[Federal Register Volume 75, Number 158 (Tuesday, August 17, 2010)]
[Notices]
[Pages 50787-50789]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-20240]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-62669; File No. SR-NYSE-2010-57]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by New York Stock Exchange LLC
Amending NYSE Rule 15 To Clarify Use of the Last Sale on the Exchange
as the Reference Price and To Define the Reference Price of a Security
in the Event That There Is No Last Sale in That Security on the
Exchange
August 9, 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 August 5, 2010, New York Stock Exchange LLC (``NYSE'' or
the ``Exchange'') 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 Rule 15 to clarify use of the
last sale on the Exchange as the reference price and to define the
reference price of a security in the event that there is no last sale
in that security on the Exchange. The text of the proposed rule change
is available at the Exchange, 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.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend NYSE Rule 15 (Pre-Opening
Indications) to clarify use of the last sale on the Exchange as the
reference price and to define the reference price of a security in the
event that there is no last sale in that security on the Exchange.\4\
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\4\ The Exchange's corporate affiliate, NYSE Amex LLC (``NYSE
Amex''), submitted a companion rule filing proposing corresponding
amendments to NYSE Amex Equities Rule 15. See SR-NYSEAmex-2010-82.
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Current NYSE Rule 15
Pursuant to NYSE Rule 15(a), a DMM must issue a pre-opening
indication if the DMM anticipates that the opening transaction will be
at a price that represents a change from the security's previous day's
closing price on the Exchange of more than the ``applicable price
change.'' \5\ In the case of an American Depositary Receipt (``ADR''),
Rule 15(b) sets forth provisions to take into account the closing price
of the underlying security on the primary foreign market or a change
from parity (as appropriate) in determining the applicable price
change.
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\5\ The applicable price change is $0.50 if the closing price of
a security on the Exchange is under $20, $1.00 if the closing price
of a security on the Exchange is $20-$49.99, $2.00 if the closing
price of a security on the Exchange is $50-$99.99, $5.00 if the
closing price of a security on the Exchange is $100-$500 and 1.5% if
the closing price of a security on the Exchange is above $500.
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In addition to the mandatory DMM pre-opening indications, pursuant
to Rule 15(c), Exchange systems disseminate a data feed of real-time
order imbalances that accumulate prior to the opening transaction on
the Exchange and the price at which interest eligible to participate in
the opening transaction may be executed in full (``Order Imbalance
Information'').\6\ The Order Imbalance Information data feed includes
all interest eligible for execution in the opening transaction of the
security in Exchange systems and uses the previous trading day's
closing price in the security on the Exchange as the reference price to
indicate the number of shares required to open the security with an
equal number of shares on the buy side and the sell side. If, however,
a mandatory pre-opening indication is published for a security
[[Page 50788]]
pursuant to the provisions of Rule 15(a) or (b), the Order Imbalance
Information data feed determines the reference price based on a
comparison of the bid and offer price of the mandatory pre-opening
indication to the last sale on the Exchange.
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\6\ The Order Imbalance Information is disseminated in
accordance with Rule 15(c)(3). If the Exchange decides to change the
frequency of the dissemination of the Order Imbalance Information,
it will notify the Commission and the market as part of the required
rule amendment process.
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Rule 15 does not address determination of the reference price in an
IPO or transferred security and none of the alternatives specified in
Rule 15(c)(2)(ii) are applicable as there would be no last sale on the
Exchange the previous day.\7\
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\7\ The Exchange notes that Rule 123D(1) currently provides for
mandatory pre-opening indications for IPOs if the price change as
measured from the offering price meets the requirements for a
mandatory indication as defined under the Rule. However, Rule
123D(1) generally pertains to situations involving unusual market
activity and indications under that rule are sent to the
Consolidated Tape. Rule 15 is intended to be a standardized process
for the issuance of pre-opening indications under more normal market
conditions and are available as part of the Exchange's proprietary
datafeeds.
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Proposed amendments to NYSE Rule 15
The Exchange believes that publication of mandatory pre-opening
indications and dissemination of Order Imbalance Information with
respect to IPOs and transferred securities would be beneficial to the
market and in the public interest by providing additional information
and transparency. Accordingly, the Exchange proposes to amend Rules
15(a) and (c) to include parameters to establish a reference price for
IPOs and transferred securities for both the mandatory pre-opening
indication and the Order Imbalance Information data feed. Specifically,
the Exchange proposes that the reference price be the offering price
(i.e., ``deal price'') in the case of an IPO, or the last reported sale
price on the securities market from which the security is being
transferred. The Exchange Floor Official who is supervising the opening
of the IPO or transferred security shall confirm that the DMM inputs
the appropriate reference price for that listing in the Exchange
system.
The Exchange also proposes to amend parts (a)(1) and (c)(2) of Rule
15 to provide that the reference price for pre-opening indications is
the last reported sale on the Exchange. The current text of Rule 15
provides that the ``previous day's closing price on the Exchange'' will
serve as the reference price. Typically, the last reported sale price
is the price of the previous day's closing transaction on the Exchange.
However, in some instances, there may not be a previous day's closing
transaction in a security and, therefore, the last reported sale price
prior to the close is the last execution on the Exchange. For example,
if the Exchange halted trading in a security prior to 4 p.m. and did
not reopen until the following trading day, there would not be any
closing transaction in that security. Or, in the case of a thinly
traded stock, the stock may not have traded at all on the previous day
or the last transaction could have occurred prior to the close of
trading at 4 p.m. and, absent any additional interest in the security
being sent to the Exchange, there would not be a closing transaction in
that security. Therefore, the Exchange proposes to amend Rule 15 to
more accurately describe the reference price. In addition, the last
reported sale price on the Exchange would not include any after-hours
executions of a security on the Exchange.\8\
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\8\ Currently, the only after-hours trading permitted on the
Exchange is the entry of basket trades in Crossing Session II. The
price of an individual security executed as part of a basket trade
is not sent to the Consolidated Tape and therefore would not be
reported as a last sale on the Exchange.
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2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\9\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\10\ in particular, 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.
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\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that the proposed rule change supports the
objectives of the Act and will provide a benefit to the market while
also protecting investors and the public interest by (i) filling a
current gap in Exchange systems and by disseminating pre-opening
indication and pre-opening Order Imbalance Information for IPOs and
transferred securities, and (ii) more accurately describing the
reference price, thereby providing greater transparency to customers
prior to the opening transaction.
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
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \11\ and Rule 19b-4(f)(6) thereunder.\12\
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.\13\
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\11\ 15 U.S.C. 78s(b)(3)(A)(iii).
\12\ 17 CFR 240.19b-4(f)(6).
\13\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-
4(f)(6)(iii) requires that a self-regulatory organization 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 Commission notes that 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 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.
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-NYSE-2010-57 on the subject line.
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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-NYSE-2010-57. 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 Section, 100 F Street,
NE., Washington, DC 20549-1090, on official business days between 10
a.m. and 3 p.m. Copies of the filing will also be available for
inspection and copying at the NYSE's principal office and on its
Internet Web site at http://www.nyse.com. 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-NYSE-2010-57 and should be submitted on
or before September 7, 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. 2010-20240 Filed 8-16-10; 8:45 am]
BILLING CODE 8010-01-P