[Federal Register Volume 78, Number 38 (Tuesday, February 26, 2013)]
[Notices]
[Pages 13110-13113]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-04360]



[[Page 13110]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68957; File No. SR-NYSEMKT-2013-14]


Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change Extending the Temporary 
Suspension of Those Aspects of Rules 36.20--Equities and 36.21--
Equities That Would Not Permit Floor Brokers To Use Personal Portable 
Phone Devices on the Trading Floor Following the Aftermath of Hurricane 
Sandy Until the Earlier of When Phone Service Is Fully Restored or 
Friday, March 29, 2013

February 20, 2013.
    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 February 15, 2013, 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 extend the temporary suspension of those 
aspects of Rules 36.20--Equities and 36.21--Equities that would not 
permit Floor brokers to use personal portable phone devices on the 
Trading Floor following the aftermath of Hurricane Sandy until the 
earlier of when phone service is fully restored or Friday, March 29, 
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
    On Thursday, November 1, 2012, the Exchange filed a rule proposal 
to temporarily suspend those aspects of Rules 36.20--Equities, 36.21--
Equities, and 36.30--Equities that would not permit Floor brokers and 
Designated Market Makers (``DMMs'') to use personal portable phone 
devices on the Trading Floor \4\ following the aftermath of Hurricane 
Sandy and during the period that phone service was not fully 
functional.\5\ Pursuant to that filing, all other aspects of those 
rules remained applicable and the temporary suspensions of Rule 36--
Equities requirements were in effect beginning the first day trading 
resumed following Hurricane Sandy until Friday, November 2, 2012.
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    \4\ 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.
    \5\ See Securities Exchange Act Release No. 68138 (Nov. 1, 
2012), 77 FR 66890 (Nov. 7, 2012) (SR-NYSEMKT-2012-59).
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    On November 5, 2012, although power had been restored to the 
downtown Manhattan vicinity, other services were not yet fully 
operational. Among other things, the telephone services provided by 
third-party carriers to the Exchange were still not fully operational 
on the Trading Floor, which continued to impact the ability of Floor 
members to communicate from the Trading Floor as permitted by Rule 36--
Equities. Accordingly, the Exchange filed to extend the temporary 
suspension of those aspects of Rules 36.20--Equities, 36.21--Equities, 
and 36.30--Equities that would not permit Floor brokers and DMMs to use 
personal portable phone devices on the Trading Floor to the earlier of 
phone service being restored or November 9, 2012,\6\ which was subject 
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.\7\ On November 9, 2012, the Exchange filed an additional 
extension of the temporary suspension of those aspects of Rules 36.20--
Equities and 36.21--Equities that would not permit Floor brokers to use 
personal portable phone devices on the Trading Floor to the earlier of 
phone service being restored or November 16, 2012, again subject to the 
same terms and conditions of the original temporary suspension that was 
filed.\8\ On November 19, 2012, the Exchange filed to extend the 
temporary suspension of those aspects of Rules 36.20--Equities and 
36.21--Equities that would not permit Floor brokers to use personal 
portable phone devices on the Trading Floor to the earlier of when 
phone service is fully restored or Friday, December 14, 2012, again 
subject to the same terms and conditions of the original temporary 
suspension that was filed.\9\ The continued extension of the temporary 
suspension was needed because of the ongoing intermittent phone and 
internet service. Specifically, the wired telephone lines and internet 
connections for Floor brokers continued to not be functional, many 
Exchange authorized and provided portable phones continued to not be 
functional and therefore Floor brokers still could not consistently use 
the Exchange authorized and provided portable phones, pursuant to Rules 
36.20--Equities and 36.21--Equities. On December 13, 2012, the Exchange 
filed to extend the temporary suspension of those aspects of Rules 
36.20 and 36.21 that would not permit Floor brokers to use personal 
portable phone devices on the Trading Floor to the earlier of when 
phone service is fully restored or Friday, January 18, 2013, again 
subject to the same terms and conditions of the original temporary 
suspension that was filed.\10\ On January 17, 2013, the Exchange filed 
to extend the temporary suspension of those aspects of Rules 36.20 and 
36.21 that would not permit Floor brokers to use personal portable 
phone devices on the Trading Floor to the earlier of when phone service 
is fully restored or Friday, February 15, 2013, again subject to the 
same terms and conditions of the original temporary

[[Page 13111]]

suspension that was filed.\11\ The Exchange now seeks another extension 
of the temporary suspension of those aspects of Rules 36.20--Equities 
and 36.21--Equities because of ongoing telephone and internet issues.
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    \6\ See Securities Exchange Act Release No. 68162 (Nov. 5, 
2012), 77 FR 67720 (Nov. 13, 2012) (SR-NYSEMKT-2012-62).
    \7\ See supra note 5 (notice that describes the terms and 
conditions of the temporary suspension).
    \8\ See Securities Exchange Act Release No. 68212 (Nov. 9, 
2012), 77 FR 69536 (Nov. 19, 2012) (SR-NYSEMKT-2012-66). Because the 
telephone lines for the DMMs were operational, the Exchange did not 
need to extend the temporary suspension of Rule 36.30--Equities as 
it related to DMMs.
    \9\ See Securities Exchange Act Release No. 68272 (Nov. 20, 
2012), 77 FR 70871 (Nov. 27, 2012) (SR-NYSEMKT-2012-69). Relief was 
not extended for DMMs. See infra note 13.
    \10\ See Securities Exchange Act Release No. 68451 (Dec. 17, 
2012), 77 FR 75681 (Dec. 21, 2012) (SR-NYSEMKT-2012-82). Relief was 
not extended for DMMs. See infra note 13.
    \11\ See Securities Exchange Act Release No. 68705 (January 22, 
2013), 78 FR 5848 (January 28, 2013) (SR-NYSEMKT-2013-06). Relief 
was not extended for DMMs. See infra note 13.
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    The Exchange has been advised by its third-party carrier that the 
damage to the telephone connections continues to be more extensive than 
previously anticipated. In addition, there has been damage to the 
internet connections available to Floor brokers on the Trading Floor, 
which has adversely impacted service. In particular, the Exchange notes 
that the lines that support both the wired and wireless phone 
connections and internet connections for the Floor brokers are based in 
an area of lower Manhattan that suffered extensive damage as a result 
of Hurricane Sandy. The type of damage that was sustained will, in some 
cases, require the third-party carrier to rebuild the infrastructure 
that supports these services, rather than engage in repairs of existing 
lines. The process of rebuilding the infrastructure has been 
incrementally slow without significant improvement since the last 
extension request. While such rebuilding and repairs are in process, 
the telephone line and internet connections for Floor brokers still are 
not fully operational and may not be for another month, given the type 
of work that needs to be completed to restore the telephone services.
    Because of the ongoing intermittent phone and internet service, 
many Exchange authorized and provided portable phones continue to not 
be functional and therefore many Floor brokers still cannot 
consistently use the Exchange authorized and provided portable phones, 
pursuant to Rules 36.20--Equities and 36.21--Equities. In addition, 
many of the wired telephone lines and internet connections for Floor 
brokers continue to not be functional. 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 and internet 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, wired phone lines, or internet 
connections.\12\
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    \12\ To the extent that Exchange-approved telephone or 
electronic communications are operational, Floor brokers must use 
those connections rather than use a personal portable phone. 
Specifically, the Exchange states that Floor brokers must return to 
pre-Hurricane Sandy communications at any point when service is 
restored even if temporary.
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    Accordingly, the Exchange proposes to extend the temporary 
suspension of those aspects of Rules 36.20--Equities and 36.21--
Equities that would not permit Floor brokers to use personal portable 
phone devices on the Trading Floor to the earlier of when phone service 
is fully restored or Friday, March 29, 2013.\13\ As noted above, the 
process of rebuilding the infrastructure has been incrementally slow 
without significant improvement since the last extension request. 
However, the Exchange believes that there will be significant 
improvement in the near future. The third-party carrier recently 
advised the Exchange that during the next month both the telephone and 
the Internet connections will be restored to Floor brokers on the 
Trading floor. The Exchange proposes that the extension of the 
temporary suspension of those aspects of Rules 36.20--Equities and 
36.21--Equities to permit use of the personal portable phones by Floor 
brokers 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.\14\
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    \13\ Consistent with the existing relief, [sic] Exchange is not 
proposing to provide any relief to DMMs in this proposal. Because 
phone service to DMMs has been restored, the existing relief does 
not provide for a temporary suspension of Rule 36.30--Equities, 
which prohibits DMMs from using personal portable phones on the 
Trading Floor. Similarly, because the off-Floor locations for DMMs 
have been restored, the existing relief does not provide for the 
temporary suspension for DMMs to be permitted to communicate with 
off-Floor personnel who may not be located at their regular physical 
location. The Exchange is not proposing to provide such relief in 
this proposal. See supra notes 5 and 6 (notices describing the 
relief previously requested for DMMs).
    \14\ See supra note 5 (notice that describes the terms and 
conditions of the temporary suspension).
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    In particular, as set forth in the prior filings, Floor brokers 
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 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 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, to the extent that personal portable phones are used 
to replicate internet connections previously approved pursuant to Rule 
36 that are not operational on the Trading Floor because of damage 
sustained by Hurricane Sandy, such use is subject to the same 
requirements that would otherwise be applicable, including record-
retention requirements. This emergency relief is solely meant to 
maintain the status quo to the extent provided in Rule 36 and not 
intended to broaden the scope of the activities allowed pursuant to the 
Rule (e.g., accessing internet only at the booth). As with all member 
organization records, such cell phone data records must be provided to 
Exchange regulatory staff, including without limitation staff of FINRA, 
on request. To the extent that Exchange-approved telephone or 
electronic communications are operational, Floor brokers must use those 
connections rather than use a personal portable phone. Specifically, 
the Exchange states that Floor brokers must return to pre-Hurricane 
Sandy communications at any point when service is restored even if 
temporary.
    As noted above, because the Exchange is dependent on third-party 
carriers for both wired and wireless phone service and internet 
connections on the Trading Floor, the Exchange does not know how long 
the proposed temporary suspension of Rules 36.20--Equities and 36.21--
Equities will be required. However, based on current estimates, the 
Exchange understands that phone service may be fully restored during 
the next month.
    Accordingly, the Exchange proposes that the extension of the 
temporary suspensions of those aspects of Rule 36--Equities that do not 
permit Floor brokers to use personal portable phones on the Trading 
Floor continue until the earlier of when phone service is fully 
restored or Friday, March 29, 2013.\15\
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    \15\ The Exchange will provide notice of this rule filing to 
Floor brokers, including the applicable recordkeeping and other 
requirements. If telephone service is fully restored prior to March 
29, 2013, the Exchange will notify Floor brokers that the temporary 
suspension of those aspects of Rule 36--Equities 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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[[Page 13112]]

2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\16\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\17\ 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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    \16\ 15 U.S.C. 78f(b).
    \17\ 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--Equities that restrict Floor broker's 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 Floor brokers to 
conduct their regular business, notwithstanding the ongoing issues with 
telephone service. The Exchange further believes that without the 
requested relief, Floor brokers 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.

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. The proposed extension of 
the temporary suspensions of those aspects of Rules 36.20--Equities and 
36.21--Equities that would not permit Floor brokers to use personal 
portable phone devices on the Trading Floor is in direct response to 
damages in the aftermath of Hurricane Sandy. The proposed relief will 
enable Floor brokers to conduct their regular business, notwithstanding 
the ongoing issues with telephone service, and thus should not have any 
burden on competition.

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 \18\ and Rule 19b-4(f)(6) thereunder.\19\ 
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 and Rule 19b-
4(f)(6)(iii) thereunder.
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    \18\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \19\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) \20\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\21\ the Commission 
may 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 so that the proposal 
may become operative immediately upon filing. 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, for 
Floor brokers, the emergency temporary relief necessitated by Hurricane 
Sandy's disruption of telephone service, as described herein and in the 
Exchange's prior filings seeking such relief, and to help maintain the 
status quo, until the earlier of when phone service for Floor brokers 
is fully restored or March 29, 2013. Therefore, the Commission hereby 
waives the 30-day operative delay and designates the proposal operative 
upon filing.\22\
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    \20\ 17 CFR 240.19b-4(f)(6).
    \21\ 17 CFR 240.19b-4(f)(6)(iii).
    \22\ 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 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. If the Commission 
takes such action, the Commission shall institute proceedings under 
Section 19(b)(2)(B) \23\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \23\ 15 U.S.C. 78s(b)(2)(B).
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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 rule-comments@sec.gov. Please include 
File Number SR-NYSEMKT-2013-14 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-NYSEMKT-2013-14. 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

[[Page 13113]]

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 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-NYSEMKT-2013-14 and should 
be submitted on or before March 19, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\24\
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    \24\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-04360 Filed 2-25-13; 8:45 am]
BILLING CODE 8011-01-P