[Federal Register Volume 75, Number 116 (Thursday, June 17, 2010)]
[Notices]
[Pages 34513-34515]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-14601]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-62263; File No. SR-NYSEAmex-2010-49]
Self-Regulatory Organizations; NYSE Amex LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Rescind Rule
60A--NYSE Amex Equities
June 10, 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 20, 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 rescind Rule 60A--NYSE Amex Equities
(``Vendor Liability Disclaimer''). 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 the
[[Page 34514]]
principal office of NYSE Amex, 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
The Exchange proposes to rescind Rule 60A--NYSE Amex Equities
(``Vendor Liability Disclaimer'').
Background
Effective October 1, 2008, NYSE Euronext acquired The Amex
Membership Corporation (``AMC'') pursuant to an Agreement and Plan of
Merger dated January 17, 2008 (the ``Acquisition''). Pursuant to the
Acquisition the Exchange's predecessor, the American Stock Exchange LLC
(``Amex''), a subsidiary of AMC, became a subsidiary of NYSE
Euronext.\3\ In connection with the Acquisition, on December 1, 2008,
the Exchange relocated all equities trading to systems and facilities
located at 11 Wall Street, New York, New York (the ``NYSE Amex Equities
Trading Systems''), which are operated by the Exchange's corporate
affiliate, the New York Stock Exchange LLC (``NYSE''), on behalf of the
Exchange.\4\ Correspondingly, the Exchange adopted NYSE Rules 1-1004,
subject to such changes as necessary to apply the Rules to the
Exchange, as the NYSE Amex Equities Rules to govern trading on the NYSE
Amex Equities Trading Systems.\5\
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\3\ 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) (approving the Acquisition).
\4\ See Securities Exchange Act Release No. 58705 (October 1,
2008), 73 FR 58995 (October 8, 2008) (SR-Amex-2008-63) (approving
the equities trading relocation and the adoption of the NYSE Amex
Equities rules).
\5\ See Securities Exchange Act Release Nos. 58705 (October 1,
2008), 73 FR 58995 (October 8, 2008) (SR-Amex-2008-63); 58833
(October 22, 2008), 73 FR 64642 (October 30, 2008) (SR-NYSE-2008-
106); 58839 (October 23, 2008), 73 FR 64645 (October 30, 2008) (SR-
NYSEALTR-2008-03); 59022 (November 26, 2008), 73 FR 73683 (December
3, 2008) (SR-NYSEALTR-2008-10); and 59027 (November 28, 2008), 73 FR
73681 (December 3, 2008) (SR-NYSEALTR-2008-11).
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Rule 60A--NYSE Amex Equities
Shortly after the Acquisition, the Exchange adopted the provisions
of legacy Amex Rule 60 as Rule 60A--NYSE Amex Equities (``Vendor
Liability Disclaimer'') to address third-party vendor liability.\6\
Rule 60A--NYSE Amex Equities provides that, in connection with member
or member organization use of any electronic system, service or
facility provided by the Exchange to members for the conduct of their
business on the Exchange, the Exchange may expressly provide in the
contract with the vendor(s) providing all or part of such electronic
system, service or facility to the Exchange, that the vendor will not
be liable for any damages sustained by a member or member organization
arising out of the use of the vendor's system. In addition, the Rule
provides that members and member organizations must indemnify both the
Exchange and the vendor for any and all damages as a result of any
claim or proceeding that arises out of or relates to the member's or
member organization's use of such vendor's system.
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\6\ See Securities Exchange Act Release No. 58705 (October 1,
2008), 73 FR 58995 (October 8, 2008) (SR-Amex-2008-63).
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At the time the NYSE Amex Equities Rules were adopted, Rules 17-
and 18- NYSE Amex Equities did not address third-party vendor
liability.
Current Rules 17- and 18-NYSE Amex Equities
In March 2009, concurrent with the NYSE, the Exchange amended Rules
17- and 18-NYSE Amex Equities to address third-party vendor liability
in the context of the NYSE and NYSE Amex Compensation Review Panels.\7\
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\7\ See Securities and Exchange Act Release Nos. 59482 (March 2,
2009, 74 FR 10114 (March 9, 2009) (SR-NYSEALTR-2009-13) (amending
Rules 17- and 18-NYSE Amex Equities) and 59486 (March 2, 2009), 74
FR 10104 (March 9, 2009) (SR-NYSE-2009-16) (amending NYSE Rules 17
and 18).
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Pursuant to these amendments, Rule 17(b)-NYSE Amex Equities
currently provides that, except as provided in Rule 18-NYSE Amex
Equities, the Exchange is not liable for any damages sustained by a
member, principal executive or member organization arising out of its
use or enjoyment of any third-party electronic system, service or
facility (``third-party vendor'') provided by the Exchange for the
conduct of business on the Exchange.
Rule 18-NYSE Amex Equities permits a member or member organization
to file a claim with the Exchange for losses arising out of a ``system
failure'', which includes ``any malfunction of any third-party
electronic system, service, or facility * * * provided by the Exchange
that results in an incorrect execution of an order or no execution of a
marketable order that was received in Exchange systems.'' In addition,
Rule 18-NYSE Amex Equities specifies that each month a ``Compensation
Review Panel'' consisting of three Floor Governors and three Exchange
employees reviews claims submitted pursuant to the Rule and determines
their eligibility for payment and whether the claims are subject to
reduction. The Exchange then submits all eligible claims to the NYSE
for reimbursement under the terms of NYSE Rule 18.\8\ If the aggregate
claims submitted by the Exchange cannot be fully satisfied because they
exceed the funds available for payment, the available funds are
allocated among all eligible claims based on the proportion that each
claim bears to the total amount eligible to receive payment. Where
claims arising out of a third-party vendor system failure cannot be
fully satisfied, the aggrieved member or member organization may file a
claim directly against the third-party vendor for the unpaid loss.
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\8\ Because the Exchange and the NYSE share a common trading
platform, NYSE Rule 18 provides a mechanism for the Exchange to seek
reimbursement from NYSE for the amounts that the Exchange undertakes
to pay out to NYSE Amex Equities members and member organizations
under Rule 18-NYSE Amex Equities. Each claim by an Exchange member
or member organization under these Rules is considered separately.
See NYSE Rule 18. See e-mail from Jason Harman, NYSE Regulation,
Inc., to Ira L. Brandriss, Special Counsel, Commission, dated June
8, 2010.
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Proposed Rule Changes
The Exchange proposes to rescind Rule 60A-NYSE Amex Equities as it
is duplicative of Rule 17-NYSE Amex Equities. Rules 17- and 18- NYSE
Amex Equities comprehensively address third-party vendor liability, and
maintaining Rule 60A-NYSE Amex Equities in the NYSE Amex Equities
rulebook is potentially confusing to members and member organizations
since, unlike the other Rules, it does not specify the process for
submission of claims for losses arising out of the use of third-party
vendor systems provided by the Exchange.
2. Statutory Basis
The Exchange believes that the proposed rule changes are consistent
with Section 6 of the Act,\9\ in general, and further the objectives of
Section
[[Page 34515]]
6(b)(5) of the Act,\10\ in particular, in that they are 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.
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\9\ 15 U.S.C. 78f.
\10\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that the proposed rule changes support the
objectives of the Act by rescinding a duplicative rule and fully
conforming NYSE and NYSE Amex Equities rules regarding vendor
liability.
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: (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 \11\ and Rule 19b-4(f)(6) thereunder.\12\
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\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 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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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,
because the proposal raises no novel issues and seeks to rescind a
duplicative rule that was left in the NYSE Amex Equities rulebook after
the Acquisition. Therefore, the Commission designates the proposal
operative upon filing.\13\
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\13\ For purposes only of waiving the operative delay for this
proposal, 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 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-2010-49 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-2010-49. 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-2010-49 and should be submitted on or before July 8, 2010.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-14601 Filed 6-16-10; 8:45 am]
BILLING CODE 8010-01-P