[Federal Register Volume 75, Number 244 (Tuesday, December 21, 2010)]
[Notices]
[Pages 80101-80102]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-31928]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-63538; File No. SR-NYSE-2010-75]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Amending Rule 123C To Clarify That Exchange Systems Enforce Rule 123C
With Respect to Market At-The-Close and Limit At-The-Close Order Entry
After 3:45 p.m.
December 14, 2010.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') and Rule 19b-4 thereunder,\2\ notice is hereby given
that on December 6, 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\ 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 Rule 123C to clarify that Exchange
systems enforce Rule 123C with respect to Market At-The-Close (``MOC'')
and Limit At-The-Close (``LOC'') order entry after 3:45 p.m. 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 purpose of this proposed rule change is to amend Rule 123C to
clarify that Exchange systems enforce Rule 123C with respect to MOC \3\
and LOC \4\ order entry after 3:45 p.m.
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\3\ A MOC order is a market order in a security that, by its
terms, is to be executed in its entirety at the closing price. If
not executed due to tick restrictions or a trading halt, the order
will be cancelled. See Rule 13 (Definitions of Orders).
\4\ A LOC order is a limit order in a security that is entered
for execution at the closing price of the security on the Exchange
provided that the closing price is at or within the specified limit.
If not executed due to a trading halt or because, by its terms it is
not marketable at the closing price, the order will be cancelled.
See Rule 13 (Definitions of Orders).
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Rule 123C governs certain closing procedures on the Exchange,
including MOC, LOC and CO order entry, cancellation of such orders and
the calculation and publication of imbalances. In particular, Rule
123C(2)(b) currently provides that MOC/LOC interest may be entered
after 3:45 p.m. only to offset a Mandatory MOC/LOC Imbalance
Publication. The rule therefore suggests that members or member
organizations entering MOC or LOC orders are actively responsible for
compliance therewith (e.g., ``orders may be entered''). However,
Exchange systems enforce compliance with this rule pursuant to system
functionality that allows only the entry of offsetting MOC/LOC interest
after 3:45 p.m. and blocks the entry of all MOC/LOC orders that would
join the same side of a published MOC/LOC imbalance and the entry of
MOC/LOC orders after 3:45 p.m. for securities for which there has not
been a Mandatory MOC/LOC Imbalance Publication.\5\ Exchange systems
also enforce compliance with this rule pursuant to system functionality
that allows or blocks, depending upon the circumstances, MOC/LOC order
entry in the event of a Trading Halt.
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\5\ See Information Memos 09-12 and 10-11, respectively.
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The Exchange proposes to amend Rule 123C(2) and (3) generally to
clarify that Exchange systems enforce compliance with the rules, and
therefore clarify that members and member organizations are not
responsible for ensuring compliance with this aspect of the rule.
The Exchange proposes additional clean-up amendments to Rule 123C.
Specifically, the Exchange proposes to delete certain text in Rule
[[Page 80102]]
123C(2)(b)(ii) \6\ and 123C(2)(c)(iii) \7\ pertaining to a ``no
imbalance'' notification after dissemination of an Informational
Imbalance as well as the text of current Rule 123C(2)(b)(iii), because
these provisions are no longer necessary due to the system-enforced
compliance with MOC/LOC order entry. In addition, the Exchange proposes
to amend Rule 123C(3)(c) to clarify that Exchange systems will reject
cancellations of MOC, LOC and CO orders after 3:58 p.m. and to add a
reference to Rule 123C(9), which pertains to alternative procedures in
the case of extreme order imbalances at the close.
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\6\ See e-mail from Clare F. Saperstein, Vice President,
Regulatory Policy and Management, NYSE Regulation, Inc., to Nathan
Saunders, Special Counsel, Division of Trading and Markets,
Commission, dated December 10, 2010 (amending the proposed rule
change by replacing the reference to ``Rule 123C(2) and (3)'' with
``Rule 123C(2)(b)(ii) and 123C(2)(c)(iii)'').
\7\ See id.
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Because the Exchange previously disclosed this system functionality
to member organizations, the Exchange believes that this rule proposal
would not require technical programming and/or modification by members
or member organizations.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\8\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\9\ 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. Specifically,
the changes proposed herein would reflect that Exchange systems enforce
compliance with Rule 123C(2) and (3) and therefore clarify that
Exchange members and member organizations are not responsible for
ensuring such compliance.
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\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(5).
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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
The foregoing proposed rule change will take effect upon filing
with the Commission pursuant to Section 19(b)(3)(A)(i) of the Act \10\
and Rule 19b-4(f)(1) thereunder,\11\ because it constitutes a stated
policy, practice, or interpretation with respect to the meaning,
administration, or enforcement of an existing rule. Specifically, the
change proposed herein would reflect that Exchange systems enforce
compliance with Rule 123C(2) and (3) and therefore clarify that
Exchange members and member organizations are not responsible for
ensuring such compliance.
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\10\ 15 U.S.C. 78s(b)(3)(A)(i).
\11\ 17 CFR 240.19b-4(f)(1).
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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-2010-75 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-NYSE-2010-75. 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 the 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-NYSE-2010-75 and should be
submitted on or before January 11, 2011.
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).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-31928 Filed 12-20-10; 8:45 am]
BILLING CODE 8011-01-P