[Federal Register Volume 76, Number 83 (Friday, April 29, 2011)]
[Notices]
[Pages 24074-24076]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-10413]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-64335; File No. SR-NYSEAmex-2011-25]
Self-Regulatory Organizations; NYSE Amex LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend Rule 72(d)
Regarding Agency Cross Transactions
April 25, 2011.
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 April 19, 2011, 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 amend Rule 72(d)--NYSE Amex Equities with
respect to agency cross transactions. The text of the proposed rule
change is available at the Exchange, at http://www.nyse.com, at the
Commission's Public Reference Room, and at http://www.sec.gov.
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 Exchange 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
[[Page 24075]]
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 Rule 72(d)--NYSE Amex Equities with
respect to agency cross transactions.\3\
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\3\ The provisions of Rule 72 are in effect during a pilot set
to end on August 1, 2011. See Securities Exchange Act Release Nos.
58673 (September 29, 2008), 73 FR 57707 (October 3, 2008) (SR-NYSE-
2008-60 and SR-Amex-2008-62) (approving the Exchange's merger with
the New York Stock Exchange LLC (``NYSE'')) and 59022 (November 26,
2008), 73 FR 73683 (December 3, 2008) (SR-NYSEALTR-2008-10)
(conforming the Exchange's rules with those of NYSE, including
establishing the ``New Market Model Pilot'' or ``Pilot''). See also
Securities Exchange Act Release Nos. 60758 (October 1, 2009), 74 FR
51639 (October 7, 2009) (SR-NYSEAmex-2009-65) (extending Pilot to
November 30, 2009); 61030 (November 19, 2009), 74 FR 62365 (November
27, 2009) (SR-NYSEAmex-2009-83) (extending Pilot to March 30, 2010);
61725 (March 17, 2010), 75 FR 14223 (March 24, 2010) (SR-NYSEAmex-
2010-28) (extending Pilot to September 30, 2010); 62820 (September
1, 2010), 75 FR 54935 (September 9, 2010) (SR-NYSEAmex-2010-86)
(extending Pilot to January 31, 2011); and 63620 (December 29,
2010), 76 FR 598 (January 5, 2011) (SR-NYSEAmex-2010-122) (extending
Pilot to August 1, 2011).
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Under Rule 72(d)--NYSE Amex Equities, when a member \4\ has an
order to buy and an order to sell an equivalent amount of the same
security, and both orders are for 25,000 shares or more, the member may
``cross'' those orders at a price at or within the Exchange best bid or
offer and does not have to break up the cross transaction to trade with
any bids or offers previously displayed at the Exchange best bid or
offer, including any interest with priority (a ``72(d) crossing
transaction'').\5\ Rule 72(d)--NYSE Amex Equities further provides that
a member can effect a 72(d) crossing transaction only for the accounts
of persons who are not members or member organizations. Accordingly, a
Floor broker cannot use this provision for customers who are
unaffiliated NYSE Amex members or member organizations.
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\4\ The reference to ``member'' in Rule 72(d)--NYSE Amex
Equities and this rule proposal means only Floor broker members.
Designated Market Makers (``DMMs''), while members of the Exchange,
do not have any agency relationships, and are therefore not able to
effect this type of cross.
\5\ A transaction effected at the cross price in reliance on
Rule 72(d)--NYSE Amex Equities is printed as a ``stopped stock'' to
denote that the transaction was outside of normal market procedures.
See Rule 128A.16--NYSE Amex Equities. The Exchange notes that block-
sized crosses outside of the Exchange best bid or offer are
addressed under Rule 127--NYSE Amex Equities.
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The Exchange proposes to amend Rule 72(d)--NYSE Amex Equities to
change the required minimum share size from 25,000 and instead require
that both the order to buy and the order to sell be ``block'' orders,
which the Exchange proposes to define for purposes of Rule 72 as at
least 10,000 shares or a quantity of stock having a market value of
$200,000 or more, whichever is less.\6\ This proposed change would more
closely align agency cross transactions with other ``block'' orders
with respect to the minimum applicable order size.\7\
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\6\ The Exchange proposes to include the ``block'' definition as
new Supplementary Material .10 to Rule 72(d)--NYSE Amex Equities.
\7\ See, e.g., Rule 104--NYSE Amex Equities and Rule 127--NYSE
Amex Equities, which provide that a ``block'' shall be at least
10,000 shares or a quantity of stock having a market value of
$200,000 or more, whichever is less.
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The Exchange further proposes to amend Rule 72(d)--NYSE Amex
Equities to modify the current restriction that a member may not effect
a 72(d) crossing transaction for the account of a member or member
organization. The Exchange instead proposes to conform Rule 72(d)--NYSE
Amex Equities to Rule 90--NYSE Amex Equities, and restrict a member
from effecting a 72(d) crossing transaction for the account of such
member or member organization, an account of an associated person, or
an account with respect to which the member, member organization or
associated person thereof exercises investment discretion. This
proposed change would enable Floor brokers to effect 72(d) crossing
transactions on behalf of unaffiliated members or member organizations.
The Exchange also proposes to update a reference to the term
``priority'' within Rule 72(d)--NYSE Amex Equities, which currently
provides that a member who is providing a better price to one side of
the cross transaction must trade with all other market interest having
priority at that price before trading with any part of the cross
transaction. The Exchange proposes to modify this requirement so that
the member seeking to provide price improvement must instead trade with
all other displayed market interest on the Exchange at that price
before trading with the cross transaction. The proposed change would
expand protection for interest on the Display Book[supreg] \8\ by
requiring the member who is providing price improvement to trade not
only with priority interest, but with all displayed interest in the
Display Book.\9\ The Exchange proposes to similarly incorporate this
change in Example 1 within Rule 72(d)--NYSE Amex Equities by deleting
the clause related to ``priority'' and replacing it with a reference to
``displayed.''
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\8\ The Display Book system is an order management and execution
facility. The Display Book receives and displays orders to the DMMs,
contains order information and provides a mechanism to execute and
report transactions and publish the results to the Consolidated
Tape. The Display Book is connected to a number of other Exchange
systems for the purposes of comparison, surveillance and reporting
information to customers and other market data and national market
systems.
\9\ The Exchange notes that displayed interest does not include
the reserve portion of any orders on the Display Book. This proposed
amendment to Rule 72(d) does not change the obligation of the member
providing price improvement to comply with Rule 90.
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Finally, the Exchange proposes to remove the reference to
``prevailing quotation'' within Rule 72(d)--NYSE Amex Equities and
replace it with a reference to the ``Exchange best bid or offer.'' This
change would provide clarity regarding the price at which a member
could effect a 72(d) crossing transaction, but does not alter the
meaning of the current rule or the mechanics of a 72(d) crossing
transaction.
2. Statutory Basis
The proposed rule change is consistent with Section 6(b) of the
Securities Exchange Act of 1934 (the ``Act''),\10\ in general, and
furthers the objectives of Section 6(b)(5),\11\ in particular, in that
it is designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, to foster
cooperation and coordination with persons engaged in facilitating
transactions in securities, and to remove impediments to and perfect
the mechanism of a free and open market and a national market system.
Specifically, the proposed rule change would more closely align Rule
72(d)--NYSE Amex Equities with other Exchange rules concerning block-
sized orders and the accounts for which agency orders may be crossed
while also expanding protection for interest on the Display Book by
requiring that such interest must be executed before a member could
break up an agency cross.
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\10\ 15 U.S.C. 78f(b).
\11\ 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.
[[Page 24076]]
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 \12\ and Rule 19b-4(f)(6) thereunder.\13\
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.
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\12\ 15 U.S.C. 78s(b)(3)(A)(iii).
\13\ 17 CFR 240.19b-4(f)(6).
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A proposed rule change filed under Rule 19b-4(f)(6) \14\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\15\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest.
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\14\ 17 CFR 240.19b-4(f)(6).
\15\ 17 CFR 240.19b-4(f)(6)(iii).
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At any time within 60 days of the filing of such 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-2011-25 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-2011-25. 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-
NYSEAmex-2011-25 and should be submitted on or before May 20, 2011.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-10413 Filed 4-28-11; 8:45 am]
BILLING CODE 8011-01-P