[Federal Register Volume 75, Number 106 (Thursday, June 3, 2010)]
[Notices]
[Pages 31482-31484]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-13339]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-62168; File No. SR-NYSEAmex-2010-44]
Self-Regulatory Organizations; NYSE Amex LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change to Add Certain
Violations of its Communications and Give-up Policies to its MRVP
May 25, 2010.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that, on May 12, 2010, NYSE Amex LLC (``NYSE Amex'' or the
``Exchange'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the Exchange. 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\ 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 Disciplinary Rule 476A to
add Rule 36--NYSE Amex Equities (Communications Between Exchange and
Members' Offices) to Part 1A: List of Exchange Rule Violations and
Fines Applicable Thereto (``Minor Rule Violation Plan'').\3\ The text
of the proposed rule change is available on NYSE Amex's Web site at
http://www.nyse.com, on the Commission's Web site at http://www.sec.gov, at NYSE Amex, and at the Commission's Public Reference
Room.
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\3\ The Exchange's corporate affiliate, New York Stock Exchange
LLC (``NYSE''), submitted a companion rule filing proposing
corresponding amendments to NYSE Rule 476A. See SR-NYSE-2010-37.
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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
The Exchange proposes to amend NYSE Amex Disciplinary Rule 476A to
add Rule 36--NYSE Amex Equities (Communications Between Exchange and
Members' Offices) to Part 1A of its Minor Rule Violation Plan.
Background
Effective October 1, 2008, NYSE Euronext, acquired the parent
company of the Exchange's predecessor, the American Stock Exchange LLC,
pursuant to an Agreement and Plan of Merger (the ``Merger'').\4\ In
connection with the Merger, on December 1, 2008, the Exchange relocated
all equities trading conducted on its legacy trading systems and
facilities located at 86 Trinity Place, New York, New York to systems
and facilities located at 11 Wall Street, New York, New York (the
``Equities Relocation'').\5\ Similarly, on March 2, 2009, the Exchange
relocated all its options trading to trading systems and facilities
located at 11 Wall Street, New York, New York (the ``Options
Relocation'').\6\ As a result of the Equities and Options Relocations,
the NYSE and NYSE Amex Equities Trading Floors are located within the
11 Wall Street building in a room adjacent to the NYSE Amex Options
Trading Floor.
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\4\ See Securities Exchange Act Release No. 58673 (September 29,
2008), 73 FR 57707 (October 3, 2008) (SR-NYSE-2008-60 and SR-Amex-
2008-62) (order approving the Merger).
\5\ See Securities Exchange Act Release No. 58705 (October 1,
2008), 73 FR 58995 (October 8, 2008) (SR-Amex-2008-63) (order
approving the Equities Relocation).
\6\ See Securities Exchange Act Release No. 59472 (February 27,
2009), 74 FR 9843 (March 6, 2009) (SR-NYSEALTR-2008-14) (order
approving the Options Relocation).
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Current Rule 36--NYSE Amex Equities
Rule 36--NYSE Amex Equities governs two primary areas: (i)
communications between the Floor and other locations, and (ii) the use
and/or possession of portable or wireless communication or trading
devices.
First, Rule 36--NYSE Amex Equities broadly prohibits members and
member organizations from establishing or maintaining any telephonic or
electronic communication between the Floor and any other location
without Exchange approval. In addition, there are several supplementary
provisions that provide more detailed prescriptions for members and
member firms.
Rule 36.10--NYSE Amex Equities advises members and member
organizations that the phone company will not install or disconnect any
line between the Floor and any other location without Exchange approval
and that such requests should be sent to the Exchange's Market
Operations Division. Rule 36.60--NYSE Amex Equities further prohibits
members and member organizations from listing a phone line in the name
of a non-member.
Rule 36.20--NYSE Amex Equities provides that Floor brokers may
maintain a phone line at their booth locations on the Floor, or use an
Exchange issued and authorized portable phone, to communicate with non-
members off the Floor. Only Exchange issued and authorized portable
phones may be used on the Floor in accordance with the prescriptions of
Rule 36.21--NYSE Amex Equities, and the use of personal phones is
expressly prohibited. Rule 36.21--NYSE Amex Equities provides that
Floor brokers using an Exchange issued and authorized portable phone
may communicate directly from the point of sale on the Floor with
someone off-Floor. In addition to processing orders, Floor brokers may
also provide ``market look'' observations over the phone. When taking
orders over the phone, Floor brokers must comply with Rule 123(e)--NYSE
Amex Equities, which requires entry of the order into an electronic
system, as well as any and all other record retention requirements
under Rule 440--NYSE Amex Equities and SEC Rules 17a-3 and 17a-4.
Exchange issued phones do not permit call-forwarding or call-waiting
and may not block a caller's identification. Floor brokers may not use
an Exchange authorized and provided portable phone used to trade
equities while on the Exchange's Options Trading Floor.
[[Page 31483]]
Notwithstanding the prescriptions of Rule 36.20--NYSE Amex
Equities, Rule 36.23--NYSE Amex Equities provides that members and
employees of member organizations may use personal portable or wireless
communications devices, including phones, outside the Exchange's
Equities Trading Floor.\7\ In addition, members and employees of member
organizations may not use personal portable or wireless communication
devices on the Exchange's Options Trading Floor unless they are also
registered to trade options on the Exchange.
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\7\ Rule 6A--NYSE Amex Equities defines ``Trading Floor'' as the
restricted-access physical areas designated by the Exchange for the
trading of equities securities, commonly known as the ``Main Room''
and the ``Garage.'' The Exchange's Equities Trading Floor does not
include the areas where its listed options are traded, commonly
known as the ``Blue Room'' and the ``Extended Blue Room,'' also
known as the ``NYSE Amex Options Trading Floor.''
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Rule 36.30--NYSE Amex Equities provides that, subject to Exchange
approval, a DMM Unit may maintain a phone line at its post to
communicate with its off-Floor business operations and/or its clearing
firm. For trading purposes, a DMM Unit's phone line may only be used to
enter hedging orders through the firm's off-Floor office or clearing
firm, or through a member of an options or futures exchange as
permitted under Rules 98- and 105-NYSE Amex Equities.
Under Rule 36.30--NYSE Amex Equities, a DMM Unit may also maintain
a wired or wireless device that has been registered with the Exchange,
such as a computer terminal or laptop, to communicate with the DMM
Unit's off-Floor algorithms. A DMM Unit using such a wired or wireless
device must certify that the device operates in accordance with all SEC
and Exchange rules, policies, and procedures. In addition, the DMM Unit
must create and maintain records of all messages generated by the wired
or wireless device in compliance with Rule 440--NYSE Amex Equities and
SEC Rules 17a-3 and 17a-4.
To address concerns regarding improper information sharing between
the Exchange's Equities Trading Floor and the adjacent Options Trading
Floor, Rule 36.70--NYSE Amex Equities prohibits members and member firm
employees from (i) using or possessing any wireless trading device that
may be used to view or enter orders into the Exchange's Equities
trading systems while on the Options Trading Floor, and (ii) using or
possessing any wireless trading device that may be used to view or
enter orders into the Exchange's Options trading systems while on the
Equities Trading Floor. These prohibitions apply to any and all
wireless trading devices, including devices issued by the Exchange or
NYSE, as well as devices that are proprietary to a member, member
organization or other entity.
Finally, Rules 36.40- and 36.50- NYSE Amex Equities prescribe
certain timing and handling requirements for ``give-up'' or ``step
out'' transactions, whereby a member or member organization executes a
customer trade on behalf of another member. While not directly related
to member or member organization communications or the use and/or
possession of portable or wireless communication or trading devices,
these requirements are important for ensuring that members and member
organizations properly document these types of transactions.
Proposed Rule Change
As noted above, the Exchange proposes to add Rule 36--NYSE Amex
Equities to Part 1A of its Minor Rule Violation Plan under NYSE Amex
Disciplinary Rule 476A.
Under Part 1A of the Exchange's Minor Rule Violation Plan, the
Exchange may impose a fine, not to exceed $5,000, on any member, member
organization, principal executive, approved person, or registered or
non-registered employee of a member or member organization for a minor
violation of specified Exchange rules. Such fines provide a meaningful
sanction for rule violations where the facts and circumstances of the
violation do not warrant the initiation of a formal disciplinary
procedure under NYSE Amex Disciplinary Rule 476, but do require a
regulatory response that is more significant than an admonition letter.
Currently, because Rule 36--NYSE Amex Equities is not part of the
Exchange's Minor Rule Violation Plan, if a member or member firm
employee were to violate the prohibitions set forth in Rule 36--NYSE
Amex Equities the Exchange would be limited to issuing either an
admonition letter or initiating formal proceedings under NYSE Amex
Disciplinary Rule 476. This is the case whether or not the member or
member firm employee violated the rule once or many times, and
regardless of whether he or she made an inadvertent error or an
intentional one.
The Exchange believes that the current regulatory approach for
dealing with Rule 36--NYSE Amex Equities violations is too inflexible.
The Exchange recognizes that members or member firm employees may
violate the prescriptions of Rule 36--NYSE Amex Equities intentionally,
as well as accidentally or inadvertently. When a violation is
intentional, formal disciplinary measures in accordance with NYSE Amex
Disciplinary Rule 476 may be warranted. However, while an admonition
letter might be appropriate for an isolated accidental or inadvertent
violation, in other cases an admonition letter would be inadequate even
though a formal proceeding may not be warranted. The Exchange believes
that the addition of Rule 36--NYSE Amex Equities to Part 1A of its
Minor Rule Violation Plan under NYSE Amex Disciplinary Rule 476A will
provide a more flexible and appropriate enforcement tool that preserves
the Exchange's discretion to seek formal discipline under appropriate
circumstances.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with, and furthers the objectives of, Section 6(b)(5) of the Act,\8\ in
that it is designed to prevent fraudulent and manipulative acts and
practices, 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 furthers the objectives
of Section 6(b)(6) of the Act,\9\ in that it provides for appropriate
discipline for violations of Exchange rules and regulations.
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\8\ 15 U.S.C. 78f(b)(5).
\9\ 15 U.S.C. 78f(b)(6).
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The Exchange believes that the proposed rule change will provide
the Exchange with greater regulatory flexibility to enforce the
prescriptions of Rule 36--NYSE Amex Equities in a more informal manner
while also preserving the Exchange's discretion to seek formal
discipline for more serious transgressions as warranted.
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.
[[Page 31484]]
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change: (i) Does not
significantly affect the protection of investors or the public
interest; (ii) does not impose any significant burden on competition;
and (iii) by its terms, does not 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 \10\ and Rule 19b-4(f)(6) thereunder.\11\
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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 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:
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-2010-44 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-2010-44. 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, 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 Number SR-
NYSEAmex-2010-44 and should be submitted on or before June 24, 2010.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12) and 200.30-3(a)(44).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-13339 Filed 6-2-10; 8:45 am]
BILLING CODE 8010-01-P