[Federal Register Volume 76, Number 3 (Wednesday, January 5, 2011)]
[Notices]
[Pages 609-610]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-33253]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-63613; File No. SR-NYSEAmex-2010-121]
Self-Regulatory Organizations; NYSE Amex LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change Making Permanent
NYSE Amex Equities Rule 123C(9)(a)(1) and Amending Rule
123C(9)(a)(1)(iii)
December 29, 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 December 20, 2010, NYSE Amex LLC (the ``Exchange'' or
``NYSE Amex'') 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 make permanent NYSE Amex Equities Rule
123C(9)(a)(1), which currently operates on a pilot basis. The Exchange
also proposes to amend Rule 123C(9)(a)(1)(iii) to eliminate the
requirement that only Floor brokers can represent interest after 4 p.m.
The text of the proposed rule change is available at the Exchange, the
Commission's Public Reference Room, www.sec.gov, 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 make permanent NYSE Amex Equities Rule
123C(9)(a)(1),\4\ which has operated on a pilot basis and allows the
Exchange to temporarily suspend certain rule requirements at the close
when extreme order imbalances may cause significant dislocation to the
closing price (``Extreme Order Imbalances Pilot'' or ``Pilot'').\5\ The
Pilot has recently been extended to June 1, 2011. In addition, in
connection with proposing to make the rule permanent, the Exchange
proposes to amend Rule 123C(9)(a)(1)(iii) to eliminate the requirement
that only Floor brokers can represent interest after 4:00 p.m. and to
make technical amendments related to the obligations of member firms
entering interest pursuant to Rule 123C(9)(a)(1).\6\
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\4\ The Exchange notes that parallel changes are proposed to be
made to the rules of New York Stock Exchange LLC. See SR-NYSE-2010-
84.
\5\ See Securities Exchange Act Release Nos. 59755 (April 13,
2009), 74 FR 18009 (April 20, 2009) (SR-NYSEAltr-2009-15) (order
granting approval of the Pilot); 60808 (October 9, 2009), 74 FR
53539 (October 19, 2009) (SR-NYSEAmex-2009-70) (extending the
operation of the Pilot to December 31, 2009); 61265 (December 31,
2009), 75 FR 1094 (January 8, 2010) (SR-NYSEAmex-2009-96) (extending
the operation of the Pilot from December 31, 2009 to March 1, 2010);
61611 (March 1, 2010), 75 FR 10530 (March 8, 2010) (SR-NYSEAmex-
2010-15) (extending the operation of the Pilot from March 1, 2010 to
June 1, 2010); 62293 (June 15, 2010), 75 FR 35862 (June 23, 2010)
(SR-NYSEAmex-2010-50) (extending the operation of the Pilot from
June 1, 2010 to December 1, 2010); and SR-NYSEAmex-2010-113 (filed
November 30, 2010) (extending the operation of the Pilot from
December 1, 2010 to June 1, 2011).
\6\ In addition, the Exchange proposes to make a technical
change to the text of Rule 123C(9)(a)(1)(v).
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Background
Pursuant to NYSE Amex Equities Rule 123C(9)(a)(1), the Exchange may
suspend NYSE Amex Equities Rule 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 Designated Market Maker (``DMM'') orally at or near
the close. NYSE Amex Equities Rule 123C(9)(a)(1) was intended to be and
has been invoked to attract offsetting interest in rare circumstances
where there exists an extreme imbalance at the close such that a DMM is
unable to close the security without significantly dislocating the
price.
As a condition of the approval to operate the Pilot, the Exchange
committed to provide the Commission with information regarding: (i) How
often an NYSE Amex Equities Rule 52 temporary suspension pursuant to
the Pilot was invoked during the six months following its approval; and
(ii) the Exchange's determination as to how to proceed with technical
modifications to reconfigure Exchange systems to accept orders
electronically after 4 p.m. As the Exchange has previously noted in
filings with the Commission, the Pilot has been invoked only twice in
NYSE Amex-listed securities.\7\
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\7\ See SR-NYSEAmex-2010-113 (filed November 30, 2010)
(extending the operation of the Pilot from December 1, 2010 to June
1, 2011).
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Proposal To Make Permanent the Operation of the Extreme Order Imbalance
Rule
The Exchange has completed and tested the system modifications
necessary to accept orders electronically after 4 p.m. The Exchange
therefore proposes to make Rule 123C(9)(a)(1), as amended, permanent
beginning on January 3, 2011.
Because the Exchange can now accept orders electronically after 4
p.m., the Exchange proposes to amend Rule 123C(9)(a)(iii) to eliminate
the restriction that only Floor brokers can represent offsetting
interest in response to a solicitation of interest pursuant to the
Rule. The Exchange further proposes to make technical changes to Rule
123C(9)(a)(1)(iii) to identify what interest may be entered in response
to a solicitation, i.e., it must be offsetting interest, a limit order
priced no worse than the last sale, and irrevocable. Market
participants sending in interest electronically in response to a
solicitation after 4 p.m. are responsible for assuring compliance with
all provisions of subsection (iii), including that such interest must
be on the opposite side of the imbalance, must be limit priced no worse
than the last sale, and must be irrevocable. Failure to abide by these
requirements could subject a market participant to regulatory review
and possible disciplinary action.\8\
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\8\ Prior to implementation of this rule change, the Exchange
will issue guidance in the form of an Information Memo that member
organizations entering interest will be responsible for complying
with Rule 123C(9)(a)(1)(iii).
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The Exchange also proposes to amend Rule 123C(9)(a)(iv) to make
clear that all
[[Page 610]]
offsetting interest solicited pursuant to the Rule will be executed
consistent with Rule 72(c), which governs the allocation of executions
among market participants.
2. Statutory Basis
The basis under the Act for this proposed rule change is the
requirement under Section 6(b)(5) \9\ that an Exchange have rules that
are designed 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 that this
filing is consistent with these principles because the proposed rule
change will increase the ability of market participants to enter
trading interest designed to prevent significant dislocation to closing
prices that could result from extreme order imbalances. The Exchange
further believes that this filing is consistent with these principles
in that it expands the field of market participants that can directly
enter interest in response to a solicitation of offsetting interest
after 4 p.m. pursuant to Rule 123C(9)(a)(1).
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\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 does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \10\ and Rule 19b-
4(f)(6)(iii) thereunder.\11\ The Exchange has asked the Commission to
waive the 30-day operative delay so that the proposal may become
operative immediately upon filing.
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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 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 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 reports in connection with this proposal to make
permanent Rule 123C(9)(a)(1) that it has completed testing of a
functionality that would enable the electronic submission of orders
after 4 p.m., and thus now proposes to remove the requirement that all
interest entered after 4 p.m. in response to a DMM's solicitation of
interest to offset an extreme order imbalance must be represented by
Floor brokers. The Commission believes that waiving the 30-day
operative delay is consistent with the protection of investors and the
public interest because doing so would allow the benefits of the new
systems modifications allowing all market participants to enter orders
electronically (rather than solely through a Floor broker) during a
Rule 123C(9)(a)(1) suspended close to be realized immediately.\12\
Accordingly, the Commission waives the 30-day operative delay
requirement and designates the proposed rule change operative upon
filing with the Commission.
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\12\ For purposes only of waiving the 30-day operative delay,
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 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-NYSEAmex-2010-121 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-2010-121. 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 website
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
publicly available. All submissions should refer to File Number SR-
NYSEAmex-2010-121 and should be submitted on or before January 26,
2011.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-33253 Filed 1-4-11; 8:45 am]
BILLING CODE 8011-01-P