Federal Register / Vol. 75, No. 237 / Friday, December 10, 2010 / Notices 77031 

8 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3See NYSE Arca Equities Rule 7.23(a)(1). 

4See NYSE Arca Equities 7.31(k)(1)(A)(1)–(2). 

5See NYSE Arca Equities Rule 7.31(k)(1)(B)(1). If 

the Market Maker specifies a reserve size for the Q 

Order, it will not automatically repost once the 

reserve size is exhausted. 

6The Exchange proposes the place NYSE Arca 

Equities Rule 7.31(k)(1)(B)(1) in ‘Reserve’ for 

possible use at a later date. 

7See Securities Exchange Act Release No. 63255 

(November 5, 2010), 75 FR 69484 (November 12, 

2010) (SR–NYSEArca–2010–83). 

8 Id. 

9See, e.g., Nasdaq Rule 4613. 

10 15 U.S.C. 78f(b). 

11 15 U.S.C. 78f(b)(5). 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.8

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–31100 Filed 12–9–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63440; File No. SR– 

NYSEArca-2010–112] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change Amending NYSE Arca 

Equities Rules 7.31(k) and 7.23(a)(1) To 

Modify Certain Characteristics of the Q 

Order and Clarify the Interest Eligible 

for Satisfaction of a Market Maker’s 

Two-Sided Obligation 

December 6, 2010. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’) 1, and Rule 19b–4 2 thereunder, 

notice is hereby given that on December 

3, 2010, NYSE Arca, Inc. (‘‘NYSE Arca’’ 

or ‘‘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 Exchange. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend 

NYSE Arca Equities Rules 7.31(k) and 

7.23(a)(1) to modify certain 

characteristics of the Q Order and 

clarify the interest eligible for 

satisfaction of a Market Maker’s TwoSided Obligation, respectively. 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 

The Exchange proposes to amend 

NYSE Arca Equities Rules 7.31(k) and 

7.23(a)(1) to modify certain 

characteristics of the Q Order and 

clarify the interest eligible for 

satisfaction of a Market Maker’s TwoSided Obligation, respectively. 

A Market Maker is currently able to 

satisfy its Two-Sided Obligation 3 by 

instructing the NYSE Arca Marketplace 

to enter a Q Order on its behalf either 

(1) at the last price and size entered by 

the Market Maker during the previous 

trading day, including or excluding 

reserve size, or (2) at a specified 

percentage from the best bid or offer.4

Currently, upon execution, a Q Order 

entered with reserve size pursuant to 

NYSE Arca Equities Rule 

7.31(k)(1)(A)(1) will automatically 

repost with the original display size and 

$10 below (above) the original bid 

(offer).5 This particular automatic 

reposting could result in a Q Order with 

a price that is significantly worse than 

the published National Best Bid or Offer 

(‘‘NBBO’’). Moreover, depending on the 

price of the security at issue, the 

automatic reposting could result in a 

Market Maker posting a Q Order at a 

price that is not in compliance with the 

new Market Maker pricing obligations 

set forth in amended NYSE Arca 

Equities Rule 7.23(a)(1)(B), which are to 

be implemented on December 6, 2010. 

Accordingly, the Exchange proposes 

to delete the text of NYSE Arca Equities 

Rule 7.31(k)(1)(B)(1) in its entirety 6 and 

delete the text ‘‘entered without reserve 

size’’ from NYSE Arca Equities Rule 

7.31(k)(1)(B)(2) to provide that a Market 

Maker, upon execution of its Q Order 

entered with reserve size, would be 

responsible for immediately posting a 

new Q order, rather than the Q order 

automatically reposting $10 below 

(above) the original bid (offer). The 

Exchange notes that Market Makers are 

currently required to post a new Q order 

upon execution of Q orders entered 

without reserve size. Requiring the same 

of Q orders originally entered with 

reserve size would encourage Q order 

prices that bear a closer relationship to 

the NBBO than the current $10 above/ 

below reposting price, thus promoting 

fair and orderly markets and the 

protection of investors and reducing the 

risk of executions at illogical prices. 

The Exchange previously represented 

to the Commission, in filing SR– 

NYSEArca–2010–83, that it would 

submit a filing with the changes 

proposed herein, including a proposed 

implementation date of Monday, 

December 6, 2010, consistent with the 

implementation date for the new Market 

Maker pricing obligations.7

The Exchange further proposes 

clarifying revisions to recently amended 

Rule 7.23(a)(1). In filing SR–NYSEArca– 

2010–83, the Exchange noted that 

Market Makers would use Q orders to 

meet the new Two-Sided Obligation 

under Rule 7.23(a)(1).8 The Exchange 

proposes to amend Rule 7.23(a)(1) to 

delete the requirement that Market 

Makers exclusively use Q orders to meet 

their Two-Sided Obligation. Rule 

7.23(a)(1) would continue to require that 

Market Makers identify to the Exchange 

the interest that is being used to satisfy 

the Two-Sided Obligation. While 

Market Makers may continue to use Q 

orders to satisfy the Two-Sided 

Obligation, the Exchange believes that 

Market Makers should be permitted to 

use other types of interest to satisfy this 

obligation, provided that the interest is 

displayed and identified to the 

Exchange. The proposed revision to 

Rule 7.23(a)(1) is consistent with the 

rules adopted by other exchanges.9

2. Statutory Basis 

The Exchange believes that its 

proposal 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) of the Act,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 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 

Exchange believes that the change 

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77032 Federal Register / Vol. 75, No. 237 / Friday, December 10, 2010 / Notices 

12 15 U.S.C. 78s(b)(3)(A). 

13 17 CFR 240.19b–4(f)(6). When filing a proposed 

rule change pursuant to Rule 19b–4(f)(6) under the 

Act, an exchange is required to give 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 Commission 

notes that the Exchange has satisfied this 

requirement. 

14 17 CFR 240.19b–4(f)(6)(iii). 

15 Id. 

16For the purposes only of waiving the operative 

date of this proposal, the Commission has 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

15 U.S.C. 78c(f). 

17 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

proposed herein would encourage 

Market Maker Q order prices that bear 

a closer relationship to the NBBO, thus 

promoting fair and orderly markets and 

the protection of investors and reducing 

the risk of executions at illogical prices. 

The Exchange also believes that the 

change propose herein would provide 

Market Makers with a more appropriate 

level of flexibility with which to satisfy 

their Two-Sided Obligation by 

permitting interest other than Q order 

interest to be identified to the Exchange 

as meeting such obligation. 

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: (1) Significantly affect 

the protection of investors or the public 

interest; (2) impose any significant 

burden on competition; and (3) 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 12 and Rule 19b– 

4(f)(6) thereunder.13

A proposed rule change filed under 

Rule 19b–4(f)(6) normally may not 

become operative prior to 30 days after 

the date of filing.14 However, Rule 19b– 

4(f)(6) 15 permits the Commission to 

designate a shorter time if such action 

is consistent with the protection of 

investors and the public interest. NYSE 

Arca has requested that the Commission 

waive the 30-day operative delay. 

The Commission has considered 

NYSE Arca’s request to waive the 30- 

day operative delay. The Commission 

believes that waiving the 30-day 

operative delay is consistent with the 

protection of investors and the public 

interest, as it will enable the Exchange 

to implement the proposed change 

consistent with the implementation date 

for the new market maker pricing 

obligations.16

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 rulecomments@sec.gov. Please include File 

Number SR–NYSEArca–2010–112 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–NYSEArca–2010–112. 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– 

NYSEArca–2010–112 and should be 

submitted on or before January 3, 2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.17

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–31097 Filed 12–9–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63437; File No. SR–ISE– 

2010–116] 

Self-Regulatory Organizations; 

International Securities Exchange, 

LLC; Notice of Filing and Immediate 

Effectiveness of a Proposed Rule 

Change To Extend the Penny Pilot 

Program 

December 6, 2010. 

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 December 

2, 2010, the International Securities 

Exchange, LLC (the ‘‘Exchange’’ or the 

‘‘ISE’’) filed with the Securities and 

Exchange 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. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The ISE proposes to amend its rules 

relating to a pilot program to quote and 

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