interest that
cannot be appropriately managed, which benefits the public interest.
The increased representation of different constituencies on the
Advisory Committee also would foster cooperation and coordination with
persons engaged in facilitating transactions in securities, contribute
to the identification of opportunities for innovation, and enhance
competition.
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
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \13\ and Rule 19b-4(f)(6) thereunder.\14\
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, if consistent with the protection of
investors and the public interest, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act \15\ and Rule 19b-
4(f)(6)(iii) thereunder.\16\
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\13\ 15 U.S.C. 78s(b)(3)(A)(iii).
\14\ 17 CFR 240.19b-4(f)(6).
\15\ 15 U.S.C. 78s(b)(3)(A).
\16\ 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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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
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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 No. SR-NYSEMKT-2012-43 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 No. SR-NYSEMKT-2012-43. 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 available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549, on official business days between the hours of 10
a.m. and 3 p.m. Copies of such filing also will be available for
inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File No. SR-NYSEMKT-2012-43 and should be
submitted on or before September 17, 2012.
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\17\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2012-20971 Filed 8-24-12; 8:45 am]
BILLING CODE 8011-01-P