[Federal Register Volume 75, Number 38 (Friday, February 26, 2010)]
[Notices]
[Pages 9009-9010]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-3946]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-61549; File No. SR-NYSE-2010-09]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Extending the Time Allowed To Temporarily Suspend Certain NYSE
Requirements Relating to the Closing of Securities on the Exchange
Which Currently Operates as a Pilot Pursuant to Former NYSE Rule
123C(8)(a)(1) Currently NYSE Rule 123C(9)(a)(1)
February 19, 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 February 12, 2010,\4\ 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.
\4\ The Exchange attempted to file this proposed rule change
prior to the close of business on February 12, 2010, but experienced
delays with the electronic filing system which caused this filing to
be received after the close of business and to be assigned a filing
date of February 16, 2010, the next business day. Because the delay
was caused by technical issues, the Commission deems the official
filing date of this proposed rule change to be February 12, 2010.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to extend the time allowed to temporarily
suspend certain NYSE requirements relating to the closing of securities
on the Exchange which currently operates as a pilot pursuant to former
NYSE Rule 123C(8)(a)(1) currently NYSE Rule 123C(9)(a)(1). 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
Statutory Basis for, the Proposed Rule Change
1. Purpose
NYSE Rule 123C(9)(a)(1), formerly NYSE Rule 123C(8)(a)(1), allows
the Exchange to temporarily suspend certain rule requirements at the
close when extreme order imbalances may cause significant dislocation
to the closing price. The rule has operated on a pilot basis since
April 2009 (``Extreme Order Imbalance Pilot'' or Pilot).\5\ Through
this filing, [sic] proposes to temporarily extend the time allowed to
temporarily suspend certain NYSE requirements relating to the closing
of securities on the Exchange which currently operates as a pilot
pursuant to 123C(9)(a)(1).
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\5\ See Securities Exchange Act Release No. 59755 (April 13,
2009), 74 FR 18009 (April 20, 2009) (SR-NYSE-2009-15).
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Background
Pursuant to NYSE Rule 123C(9)(a)(1), the Exchange may suspend NYSE
Rules 52 (Hours of Operation) to resolve an extreme order imbalance
that may result in a price dislocation at the close as a result of an
order entered into Exchange systems, or represented to a DMM orally at
or near the close.\6\
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\6\ See NYSE Rule 123C(9)(a)(1).
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The provisions of NYSE Rule 123C(9)(a)(1) operate as the Extreme
Order Imbalance Pilot. The Exchange invokes NYSE Rule 123C(9)(a)(1) to
attract offsetting interest in those rare circumstances where there
exists such a large imbalance at the close that a DMM is unable to
close the security without significantly dislocating the price.
Further, pursuant to NYSE Rule 123C(9)(ii) the time to receive such
off-setting interest must not be later than 4:30 p.m. (or 30 minutes
after the scheduled close in the case of an earlier close).
Proposal To Extend the Time To Receive Off-Setting Interest in
Berkshire Hathaway A Security on February 12, 2010
On February 12, 2009, significant corporate actions in Berkshire
Hathaway Class A and B securities significantly increased the trading
volume in those securities. It was determined based on the fact that
there is a relation between the price of the two securities and the
fact that there was significantly greater liquidity in the Class B
shares than the Class A shares that the most efficient manner to effect
the close of trading in those securities was to effect the closing
transaction in Berkshire Hathaway Class B securities first.
The significant volume resulted in [sic] Class B security closing
transaction be [sic] completed at 4:19 p.m. Thereafter the DMM
immediately assessed the shares eligible to be executed in the closing
transaction for the Class A securities. At 4:27 p.m. when the imbalance
was determined the Exchange sought off-setting interest; however, the
remaining 3 minutes was not a sufficient amount of time to receive and
effect the closing transaction in the Class A security.
As to effect a fair and orderly close, the closing transaction for
the Class A security occurred after 4:30 p.m.\7\
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\7\ Specifically, the order acceptance cut-off time period
designated by the Exchange was 4:35 p.m. Thereafter, once such
offsetting interest from both on-Floor and off-Floor participants
was received, the closing transaction for the Class A security was
completed at approximately 4:41 p.m. See E-mail from Deanna G. W.
Logan, Managing Director, NYSE Regulation, to David Liu, Assistant
Director, et al., Division of Trading and Markets, Commission, dated
February 16, 2010.
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2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Securities Exchange Act of 1934
[[Page 9010]]
(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. The Exchange
believes the proposal facilitates the fair and orderly execution of the
closing transactions in an unusual market situation and thus ultimately
served to protect investors and the public interest.
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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
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-NYSE-2010-09 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-2010-09. 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 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-
NYSE-2010-09 and should be submitted on or before March 19, 2010.
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\12\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-3946 Filed 2-25-10; 8:45 am]
BILLING CODE 8011-01-P