[Federal Register Volume 76, Number 18 (Thursday, January 27, 2011)]
[Notices]
[Pages 4961-4963]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-1725]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-63746; File No. SR-NYSEAmex-2011-05]
Self-Regulatory Organizations; NYSE Amex LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change Adopting Standards
for Market Maker Electronic Quotes That Are Present During an Opening
Auction
January 20, 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 January 14, 2011, 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\ 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 adopt standards for Market Maker
electronic quotes that are present during an opening auction. 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 filing is to adopt rules governing quote widths
for Market
[[Page 4962]]
Maker electronic quotes that are present during an opening auction,
based on a provision of the Rules of NASDAQ OMX PHLX (``Phlx''), by
revising the Obligations of Market Makers in Rule 925NY.
Currently, the only restriction on quote widths for NYSE Amex
Market Maker electronic quotes is that they be no more than $5 wide.
The Exchange has found that the absence of more narrow quotes during an
opening auction has prevented series from opening promptly and is
unnecessarily delaying the execution of orders.
The Exchange proposes to adopt a provision based on Phlx Rule
1014(c)(i)(A)(2)(a). The Phlx rule sets the maximum bid/ask
differential for electronic quotes at $5, but also requires electronic
quotes that are submitted during an opening rotation to have a bid/ask
differential that is consistent with the quote width requirements for
open outcry trading. NYSE Amex intends to modify the requirements of
NYSE Amex Rule 925NY(b) \3\ to also apply them to quotes submitted for
possible participation in a Trading Auction as defined in Rule 952NY.
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\3\ While our proposed rule text is not exactly identical to
Phlx Rule 1014(c)(i)(A)(2)(a), the intent and impact of the rule is
the same--namely, to provide for narrower quotes during an opening
auction, which in turn helps facilitate a prompt and efficient
opening. As discussed below, we believe that this proposed rule
change qualifies for immediate effectiveness as a ``non-
controversial'' rule change under paragraph (f)(6) of Rule 19b-4. 17
CFR 240.19b-4(f)(6).
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Specifically, the Exchange proposes that an electronic quote that
is submitted for possible participation in an opening auction must have
a bid/ask differential of no more than:
(A) .25 between the bid and the offer for each option contract for
which the bid is less than $2,
(B) No more than .40 where the bid is $2 or more but does not
exceed $5,
(C) No more than .50 where the bid is more than $5 but does not
exceed $10,
(D) No more than .80 where the bid is more than $10 but does not
exceed $20, and
(E) No more than $1 when the last bid is $20.10 or more.
These differentials are common in the options industry,\4\ and are
often referred to as ``legal width''.
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\4\ See, e.g., Boston Options Exchange Rule Chapter VI
Sec.5(a)(vii), International Securities Exchange Rule 803(b)(4),
NASDAQ OMX PHLX Rule 1014(c)(i)(A)(1)(a).
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As is currently the case, different bid/ask differentials would be
permitted to be established, but only with the approval of at least two
Trading Officials.
The Exchange believes that setting a narrower differential for
opening auction quotes will expedite the opening of all options series
on the Exchange promptly after the opening of the underlying security.
NYSE Arca [sic] will implement this rule change upon notification
to OTP Holders through the issuance of a Regulatory Bulletin.
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
Section 6(b) \5\ of the Securities Exchange Act of 1934 (the ``Act''),
in general, and furthers the objectives of Section 6(b)(5) \6\ in
particular in that it is designed to promote just and equitable
principles of trade, to prevent fraudulent and manipulative acts, to
remove impediments to and to perfect the mechanism for a free and open
market and a national market system and, in general, to protect
investors and the public interest, by expediting the opening auction
process and the execution of Customer orders submitted for the opening.
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\5\ 15 U.S.C. 78f(b).
\6\ 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: (1) Does not
significantly affect the protection of investors or the public
interest; (2) does not impose any significant burden on competition;
and (3) by its terms does not become operative for 30 days after the
date of this filing, 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 \7\ and Rule 19b-4(f)(6) thereunder.\8\
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\7\ 15 U.S.C. 78s(b)(3)(A).
\8\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to provide the Commission
with 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 fulfilled 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-NYSEAmex-2011-05 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-2011-05. 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
[[Page 4963]]
Exchange.\9\ 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.
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\9\ The text of the proposed rule change is available on the
Commission's Web site at http://www.sec.gov.
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All submissions should refer to File Number SR-NYSEAmex-2011-05 and
should be submitted on or before February 17, 2011.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-1725 Filed 1-26-11; 8:45 am]
BILLING CODE 8011-01-P