[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
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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