[Federal Register Volume 75, Number 89 (Monday, May 10, 2010)]
[Notices]
[Pages 25889-25890]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-10962]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-62019; File No. SR-NYSEArca-2010-16]
Self-Regulatory Organizations; NYSE Arca, Inc.; Order Granting
Approval of Proposed Rule Change Amending Rule 6.37A and Rule 6.64
April 30, 2010.
On March 11, 2010, NYSE Arca, Inc. (``NYSE Arca'' or ``Exchange'')
filed with the Securities and Exchange Commission (``Commission'') a
proposed rule change pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 \2\ thereunder to
amend the bid-ask differentials for market maker quotations outlined in
NYSE Arca Rule 6.37A(b)(4) and amend NYSE Arca Rule 6.64(b) to
establish bid-ask parameters in the OX System to be used during the
opening auction process (``Auction'') and to implement an associated
conforming change to NYSE Arca Rule 6.87. The proposed rule change was
published for comment in the Federal Register on March 30, 2010.\3\ The
Commission received no comment letters regarding 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\ See Securities Exchange Act Release No. 61759 (March 23,
2010), 75 FR 15758 (``Notice'').
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Currently, NYSE Arca Rule 6.37A(b)(4) specifies the bid-ask
differential requirements applicable to market maker quotations when
electronically bidding and offering on the OX System during an Auction.
The Exchange now proposes to replace the applicable bid-ask
differentials for market maker quoting obligations during an Auction,
with the $5 quote differential that is in place at all other times.
NYSE Arca also proposes to establish parameters for the opening
auction as described in Rule 6.64. Pursuant to this proposed rule
change, the OX System will not conduct an Auction in a given series
unless the composite NYSE Arca bid-ask is within an acceptable range.
For the purposes of the Auction, an acceptable range will be the bid-
ask parameters pursuant to Rule 6.37(b)(1)(A)-(E). These bid-ask
differentials are identical to the existing legal width differentials
for market maker Auction quotations which this filing proposes to
delete. The Exchange represented that by establishing price protection
parameters within the Auction process of the OX System, rather than
just as a requirement for submitted quotes, customers and other market
participants will be afforded a higher level of price protection than
they presently have on NYSE Arca.
In addition, the Exchange proposes a minor change to Rule 6.87--
Obvious Errors and Catastrophic Errors. Rule 6.87(b)(2)(B) presently
contains a reference to bid-ask differentials pursuant to Rule
6.37A(b)(4)-(5). Due to the proposed changes contained in this filing
related to the bid-ask differentials of Rule 6.37A(b)(4)-(5), the
Exchange proposes to now reference the bid-ask differentials contained
in Rule 6.37(b)(1)(A)-(E). The bid-ask differentials of each rule are
identical, therefore the change will not alter in any way the methods
used by the Exchange when making obvious error determinations.
After careful consideration, the Commission finds that the proposed
rule change is consistent with the requirements of the Act and the
rules and regulations thereunder applicable to a national securities
exchange \4\ and, in particular, the requirements of Section 6 of the
Act.\5\ Specifically, the Commission finds that the proposed rule
change is consistent with Section 6(b)(5) of the Act,\6\ which
requires, among other things, that the rules of a national securities
exchange be 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 mechanisms 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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\4\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. 15 U.S.C. 78c(f).
\5\ 15 U.S.C. 78f.
\6\ 15 U.S.C. 78f(b)(5).
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The Commission notes that the requirements provided under the
Exchange's current quote parameters applicable during the Auction are
not being eliminated but instead are being transferred and integrated
into the Auction process itself. Pursuant to the proposed rule change,
the OX System will not conduct an Auction in a given series unless the
BBO is within an acceptable range, delineated by the parameters in NYSE
Arca Rule 6.37(b)(1)(A)-(E), the identical width differentials for
market maker Auction quotations that currently exist. The Commission
believes that establishing parameters in the Auction process itself
instead should enhance efficiency in pricing for customers and other
market participants. Lastly, the proposed conforming changes to NYSE
Arca Rule 6.87 are not substantive and thus do not raise any regulatory
concerns. For these reasons, the Commission finds that the proposed
changes are consistent with the Act.
Therefore, it is ordered, pursuant to Section 19(b)(2) of the
Act,\7\ that the proposed rule change (SR-NYSEArca-2010-16) is hereby
approved.
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\7\ 15 U.S.C. 78s(b)(2).
[[Page 25890]]
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For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\8\
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\8\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-10962 Filed 5-7-10; 8:45 am]
BILLING CODE 8011-01-P