[Federal Register Volume 75, Number 70 (Tuesday, April 13, 2010)]
[Notices]
[Pages 18935-18937]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-8362]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-61847; File No. SR-NYSEAmex-2010-34]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by NYSE Amex LLC Amending NYSE
Amex Equities Rule 70 in Order To Update Functionality Relating to the
Entry of D-Quotes and Pegging E-Quotes
April 6, 2010.
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 April 1, 2010, NYSE Amex LLC (the ``Exchange'' or ``NYSE
Amex'') 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 NYSE Amex Equities Rule 70 in order
to update functionality relating to the entry of d-Quotes and pegging
e-Quotes. The text of the proposed rule change is available at the
Exchange, on the Commission's Web site at http://www.sec.gov, 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.
[[Page 18936]]
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 its equities rules to provide that
d-Quotes and pegging e-Quotes that are entered 10 seconds or less
before the scheduled close will automatically be rejected by Exchange
systems. Accordingly, on a regular trading day, Exchange systems will
reject d-Quotes or pegging e-Quotes entered at or after 3:59:50 p.m. On
days where trading closes at 1 p.m., e.g., the day after Thanksgiving,
Exchange systems will reject d-Quotes or pegging e-Quotes eligible for
the close entered at or after 12:59:50 p.m.\4\
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\4\ New York Stock Exchange LLC has filed a companion rule
proposal to conform its rules to the changes proposed in this
filing. See SR-NYSE-2010-31.
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The Exchange believes that the 10-second cut-off will contribute to
a more orderly closing process, by providing an opportunity for contra-
side interest, including the new Closing Offset (``CO'') order, to flow
into the Exchange market. This proposed change is consistent with the
Exchange's ongoing effort to streamline the closing process and enhance
transparency at the close. In light of recent enhancements to the
imbalance feed information, the Exchange believes that designating a
cut-off time before the close for the entry of d-Quotes and pegging e-
Quotes will contribute to these objectives.
Currently, d-Quotes and pegging e-Quotes are added to the pre-close
data feed beginning at 3:55 p.m., and updated every five seconds until
the close. The Exchange believes that a 10-second cut-off prior to the
close for entry of d-Quotes and pegging e-Quotes will provide
sufficient time for all market participants to electronically recognize
and respond to this information by entering offsetting interest to
mitigate market impact, by entering limit orders or the new CO
order.\5\ The Exchange further believes that the 10-second cut-off will
not materially impact a Floor broker's ability to represent customer
interest in the closing transaction because, like other market
participants, Floor brokers can enter offsetting market-on-close or
limit-on-close orders or CO orders in that 10-second period. Floor
brokers also continue to have the ability to represent interest orally
at the close. However, the Exchange believes that the proposed cut-off
period will have minimal impact on current trading practices of Floor
brokers because the manual entry process for d-Quotes in the handheld
devices creates physical constraints that naturally limit the number of
d-Quotes that can be sent in the last 10 seconds. Therefore, the cut-
off time should not impose a significant limitation on Floor brokers
that is not already present because of the manual aspect of d-Quote
entry. The proposed change is also consistent with ongoing regulatory
guidance that encourages all market participants, including Floor
brokers, to avoid holding back large interest until at or near the
close.\6\
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\5\ See Securities Exchange Act Release Nos. 61233 (Dec. 23,
2009), 74 FR 69169 (Dec. 30, 2009) (SR-NYSE-2009-111); 61244 (Dec.
28, 2009), 75 FR 4797 (Jan. 5, 2010) (SR-NYSEAmex-2009-81). The
Exchange implemented these rule changes for both NYSE and NYSE Amex
Equities on March 1, 2010.
\6\ See. e.g., NYSE Regulation Information Memo 09-29 (June 19,
2009), published at http://www.nyse.com.
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To effect this change, the Exchange proposes to amend NYSE Amex
Equities Rules 70.25(a)(ii) and 70.26(iii) to provide that Exchange
systems will reject d-Quotes or pegging e-Quotes, as applicable, that
are entered 10 seconds or less before the scheduled close. The Exchange
also proposes to add to NYSE Amex Equities Rule 70(h)(i) to cross
reference Supplementary Material .25 and .26 of Rule 70 to reflect that
those rules also impact how Floor broker agency interest interacts in
the closing process. The Exchange notes that any d-Quotes or pegging e-
Quotes eligible for the close that were entered before this proposed
cut-off time remain eligible to participate in the close. The Exchange
will notify members and member organizations, including Floor brokers,
of these rule changes and the date they will be implemented by issuing
a Trader Notice and/or publication of an Information Memorandum.
2. Statutory Basis
The statutory basis for the proposed rule change is Section 6(b)(5)
of the Act,\7\ which requires the rules of an exchange 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. The
proposed rule change also is designed to support the principles of
Section 11A(a)(1) \8\ of the Act in that it seeks to assure fair
competition among brokers and dealers and among exchange markets and
the practicability of brokers executing investor's orders in the best
market. The Exchange believes that the proposed updates to Floor broker
functionality meet such goals as it will contribute to a more orderly
closing process, by providing an opportunity for contra-side interest
to flow into the Exchange market.
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\7\ 15 U.S.C. 78f(b)(5).
\8\ 15 U.S.C. 78k-1(a)(1).
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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:
(i) Significantly affect the protection of investors or the public
interest;
(ii) Impose any significant burden on competition; and
(iii) Become operative for 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, it
has become effective pursuant to Section 19(b)(3)(A) of the Act \9\ and
Rule 19b-4(f)(6) thereunder.\10\
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\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires the self-regulatory organization to submit to the
Commission written notice of its 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 may summarily abrogate 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:
[[Page 18937]]
Electronic Comments
Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an e-mail to [email protected]. Please include
File Number SR-NYSEAmex-2010-34 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-2010-34. This
file number should be included on the subject line if e-mail 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 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 Number SR-NYSEAmex-2010-34 and should be submitted on or before
May 4, 2010.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-8362 Filed 4-12-10; 8:45 am]
BILLING CODE 8011-01-P